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article image28 new nuclear reactors for US if Senate Energy Bill provision passes House

By Paul Wallis     Jul 31, 2007 in Politics
A provision allowing the Department of Energy to approve loan guarantees for clean energy projects might have opened the floodgates for the financing of new reactors. “Clean energy” subsidies have done the trick.
The New York Times report says that a single sentence in the energy legislation, which was “inserted without debate at the urging of the nuclear power industry” could make financing for new reactors much more appealing to lenders. $50 billion is the figure for guarantees being used by lobbyists for the next two years.
The nuclear debate has entered a new, delightfully senile, populist, phase. The pro and anti-nuclear arguments have come from the predictable sources. The GOP Energy Committee Senator is for it, there are Democrats against it, and environmentalists are much less than happy. Clean energy and nuclear power are not synonymous to some.
However, the global warming debate has motivated a reversal of policies among the political intelligentsia. The foreign oil albatross has also been hanging around the necks of the think tanks, American dependency on oil imports being a very sore point.
(Superficial things like dependency on slightly modified 1900s technology and very low mileage to the extremely expensive gallon apparently don’t count.)
So “something had to be done”, and the energy bill is evidently it. In this case the "primary architect" of the bill thinks the provision only applies to advanced reactors. It might or might not be what the law means. Maybe someone will find out, one day, and tell the NYT. Wouldn't that be nice.
Whether or not this thing qualifies as doing anything is a matter of opinion. There are practical considerations for the loan guarantees, some of them not coming from politicians. The subsidies, as an idea, let alone law, haven’t impressed the Congressional Budget Office. Its analysis cites the risks of new technologies, and makes the pointed comment that cost estimates are invariably low. That wouldn’t surprise too many people. Cost overruns are endemic in so many government funded projects that it’s a little strange that anyone believes estimates on face value any more.
So far the mathematics aren’t too clear, either, but they make interesting reading. The 28 new reactors are reputed to cost $ 4-5 billion each. So the net cost is $112-140 billion. That $50 billion would appear to leave quite a bit of the costs uncovered. Which would mean $62-90 billion worth of reasons to ask for more subsidies, and perhaps deny that money to other technologies.
The $50 billion is also the estimate for a two year timeframe. Construction would definitely not finish in that period. We can assume that there might be some extra handouts required. A guarantee isn't a payment, but it might as well be. The rail barons worked on much the same principles, or lack of them.
Cute. Starve the competition of funds, cover your own risks, your lender’s risks, get government committed, and make the profits, all on an unspecified timespan .
Come off it.
More about Energy bill, Nuclear power, Loan guarantees
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