On this episode of the Institute for Energy Research’s Plugged In Podcast, Paige Lambermont, a policy analyst at IER, joins the show to discuss Germany’s closure of several nuclear power plants.
Links:
- The Final Death Knell of German Nuclear Power
- The Economist: The Final Death Knell of German Nuclear Power
- More from Catalyst
- The latest research from Paige
- More on nuclear energy from IER
Podcast Transcript:
0:03
You’re listening to the plugged in podcast presented by the Institute for Energy Research to find out more about our work.
0:09
Visit our website at Institute for energy Research dot org.
0:14
Welcome back to the plugged in podcast.
0:17
I’m Alex Stevens and joining me today to discuss Germany’s energy transition is my colleague here at I page.
0:24
Lemont page is a policy analyst here at I page.
0:28
Welcome back to the show.
0:30
Thanks for having me, Alex.
0:32
So I’ve had a few people ask that I do more episodes on nuclear energy and you write quite a bit about Nuclear for catalyst and some other publications.
0:44
So I figured why not have page on and we can chat about what’s going on in Germany and talk a little bit about nuclear energy and its future favorite topics.
0:56
The German exit from nuclear power.
0:58
It’s part of its energy transition, which is a word that I can never pronounce.
1:02
It’s energy energy Venda.
1:06
Yes.
1:07
So this started back in 2010.
1:10
And my understanding is that this wasn’t completely climate driven actually, the the decision to go away from nuclear power and adopt more renewable energy Can you just talk a little bit about what precipitated Germany’s decision to go through with this energy transition and what originally sort of propelled it?
1:32
Yeah.
1:33
So energy Venda began overall in 2010.
1:37
and animosity to nuclear energy was always part and parcel of that.
1:41
But in 2011, following the Japanese earthquake and the Fukushima Daiichi nuclear accident, German Germany immediately shut down all of its nuclear reactors and it did a systematic review of them.
1:54
and it was really interesting because there were two commissions, one was in charge of examining the reactor safety and the other was an Ethics Commission.
2:03
The reactor safety commission found that all of the reactors in Germany were in perfect safe working order and it was far less likely that any similar accident would happen in Germany versus in Japan.
2:15
I mean, for obvious reasons, Germany is not a island nation that has frequent earthquakes.
2:21
It’s just not you know, an an issue that is as likely to happen there and the the reactor construction as well is more is more safe just by design.
2:32
And so that commission found that it was far less likely that anything would happen there.
2:36
But the Ethics Commission had a finding that is equal parts fascinating and infuriating.
2:42
They found that the actual risks from the nuclear power plants had not changed, but the perception of those risks had and that focus on perception is something that the nuclear industry, even globally has had to contend with for its entire existence.
3:01
Just the way that nuclear came about being part of, you know, the, the at the development of the atomic bombs coming first, just really set a tone.
3:10
And for a lot of people, it’s impossible to, to understand the actual safety of reactors because they just have this bad, there’s a bad taste in people’s mouths.
3:20
They have a bad idea about it and what it means.
3:23
And so any time something happens, that only exacerbates that perception issue.
3:30
And Germany is somewhere where that has always been the case.
3:34
Their green party has had significant historical animosity toward nuclear.
3:40
And that really never went away.
3:42
Yes.
3:42
So give us a sense of how much capacity Germany’s retired, I guess, at its peak, how many nuclear power plants were, were running in Germany?
3:54
And where have they where are they at now?
3:58
So, in 2011, Germany had 17 operating nuclear reactors providing about a quarter of its electrical output.
4:08
As of April 31st, they have zero operating nuclear reactors.
4:13
they shut down their final three at the end of April and the shutdown for that was what precipitated your column at Catalyst.
4:22
What was the title of that again?
4:23
Just I’ll include it in the show notes, but it’s sort of the organizing principle for our conversation, I guess today.
4:29
So it was the death knell of German nuclear.
4:33
So what has the death knell of German nuclear done to electricity prices, reliability.
4:39
All the things that we care about here at I R.
4:41
So, German energy prices have been skyrocketing for the past few years.
4:48
They are actually from January of 2020 to January of 2023.
