President Obama seized a key Republican energy initiative as his own Tuesday, promising $8.33 billion in federal loan guarantees for a pair...
WASHINGTON — President Obama seized a key Republican energy initiative as his own Tuesday, promising $8.33 billion in federal loan guarantees for a pair of Georgia reactors that he said would give new life to the U.S. nuclear-power industry and create a surge of high-skill jobs.
By helping to finance the construction of the reactors — the first new U.S. nuclear-power units in more than 30 years — Obama is hoping to jump-start his efforts to pass comprehensive climate-change legislation, which has stalled in Congress in the face of GOP opposition.
The president also is casting the nuclear initiative as a centerpiece of his plan to produce clean-energy jobs, although construction on the two reactors would not begin for more than a year. Nonetheless, after touring a Maryland training facility for energy jobs, Obama said the competition for those positions worldwide will be fierce.
“If we fail to invest in the technologies of tomorrow, then we’re going to be importing those technologies instead of exporting them,” he said. “We will fall behind. Jobs will be produced overseas instead of here in the United States of America.”
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Republicans, who have called for building as many as 100 new nuclear-power plants, hailed the president’s move as evidence that he has accepted their argument. Sen. Lindsey Graham, R-S.C., called it a “good first step” that would pave the way for progress on climate and energy legislation.
But Obama’s announcement set up a clash with environmentalists who remain worried about the safety of nuclear power and waste disposal. And it drew criticism from some conservatives who called it a risky move that could cost taxpayers billions if construction costs spiral, electricity demand sags and utilities default.
Nuclear-power plants “are simply not economically competitive now, and therefore they can’t be privately financed,” said Peter Bradford, an adjunct professor at Vermont Law School and a former member of the Nuclear Regulatory Commission (NRC).
Jack Spencer, a fellow at the Heritage Foundation and a supporter of nuclear power, warned that the guarantees would “perpetuate the problems that have plagued nuclear energy for 30 years: the regulatory structure and nuclear waste [disposal] and too much government dependence.”
The loan guarantees announced Tuesday would sharply lower borrowing costs to finance new reactors in eastern Georgia near the South Carolina border, where two units are being operated by the Atlanta-based Southern Co. The loan guarantees would cover part of the $14 billion in financing needs; Japanese export loan guarantees would cover another portion.
Administration officials said the loan guarantees would not cost taxpayers anything and companies would pay fees to cover risk of default. But critics said the administration was vastly underestimating the likelihood of loans going bad.
Jobs would be created, but not right away. The nuclear units would require 3,500 construction positions and later 800 jobs for operating the plant. But Southern’s Chief Executive David Ratcliffe noted that the company would not draw the loan guarantees and begin construction until the NRC grants a license, which it does not expect until late 2011. Moreover, the Energy Department and Southern are still negotiating terms of the guarantees.
To deflect critics, the president promised efforts to make the technology even safer and asserted that nuclear power must be a significant part of global attempts to reduce reliance on polluting, carbon-based fuels.
“It’s that simple,” he said. “This one plant, for example, will cut carbon pollution by 16 million tons each year when compared to a similar coal plant. That’s like taking 3.5 million cars off the road.” The reactors would be able to power 550,000 homes, providing electricity to 1.4 million people.
Part of energy strategy
Obama has long been amenable to nuclear power and said throughout the presidential campaign that it had to be part of a comprehensive energy strategy. The loan guarantee he promised Tuesday would come from $18.5 billion in money authorized during President Bush’s administration. But Obama has proposed tripling that to $54.5 billion, an amount that Energy Secretary Steven Chu said could help jump-start seven to 10 new nuclear-power reactors. The United States has 104 commercial nuclear reactors.
The House passed climate-change legislation last year that included a cap-and-trade system that Republicans derided as a tax on carbon production. The legislation is stalled in the Senate, but Graham has been meeting with Sens. John Kerry, D-Mass., and Joe Lieberman, I-Conn., in hopes of reaching a compromise.
After a meeting with Republican leaders last week, Senate Minority Leader Mitch McConnell, R-Ky., cited construction of nuclear-power plants as one of the areas that “we might be able to work on together.”
In his speech at a training center in Lanham run by the International Brotherhood of Electrical Workers, Obama urged Republican supporters of nuclear power to “recognize that we’re not going to achieve a big boost in nuclear capacity unless we also create a system of incentives to make clean energy profitable.” He said, “As long as producing carbon pollution carries no cost, traditional plants that use fossil fuels will be more cost-effective than plants that use nuclear fuel.”
That, he said, is why Congress should pass comprehensive energy and climate legislation.