Courtesy of CCNPPI
The Calvert Cliffs Nuclear Power Plant is on the western shore of the Chesapeake Bay. Constellation Energy is pursuing loan guarantees to build an additional unit here, and hopes to build several more after that.
The Calvert Cliffs Nuclear Power Plant is on the western shore of the Chesapeake Bay. Constellation Energy is pursuing loan guarantees to build an additional unit here, and hopes to build several more after that. Courtesy of CCNPPI
Building a nuclear plant is a lot like trying to get a mortgage these days to build an expensive house. You might need someone to co-sign your loan.
"Now, they never pay any money, but they're there just in case," says Jim Connaughton, executive vice president of Constellation Energy.
President Obama this week showed how serious he is about nuclear power by proposing to triple the money available for loan guarantees for nuclear plants for a total of $54 billion. His nuclear overture also sent the message that he is determined to woo supporters for climate change legislation, which is stuck in the Senate.
But environmental and taxpayer groups complain that the proposal would set up Americans for another expensive corporate bailout.
Nuclear plants cost more than $10 billion to build, and most companies cannot get financing for them without government loan guarantees.
"We just need the federal backstop in order to attract the private sector investment that will make that possible," says Connaughton.
Constellation is pursuing loan guarantees to build an additional unit at its nuclear plant in Calvert Cliffs, Md., and hopes to build several more after that.
Congress and President Bush created the loan guarantee program in 2005. Power companies say that the $18 billion already promised would help build a few plants but would not spark the nuclear renaissance they want.
Nuclear Power Helps Obama Meet Climate Goals
The additional $36 billion the president is proposing could do that and help Obama meet his greenhouse gas goals, industry executives say.
"Nuclear is the only generation out there that produces power 24-7 with no carbon emissions at all," says Tom Williams, a spokesman for Charlotte, N.C.-based Duke Energy.
Williams says wind and solar produce electricity only when the wind is blowing or the sun is shining, so nuclear power is needed to help the country cut greenhouse gases 80 percent by 2050. The president and many scientists say that is necessary to help avert catastrophic climate change.
The president's nuclear proposal could play another crucial role in helping him address climate change, say utility executives and members of Congress. It could help persuade Republicans and moderate Democrats to support a sweeping global warming law. The House passed a bill last year, but similar legislation is stuck in the Senate.
"There's a lot of support for nuclear from the people who are currently not supporting the climate bill. By offering up this, it should help bridge the gap," Williams says.
Environmental Groups Can't Get Behind Nuclear Loan Guarantees
Environmentalists agree that the loan guarantees help the climate bill's odds.
"If you offer a bunch of utilities $54 billion in loan guarantees, they will probably round up a few senators to support you. That's correct," says Carl Pope, executive director of the environmental group the Sierra Club. "That's how Washington is working these days. That doesn't mean that I like it."
Pope and many other environmental activists usually support President Obama, but they oppose his loan guarantee proposal.
They stress that nuclear plants are inherently dangerous because waste from them stays hazardous for hundreds of thousands of years. And the country still hasn't come up with a long-term plan to store the stuff.
Plus, they argue that nuclear plants are so expensive to build, they're a bad economic risk for taxpayers.
"They need the loan guarantees because investors are afraid that they'll never finish the plant. Or the plants will cost twice as much as they're supposed to and will never be able to sell affordable electricity," Pope adds.
Still Pope says loan guarantees for the nuclear industry would not sour environmental groups on a climate bill.
"I don't think these kinds of loan guarantees would push us into opposition to a climate bill that would otherwise save the planet," he says.
But even if the president's nuclear overture wins over a few Republicans and moderate Democrats, the climate bill still faces a lot of other hurdles.