4:53
There’s been nearly a 300% rise in electricity prices.
4:58
And that was that there was even more extremes in, in August of last year, it was €469 per megawatt hour.
5:10
And that is just no one can pay that, that’s not sustainable for keeping the lights on at all.
5:18
So how give us a sense of like how much that had to do though with obviously the, the Russian Ukrainian war is kind of playing a role in things.
5:27
But the retirement of nuclear is playing a role of things.
5:31
What’s like the breakdown of the grid in Germany in terms of gas and nuclear and these things.
5:38
And then ju ju just so people have a sense of, you know, how much each one of these things is playing a role, I guess.
5:44
So in 2020 the German grid was 24% coal, 12% nuclear, 12% natural gas, 10% solar and 9% biomass.
5:58
with a, you know, a oh a 27% wind.
6:01
Now that 27% of wind and that 10% of solar is incredibly intermittent.
6:07
you know, sun doesn’t shine, wind doesn’t blow, that power is going away.
6:11
So undergirding that you need your base loads, you need either coal, nuclear or natural gas.
6:18
And now that all of the natural gas is extremely limited after the Ukrainian War and now that none of that 12% nuclear, is there any longer, you either have to increase that coal or somehow increase the reliability of the wind and solar.
6:37
And since there’s not really a way to increase the reliability of the wind and solar, what you end up with are these images coming out of Germany of old growth forests and villages being raised to mine coal at the surface because that’s all there is left there.
6:55
It’s just, you know, it’s not a very large country.
6:56
So they’re, they’re really unable to pursue the best mining practices or even to pursue the highest quality coal, they’re just going after whatever’s there, however, they can get it and they have to because that’s the only way to keep the lights on right now, people are not going to tolerate, not having available access to electricity, right.
7:16
So if you, if you don’t allow certain resources, people are going to just turn to whatever the cheapest most available option is.
7:25
So, you know, outlying or trying to regulate nuclear out of existence.
7:30
Kind of makes sense that, ok.
7:32
Well, we’re gonna turn to and look for other resources and coal is kind of, there is, is sort of an option for them in Germany.
7:40
You have to replace it with something.
7:42
And that is how the German Green Party has become the party of coal, by pushing for the closure of these nuclear power plants.
7:50
They’ve been forced, you know, they have to do something.
7:53
And I think that they’re learning that decisions have consequences and that however excited they want to be about their win in the nuclear realm.
8:04
They’re going to have to do something about it.
8:06
And I don’t think they’re gonna be very happy with what that something is.
8:09
Two questions here.
8:10
So how has the government sort of responded to the huge increase in prices?
8:13
Has there been a rethink at all of the energy transition?
8:16
And then on the sort of other end, public opinion around the energy transition there in Germany, where was it in like 2010 ish when they kicked this off?
8:27
And has the public been rethinking the policies the government has pursued there as well?
8:34
Yeah, so to answer the first question, they have instituted a price cap on both gas and electricity in Germany.
8:41
That price cap is €40 cents per kilowatt hour.
8:45
And it’s limited to 80% of last year’s usage.
8:49
So it, it both encourages them to use less and subsidizes the price.
8:54
But it’s an incredibly expensive policy.
8:57
I mean, you, I mean you heard the electricity prices if they have to cover for that.
9:03
So it’s an incredibly expensive policy that shields consumers from the price impact of these policy decisions while there’s a chance to reverse course, you know, this, this came into effect right before the closures or the final three closures.
9:20
So it shields people from the impact of a decision while the decision is happening and then they pay for it later because they’re paying, you know, through taxes for that that price cap.
9:35
And so it just creates economic disincentives for rational decision making.
9:40
I mean, it’s in a way it’s necessary because you can’t have prices that high and have normal people be able to keep the lights on.
9:49
And it’s just, it shows how extreme, extremely poor their policy thinking on this was before.
9:54
But I think that in the long term, this cap is only going to exacerbate that problem.
10:00
It is shielding the problem from the public in a way that causes, you know, the impetus for change to not exist.
10:08
And so I think that’s probably the main problem with that and I mean, just the existence of the cap in the first place shows that things are dysfunctional, true.
10:16
And so that, that’s a problem.
