US climate hawks have not had much to celebrate lately, with the Trump administration lurching backward and states finding it more difficult than expected to move forward on their own.
But last week brought reason for celebration, as New Jersey, unified under Democratic rule after the 2017 gubernatorial election, passed a suite of legislation that vaulted it into the ranks of top US climate leaders, alongside California and New York.
In laying out a clean-energy future, New Jersey had to wrestle with what is becoming a familiar dilemma: Most of its current clean energy is provided by nuclear power, but markets and public opinion are swinging toward renewable energy. The way the state navigated that dilemma — showing, as New York has, that nuclear and renewables can work together — sends an important signal to other states facing the same circumstances.
— Mike Bloomberg (@MikeBloomberg) April 13, 2018
Let’s take a closer look at the situation New Jersey faced and the somewhat ugly but undeniably effective measures it took in response.
Right now, more than half of New Jersey’s power comes from natural gas, about 40 percent comes from nuclear, and renewables account for under 5 percent. Nuclear provides the vast bulk of the state’s carbon-free power.
New Jersey’s 2007 Global Warming Response Act set a goal of reducing the state’s greenhouse gas emissions 80 percent by 2050. That simply won’t be possible without almost completely decarbonizing the power sector.
But here’s the problem. The state’s nuclear plants are having trouble competing in energy markets (in part because they are not compensated for their climate-friendly attributes). Their owners — PSEG, which runs the 2.3-GW Salem and 1.2-GW Hope Creek plants, and Exelon Generation, which runs the 636-MW Oyster Creek plant — say that they will be forced to shut the plants down soon absent intervention.
So New Jersey faces a choice. If its nuclear plants remain open and running, then new renewable energy will replace natural gas. If its nuclear plants close, then new renewable energy will replace nuclear. The former would reduce carbon emissions. The latter would not. (In fact, since renewable energy is unlikely to completely replace the giant gap left by a closed nuclear plant — recent nuclear retirements have mostly prompted more natural gas — it increases them.)
The only way to reduce power-sector emissions in New Jersey is to have nuclear and renewable energy work together — to keep nuclear plants open as long as possible so that growth in renewables builds on top of them and replaces natural gas.
And that, miracle of miracles, is exactly the course New Jersey has chosen.
The New Jersey legislature passed three relevant bills to make this happen.
The first bill increases the state’s renewable portfolio standard (RPS) — the amount of renewable energy its utilities are required to acquire — to 35 percent by 2025 and 50 percent by 2030, among the more ambitious targets in the nation. (A pause here to note that RPS policies, though unloved and under-discussed, are responsible for more renewable energy in the US than any other policy.)
The same bill also boosts the solar-specific target under the RPS, sets up a community-solar program (so nonhomeowners can access solar), and targets 2 gigawatts of energy storage by 2030.
The second bill helps lay the foundation for more offshore wind in the state, near Atlantic City.
New Jersey’s clean energy legislation:
– Increases RPS to 50% x 2030
– Boosts offshore wind goal to 3,500 MW
– Sets energy storage target of 2,000 MW x 2030
– Doubles net metering soft cap
– Creates community solar program
– Requires 2%/yr utility energy efficiency gains pic.twitter.com/7H0DOd93gV
— Ben Inskeep (@Ben_Inskeep) April 13, 2018
Now, pause and consider two facts.
First, 50 percent is an extremely ambitious target for renewable energy, which currently plays a close-to-negligible role in NJ’s energy system. And second, if all those nuclear plants close, New Jersey could conceivably hit its RPS target without lowering carbon emissions from the power sector at all. All the new carbon-free renewable energy would replace carbon-free nuclear energy, leaving the carbon-generating natural gas in place, unscathed.
Seems like a bad idea!
So New Jersey also implemented a $300 million annual subsidy for nuclear plants in the state. To receive zero-emission credits (ZECs), a plant must be certified by the New Jersey Board of Public Utilities and open its books to the board every three years to establish that it would close without the subsidy.
The ZECs would be paid for through a $0.004 per kilowatt-hour tariff on utility retail customers. Through the exact costs are unclear yet, the figure that’s been bouncing around is $41 per customer per year. (That’s about a latte a month, to preserve 4 GW of carbon-free power, which, c’mon.)
