ROLE OF NUCLEAR POWER: A COST- EFFECTIVE SOLUTION TO MEET CONSTRAINTS OF CARBON EMISSIONS

Transcription

1 ROLE OF NUCLEAR POWER: A COST- EFFECTIVE SOLUTION TO MEET CONSTRAINTS OF CARBON EMISSIONS Toshihiko Nakata Graduate School of Engineering, Tohoku University Japan nakata@cc.mech.tohoku.ac.jp Abstract It is expected that nuclear power will play an important role in Asia/Pacific region in future. However, current trends toward deregulation of electricity market would change energy systems in economical way. The purpose of this study is to analyze the future energy systems in Japan by using an energy-economic model. In the first part of this paper, I examine the role of nuclear power in reducing CO 2 emissions in power generation systems. Phasing out of nuclear power is hypothesized in the model to evaluate the difference in carbon emissions. In the second part of the paper, I explore an economic aspect of two cases with or without nuclear power in the future. Costs of supply the energy from each resource to meet the demand are examined and compared. Then a cost-effective way of reducing carbon emission is proposed. The generation capacity of renewable power plants has strong impact on the total CO 2 emissions especially under the condition of nuclear phase-out and the carbon constraint. A lower growth in renewable power plants makes it difficult to reduce CO 2 smoothly. The result of this study shows that the capital cost of nuclear power is relatively expensive than in any other power generations, resulting in less competitiveness in electricity market. It is expected that cost reduction in nuclear power will facilitate its share in electricity market and will meet the constraint of carbon emissions. Introduction Nuclear energy has been an important energy source since the first oil embargo occurred in the early 1970s. Energy security has been a first concern for policy makers in Japan. Japan has increased its reliance on nuclear power because it has limited domestic energy resources. At present, 51 commercial nuclear power plants are in operation, and the government had wanted to build 20 more by the year Recently global warming has priority over energy issues. The government maintains that nuclear power helps to prevent global warming because nuclear power plants do not emit carbon dioxide. However, they present major environmental problems when radiation leaks occur. Moreover, the disposal of highly radioactive nuclear wastes still poses a risk. The government is compelled to find a solution to the problem. Moreover, partial deregulation of electricity market in Japan will begin in March 38

2 21, 2000 for mainly business users who receive the high-voltage power more than 20,000 voltages and consume the large-scale electricity more than 2,000 kwh. This deregulation is supposed to be completed in several years, leading fierce competition in electricity. The question of what would be the best way to control the emission of CO 2 remains unsettled. The problem, which we have to consider, next is an integrated concept of national security to meet the environmental constraints. Nuclear power needs be examined in detail now from the standpoint of what we call environmental security (Allenby, 2000). Whereas I recognize the importance of nuclear power, it seems that its role from economic and environmental aspects in next century is not well organized. This paper is intended as a study of analyzing the future energy systems in Japan. An energy-economic model is introduced to find the solution to the problem between energy consumption and the environment. First, the role of nuclear power to reduce CO 2 emissions is examined. To make it clear, phasing out of nuclear power (Nordhaus, 1997) is hypothesized in the model to evaluate the difference in carbon emissions. Renewable which I think play a significant role after the retirement of nuclear power stations are set to increase their capacity at the rate of ten or fifteen percent commencing the year An economic aspect of two cases with or without nuclear power, is also examined. Financial parameters such as capital costs and operating costs are summarized up to the year An Energy Model and Input Conditions The META Net economic modeling system developed at the Lawrence Livermore National Laboratory (Lamont, 1994) has been used for this study. META Net is a partial equilibrium modeling system that allows for explicit price competition between technologies, and can constrain or tax emissions. It allows a user to construct an energy model as a network of processes such as end-uses (price sensitive demand), markets (allocating market shares based on relative prices), conversion processes (computing inputs required to meet output requirements based on efficiencies, and computing prices based on capital and operating costs), and resources (which can be exhaustible, or can follow a set price track). The system takes the model descriptions and computes the multi-period price-quantity equilibrium. Various policy actions such as subsidies and taxes can be represented in the model. It accounts for resource exhaustion over time and for the addition and eventual retirement of increments of capacity in the conversion nodes. Figure 1 shows the outline of the Japan model. It has sixty-nine processes; includes eight demand nodes in the industrial, commercial, residential and transportation sectors; and contains nine resource nodes modeling purchases of coal, natural gas, petroleum and nuclear fuel on the world markets, along with domestic hydropower and other renewable. Additional processes model electrical services, transportation services, and the alteration of fuels to heat. Necessary operating parameters such as capital costs and operating costs are used based on the current references (Federation of Elec- 39

