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NUCLEAR ENERGY INSTITUTE

# 

# **RICHARD J. MYERS**

# *Senior Director, Business Policy*

# *Phone: 202.739.8021*

# *Fax: 202.293.3451*

# *E-mail: <rjm@nei.org>*

# 

# June 5, 2002

# 

# Ms. Jean Vernet

U.S. Department of Energy

Office of Policy and International Affairs

Office of Electricity and Natural Gas Analysis

Forrestal Building, PI-23, Room 7H-034

1000 Independence Ave, SW

Washington DC 20585

RE: Notice of Inquiry and Request for Comment, Voluntary Reporting of
Greenhouse Gas Emissions, Reductions and Carbon Sequestration (Section
1605(b), Energy Policy Act, Public Law 102-486)

Dear Ms. Vernet:

On behalf of the U.S. nuclear energy industry, the Nuclear Energy
Institute[^1] appreciates the opportunity to provide comments on the
Notice of Inquiry published by the Department of Energy (67 *Fed. Reg.*,
30370, May 6, 2002). The NOI solicits input on how to modify the
voluntary program for reporting of greenhouse gases, originally
established by the Energy Policy Act of 1992, to reflect the President's
February 14, 2002, initiative on climate change. In that initiative, the
President established clear objectives for the revisions to the 1605(b)
program:

-   "...enhance measurement accuracy, reliability and verifiability,
    working with and taking into account emerging domestic and
    international approaches."

-   "...ensure that businesses and individuals that register reductions
    are not penalized under a future climate policy, and to give
    transferable credits to companies that can show real emissions
    reductions."

These comments focus solely on one of the explicit issues raised in the
May 6 Notice of Inquiry---avoided emissions. Avoided emissions arise
from (1) increased generation from non-emitting generation sources such
as nuclear power plants, renewable energy technologies and hydroelectric
facilities, and 2) improvements in end-use energy efficiency. Both types
of activity displace the need for electricity generated by "emitting"
sources.

Such avoided emissions are important, if not critical, in slowing or
reversing the rate of increase in future emissions of carbon dioxide
(CO~2~), while still supporting robust economic growth in the United
States. As electricity demand increases with economic growth and the
continued substitution of electricity for direct burning of fossil
fuels, new generating capacity must be built to meet that demand. To the
extent that new generating capacity is fossil-fueled, greenhouse gas
emissions will increase. Only increased output from emission-free
sources, construction of new emission-free generating capacity, or
energy efficiency measures can reduce the rate of increase in greenhouse
gas emissions.

## General Principles

With respect to avoided emissions, the Nuclear Energy Institute believes
several simple principles should guide any modifications to the 1605(b)
program. Specifically, the modifications should recognize that:

-   avoiding emissions of greenhouse gases through expanded use of
    carbon-free, emission-free technologies like nuclear energy is fully
    as valuable as reducing emissions of greenhouse gases. A ton of
    greenhouse gas avoided is no different from a ton reduced or a ton
    sequestered;

-   existing voluntary initiatives in the United States to reduce
    greenhouse gas emissions, to the extent they are successful, have
    succeeded largely as a result of improved performance and output
    from the nation's nuclear power plants;

-   any new program to reduce greenhouse gas emissions, or to moderate
    the greenhouse gas intensity of the U.S. economy, must provide
    explicit recognition for the significant role of nuclear energy and
    acknowledge that nuclear power will play as significant a role in
    the future as it has in the past;

-   creating a robust reporting system, under which nuclear power plants
    can register emissions avoided and receive transferable credits for
    those tons avoided, is important to capture the full potential of
    nuclear energy---both increased output from existing new plants and
    construction of new nuclear power plants;

-   failure to recognize the value of avoided emissions will make
    achievement of the President's goal---reducing the greenhouse gas
    intensity of the U.S. economy---more difficult, if not impossible;

-   calculating avoided emissions is a relatively straightforward and
    transparent exercise.

## Discussion

*Contribution from Existing Nuclear Power Plants.* Nuclear power plants
represent approximately 20 percent of U.S. electricity supply, and
approximately three-quarters of emission-free electricity production.
Since 1973, America's nuclear power plants have avoided the emission of
2.8 billion metric tons of carbon[^2] equivalent by producing
electricity that would otherwise have been produced by fossil fuels. In
2000, the last year for which data exists, U.S. nuclear power plants
avoided the emission of 174.4 million metric tons of carbon.

To place these numbers in perspective, carbon emissions from the U.S.
electric sector in 2000 were 641.6 million metric tons. In the absence
of nuclear energy, U.S. electric sector emissions of carbon would have
been 27 percent higher. Clearly, then, U.S. nuclear power plants are
already making a significant contribution to reducing the greenhouse gas
intensity of the U.S. electric sector, and must play a prominent role in
any national program to reduce the greenhouse gas intensity of the U.S.
economy going forward.