10:19
I think in terms of the popularity of nuclear power over time in Germany at the, at the time of Fukushima, it was deeply unpopular as prices have risen and things have gotten more uncertain.
10:33
It’s become a lot more popular to a point where in December of November of last year before the planned December closures of the three, the last three units.
10:45
Prime Minister Schultz was forced to issue an executive order, delaying the closure of the plants until April because they needed to get through the winter.
10:58
And so they did delay it, but there was nothing, nothing else that could be done really within their political structure to like to fully stop this.
11:07
Or at least nothing that there was the political will to do.
11:10
That was about the most that he could achieve on his own because they have a coalition style government which makes it pretty difficult to get anything like that done quickly.
11:20
Yeah, but so I think that, you know, it’s become more popular over time, especially as, you know, as electricity prices rise, people’s willingness to tolerate something they might not otherwise love changes, right?
11:33
You know, you might not tolerate at, you know, at 20 cents a kilowatt hour.
11:38
What you’re going to tolerate at 40 or 60 or 80.
11:41
So, so is it fair to say that the price caps are kind of shielding the public from, from directly having to experience these costs, these costs?
11:49
But then down the line, you know, whatever government spending goes on and, you know, it has to be covered either in, in taxes in new revenue.
12:00
Right.
12:00
So they’re gonna pay for it and either higher, probably higher taxes somewhere down the line.
12:05
Right.
12:05
Again, just with public opinion.
12:08
Do you have, like, exact numbers, survey numbers or?
12:10
No, I don’t have any recent survey numbers.
12:14
any survey numbers I have are from like 2020.
12:16
So they’re not really directly relevant anymore.
12:20
But it, I mean, there, there’s in every headline you see and, and everything like that, there’s been a shift even in the, the pressure being placed on German politicians.
12:30
Just the fact that he did feel the need to make that extension in itself was a pretty big reversal.
12:36
But it just was too little, too late.
12:39
I mean, they closed three units in December of the previous year of December of 2021 when they were well into the Ukrainian war and well into this price struggle.
12:54
So there was time for them to at least keep six of these units open, the companies that source that run, run the plants and source.
13:03
The uranium said we, we, we can make it work if you are willing to let us continue operating, we will get the supply lines in place and we will keep this operating and nothing was done.
13:13
So they closed.
13:15
So they had the ability to keep 12% of, you know, their electricity on the grid and they didn’t got you.
13:24
So, from what I read there does seem to be somewhat of a rethink going on in the eu broadly when it comes to nuclear.
13:32
Right?
13:32
I, I saw a headline about France blocking some motion just maybe it was yesterday or a couple of days ago in the eu where they were trying to allow for nuclear to be maybe counted as a green source.
13:47
Or what exactly is the pushback more broadly in the EU?
13:50
Like there, the rest of the EU, oh, a big reason that Germany did make the decision to keep them open for three more months or four more months was pressure from the EU because when Germany isn’t able to meet its electricity demand, it doesn’t exist in a vacuum.
14:08
Someone else makes up that shortfall.
14:10
Honestly, a lot of the time it’s French nuclear, making up that shortfall.
14:14
So it’s not that, you know, Germany is just going to sabotage itself by doing this.
14:20
The rest of Europe makes up the difference when they like where they can like, you know, it’s a, it’s a tied together market, they, they import and export to each other all the time.
14:28
So the rest of Europe put a lot of pressure on the German government not to make the decision.
14:34
And yeah, there, there is that the motion to make nuclear energy counted within the, the green system.
14:44
And it makes sense because it meets the criteria of, you know, not having carbon emissions.
14:49
It has, you know, the same carbon emissions as wind and solar.
14:54
even after considering carbon intensity of construction.
14:57
So it, it does, it doesn’t make sense not to count it unless you’re not counting it for some alternate reason, which is why they weren’t counting it.
15:07
So yeah, that, that’s definitely interesting.
15:08
And France also had a different, very interesting thing come down recently, which was France had in place for a while in their energy system, a rule preventing them from getting more of their, more than 50% of their electricity from nuclear despite having a large enough nuclear fleet to get more than that.