3 tric Power Companies, 1998; US Department of Energy, Energy Information Administration, 1998; MITI, 1998). There are several key assumptions that drive any analysis of this type. These include growth rates, government policies to encourage particular technologies, and demand responses to changes in price. A moderate rate of growth over the model horizon is assumed. Assumptions about the growth and demand elasticities in each sector are set based on the reference (Nakata, 2000). Because the energy share of aviation is less than five percent, aviation energy is not included in the transportation sector. Technology assumptions for the electric sector are set as follows: Hydropower is set at a constant generation quantity because of physical constraints. Oil-burning power plants are subject to maximum quantity constraints according to the IEA agreement just after the first oil embargo. It is assumed that nuclear power plants will maintain the generating capacity of 1995 constantly until 2040, considering government concerns. Coal gasification combined cycle will become available in 2005 and are assumed to be put to maximum generating capacity, increasing by eight percent every year commencing in It is assumed that the maximum electric power generation by renewable energy will reach 2.24E+7 mmbtu in the year 2010 (MITI, 1999), which will increase fifteen percent every year. 40

4 Analyzed Energy Scenarios First in the study, a reference case analysis was developed to model the expected emissions, resource use, and investments in energy technologies in the absence of policy actions. In the reference case scenario it is assumed that there is no intervention in the energy system, except that nuclear power is subsidized as needed to maintain a 35 percent share of the electric market (the share in 1995). Under this scenario, carbon dioxide emissions rise to 490 mmtc by the year Second, the next step was to model the effects of constraint of CO 2 emission with the goal of a reduction of 100 million tons of carbon (mmtc) by the year The CO 2 emission is set below 390 mmtc by the year Third, the impact of phase-out of nuclear power plants on the electricity sector is examined. In this case, I assume that the level of nuclear capacity will begin phasingout in the year 2015 and will reach zero capacity in the year Because the average lifetime of nuclear power plants is assumed to be forty years, and most of the nuclear power plants in Japan was constructed during Fourth, the impact of phase-out of nuclear power plants under the CO 2 constraint condition is studied. Both nuclear phase-out and the constraint of maximum carbon emission are assumed in this scenario. Fifth, there is still some uncertainty about power plants which use renewable energy in the future. In this scenario, it is assumed that the maximum electric power generation using renewable energy will increase ten percent every year, showing five percent lower than the four scenarios mentioned above. Following abbreviations are used to stand for the five scenarios in this study. Ref: reference case. CO 2 : CO 2 constraint case. NF: Nuclear phase-out case NF-CO 2 : Nuclear phase-out under CO 2 constraint case. NF- CO 2 -RL: Low increase in the capacity of renewable power plants under the condition of the NF- CO 2. Results of the Analysis The first result concerns the composition of electric power generation up to the year 2040 for the different scenarios. The graphs in Figs. 2, 3, and 4 show the changes in electric power generation for the three cases; CO 2, NF- CO 2, NF- CO 2 RL, respectively. The long tail of increase is easily expressed in Fig. 2 showing the electric power generation. Only the coal boiler shows a decline in output commencing the year A sharp increase in gas-fired power plants are made clear in Figs. 3 and 4. Since the emission rate of CO 2 of gas combustion is lower than that of coal combustion, the CO 2 constraint condition causes drastic changes in gas and coal consumption. The fact that renewable power plants do not emit any CO 2 implies great reliance on renewable energy in electric power generation. The difference between Figs. 3 and 4 suggests that the renewable power plants are expected to supply electric power at the 41

