InvestMacro

By Todd Allen, University of Michigan 

Constellation, an energy company that provides electricity and natural gas to customers in 16 states and Washington, announced on Sept. 20, 2024, that it plans to restore and restart Unit 1 at Three Mile Island, a nuclear plant near Middletown, Pennsylvania, that was shut down in 2019. Microsoft has signed a 20-year agreement to purchase electricity generated by the plant to offset power demand from its data centers in the mid-Atlantic region.

Three Mile Island was the site in 1979 of a partial meltdown at the plant’s Unit 2 reactor. The Nuclear Regulatory Commission calls this event “the most serious accident in U.S. commercial nuclear power plant operating history,” although only small amounts of radiation were released, and no health effects on plant workers or the public were detected. Unit 1 was not affected by the accident. University of Michigan nuclear engineering professor Todd Allen explains what restarting Unit 1 will involve, and why some other shuttered nuclear plants may also get new leases on life.

What is the history of TMI-1?

Three Mile Island Unit 1 is a large nuclear power station with the capacity to generate 837 megawatts of electricity – enough to power about 800,000 homes. It started commercial operations in 1974 and ran until September 2019.

After the accident at Unit 2 in 1979, Unit 1 was shut down for six years, until the operator at the time, Metropolitan Edison, demonstrated to the Nuclear Regulatory Commission that it could operate the reactor safely.

Constellation closed Unit 1 down in 2019, even though the plant’s operating license had been extended through 2034 and it had no operational or safety problems. TMI-1 could not compete economically at that point with natural gas-fueled power plants because gas had become extremely cheap.

Pennsylvania also had a policy preference for increasing electricity generation from solar and wind power. The state legislature chose not to reclassify the plant as a carbon-free electricity source, which would have qualified it for state support.

What is the reactor’s current condition?

Since the shutdown in 2019, the plant has sat idle. The NRC calls this status safe storage, or SAFSTOR. The plant is shut down, uranium fuel is removed from the reactor, and the facility is maintained in a safe, stable condition. Irradiated fuel is stored in large steel and concrete casks on a physically secured portion of the site, known as an Independent Spent Fuel Storage Installation.

In addition to the fuel, other materials in the plant are radioactive, such as structural channels that direct the cooling water during operation and the large vessel in which the reactor is housed. Radioactive decay occurs during the SAFSTOR period, reducing the plant’s radioactivity and making it easier to dismantle the plant later.

What will Constellation need to do to prepare the reactor to restart?

Constellation will need to ensure that it has enough fuel and sufficiently trained personnel. It also will have to ensure that the reactor’s components are still in a condition that allows for safe operation.

This will require detailed inspections and mandatory maintenance actions to ensure that all components are running correctly. In some cases, the company may need to install new equipment.

The exact work will depend on the results of inspections but could include upgrading or replacing the reactor’s major components, such as the turbine and associated electricity generator; large transformers that move the electricity from the reactor out to the grid; equipment used to cool the reactor during operation; and systems for controlling the plant during startup, shutdown and power generation.

As an analogy, imagine that you move to a city and stop driving your car for five years. When you decide to resume driving, you’d need to ensure you have gas, that your driver’s license is still valid and that all of the car’s components still operate correctly. It would probably need new oil, air in the tires, new filters and other replacement parts to run well.

A nuclear plant is much more complicated than a car, so the number of checks and verifications will take longer and cost more. Constellation expects to bring the restored plant online in 2028 at a projected cost of US$1.6 billion.

What will the NRC consider as it decides whether to relicense the reactor?

The agency needs to independently confirm Constellation has enough fuel and trained personnel, and that the plant can run safely. These checks must be approved by the commission before the plant can operate.

In my view, Constellation will need to show that the plant is in a condition to operate at the same levels of safety that existed there in September 2019 when the company terminated operations.

Do you expect other utilities to try this type of restoration at closed reactors?

Constellation is not the only utility considering restarting a nuclear plant. Holtec International, an energy technology company, bought the closed Palisades nuclear plant in southwest Michigan in 2022 with the intent to decommission it, but then the company decided to restore and reopen the plant.