15:28
And it was part of they had a proposed nuclear phase out for a while.
15:32
that Macron had been kind of preventing from actually going into effect for a, for a while and it seems that they’re considering if not fully reversing that course, which is really good to see.
15:45
Got you.
15:46
So let’s talk a little bit about nuclear here in the United States.
15:48
I often get asked, you know, what is the future?
15:52
Something along the lines of like, what is the future of nuclear does is it doesn’t it seem so promising?
15:56
It’s, you know, no emissions baseload energy.
16:00
There’s sort of a narrative around nuclear and then there’s a counter narrative that says, yeah, that’s all great, but it’s really expensive.
16:08
And I think when you look at projects like Vogel in in down in Augusta, Georgia, I think it’s Augusta, well down in Georgia there where you have all these crazy cost overruns and things there obviously seems to be something to the fact that building a nuclear plant is incredibly expensive.
16:27
What is holding back nuclear here in the United States are these cost overruns policy driven, try to make sense of, of, of nuclear forming here in the S A.
16:39
There’s definitely, there’s an economies of scale issue.
16:45
The more you build something, the better you get at building it, we build nuclear plants just often enough right now to stay bad at it forever.
16:54
Like, you know, the first time you’re building something, you’re, you know, figuring out all the regulations as you go, figuring out the most efficient way to do it, it, it’s really expensive.
17:03
And with, you know, Watts Bar being the last plant that came online like 2016, I think.
17:09
And before that, they’re not being one since the nineties that we’re just not building them often enough to be good at it.
17:15
And there’s also the regulatory consideration.
17:19
the regulations, especially on Vogel changed while they were building the plant, you can’t run a construction project that way, it’s just impossible.
17:28
Like the, the anti-aircraft rule changed in the middle of construction.
17:32
And instead of saying, OK, we’re going to apply this rule to everything permitted after the date that the rule went into effect, they forced the rule to apply to a plant that was already being built.
17:42
You can’t regulate something during the construction process like that.
17:47
It’s just not sustainable.
17:48
Explain the anti-aircraft rule because someone told me about that.
17:51
I I hadn’t known about it before.
17:54
It’s an interesting regulation that kind of came in in the middle, like you said, in the middle of one of these.
18:00
Yeah, the anti-aircraft rule is basically, to prevent terrorist action using planes against nuclear power plants.
18:09
but it changes some of the ways that it needs to be constructed, various, you know, regulatory things that it needs to meet in the construction that when you’ve already poured the concrete, you have to go back and tear things out and put things back and it just, it just over complicates it and makes it far more expensive because if you’re redrawing plans during construction, that means that construction is halted for however long it takes for you to do that.
18:34
And that means that you’re paying people during that time and you know, you’re paying for equipment during that time, like all of these costs are just ballooning out of control while you’re waiting.
18:43
And that’s a big, a big issue.
18:46
Now, I’m not gonna say that there weren’t other issues at Vogel as well.
18:49
There were definitely issues on the company side too, but all of it kind of mixes together to create a real problem.
18:57
And I think like the more often we build reactors, the cheaper they get over time and reactors are interesting because their main costs are at the front end.
19:10
The construction costs are really, really high, but the fuel costs are really low.
19:15
The maintenance costs are really low and they can operate for 40 to 80 years with, you know, little input beyond that.
19:22
Besides the cost of uranium, which is not very high compared to the output.
19:28
So yes, you’re paying a lot on the front end.
19:31
But over the life of the plant compared to you know, wind and solar where the cost, the construction cost on the front end are fairly high, but they only last 20 years best case scenario and it’s usually shorter than that and one bad hailstorm is gonna totally change that dynamic.
19:51
Got you.
19:52
So when I usually raise the cost concerns and say, and a grant that it’s, you know, probably mostly policy driven.
20:00
But you know, there there’s other factors involved interest rates going up, makes any big project like that gonna be more, more expensive and stuff.
20:08
Setting all that aside when I raise those concerns, people then bring up small modular reactors as being sort of the end run around these problems.
20:19
So could you talk a little bit about that technology?
20:21
Some of the new small react small modular reactor designs are really cool for several reasons.
20:25
One of them is they require much smaller emergency planning zones than larger reactors.