5 maximum capacity. The condition of low increase in the capacity of renewable power plants results in an excessive dependence on gas as a source of electricity. A coal gasification combined cycle is not appeared in electric power generation in the figures shown above. 7E+09 6E+09 CO2 case 5E+09 4E+09 3E+09 2E+09 1E+09 0E+00 Nuc.Blr Hydro. Coal.Blr Gas.Cmb Gas.Trb Gas.Blr Oil.Blr Renew Year Fig. 2 Changes in the Electric Power Generation (CO 2 case) 7E+09 6E+09 NF-CO2 case 5E+09 4E+09 Nuc.Blr 3E+09 Hydro. Coal.Blr 2E+09 Gas.Cmb 1E+09 Gas.Trb Gas.Blr Renew. Oil.Blr 0E Year Fig. 3 Changes in the Electric Power Generation (NF-CO 2 case) 42

6 7E+09 6E+09 NF-CO2-RL case 5E+09 4E+09 Nuc.Blr 3E+09 Hydro. 2E+09 Coal.Blr Gas.Cmb 1E+09 Gas.Trb Gas.Blr Renew. 0E+00 Oil.Blr Year Fig. 4 Changes in the Electric Power Generation (NF-CO 2 RL case) 300 Yr Coal 250 Gas Petroleum Ref CO2 NF NF-CO2 NF-CO2-RL 12 Fig. 5 Estimated CO 2 Emission in Electricity in the Year 2040 for the five scenarios 43

7 Yr Coal Gas Petroleum Ref CO2 NF NF-CO2 NF-CO2-RL Fig. 6 Estimated Total CO 2 Emission in Japan in the Year 2040 for the five scenarios Ref NF NF-RL Yr Carbon tax ($/tonc Fig. 7 Impact of carbon taxation on the reduction of CO 2 emission The CO 2 emissions in the year 2040 from the electricity sector for the five scenarios are represented schematically in Fig. 5. The differing volumes of carbon emissions are plotted in the bar graph. The nuclear phase-out case (NF) shows the maximum CO 2 emission mainly emitted from the coal combustion. In the CO 2 constraint 44

8 cases, it is clear that the gas combustion in electric power generation is being increased instead of the coal combustion. Figure 6 shows the total CO 2 emission in the year 2040 for the five scenarios. In any cases, petroleum is a main energy source, because other sectors such as the transportation sector do not have competitive alternative technology, which can convert the other fossil fuel into the power. A carbon tax is expected to be one of the most efficient approaches to reduce carbon emissions (Sawa, 1997). This study evaluated several different tax rates to determine the rate that would achieve the target reduction in the year Both cases with and without carbon tax were extrapolated to explore the difference in fuel prices. The cost of each approach and the configuration of energy systems that results from it are evaluated. In the taxation case, the carbon tax was assumed to be imposed in increments, starting at zero in the first period and then rising by a fixed amount in each subsequent period until reaching the target amount of the tax. This approach avoids the sudden shock to the system and the stranded assets that can result from rapid market changes. The impacts of carbon tax rates on the reduction of CO 2 emission are plotted in Fig. 7 for the three scenarios. It was found that a tax rate of $160/tonC in the reference case produced an emission rate of 390 mmtc in the year 2040, achieving a reduction of 100 mmtc in the emission rate. The tax was introduced gradually over time, increasing the tax rate in uniform steps in each period until the maximum rate was reached in A tax rate of $205/tonC produced an emission rate of 390 mmtc in the year 2040 for the NF case, and a tax rate of $320/tonC produced it for the NF-RL case. Table 1. Summary of Costs and Tax Revenues for the Five Scenarios Case Ref CO2 NF NF-CO2 NF-CO2- RL Carbon tax ($/tonc) None 160 None $ US Capital Cost 2.10E E E E E+12 Operating Costs 5.19E E E E E+11 Fuel Costs 3.70E E E E E+11 Total direct energy costs 2.99E E E E E+12 Carbon Tax revenue E E E+11 Total cost to consumers 2.99E E E E E+12 CO2 emission in (mmtc) Total energy consumption in 2040 (Quads)

