News in Depth: Nuclear Energy and Mexico’s Radical Quest to Reduce Greenhouse Gas Emmisions

Mexico’s Bold Emissions Goals

On Friday, March 27, 2015, the Government of Mexico announced new targets that aim to cut output of greenhouse gases by 22 percent and its emissions of black carbon and soot by 51 percent by the year 2030. Such a move would make 2026 its peak emissions year.

While Mexico is only responsible for an estimated 1.5% of global emissions, the country felt strongly that is was important to set the goals high and to set them early in the lead up the global climate conference in Paris in December. Roberto Dondisch Glowinski, Mexico’s lead negotiator to the United Nations (U.N.) climate talks, is quoted in Scientific American saying: “we are trying to show that what we say in the negotiations, we stand by our words. Second, we want to show that it is feasible.”

How does Mexico plan to meet these targets? Steven Mufson, writer for the Washington Post, notes that meeting these goals will require higher fuel efficiency standard for cars and an increasing of investment in renewable and nuclear energy for the power sector.

The Future of Nuclear in Mexico

As the World Nuclear Association (WNA) highlights, Mexico currently operates two nuclear reactors that generate approximately 4 percent of its electricity. The country is also a net energy exporter, as it is rich in fossil fuel resources such as oil and natural gas. As the WNA notes, there is political will to further develop nuclear capacity, but the recent drop in oil prices has stymied any significant progress.

Given these new targets, Mexico’s Federal Electricity Commission (CFE) may pursue an earlier strategy which included building six to eight 1400 MWe units and, potentially, more flexible and less cost-intensive Small Modular Reactors (SMR) that could service the agricultural sector. However, putting these plans into action will require new investments in education and training.

In January 2015, ScienceDaily featured the research of Dr. Lorenzo Martínez Gómez, a researcher at the Institute of Physics of the Autonomous Nacional University of Mexico (UNAM). Dr. Gómez’s argues that nuclear energy is key to mitigating climate change and to reducing fossil fuel use in Mexico. The article summarizes Dr. Gómez’s main points, including: 1) that the public in Mexico fears nuclear, despite fossil fuels inflicting more actual damage to the environment and to public safety, and 2) that the key to the success of nuclear in Mexico will be training and education of scientists and technicians.

The federal government manages employment opportunities that will be generated by energy reform efforts (about 135,000 in total) not only in areas of hydrocarbons, but new technologies to develop alternative energy. Given the government’s investment in training, Mr. Gómez argues that now is the time to spark a revival in nuclear engineering in Mexico.

In short, it’s likely that the nuclear sector can play a big role in helping Mexico achieve its new emissions goals by leveraging investments in training and education and by capitalizing on new found political will both at home and abroad. Significant progress is hard to predict in the short term, but we’re optimistic that the global climate change conference in December may provide the necessary spark to push the government of Mexico and its partners into action.

News in Depth: Japan’s Shift Towards Fossil Fuels Raises New Questions about Emissions and Nuclear Investment


The Wall Street Journal recently reported on Japan’s increasing investment in coal, oil, and natural gas as the country strains to produce enough electricity following the idling of all nuclear plants in the aftermath of the Fukushima disaster in March of 2011.

Japan’s embrace of fossil fuels has a number of implications, most notably the pressure on emissions standards and on medium and long term investments in nuclear and renewable energy sources more broadly. In this week’s News in Depth feature, we explore Japan’s recent moves with respect to fossil fuels and the impact those moves have on emissions and strategies for energy infrastructure investment.

The Low Price of Oil and it’s Impact on Japan’s Energy Sector

As of writing, Oil is priced at ($53.44 for Brent Crude), reflecting a downward trend that began in 2014.

Crude Oil 6 Month Price Trend

Goldman Sachs analysts suggest that we may see the price of U.S. crude drop as far as $40 a barrel in the near-term, as inventories begin to rise.

While we continue to forecast a strong demand recovery in 2015, we believe that sequentially weaker activity, the end of winter and the end of potential restocking demand, will lead to a sequential deceleration in demand-growth as we enter the spring.

These prices, in addition to low coal and natural gas prices, have had a major impact on Japan as it seeks to fill the capacity void left by its 48 idled nuclear plants. Japan brought 14 new gas and coal-fired power plants online by the end of 2014 alone. It’s also been reported that by the end of 2025, Japan hopes to have a total capacity of over 13GW of new coal generation.

Reactions to this shift towards oil, coal, and gas have been mixed. There are clear political and economic advantages to Japan’s diversification. Perhaps most importantly, reliance on the cheaper fossil fuels will help Japan ease it’s energy import bill. In the first half of 2014, Japan’s trade gap reached 4.8 trillion yen. Moves to these cheaper energy sources are projected to lower that deficit and to ease pressure on and lower costs for Japan’s economy and manufacturing sector.

However, with Japan being the world’s fifth-biggest emitter of carbon dioxide, concerns have been raised about its increasing reliance of fossil fuels. Aaron Sheldrick, reporting for the Japan Times, writes that Japan is seeing increasing pressure from other countries, including China and the US, to meet it’s emission targets.

Balancing Short Term and Long Term Energy Investments

While the situation in Japan reflects many unique factors, including the Fukushima disaster and the public distrust of nuclear energy, it also provides a number of interesting angles of analysis. There is the broader phenomena of cheap oil and fossil fuels. However, the concerns highlighted above, including climate change and the regulation of carbon emissions, highlight the importance of keeping a longer term view on energy infrastructure investment. Moreover, it is important to consider the balance of an interest in highly elastic and less capital intensive energy sources, such as fossil fuels, with an interest in longer term infrastructure investments, such as nuclear, that pollute less and provide for greater supply certainty for growing economies.

For more on these issues, listen to The Bulletin with UBS podcast by Monocle, which this weeks focuses on global investment strategies in the oil sector. For further reference and cost comparisons between different energy sources, see also The Economics of Nuclear Power.

US Deparement of Energy agrees to fund NuScale SMR to commercialization

The US Department of Energy (DOE) announced this week that it will invest $217 million over five years in the development and commercialization of the NuScale Small Modular Reactor (SMR).  The DOE expects their investment to be matched by private sector investment in the project.  NuScale intends to use the funds to test their reactor and to complete the process of certification through the Nuclear Regulatory Commission with hopes of having the first NuScale reactor online by 2023.

NuScale’s 45MW pressurized water reactor is a unique design making use of an unconventional fuel assembly which is passively cooled and more inherently safe than existing reactors.  In the event of an overheating, the reactor is designed to cool without any human input, without any additional water, and without electricity.  The NuScale SMR will be mass produced in a factory and shipped by truck, rail, or barge in sets of up to twelve for power stations between 45MW and 540MW.

Here, the Chief Commercial Officer of NuScale Power explains some of the benefits of a small modular reactor generally and the NuScale reactor specifically.

If NuScale is able to keep to its schedule for commercialization, it could play a major role in achieving US President Barack Obama’s recently stated goal of reducing the emissions of all US power plants 30% by 2013.