Nuclear power plants have also played a significant---indeed, the most
significant---role in the Department of Energy's existing program to
document reductions of greenhouse gases under §1605(b) of the 1992
Energy Policy Act. The most recent data available are for 2000 and are
shown below:[^3]

+-----------------------+-----------------------+----------------------+
| ### T                 |                       |                      |
| ons Reported in 2000  |                       |                      |
| Under 1605(b) Program |                       |                      |
|                       |                       |                      |
| *(metric tons of      |                       |                      |
| carbon dioxide)*      |                       |                      |
+-----------------------+-----------------------+----------------------+
| ***Reporting          | ***Tons Reported***   | ***Percent of        |
| Sector***             |                       | Total***             |
+-----------------------+-----------------------+----------------------+
| Nuclear Energy        | 116,776,270           | 43.3%                |
+-----------------------+-----------------------+----------------------+
| Non-Nuclear Electric  | 77,471,385            | 28.6%                |
+-----------------------+-----------------------+----------------------+
| Alternate Energy      | 59,867,258            | 22.2%                |
+-----------------------+-----------------------+----------------------+
| Industry              | 13,966,044            | 5.2%                 |
+-----------------------+-----------------------+----------------------+
| Agriculture and       | 112,747               | 0.1%                 |
| Forestry              |                       |                      |
+-----------------------+-----------------------+----------------------+
| Other Sectors         | 1,424,390             | 0.5%                 |
+-----------------------+-----------------------+----------------------+

The tons of CO~2~ avoided by nuclear power plants shown in the table
above are the result of improved performance, which displaced the need
for fossil-fueled generation. As the data show, higher output, higher
reliability and capacity uprates at nuclear power plants were the
largest single source of tons reported under the existing 1605(b)
program. In fact, improved performance at existing nuclear power plants
represented 43.3 percent of all tons reported and approximately 60
percent of the tons reported by the U.S. electric sector.

During the 1990s, U.S. nuclear power plant performance improved
dramatically. In 1990, U.S. nuclear power plants produced 577 billion
kilowatt-hours of electricity; in 2001, U.S. nuclear power plants
produced 767 billion kilowatt-hours. The difference between 1990 output
and 2001 output is equivalent to 24 new 1,000-megawatt power plants
operating at 90 percent capacity factor. Put another way, the increased
output from U.S. nuclear units during the 1990s satisfied approximately
25 percent of the growth in electricity demand during that period. And
perhaps most important, the increased production displaced the need to
burn fossil fuels to generate that electricity, and thus avoided the
emission of hundreds of millions of tons of carbon.

*Contribution fron Nuclear Energy in the Future.* Just as nuclear energy
has played a significant role---indeed, a dominant role---in mitigating
greenhouse gas emissions and reducing the greenhouse gas intensity of
the U.S. economy in the past, so also will nuclear energy play a
significant role in the future.

In the near-term, U.S. nuclear power plants will avoid the emission of
greenhouse gases by continuing to improve performance and by uprating
their nameplate capacity rating[^4]. The Nuclear Energy Institute
estimates that the 103 existing nuclear units in the United States could
yield as much as 10,000 megawatts of new capacity equivalent through
higher capacity factors, uprates and restarts of nuclear plants not
currently operating. All of this "new" capacity would, clearly, displace
the need to burn fossil fuels to meet demand for electricity.

In the intermediate term, the industry is implementing a multi-year
program to create the business conditions under which nuclear generating
companies would build new nuclear power plants. This program involves a
number of separate initiatives, which will, among other things, prove
that the new licensing procedures established in the 1992 Energy Policy
Act work as intended, and reduce the capital cost of new nuclear
projects. Assuming success in this industry initiative, and continuing
policy support from the Executive Branch and U.S. Congress, the industry
should be in position to start new nuclear plant construction later this
decade, with significant numbers of new nuclear units entering service
between 2010 and 2020. As with uprates at existing units, any new
capacity would displace fossil fuels and the carbon emissions associated
with combustion of fossil fuels to generate electricity.

In the future, whether or not nuclear generating companies uprate
existing nuclear plants and, eventually, build new nuclear units will
depend, to some extent, on the nuclear companies' ability to capture the
economic value associated with avoiding emissions of greenhouse gases.
The President's February 14 climate change initiative, which proposes to
establish a system of transferable credits for companies that avoid,
reduce or sequester greenhouse gas emissions is an important first step.
The U.S. nuclear energy industry believes that any program to reduce the
greenhouse gas intensity of the U.S. economy cannot succeed without a
growing contribution from nuclear power plants. The industry also
believes that a robust reporting program and a system of transferable
credits is necessary to capitalize fully on nuclear power's significant
potential.

