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  • Obama’s Enthusiasm to Nuclear Energy is Encouraging, But…

    President Obama reaffirmed his willingness to expand the commercial nuclear energy in the United States when he said in his State of the Union address that we should be “building a new generation of safe, clean nuclear power plants in this country.” He backed it up by including an additional $36 billion in loan guarantees to nuclear energy projects. On top of the $18.5 billion allotted under the Energy Policy Act of 2005 (EPACT 2005), the total amount in loan guarantees now stands at $54.5 billion. Is this good or bad for the future of nuclear energy; more importantly, is it good for electricity consumers?

    It depends.

    The initial $18.5 billion in loan guarantees were to mitigate the massive government-imposed regulatory risk that inflate. It was meant to bring stability for the first handful of reactors built in the United States. Congress and the nuclear industry believed these provisions would provide predictability after years of erratic regulatory hurdles through targeted and limited temporary assistance.

    But “Expansive loan guarantee programs are wrought with problems,” writes Heritage’s Research Fellow, Jack Spencer, in a new paper entitled, “Conditions and Policy Reforms Must Accompany Nuclear Loan Guarantee Boost.” He adds, “At a minimum, they create taxpayer liabilities, give recipients preferential treatment, and distort capital markets. Further, depending on how they are structured, they can remove incentives to decrease costs, stifle innovation, suppress private-sector financing solutions, perpetuate regulatory inefficiency, and encourage government dependence.”

    Nuclear loan guarantees alone won’t bring about a nuclear renaissance in the United States; in fact, by themselves they will likely do more harm than good. However, if coupled with a set of conditions that limit the scope of the program, the negative impact of loan guarantees can be contained while maximizing their benefit. The nuclear loan guarantee program should be conditioned on: ending further loan guarantees, ensuring that recipients pay the full cost of the subsidy, making recipients privately refinance within five years of project completion, limiting guarantees to no more than two plants of any reactor design and limiting two thirds of the loan money to supporting a single technology. Other reforms necessary to create a sustainable nuclear industry consist of finding a solution for waste management, making the regulatory process more efficient, and equipping the NRC to regulate multiple reactor technologies.

    You can read more in Spencer’s paper, here.

    Posted in Energy [slideshow_deploy]

    5 Responses to Obama’s Enthusiasm to Nuclear Energy is Encouraging, But…

    1. Andrew, Bay City says:

      I can understand the problem with subsidizing nuclear power. But practically speaking, is there any other to make it work?

      While I agree that the safety regulations are probably over the top (which is the real cost of running a nuclear power plant), I have to ask how much they can reasonably be loosened and still expect the plants to be appropriately "safe.". You can't have a thriving nuclear industry and all the current safety regulations without subsidization.

    2. Bobbie Jay says:

      Remember, he is an eloquent speaker. Keep in mind, there's ALWAYS something anti-American, unconstitutional hidden, behind the eloquence.

    3. Darold LeBouef says:

      I have a great idea. Let's punch a few hole in the ground and bring out the oil. It will put a lot of people to work, bring down the price of enegery. And let the states collect all that oil royalties which could add up in the billions. What a great idea.

    4. jonmarkp denver says:

      Wow, talk about disingenuous! In one post you're whining that renewable energy won't work without subsidies, yet you're perfectly willing to subsidize nuclear energy directly, and oil and coal energy though massive tax breaks.

      On God's green earth there has never been invented a more expensive way to boil a cup of water than nuclear energy. Oil and coal foul the air, the water and the soil. The hard facts are that nuclear energy is a giant zero; all of our oil and coal will be needed for manufacturing plastics, lubricants, fertilizers, medicines and countless other essential items. And they simply aren't needed for energy. There is enough solar and wind energy just in the US to power the entire planet for a century. What's wrong with renewable energy, of course, is that it doesn't require top-down distribution from bloated, capital-intensive, greedy manipulators.

    5. Pingback: Obama Goes Nuclear » TripleCrisis

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