20:31
They require less personnel.
20:33
They are smaller and easier to construct.
20:35
They can sometimes be constructed offsite and then brought other places.
20:39
And they’re passively safe.
20:42
So, with the traditional reactor, if it melts down, it has to be shut off externally by an operator.
20:49
But the small modular designs, if they melt down, they shut themselves off basically through the way that the fuel is released and then it, it, it shuts itself down.
21:00
So that passive safety element changes the way that it can be, you know, needs to be regulated.
21:06
But it, and it also just makes it safer from the perspective of the public as well.
21:12
But there’s, they’re a really cool technology because they are they’re more applicable to different situations.
21:21
Being smaller, allow allows flexibility and it allows their locations to be different, they can be located closer to things.
21:30
And for more specific purposes.
21:33
Right now, there are a few different types of S M R underdevelopment.
21:38
Actually just yesterday, Olo announced that it plans to build two of its new small modular reactors in Ohio.
21:46
It just got permission.
21:48
I think it was yesterday.
21:49
One thing that I want to talk about is sort of like the politics of nuclear then too.
21:53
So a lot of times I feel like nuclear is sometimes just a talking point where people who are concerned about climate change.
22:03
And these things will say, we have to switch to renewable energy, we have to, you know, move away from fossil fuels and you’ll have people on the right come back and say, yeah, well, what about nuclear?
22:14
And it feels like to me at times, nuclear is a talking point, but I don’t have a good sense of, well, is there actually like a political coalition that is being built that can move policy in a direction that sort of lowers the, the the, the cost overruns?
22:34
And is there actually sort of a movement driving on some sort of change in this industry?
22:40
So, like, do you have a good sense of what the what the politics and, and the sort of process of, you know, building a coalition and, and all this is, is like around nuclear right now.
22:51
Yeah.
22:52
So I think, I think nuclear has had an issue for a long time that it got us a holdover from the Navy.
23:01
so the nuclear Navy was developed kind of alongside the commercial nuclear fleet.
23:06
And so, the, the All press is good press idea, never replied.
23:11
It was always the least press possible is what, what, what the goal was.
23:17
And I think until about the last 10 years, that was the comms perspective on nuclear stuff.
23:22
And as a result, very little coalition building was done and public sentiment wasn’t curried in the way that a lot of other industries curried it.
23:33
And so I think that that was a real, a real problem that needed to be gotten around.
23:38
And I think recently, like in the past couple of years, the industry has done a much better job advocating for itself in that way and building coalitions to accomplish anything politically on the matter.
23:52
And I think, I think it’s getting better.
23:53
I don’t think, I don’t think there’s one overarching like co, like coalition or group that’s really doing it.
24:00
I think it’s a collection of a lot of different people with a lot of different motives.
24:05
I think there’s people who are, you know, exclusively favor nuclear just by itself.
24:12
I think there’s people in, on, on the left who favor, you know, any renewable technology, including nuclear, there’s people on the left who favor all carbon neutral technologies except for nuclear.
24:27
I, I don’t know that it fits neatly into anyone’s boxes.
24:31
and I think that’s one of its big problems but I don’t know that that’s, you know, I don’t know, it’s not necessarily bad in and of itself.
24:39
It’s just that it, it’s made it harder for it to be developed because there’s, you know, there’s not that one big group really pushing hard and lobbying hard for it.
24:49
It’s kind of a collection of disparate groups with different ideologies and ideas just preparing for our conversation.
24:56
I, I, I did happen to see there was a survey that pointed to the fact that support for nuclear in the US.
25:03
Most of the public is the highest it’s been in a decade.
25:05
So that seems to track what you’re saying is that there are, there are people trying to like on the side trying to build the case for it and just anecdotally that I see that a lot in sort of policy conversations and stuff as well.
25:20
So before we move to a wrap up, is there anything on Germany’s energy transition or nuclear in general that we haven’t covered that?
25:30
you want to talk about or?
25:32
Yeah, just one thing.
25:34
So Belgium right now is facing a very similar situation to what Germany face.
25:41
They are planning to close all of their nuclear reactors by the end of the decade.