That work is underway now. Recently, in its first major inspection at the plant, the NRC found a number of components that it said required more testing and repair work.

Wolverine Power Cooperative, a not-for-profit energy provider to rural communities across Michigan, plans to purchase electricity from the restored Palisades plant, with support from the U.S. Department of Agriculture’s Empowering Rural America program. Holtec is receiving support for restoring Palisades from the U.S. Department of Energy and the state of Michigan.

A third company, NextEra Energy, is considering restarting its Duane Arnold nuclear plant in Palo, Iowa. And others could follow. In the past decade, a dozen nuclear plants closed before the end of their licensed operating lives because they were having trouble competing economically. But with electricity demand rising, especially to power data centers and electric vehicles, some of those plants could also become candidates for reopening.

About the Author:

Todd Allen, Professor of Nuclear Engineering & Radiological Sciences, University of Michigan

This article is republished from The Conversation under a Creative Commons license. Read the original article.

By Noah Kaufman, Columbia University 

On a recent visit to Rangely, a small town in northwest Colorado, my colleagues and I met with the administrators of a highly regarded community college to discuss the town’s economy. Leaving the scenic campus, we saw families driving into the mountains in off-road vehicles, a favorite activity for this outdoors-loving community. With a median household income above US$70,000 and a low cost of living, Rangely does not have the signs of a town in economic distress.

But an existential risk looms over Rangely. The town is here because of an oil boom during World War II. Today, the oil and gas industry contributes over half of the county’s economic output.

Rangely is not unique in the United States, which is the world’s largest producer of oil and natural gas. There are towns across the country that depend on the oil and gas industry for well-paying jobs and public revenues that fund their schools and other critical services.

A heavy dependence on any single industry is risky, and the oil industry is prone to booms and busts. But the economies of oil- and gas-dependent towns face a unique threat from global efforts to address the risks of climate change, which is fueled by the burning of oil and natural gas. Any serious strategy to halt global warming involves policies that will, over time, sharply reduce demand for all fossil fuels.

Early signs of this transformation can be seen in last year’s international agreement to “transition away from fossil fuels” and in the spread of electric vehicles that are starting to displace gasoline- and diesel-powered cars, trucks and buses.

As an economist who worked at the White House during the Obama administration and early Biden administration, I contributed to detailed strategies to reduce greenhouse gas emissions and to support communities in economic distress. But we did not have a plan to prepare oil and gas towns like Rangely for future economic challenges.

Why oil and gas towns are overlooked

Congress has prioritized support for small towns in recent legislation. However, oil- and gas-dependent towns were largely absent from these strategies for three primary reasons.

First is a perceived lack of urgency. The attention to a “just transition” as the nation moves away from fossil fuels has been disproportionately directed to coal-dependent communities. U.S. coal production has declined for 15 years, and a continued transition away from coal appears imminent and inevitable.

In contrast, U.S. production of oil and natural gas continues to grow. To be sure, some oil and gas communities are already struggling. But the widespread economic risks of a shift away from oil and gas may feel more like a problem for future decades.

Second, politicians downplay risks to oil and gas communities.

Most Republicans are not planning for a future decline in oil and gas production at all, and that includes many local politicians in oil and gas-dependent communities. For their part, most Democratic politicians prefer to focus on how climate action can be an engine of future economic growth. President Joe Biden likes to say, “When I think about climate change, I think jobs.”

He is not wrong to highlight the economic opportunities of climate solutions. But clean energy jobs rarely offer one-for-one replacements for the high-paying jobs in the oil and gas industries and the public revenues those industries bring local communities.

Third, economists’ policy toolbox is poorly suited to the challenges facing oil and gas communities.

Proposals to support local economic development commonly suggest targeting persistently distressed local economies with measures such as wage subsidies that have the potential to rapidly put more people to work.

A different prescription is needed for oil and gas communities, which are not generally struggling today. Over the 15-year period prior to the pandemic, the U.S. counties with oil and gas production experienced average annual GDP growth of 2.4% per year, compared with 1.9% nationwide.