*Calculating Avoided Emissions.* Computing avoided emissions is not
difficult or complex. The primary issue is determining which power plant
emission source(s) is displaced by generation from the non-emitting
technology. The displaced source could be emissions from an existing
plant or a new plant.

The Nuclear Energy Institute has developed an Emissions Calculator
(E-Calc), which can compute for each nuclear power plant in the U.S. its
avoided emissions---both historically and forward looking. Current and
future avoided emissions are computed using several alternative methods:

-   State-wide average emission rate in 1999 for baseload fossil plants

-   Power Pool average emission rate in 1999 for baseload fossil plants

-   New natural gas combined cycle (NGCC) plant meeting NSPS/NSR
    standards

-   New integrated coal gasification combined cycle (IGCC) plant meeting
    NSPS/NSR standards

These alternative benchmarks provide a range of displaced emission
estimates. Depending on more detailed information on power plant
operations---both current and future---a more exact estimate of avoided
emissions can be computed.

On the basis of its experience in computing avoided emissions, NEI
believes there are several viable approaches to calculating avoided
emissions in the context of the new 1605(b) guidelines: a formula can be
inserted into the guidelines with alternative parametric estimates,
similar to what is included in NEI's E-Calc model, or the computation of
avoided emissions could be approved on a case-by-case basis consistent
with an analytic framework.

Conclusion

In summary, the Nuclear Energy Institute believes it is absolutely
essential that the federal government's new voluntary program for
reporting greenhouse gases recognize explicitly that avoiding emissions
of greenhouse gases through expanded use of carbon-free, emission-free
technologies like nuclear energy, renewables and hydroelectricity, or
through energy efficiency programs, is fully as valuable as reducing
emissions of greenhouse gases.

NEI also believes that operating experience demonstrates clearly that
existing nuclear power plants have played a significant role---if not
the dominant role---in existing voluntary initiatives in the United
States to reduce greenhouse gas emissions. Similarly, any new program to
reduce greenhouse gas emissions, or to moderate the greenhouse gas
intensity of the U.S. economy, must provide explicit recognition for the
significant role of avoided emissions through a system of transferable
credits. Such a system can help ensure that the nation realizes the full
potential of nuclear energy---both increased output from existing plants
and construction of new nuclear power plants---in avoiding emissions of
greenhouse gases. Failure to recognize the value of avoided emissions
will make achievement of the President's goal---reducing the greenhouse
gas intensity of the U.S. economy---more difficult, if not impossible.

Please contact me at 202.739.8021 if you have questions about these
comments, need additional information on any of the issues raised, or
would like a demonstration of the Nuclear Energy Institute's E-Calc
model for computing avoided emissions.

Sincerely,

Richard J. Myers

Senior Director, Business Policy

NUCLEAR ENERGY INSTITUTE

[^1]: NEI is the organization responsible for establishing unified
    nuclear industry policy on matters affecting the nuclear energy
    industry, including regulatory aspects of generic operational and
    technical issues. NEI members include all utilities licensed to
    operate commercial nuclear power plants in the United States,
    nuclear plant designers, major architect/engineering firms, fuel
    fabrication facilities, materials licensees, and other organizations
    and individuals involved in the nuclear energy industry.

[^2]: Specifically, nuclear power has avoided the emission of 2,793.6
    million metric tons of carbon by producing electricity that would
    otherwise have been produced from fossil fuels. These estimates are
    derived using the Nuclear Energy Institute's proprietary E-Calc
    model, which calculates the fuels displaced by each nuclear power
    plant. The NEI results are generally consistent with Energy
    Information Administration estimates of emissions avoided by nuclear
    power plants. In a recent report ("Impact of U.S. Nuclear Generation
    on Greenhouse Gas Emissions"), EIA estimates nuclear plants avoided
    the emissions of 3,142 million metric tons of carbon between 1960
    and 2000. Although beyond the purview of the May 6 NOI, it is worth
    noting that nuclear power plants also avoided the emission of 33.6
    million tons of NOx and 66.1 million tons of SO~2~ between 1973 and
    2000.

[^3]: Source: NEI analysis of data contained in "Voluntary Reporting of
    Greenhouse Gases 2000" (DOE/EIA-0608), February 14, 2002.

[^4]: Most U.S. nuclear power plants can "uprate" their capacity in
    various ways to produce more electricity. Nuclear power uprates are
    activities that increase the rated capacity of a reactor, allowing
    the unit to produce more electricity. Increasing the rated capacity
    of a reactor enables it to produce more thermal energy, which is
    used to produce hotter steam to drive the turbine generator and
    increases electricity generation. Higher power levels usually
    involve increased steam and water flow.