The nuclear subsidies were widely supported — the bill passed the state Senate 29-7 and the Assembly 60-10 — and not only for their climate benefits. As PSEG spokesperson Michael Jennings told Power magazine:
If New Jersey were to lose half its [power] supply, electricity prices would jump—economists estimate by $400 million a year. Air pollution would greatly increase, including 14 million additional tons of carbon a year. … There would also be significant economic effects. The loss of our nuclear plants would put our 1,600 nuclear plant employees out of work, with a cascading effect that would cost New Jersey 5,800 jobs statewide. And the state’s economy would take an $800 million-a-year hit.
Obviously PSEG has reason to talk its own book here, but from a climate-hawk perspective, the main thing that matters is carbon, and the carbon effects are perhaps the best understood. Keeping the nuclear plants open means new renewable energy will be pushing out natural gas, and emissions with it.
p.s. Also worth noting: @TheBrattleGroup estimates closure of Salem & Hope Creek plants would raise electricity prices and cost New Jersey ratepayers ~$400m/year. Even if estimate is +/- 50% accurate, important context for the $300m/yr subsidy cost. https://t.co/hRTN7LS51Kpic.twitter.com/doOttERRkU
— JesseJenkins (@JesseJenkins) April 13, 2018
Similar policies supporting existing nuclear plants have been passed in New York and Illinois. Connecticut, Pennsylvania, and Ohio are all in various phases of debating or legislating on the same issue.
As I covered in detail in a previous post, there are four nuclear plants in Ohio and Pennsylvania that are slated to close prematurely. Last week, the research consultancy Brattle Group released a report analyzing the impact of those retirements, which are all taking place in the PJM regional energy market.
The results are startling. Closing those four nuclear plants would wipe out the carbon emissions benefits of all the renewable energy installed in the PJM energy market in the past 25 years.
Simply replacing the lost nuclear power with renewable energy would cost $2 billion a year, and that enormous investment would not replace or prevent any fossil fuel generation.
At current rates of growth in renewables, PJM would not reach 2017 levels of carbon-free generation until 2032. That’s 14 years just to get back to where PJM is now — with higher emissions in the meantime adding to total atmospheric greenhouse gases.
Even if the rate of renewable deployment were doubled, it would take until 2034 to catch up to the level PJM could reach with nuclear plants open and the current rates of renewables growth.
These are all just different ways of saying the same thing: The loss of multiple gigawatts of carbon-free generation is an enormous setback to decarbonization efforts no matter what replaces them. New Jersey sensibly wants to avoid that fate, even as it aggressively pursues renewables.
New Jersey can’t afford such a huge setback in its electricity decarbonization efforts. It has a statutory target to meet; losing nuclear plants would making hitting it exponentially more difficult, if not impossible.
Some renewables advocates are grumbling about the nuclear subsidies, of course. And some nuclear advocates are grumbling about the renewable-energy subsidies Murphy added to the bill when he won office. PJM managers are grumbling about all the subsidies, complaining that they are distorting the energy market.
And, sure, grumble away. Everyone who supports decarbonization would prefer a large and rising carbon price to all these kludges. Put a value on carbon-free energy and let the sources fight it out, free from interference. Praise be to tech-neutral market mechanisms [sways, waves hands in sky, claps].
But if wishes were fishes we’d all swim in riches, as they say. There is no large and rising carbon price in New Jersey, though the state will rejoin the Regional Greenhouse Gas Initiative (RGGI) next year, benefiting from its low-and-rising carbon price.
Today, I signed an Executive Order to rejoin the Regional Greenhouse Gas Initiative (RGGI). We will grow the clean energy economy so New Jersey is once again a leader in technology, innovation, and economic growth.
— Governor Phil Murphy (@GovMurphy) January 29, 2018
RGGI prices might get high enough to save nuclear plants someday but not in time to save the plants in question. Given that rock-and-hard-place situation, New Jersey is doing what it has to do to continue reducing emissions.
It ain’t pretty. It’s not an ideal or even second-best solution. It is fraught with all the dangers of rent-seeking and incumbent lock-in.And it is vulnerable. (Lawsuits have been launched against both the New York and Illinois versions; both suits were dismissed by federal district courts and are currently on appeal.)
But messy as it is, it gets the job done. New Jersey is putting carbon first, keeping its base of carbon-free generation in place as it sets out to build a renewable energy future.
Climate hawks should celebrate. And more than that, they should seek similar solutions for other nuclear plants threatened with closure. We need more carbon-free energy, not less.