Most oil and gas communities do not need economic stimulus policies that provide immediate relief. What they need are holistic economic development strategies that can cultivate new industries – building on their existing strengths – that will enable them to prosper into the future.

Solutions to help oil and gas towns prepare

Harvard economist Ricardo Hausmann compares the challenge of developing new economic capabilities to the game of Scrabble, where each additional letter enables the creation of more words. He cites the Finish economy as an example: It evolved from harvesting lumber to making tools that cut wood to producing automated cutting machines. From there, it evolved to sophisticated automated machines, including those used by global corporations such as telecommunications giant Nokia.

Such economic evolutions must be tailored to the characteristics of individual places. But the initial step is to recognize the problem and invest in solutions.

The Southern Ute Indian Tribe is doing this in southwest Colorado. It devotes oil and gas revenues to a Permanent Fund, which promotes fiscal sustainability by ensuring the tribe’s assets are aligned with its long-term financial goals, and a Growth Fund that diversifies the tribe’s revenue sources by investing in a range of businesses.

At the national level, a recent National Academies panel proposed the creation of a federally chartered corporation to help communities facing acute economic threats, including a future decline in oil and gas. This corporation could provide funding for displaced workers, critical public infrastructure and programs that ensure access to economic opportunities.

Colorado’s state Office of Just Transition has started to serve this role. Currently, it focuses only on the transition away from coal, with the goals of helping communities develop new economic opportunities and helping workers transition to new jobs. But its mission could be expanded in the future. In fact, Rangely is already receiving some support due to coal closures nearby.

No one-size-fits-all solution

Small, rural towns like Rangely illustrate how oil- and gas-reliant regions will need unique strategies tailored to the strengths and limitations of individual places. No off-the-shelf playbook exists.

Our group of researchers who visited Rangely are part of the Resilient Energy Economies initiative, which was created by universities, research institutes and philanthropic organizations to ensure that policymakers have the information they need to help fossil fuel-dependent communities successfully navigate the energy transition.

The best time to build a more resilient economy is before a crisis arrives. Anyone familiar with the Bible – or Broadway – knows the story of Joseph, whose dreams foresaw seven years of abundance for Egypt followed by seven years of famine. The pharaoh acted on Joseph’s vision, using the boom to prepare for the bust.

The United States is experiencing abundant oil and gas production today. Policymakers know risks are coming. But so far, the country is failing to prepare communities for harder days to come.

About the Author:

Noah Kaufman, Senior Research Scholar in Climate Economics, Columbia University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

By Noah Kaufman, Columbia University 

On a recent visit to Rangely, a small town in northwest Colorado, my colleagues and I met with the administrators of a highly regarded community college to discuss the town’s economy. Leaving the scenic campus, we saw families driving into the mountains in off-road vehicles, a favorite activity for this outdoors-loving community. With a median household income above US$70,000 and a low cost of living, Rangely does not have the signs of a town in economic distress.

But an existential risk looms over Rangely. The town is here because of an oil boom during World War II. Today, the oil and gas industry contributes over half of the county’s economic output.

Rangely is not unique in the United States, which is the world’s largest producer of oil and natural gas. There are towns across the country that depend on the oil and gas industry for well-paying jobs and public revenues that fund their schools and other critical services.

A heavy dependence on any single industry is risky, and the oil industry is prone to booms and busts. But the economies of oil- and gas-dependent towns face a unique threat from global efforts to address the risks of climate change, which is fueled by the burning of oil and natural gas. Any serious strategy to halt global warming involves policies that will, over time, sharply reduce demand for all fossil fuels.

Early signs of this transformation can be seen in last year’s international agreement to “transition away from fossil fuels” and in the spread of electric vehicles that are starting to displace gasoline- and diesel-powered cars, trucks and buses.

As an economist who worked at the White House during the Obama administration and early Biden administration, I contributed to detailed strategies to reduce greenhouse gas emissions and to support communities in economic distress. But we did not have a plan to prepare oil and gas towns like Rangely for future economic challenges.