9 Financial parameters are seen in Table 1, which shows a summary of the costs and tax revenues for the five scenarios. The costs are the discounted present values of the total stream costs over the time horizon. In the CO 2 constraint cases, the fuel costs are relatively higher than in the reference and in the NF cases because the fuel shifts from coal to gas. In terms of capital costs, we can see slightly less expensive costs in NF- CO 2 -RL case. Considering the total direct energy costs and the carbon tax revenue, the total cost to consumers is increased under the CO 2 constraint cases. However, these differences in the cost to consumers are small, remaining within a seven-percent difference. Another consideration is the differences in total energy consumption for the five scenarios. The case involving the NF and the CO 2 constraint results in less energy consumption. In this case, 25.4 Quads represents an 18 percent saving in energy consumption compared with the reference case scenario. Conclusion So far we have outlined the way in which energy system is modified to suit each cases such as nuclear phase-out and the constraint of CO 2 emissions. To sum up the major characteristics of electric power generations, a reduction in coal boiler, an increase in gas consumption and reliance on renewables are of most significance. The generation capacity of renewable power plants has strong impact on the total CO 2 emissions especially under the condition of nuclear phase-out and the carbon constraint. A lower growth in renewable power plants makes it difficult to reduce CO 2 smoothly. In concluding, I should note that although we need large amount of renewable power in near future, it is possible to reorganize the electric power generation system after the retirement of nuclear power plants. The result of our analysis clearly shows that the total costs to consumers are slightly increased, remaining within a seven-percent difference, and resulting in drastic changes in energy system in Japan. It is expected that cost reduction in nuclear power will facilitate its share in electricity market and will meet the constraint of carbon emissions. Again, however, there is still some uncertainty about the renewables in the future, the results of this analysis will change the direction of energy policy to meet the constraint of CO 2 emission. Acknowledgements Significant contributions to this article originated from a one-year stay as a participating guest at the Lawrence Livermore National Laboratory, USA. With respect to this study, I am particularly grateful to Dr. Alan Lamont at the Engineering Directorate. References 1. Allenby, B. R. (2000). Environmental Security: Concept and Implementation. International Political Science Review, 21(1), Federation of Electric Power Companies. (1998) Handbook of the Electric Power Industry, Tokyo. 46

10 3. Lamont, A. (1994) User s Guide to the META Net Economic Modeling System Version 1.2. UCRL-ID , Lawrence Livermore National Laboratory, Livermore, California. 4. MITI, Agency of Natural Resources and Energy. (1998) Interim Report on General Energy Supply and Demand, Tokyo. 5. MITI, Agency of Natural Resources and Energy. (1999) Current Status and Future Prospect of PV program in Japan, Tokyo. 6. Nakata, T. (2000). Analysis of the Impact of Hybrid Vehicles on Energy Systems in Japan. Transportation Research D, printing. 7. Nordhaus, W. D. (1997). The Swedish Nuclear Dilemma: Energy and the Environment. Washington, DC: Resources for the Future. 8. Sawa, T. (1997) Chikyuu Ondanka Wo Fusegu. Iwanami Shoten Publishers, Tokyo. 9. US Department of Energy, Energy Information Administration. (1998) Assumptions for the Annual Energy Outlook, Washington DC. 47