SPECIAL REPORT | DECOMMISSIONING DECISIONS and a commitment to replacing the plant’s capacity


with renewables and energy efficiency. Nevertheless, on 31 August 2022 California’s legislature voted to keep the Diablo Canyon Nuclear Plant online until 2030 and, what is more, offer a US$1.4bn loan to operator PG&E for the cost of permits. Uniquely, in March 2023, the US Nuclear Regulatory Commission allowed Diablo Canyon to remain in operation through its licence expiry date on current licences and during an application for licence renewal. Nelson and Ramana are largely concerned with the 2016


Joint Proposal to retire Diablo Canyon as a novel solution to the problem of devaluation of expensive assets. They say, “As devaluation of energy assets becomes an increasingly- prevalent reality of transition trajectories in many jurisdictions, and as just transitions strategies are pursued by various stakeholders, such negotiated devaluations may offer an emerging strategy for asset owners to manage reputational and material risks through the devaluation process.”


But they also argue that the potential reversal of this


Below: James A. FitzPatrick, shown top, won an extended licence from NRC, which allows it to operate until 2034, but although Vermont Yankee, shown below, is located less than 200 miles away this plant was decommissioned Source: Constellation and Orano


proposal “demonstrates the political contingency of devaluation and of associated negotiated transitions”. Diablo Canyon’s prospects started changing in 2021, when several high-level nuclear officials, including two former Secretaries of Energy, publicly supported keeping the plant running even after 2025. In 2022 two opponents – Governor Gavin Newsom and Senator Diane Feinstein – also reversed their positions and publicly supported continued operations. The Biden Administration’s offer of up to US$6bn in subsidies also pushed California’s lawmakers to abandon the Joint Proposal. The authors said that “the plant’s economic viability is


a continued site of struggle among diverse environmental and energy agendas. These changing political forces and economic incentives are changing PG&E’s calculations… demonstrating the political contingency of devaluation and associated negotiated transitions”.


Some of the plant’s technical challenges – for instance,


relating to the position of nuclear energy in the state’s overall energy mix – were shaped by its political context. The state’s increasingly-ambitious renewables requirements led PG&E to conclude that a large baseload power plant would in the future be a liability rather than an asset. This is why PG&E decided to pursue a political solution. The strong ties of labour and environmental organisations to Democratic state leadership set the overall context in which the utility felt obliged to pursue a negotiated approach – but also, under California’s regulated market it could to recover the costs of the deal from ratepayers. The authors argue that it was a change in political dynamics that gave PG&E the option of pivoting to use public funding to support continued operation. Ultimately, Diablo’s future – and those of similarly-large,


contested energy assets – will depend on how policymakers react to decarbonisation needs, grassroots pressure and actions by incumbent industries. The uncertainty is greatest with facilities that involve massive fixed-capital investments, of which nuclear power plants are just one example. Others large energy assets that may also face this uncertainty include pipelines or liquified natural gas terminals, for exmaple. The authors say that sustained grassroots pressure and powerful labour and environmental groups can narrow the exit path for an asset owner, with material benefits for stakeholders affected by transitions. However, they describe the example of Diablo Canyon as an “asset-owner-driven negotiation,” suggesting that too strong a presence from the incumbent can make the outcome more fragile with regard to other stakeholders. They say, “As asset owners seek to mobilise just transition tactics to proactively manage declining assets without shifting fundamental power relations, their control of the process may limit the dimensions of justice that can be affirmed and produce unstable coalitions that may undermine trust in the negotiated process”. For the authors, “This raises strategic questions for


grassroots actors demanding just transitions”. Similarly, it raises questions for the owners of large assets such as nuclear power plants. In a public conversation about the future of their asset, how much influence is enough to educate other stakeholders, without making them feel they have been pushed towards a particular outcome? How much should owners talk about economic and technical factors, and how much should they try to take advantage of ‘moments’ that could override some of those arguments? And what can they learn from other national policies about whether they have to convince a multitude of local stakeholders, or just one key political decisionmaker? ■


20 | October 2024 | www.neimagazine.com


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