Is Nuclear Energy Green?
The essence of investment management is the management of risks, not the management of returns. - Benjamin Graham
This week, let’s run right down the rabbit hole and take a look at a hot topic in the news cycle around clean energy, specifically nuclear energy.
The European Commission kicked off February with a bang by proposing that the EU Taxonomy will include nuclear energy and natural gas as sources of “green energy.” For those not familiar, the EU Taxonomy is a classification system which establishes a list of environmentally sustainable economic activities. Proponents state that it could play an essential role in helping the EU scale up sustainable investment and in meeting its Paris Climate Accord commitments. Essentially, the EU taxonomy would provide companies, investors, and policymakers with appropriate definitions for which economic activities can be considered environmentally sustainable. In this way, it should create security for investors, protect private investors from greenwashing, help companies to become more climate-friendly, mitigate market fragmentation and help shift investments where they are most needed.
Yet, this framework which was intended to protect from Greenwashing is now being accused of promoting greenwashing with a last-minute proposal to include Nuclear Energy and Natural Gas as green energy.
In fairness, the EU Taxonomy was intended to include what are deemed “transitional activities,” which refers to fuels that can be used in place of more carbon-intense fuels while the energy sector transitions to lower emission fuel sources. Natural Gas has long been considered such a transitional fuel source, it is cleaner than coal and provides a baseload fuel source while countries increase their renewable energy generation and while baseload issues are addressed by the grid.
The inclusion of Natural Gas was met with investor pushback, including BlackRock and Vanguard, who stated that the inclusion of natural gas would “seriously compromise Europe’s position as a global leader in sustainable finance.” The argument is we are past the point of needing natural gas as a bridge, and the energy sector should be pushed towards non-fossil-fuel-based energy generation. There is no debate natural gas is a fossil fuel; while lower in emissions than coal, it still has emissions. The process of collecting natural gas also includes flaring, transmission loss, and many other factors that further increase its impact as a climate warming contributor. This particular issue is more of a matter of timing; the European Commission will have a very public debate over if natural gas is enough of a contemporary transition fuel to be included, and if so, what is the sunset date for its removal. We are already seeing energy codes acknowledging the need for electrification. If Europe wants to continue to be seen as a leader in becoming a net-zero carbon emitter by 2050, they will have to take a hard look at the issue of transition fuels.
Nuclear Energy, however is a bit more complex. The US Department of Energy, Office of Nuclear Energy takes the position that Nuclear is Clean and Sustainable. The DOE points to the fact that the production of energy from nuclear power results in no harmful emissions and therefore protects air quality. They also point out the smaller land footprint and claim that the amount of waste generated by nuclear is minimal.
It has to be noted that in some regards the assessment is being done in a focused manner that does not take into account the life cycle of nuclear energy, which is where opponents to nuclear energy weigh in.
Perhaps the thing that springs to mind immediately with nuclear energy is the meltdown risk. To date, 1.5% of all nuclear plants ever built have melted down to some degree. From Chernobyl to Fukushima Dai-ichi in Japan and from Three-mile Island to Saint-Laurent in France, we have seen disasters unfold in real-time, which resulted in massive environmental damage and have taken a toll on the inhabitants near each of these disasters. Proponents of nuclear power will claim that technology has advanced since this time and safer designs are at hand, but these designs are generally untested.
This brings up the second major hurdle against nuclear, and that is the time it takes between planning and operation. These “safer designs” are literally decades away from reality, even if approved today. It is estimated that the average time to bring a nuclear reactor from planning to operation is now approaching 20 years per nuclear plant. If we started today, it would be 2042 before the power switch was even activated, and by then, we still would not know if the “safer reactor” was actually safer. For comparison, utility-scale wind and solar average 2-5 years from planning to operation.
If something takes four times longer to build and bring online, you can also imagine that cost must be more significant as well. A real-world example can be observed in the 2018 Lazard study on the Levelized cost of energy (LOCE) for nuclear power plants which was at $151/MWh, compared to $43 (29 to 56)/MWh for onshore wind and $41 (36 to 46)/MWh for utility-scale solar PV from the same source.
Nuclear also has an additional concern that is unique amongst energy generation, the risk that it can lead to weapons proliferation. Importing uranium and enriching it in a reactor provides an opportunity for the plutonium to be harvested and used to create nuclear weapons. This risk is also present even in the newly proposed small modular reactors.
Finally, is nuclear really a zero-emissions energy generation source. In realty there are emissions related to mining the uranium used in nuclear energy. Whe considering it takes about 200 tonnes of U3O8 per year to keep a large (1000 MWe) nuclear reactor running; mining and milling uranium to feed such a plant would, therefore, emit 2000-50000 t CO2 each year.
We are about to witness a public battle by both sides of debate around what kind of energy is considered green. That battle will feature not only social and print media positions, but also legal battles as groups challenge the EU Taxonomy proposal.
Here is the question to us as real estate sustainability professionals, do we really want our organization, portfolio, or reputation to be in the middle of that fight. While we all may hold personal opinions on what is green or what isn’t green and arguments can be made for or against those positions to some degree, what we cannot account for is the reputational risk associated for our portfolios.
In regards to natural gas, it is a fossil fuel and it is a Scope 1 emission. There is no way around that. We can also anticipate as costs and emissions go down for electrical energy combined with regulations, that the costs of natural gas will increase. Therefore in my opinion, we need to start planning for electrification especially in new developments.
Nuclear energy is a bit different, in that the energy generation source itself is not considered a fossil fuel. I would speculate however that it will be ultimately treated like large scale hydro.
While small scale hydro is considered clean energy, the larger reservious and dams associated with larger scale hydro produce large amounts of CO2. A 2016 study published in BioScience estimated that reservoirs are emitting the equivalent of one gigaton—or one billion tons—of carbon dioxide into the atmosphere every year. In addition, these larger scale hydro projects have a large impact on the land and disrupt water supply for communities and ecologies downstream.
The example of large scale hydro illustrates that energy generation origin extends beyond merely did it come from a fossil fuel or not. We have to also consider what are the other life cycle impacts associated with collecting the matter that is used to generate the energy.
One of the fundamental elements of sustainability management is the management of risk, which includes reputational risk. Failure to take into account the full picture of your energy sources can expose your portfolio to reputational risk.
So is Nuclear Green? Probably not.
Does it derive from a fossil fuel? No.
Does reliance on Nuclear Energy as the mechanism to reduce your carbon impact make sense? Well, if you consider it costs 3 times as much and takes 4 times as long to get operational, and carries with it a stigma that esposes you to reputational risk, it probably does not make sense. Perhaps technology can change this. In time we may learn to produce nuclear energy from fusion instead of fission, but will that be a viable reality by 2050? For that matter, even using fission technology, we would barely be online and operational by 2050.
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Stay well!
Chris Laughman is the ThirtyNine Blog author, a blog dedicated to reducing the impact of the built environment. When not blogging, Chris is helping the real estate industry reduce energy and water impact as the Vice President of Sustainability for Conservice, the Utility Experts. Whether Multifamily, Single Family, Student Housing, Commercial, or Military, we simplify utility billing and expense management by doing it for you. Our insight into your utility consumption provides an opportunity to identify risks. Leveraging innovation and experience we ignite solutions with real impacts and track performance to ensure the trendline stays laser-focused on the goal. At Conservice we have developed a true bill-to-boardroom solution to help truly make a difference. We have before us a tremendous opportunity. Standing shoulder to shoulder, we will get this done. Contact me at claughman@conservice.com for more information.
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