Undue Panic, APEC On Board, Nuclear Subsidies (?)

Here’s an interesting article from Fortune Magazine: Allan Sloan on why overreacting to the Deepwater Horizon spill is counterproductive, using the reaction to Three Mile Island as a template. We found it a little confused, largely because, as we’ve mentioned before, TMI and Deepwater Horizon are tough to fit together. For example, we were amused to find this in one paragraph:

We panic over horrifying but fluky events like Three Mile Island and Deepwater Horizon, costing ourselves dearly.

And this in the next paragraph:

In an ideal world, BP would make everyone whole for the damage it has caused, its top managers would be fired and impoverished for having failed as stewards, and the company's shareholders would be wiped out in an orderly, controlled bankruptcy that doesn't create worldwide chaos.

All that would be left would be to raze BP’s buildings and salt the earth where they stood. Still, he understands that, despite calling the Three Mile Island accident horrifying, it really wasn’t:

It was a terrifying incident, but it turned out that there was only minimal harm to the environment and probably none to the local citizenry -- other than scaring them half to death.

Or terrifying. And that minimal harm to the environment? Also none.

Hmmm – maybe we didn’t like the article that much. But in fact, we did - he has good points to make:

We certainly shouldn't let industry run itself. Left to their own devices, free markets tend to excesses, followed by collapses. That's how we got the financial meltdown and the Great Recession. But we can't keep running our country reactively.

We agree with this – disasters are best dealt with after they’ve been concluded, when cooler heads prevail - though we only run our country reactively when there’s something to react to and even if cooler heads do prevail, everything will still be a reaction to the disaster. One sure conclusion – the pendulum that swung away from regulation in the aughts will now almost certainly swing back toward it. That won’t eliminate risk, but it will lower it considerably – even proactively.

Do read the whole thing – a lot to chew on.

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Meeting in Fukui, Japan on 19 June, the Apec energy ministers signed a declaration setting directions to advance energy security, improve energy efficiency and increase the clean energy supply in the region.

Apec is Asia-Pacific Economic Cooperation. Here’s its Web site – we were curious to see if Australia and New Zealand were members – they are – as are the larger countries on this side of the Pacific – Canada, the U.S. and Mexico.

And what were those directions they set?

The declaration states, "Low emission power sources - renewable, nuclear and fossil-fuels with carbon capture and storage - can allow electricity generation to expand in a sustainable fashion without the risk of needing to be curtailed to cope with climate change; their deployment should be promoted."

And just to gild the power plant:

The statement noted, "Solid financial frameworks, as well as cooperation among member economies and with relevant multilateral organizations, can help to support new nuclear power plant construction consistent with this commitment."

So there you go. This isn’t on the site yet, but here’s an interesting tidbit – the 2009 declaration includes no mention of nuclear energy at all. There’s so much activity among these countries in gearing up for new nuclear, that’s a big miss. Good to see it so prominently featured in 2010.

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We’ve mentioned a couple of times – not very positively, to say the least – the plan in Germany to tax fuel rods to raise revenues from nuclear plants unaffected by a carbon tax  but we’re not sure how we feel when this flows the other way, if rather imperfectly:

[U.K. Prime Minister David] Cameron proposes a CO2 charge triggered when the price of European Union permits falls below a set level. That would raise costs for generating electricity from coal and natural gas, which are more-immediately economical than atomic reactors. The U.K. will propose tax shifts to “support the carbon price” later in 2010, the government said in a budget presented today.

Wouldn’t this benefit all non-carbon producing projects? Nope, at least the article doesn’t say so:

“It’s a way of trying to subsidize nuclear, collecting that subsidy from all electricity consumers,” said Trevor Sikorski, director of carbon markets and environmental products research in London at Barclays Capital.

Well, wait, we’re just not sure about this one. We think we would view the plant with a fishy eye if the revenues were handed over to nuclear energy concerns – the details would matter - but that’s not happening.

This also isn’t cap-and-trade but a direct carbon emission tax and of course its goal is to discourage its production. Nuclear energy certainly benefits for all the reasons it normally would, but even if Cameron said directly that is his specific goal, this tax still doesn’t qualify as a subsidy for nuclear energy. Instead it supports the specific policy goal – which the U.K. has espoused - of moving away from carbon emissions.

This is from Business Week, and they certainly know their business beans, but this is a true puzzler. Where nuclear energy is concerned, there seems no there there. If nuclear plants move forward as a result of it, good; if a wind farms gets a push, good too.

Newly minted British PM David Cameron.