Photo via WN
Obama's budget for 2011 is filled with peculiarities. There are a few primary points of interest when it comes to energy--the empty cap and trade framework outlined within, the severing of multi-billion fossil fuel subsidies (which I'll get to in a post later today), and perhaps most surprisingly, over $54 billion for nuclear power. That's up almost $20 billion from the year before.Details on More Nuclear Loans
The move expands from $36 billion to $54.5 billion the amount of loan guarantees the federal government is willing to award nuclear power projects. But why? Why expand nuclear loan guarantees--which weren't even capitalized on last year--when the budget is already, as everyone and their mother knows, strapped for cash?
Conventional wisdom says that it's a move designed to bring more Republicans to the table for energy reform negotiations. But conventional wisdom also holds that passing a climate bill this year is unlikely at best. Perhaps Obama simply wants to demonstrate his goodwill and put some muscle behind his calls for bipartisanship, especially on energy issues. The nuclear industry is strongly aligned with the GOP, and conservatives have been calling for more nuclear power for as long as I can remember.
A Nuclear Problem
But therein lies the problem. The reason that the GOP has been calling for nuclear power for so long is because they haven't gotten any for decades. And they haven't gotten any nuclear power for decades because it's simply not cost effective--nuclear power is hugely expensive, and proposed nuclear power plants are big financial risks that no private company really wants to back for just that reason. Which is why the nuclear industry wants, nay, needs those loan guarantees--now $54 billion of them.
In an ideal world, the loan guarantees spur investment in high-risk power plants that then go online, and generate clean energy, while simultaneously having served as a bargaining chip for getting more ideal renewable sources better support and funding. And the loans for the projects get paid back in a timely manner.
Problem is, if any of those proposed projects default, the taxpayer will end up footing the bill. Each average proposed nuclear plant costs $8 billion, and if the project fails, the taxpayer would be stuck with something like $6 billion. And since at least a few of the projects would likely default, it would but an unnecessary stress on the federal government--and the taxpayer.
And that's why it seems to me that without any real pledged support for bipartisan energy reform--Senator Lindsey Graham and his valiant efforts notwithstanding--this expansion of funding for nuclear power is a bad idea.
More on Obama and Nuclear Power
Obama Plans Climate Bill Push, Supports Nuclear and Drilling
Goodbye, Yucca Mountain: Obama's Budget Cuts Nuclear Storage Plans
Will The New Decade Bring the US New Nuclear Energy?