25:46
And it, it’s being projected that that would result in absolute inability to keep their grid functional.
25:55
And so going planning on writing about that soon and seeing just what happens there because hopefully the lesson that Germany is teaching will be, will be learned, but we’ll see.
26:06
Got you.
26:07
Yeah, I, I think Germany and a lot of these countries in Europe, we’re seeing a sort of natural experiment and what happens when you switch to renewables and retire your base load.
26:16
And, they were, I guess, lucky this past winter that I, from my understanding that things were milder than they have been.
26:24
And historically and, it’ll be interesting to see what happens, down the line when, they have a normal winter and energy demand spikes and, how they’re able to deal with these things.
26:36
So, yeah, definitely scary to think about because, you know, energy decisions have real world consequences when it gets very cold or very hot.
26:45
You really want a reliable grid.
26:48
Yeah.
26:48
Did you see the that that article in the economist about more people dying from high energy prices in Europe than COVID this past year.
26:57
I didn’t see that it was an interesting piece and you know, gets to a point that we make a lot about the importance of energy and obviously, the lack or inability to afford energy is gonna have serious consequences for people.
27:11
So I’ll plug that in the show notes too.
27:14
It’s an interesting read.
27:15
So what are you currently working on?
27:17
for I it could be nuclear related.
27:20
Just what should our listeners look out for from you coming down the pipe?
27:25
So I would look out for our recent paper, not by any personally, but by the whole organization called the Economic and Strategic Importance of domestic mineral production, which we’ve been writing a lot about as well on the site.
27:39
So, I’ve got articles coming out at Catalyst from it.
27:42
I’ve got one in the Colorado Business magazine, on the same topic and it all just covers the incredible mineral requirements of the energy transition and what it would take to create a domestic mining strategy that would even make that possible.
27:58
Great.
27:59
And then just as a wrap up, I’m trying to do this new thing where I invite guests to, you know, pitch a, a film or a book or something.
28:07
They’re, they’re reading or they enjoy what, what have you been looking at lately and what do you want to tell our listeners about?
28:15
Yeah.
28:15
So I have been consuming Robert Jordan’s, The Wheel of Time series, a 14 book fantasy series on an epic scale.
28:26
I’m on book four now and they are just an incredible set of books with a really cool world, lots of excellent world building, interesting characters and a magic system.
28:38
That’s just really neat.
28:40
And these books, most of them were published in the nineties.
28:44
They are foundational to a lot of the fantasy books you’ll read now.
28:47
So, pretty cool.
28:49
Yeah, it sounds interesting.
28:50
The I, I’ve never been like much of a, a fantasy kind of, I don’t know, reader but big like sci-fi fan and I know like the fans of those books, they have like really deep audiences that like people get really into it and stuff.
29:06
So it’s definitely an interesting culture, I guess nothing necessarily.
29:12
I’m a big fan of both genres.
29:14
And yeah, you find a lot of really interesting, just a lot of really interesting themes and perspectives in that kind of genre fiction that reflect on the real world.
29:24
And yeah, I can’t get enough of it.
29:27
Great.
29:28
And I’m gonna be recommending a book called Following their Leaders, Political Preferences and Public policy.
29:33
It’s by Randall Hoco and published by Cambridge University Press.
29:37
I’ve been reading this, like maybe halfway through it.
29:40
It’s sort of a follow up on his book on political capitalism, which I’ve talked about on this show before.
29:47
It’s just about how, basically there’s an assumption that, you know, voters kind of just like have their preferences for different policies and they’re out there and that’s sort of the natural assumption in political science.
30:00
But what he kind of points out is no, actually there’s a process where people who have like sort of inside information elites sort of generate the policy discussion and the platforms that are up for grabs in political elections.
30:17
And it’s just sort of an interesting economic take on how it is that voters come to have their, their preferences and, and things and what sort of drives that.
30:27
So, I highly recommend it.
30:30
Interesting book.
30:32
not probably not as fun as, as fantasy fiction, but maybe for this audience, there’ll be a few readers out there.
30:38
And my guest today has been Paige Leberman from I R here page.
30:43
Thank you for joining me today.
30:45
Thanks for having me, Alex.
