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This Week in Climate: Natural Gas, Nuclear Power, and Australia’s next climate law.

Sunday, August 7th, 2022: In our climate news column, "This Week in Climate", we take a look at the dwindling future for natural gas, a big step for modular nuclear plants and Australia’s next climate law.
Julian Moore
Aug 6, 2022 11 min read
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One of the more relatable conceits of mainstream climate skepticism is that solutions to climate change should not be more harmful to human civilization than its impacts.

It’s a persuasive argument to the mind of those still undecided on climate change, and a reassuring appeal to caution that calls back a trusty adage: the cure shouldn’t be worse than the disease.

This typically takes shape as an economic argument. Critics of climate action insist that climate solutions such as EVs and home batteries are, and will always be, more expensive than fossil fuels.

Innovative solutions may have promise, but they will take millions in development and years of experimentation before they can deliver cheap power.

And then there’s the rest of the world. Even if we adopt expensive renewable solutions, won’t the rest of the world undermine us with cheap fossil fuels anyway?

This week, all three of those arguments were flipped on their heads as renewables are beating out fossil fuel alternatives in European markets. Meanwhile, American innovators make a breakthrough on modular nuclear energy; and in Australia, too long a recalcitrant climate denial state, lawmakers are moving ahead with a new climate law.


Hydrogen Fuel Flips

This week, green hydrogen fuel became cheaper to produce than blue hydrogen for the first time.

Green hydrogen is a low-emissions fuel derived from water electrolysis powered by renewables, while blue hydrogen is a by-product of steam reforming natural methane gas. Both produce few emissions at the point of consumption, but the overall emissions associated with blue hydrogen may make it worse than coal.

Until this point, blue hydrogen has been a cheaper and more attractive option for investors. But as the war in Ukraine drags on, Russia is tightening its gas embargo on Europe to force a compromise, keeping natural gas prices high.

However, that’s also why the cost inversion isn’t expected to last in the near term. Gas facilities have a long lead time, meaning that European gas projects approved this year are expected to come online in 2024, at which point the cost of blue hydrogen will wind back down.

The cost inversion, even if short-lived, is giving investors pause about the future economic competitiveness of natural methane gas. New facilities will come online, but geopolitical conflicts with exporting countries could still pose security risks in the future that are increasingly undermining investor confidence.

The delay in gas development also gives green hydrogen critical time to scale up the 41 green hydrogen projects under development from the European Union’s $5.4 billion Hy2Tech program.

Ambiguity between the two hydrogen fuel sources has complicated the energy transition debate since both fossil fuel interests and climate activists are calling for “hydrogen fuel” as an alternative energy source.

For example, the draft version of the Inflation Reduction Act included a production credit for “clean hydrogen.” That language raised some red flags because it doesn’t distinguish between blue and green, leaving yet another door open for the presumptive climate bill to lend support to energy derived from fossil fuels.


New Nuclear Tech

The United States Nuclear Regulatory Commission approved the first new nuclear reactor design this week, giving a green light to the NuScale modular nuclear reactor.

The NuScale reactor has several advantages over traditional nuclear sites besides its compact size and modularity.

First, it’s a whole lot cheaper to build.

NuScale’s facilities take roughly 36 months to complete, which is considerably faster than a uh…decade-plus. That means faster return for investors, and a project that doesn’t go more than $16 billion and counting over budget.

That’s also why NuScale foresees overnight capital costs of $3,600/KW compared to $9,000/KW from Class IV nuclear generators.

But perhaps the biggest innovation in NuScale’s reactors is that they require considerably less water than nuclear plants in operation today. The NuScale plants source water from a large reservoir, which is then circulated and then cooled to be re-used.

This week, nuclear reactors in France faced their third round of shutdowns this year because their adjacent rivers are too warm to cool the plants.

This is a considerable climate risk for nuclear power that doesn’t promise any easy solutions.

Water use is also coming under tight scrutiny across the world as droughts affect regions that have historically been water-rich, like the United Kingdom, Germany’s Rhine River and the Mekong River and Delta regions of China and Southeast Asia.


Australia Climate Law

Australia’s House of Representatives passed the country’s climate commitments into law this week, charting a path to reduce emissions by 43% compared to 2005 levels by 2030, and to “net zero” by 2050.

The law effectively codifies Australia’s strategy that was abandoned before former Prime Minister Tony Abbott took over in 2014.

Details of the plan are still being worked out, but Australia’s Climate Change Authority will now have the authority to issue guidance on emissions reductions for policymakers across the country. If the national government doesn’t follow that guidance, it will now have to publish an explanation for why it didn’t.

The law also codifies Australia’s side-lined “safeguard” system that set a cap on the country’s largest emitters so that they wouldn’t counteract government-funded emissions cuts from agriculture and other areas.

The law now goes to the Senate where Australia’s Greens will try to get assurances that the new law will prohibit new coal and gas facilities. If they fall short of that, their hope is for the Senate to at least consider the impacts of the country’s status as a leading global coal exporter.






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The Author

Julian Moore