Why oil and gas towns are overlooked

Congress has prioritized support for small towns in recent legislation. However, oil- and gas-dependent towns were largely absent from these strategies for three primary reasons.

First is a perceived lack of urgency. The attention to a “just transition” as the nation moves away from fossil fuels has been disproportionately directed to coal-dependent communities. U.S. coal production has declined for 15 years, and a continued transition away from coal appears imminent and inevitable.

In contrast, U.S. production of oil and natural gas continues to grow. To be sure, some oil and gas communities are already struggling. But the widespread economic risks of a shift away from oil and gas may feel more like a problem for future decades.

Second, politicians downplay risks to oil and gas communities.

Most Republicans are not planning for a future decline in oil and gas production at all, and that includes many local politicians in oil and gas-dependent communities. For their part, most Democratic politicians prefer to focus on how climate action can be an engine of future economic growth. President Joe Biden likes to say, “When I think about climate change, I think jobs.”

He is not wrong to highlight the economic opportunities of climate solutions. But clean energy jobs rarely offer one-for-one replacements for the high-paying jobs in the oil and gas industries and the public revenues those industries bring local communities.

Third, economists’ policy toolbox is poorly suited to the challenges facing oil and gas communities.

Proposals to support local economic development commonly suggest targeting persistently distressed local economies with measures such as wage subsidies that have the potential to rapidly put more people to work.

A different prescription is needed for oil and gas communities, which are not generally struggling today. Over the 15-year period prior to the pandemic, the U.S. counties with oil and gas production experienced average annual GDP growth of 2.4% per year, compared with 1.9% nationwide.

Most oil and gas communities do not need economic stimulus policies that provide immediate relief. What they need are holistic economic development strategies that can cultivate new industries – building on their existing strengths – that will enable them to prosper into the future.

Solutions to help oil and gas towns prepare

Harvard economist Ricardo Hausmann compares the challenge of developing new economic capabilities to the game of Scrabble, where each additional letter enables the creation of more words. He cites the Finish economy as an example: It evolved from harvesting lumber to making tools that cut wood to producing automated cutting machines. From there, it evolved to sophisticated automated machines, including those used by global corporations such as telecommunications giant Nokia.

Such economic evolutions must be tailored to the characteristics of individual places. But the initial step is to recognize the problem and invest in solutions.

The Southern Ute Indian Tribe is doing this in southwest Colorado. It devotes oil and gas revenues to a Permanent Fund, which promotes fiscal sustainability by ensuring the tribe’s assets are aligned with its long-term financial goals, and a Growth Fund that diversifies the tribe’s revenue sources by investing in a range of businesses.

At the national level, a recent National Academies panel proposed the creation of a federally chartered corporation to help communities facing acute economic threats, including a future decline in oil and gas. This corporation could provide funding for displaced workers, critical public infrastructure and programs that ensure access to economic opportunities.

Colorado’s state Office of Just Transition has started to serve this role. Currently, it focuses only on the transition away from coal, with the goals of helping communities develop new economic opportunities and helping workers transition to new jobs. But its mission could be expanded in the future. In fact, Rangely is already receiving some support due to coal closures nearby.

No one-size-fits-all solution

Small, rural towns like Rangely illustrate how oil- and gas-reliant regions will need unique strategies tailored to the strengths and limitations of individual places. No off-the-shelf playbook exists.

Our group of researchers who visited Rangely are part of the Resilient Energy Economies initiative, which was created by universities, research institutes and philanthropic organizations to ensure that policymakers have the information they need to help fossil fuel-dependent communities successfully navigate the energy transition.

The best time to build a more resilient economy is before a crisis arrives. Anyone familiar with the Bible – or Broadway – knows the story of Joseph, whose dreams foresaw seven years of abundance for Egypt followed by seven years of famine. The pharaoh acted on Joseph’s vision, using the boom to prepare for the bust.

The United States is experiencing abundant oil and gas production today. Policymakers know risks are coming. But so far, the country is failing to prepare communities for harder days to come.

