Lessons in Climate Derisking: The United States' Failed Nuclear Renaissance

Abstract

Ameliorating climate change depends centrally upon transforming the energy system to run on clean energy. In turn, this transformation requires finding entities willing and able to build massive amounts of new clean energy infrastructure. The emerging U.S. strategy for inducing this buildout is via "climate derisking," which involves using government incentives to cajole private investment in the clean energy transition by lowering the chances that such investments might not yield sufficient profits. The United States' landmark 2022 climate legislation, the Inflation Reduction Act (IRA), represents an unprecedented embrace of climate derisking. In this Article, we contend that an underexplored antecedent of the IRA provides critical insight into the promise and perils of a derisking approach to climate change. In the early 2000s, the United States attempted to create a nuclear power renaissance through legislative derisking, with disappointing results. All told, nuclear derisking legislation spurred nuclear investments in only a few southern states, where it ultimately resulted in tens of billions of dollars of wasted expenditures and little new carbon-free electricity. After situating derisking within theories of infrastructure development, the Article chronicles attempts to revitalize nuclear power across four states: Georgia, South Carolina, Florida, and North Carolina, drawing from relevant legislation, administrative actions, court cases, news accounts, and interviews with key stakeholders. We then consider what lessons the failed nuclear renaissance offers the significant project of derisking clean energy now underway in the United States and beyond. The U.S. nuclear non-renaissance highlights a range of risks that accompany clean energy infrastructure development, including regulatory risks, scalar risks, temporal risks, and cultural risks. These multiple dimensions of project risk render the IRA's cabined emphasis on financial derisking a limited method of driving the clean energy transition. We contend that far more direct public control over this infrastructural transformation is necessary to realize the scope of change that both federal policy and fundamental scientific imperatives demand. More immediately, we explore how the lessons that haunt nuclear power might be put to use in administering the IRA for maximum efficacy in achieving both its climate and broader social aims.

Keywords: climate change, clean energy, nuclear power, derisking, electricity, energy regulation, energy law, Inflation Reduction Act, industrial policy, green industrial policy, public utility law