Reaction to Obama's nuclear energy plan
By Steven Mufson
Budget headlines in the energy world this week haven't been about green jobs, solar or wind. They've been about the Obama administration's proposed tripling in loan guarantees for new nuclear power plants. The Obama administration says these will be "innovative" nuclear power plants, and indeed there have been design improvements since the last set of plants was built 30 years ago. But foes of the loan guarantees say they provide help to an industry that can't get financing on its own. A federal guarantee sharply reduces the cost of borrowing, and many utilities that would likely build new plants have only average credit ratings. And that can make all the difference for capital intensive projects like these.
Energy Secretary Steven Chu, a Nobel Prize winning physicist who is deeply alarmed about climate change, believes nuclear power plants can help the country meet its goals for reducing greenhouse gas emissions. In a briefing with reporters Monday, he said the Obama budget proposal for an additional $36 billion in loan guarantees was premised on the idea that "to give a boost to restarting the nuclear industry in the United States you need several of each type of reactor" in order to "give confidence to the financial community."
He continued: "The feeling was you needed on a scale of six, eight, 10 reactors. We feel the 18 [billion dollars of earlier loan guarantees] plus the 36 [billion dollars of new loan guarantees] will be enough to allow seven to 10 reactors to be built."
After that, he said, enough confidence should exist for the industry to be self sustaining.
The committment falls short of the ambitious goals many Republican lawmakers, led by Sen. Lamar Alexander (R-Tenn.), have set. But many nuclear power industry executives say Alexander's goals are unattainable and the industry welcomed the Obama administration's proposal. "It's great news," an executive at one nuclear power plant builder told me. "We're all for it."
"These loan guarantees will serve as a catalyst to accelerate construction of new nuclear plants, creating thousands of high-paying, long-term jobs in the process," said Nuclear Energy Institute President and Chief Executive Officer Marvin Fertel in a statement.
Many of the Obama administration's most loyal defenders are upset. Daniel Weiss, senior fellow and director of climate policy at the Center for American Progress, said in a blog post that "$54 billion in loan guarantees make little policy or political sense."
Friends of the Earth called Obama's state of the union address "a kick in the gut" because its energy ideas included coal and nuclear as well as renewables. "We elected him to make tough decisions, and 'all of the above' as an energy strategy is no decision. Letting special interests write energy policy is not changing the ways of Washington," the group said.
Kate Sheppard, who covers energy and environmental politics in the Washington bureau of Mother Jones, wrote a piece for Foreign Policy's Web site asking this: " Last year, around this time, the U.S. president was extolling the virtues of solar power. Now, he's talking about coal and nuclear plants. What happened?"
Her answer: "What changed Obama's tune so dramatically? In short, political reality caught up with him. A year ago, Obama -- and the world -- believed Congress would pass a single, strong cap-and-trade bill. Now, it seems that won't happen. Thus, on Wednesday, Obama was speaking not to his core base of support for climate legislation, but to the few Republicans and several Democrats to whom he'll need to make concessions in what the White House has called the 'Grand Bargain.'"
Some critics came from the conservative end of the spectrum too, from those opposed to subsidies. The administration argues that there is no subsidy involved, and that a fee paid by nuclear power companies will cover the credit risk of a default on a nuclear power plant project - something that could happen because of high costs, vanishing demand or bad financial management. It happened to some companies three decades ago. But critics say that if the entire credit risk were covered by industry fees, there would be no need to involve the federal government.
Henry Sokolski, executive director of the Non-Proliferation and Policy Education Center, said "this may be the most pro-nuclear administration since [President George W.] Bush and maybe [President] Eisenhower."
Dan Beyers| February 1, 2010; 7:20 PM ET Save & Share:
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