About the Author:

Noah Kaufman, Senior Research Scholar in Climate Economics, Columbia University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

By Martin J. Pasqualetti, Arizona State University; Chad Walker, Dalhousie University, and Michelle Adams, Dalhousie University 

From cereal boxes to our distinct milk bags, Canadians have been told that one of the best things we can do for the planet is to embrace the circular economy — reusing, repurposing or reallocating assets to ensure they’re kept within useful circulation as long as possible, and ideally forever.

Originally conceptualized as recycling, we are all familiar with the good feeling that comes from tossing paper, plastic and other materials into the blue bin rather than throwing them in a landfill. It’s time to consider applying an expanded version of this approach to what we call energy landscapes.

Considering the thousands of square kilometres that we have carved, scraped and bulldozed to produce the energy we crave, it is past time we started figuring out how we can recycle energy landscapes and make them useful for new purposes.

In our over-crowded world, we can no longer justify exploiting our landscapes for the energy we need and then simply walking away. We need to embrace a circular economy for our energy landscapes of the past and prepare to recycle the landscapes of the future.

Recycling landscapes

Recycling of energy landscapes comes to two forms; that is, the land itself and the infrastructure we place upon it.

Although rare in Canada, the idea is quickly catching on elsewhere. Lignite pits in Germany have been converted to recreational lakes. A derelict, coal-burning power plant in London has been transformed into an exhibition, condominiums and retail space.

In Nova Scotia, a 14 MW wind farm was developed at the site of the province’s coal-fired Lingan power station, and newly proposed green hydrogen production facilities are to be built on the land of stalled liquefied natural gas projects.

The idea of recycling or reusing applies not just to fossil fuels, but to renewable energy policies as well.

Last summer, the Conservative government of Alberta made decisions on the future land use of renewable energy projects like wind and solar farms. As outlined by academic Ian Urquhart earlier this year, the government’s seven-month moratorium banned all new projects under the rationale they threatened the province’s best agricultural lands and “Alberta’s pristine landscapes.”

However, the restrictions brought in, including a 35-kilometre buffer zone, do not apply to new oil and gas projects. Alberta Premier Danielle Smith’s government therefore created a unique set of recycling concerns around renewables that didn’t apply to fossil fuels.

Reusing space in an energy transition

At a time when more local smart grid projects — bringing together local renewables, battery storage, smart controls, heat pumps and electric vehicles — are being developed, there’s a need to consider how to go beyond recycling to reuse existing space and infrastructure.

Rooftop solar is an obvious choice to better utilize space, though the footprint of household and on-street EV charging infrastructure is similarly unsubstantial compared to your neighbourhood gas station.

Recycling in a clean energy transition will not only have great value in energy landscapes, but also in new clean energy technologies themselves. While we are already slowing the rise of climate change-fuelling emissions, we can go further if we advance the practice of recycling EV batteries and solar panels.

But we can’t stop there. We must also prepare to recycle the landscapes these technologies create.

Abandonment is not an option

Abandoning exhausted energy sites is wasteful, unnecessary and costly. The customary energy life cycle includes exploration, development, extraction, processing, transmission and sometimes reclamation. We advocate for an additional stage: recycling, thus preparing the land to be reimagined for another cycle of useful purpose.

We must take greater care of the precious Canadian landscape, especially those that have paid dearly to provide the energy we need. Once the land gives all it can, we should consider it not the end of the life cycle but as a new beginning.

Recycling energy landscapes as a strategy challenges the status quo. We must chart a path toward ensuring that such landscapes are repurposed to benefit both ecosystems and society, and embrace a circular economy for the land.

About the Authors:

Martin J. Pasqualetti, Professor of Geography and Senior Global Futures Scientist, Arizona State University; Chad Walker, Assistant professor, Low-carbon Transitions, School of Planning, Dalhousie University, and Michelle Adams, Associate professor, School for Resource and Environmental Studies, Dalhousie University

This article is republished from The Conversation under a Creative Commons license. Read the original article.