In efforts to try and parley with conservatives, President Obama recently announced $8.3 billion in federal loan guarantees for Southern Company to build two new nuclear power reactors. As the Democrats’ control of the Senate begins to unravel and the President’s term-long agenda follows a similar fall into uncertainty, the political footwork is not surprising. However, it may also not be not wise. Not only will it fail to produce any new Republican support on a trying to produce comprehensive climate legislation, but the President’s olive branch to nukes will do no more than set the taxpayers up for yet one more “loan” to corporate America–laced with risk.
I came across a fantastic article by Jerry Taylor on energy blog, MasterResource. As Taylor notes, the administration’s proclaimed goal of trying to stimulate private investment in new nuclear plants is misguided and incredible unlikely. On the contrary, private investment has been shying away from nuclear for years, even before the recession. After all, there is a reason (or a number of them) why we have not built a new nuclear power plant in 30 years.
The fellows over at MasterResource often give renewable energy production a hard time, pointing out why they believe it is a flawed pursuit of our energy infrastructure. I happen to think they avoid some issues of why coal power production is such a flawed system. But I do not read their blog because they mirror my support and position on all energy issues. I read their work because they report on facts and touch on the sides of issues that mainstream media conveniently avoids. In this case, Taylor writes:
In a letter to the U.S. Department of Energy dated July 2, 2007, six of Wall Street’s s then-largest investment banks – Citigroup, Credit Suisse, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley – informed the administration that, contrary to the government’s expectations, anything short of a 100 percent unconditional guarantee would be insufficient to induce private lending.
This means that in the same vein as the President’s paltry $8 billion in High Speed Rail, these committed guarantees are only a portion of the $14 billion of projected costs for the Georgia power station. Taylor goes on to point out that these are the same banks that were supposedly three-sheets to the wind before the beginning of the 2008 recession, investing in precariously with everything they had to try and turn a profit and none of them wanted anything to do with nuclear technology. So the risk that the capital market was not willing to take is now being absorbed by the taxpayers via a decree from the government. It is noted in the article that the Congressional Budget Office sees the likelihood of default at over 50%. Conversely, there are many private entities that join government funding in producing wind, solar, biomass and geothermal power.
One of the main problems facing new nuclear capacity is a similar problem facing high speed rail and vertical farming (the construction of farming infrastructure in urban areas): no one knows how expensive it really is. Our country has spent decades praising the efficiency of nuclear energy but hiding from its costs. Back in July, climate writer Joe Romm highlighted how Ontario’s desire for new nuclear reactors disintegrated when spiraling estimates of cost (at over $10,800/kW) from French company Areva made the dream impossible. For some reason, someone believes that such miscommunication is being avoided in our present case or that the intricacies of designing and constructing a nuclear reactor have been mastered by us in America.
I may be able to support nuclear energy if someone could point me to the individual who has an answer for that ever elusive question: What are we going to do with the waste? No amount of dancing or lip service can fabricate a convincing response to this query which is why the issue still goes unresolved, even with the nuclear capacity that we already have. Nuclear waste is among the most hazardous substances that mankind has ever created and it will be around longer than the civilized world has even existed. As of now, nuclear waste has to be guarded, which costs only more money. This is just another example of how the externalities of a given societal norm are forgotten, along with their costs and repercussions, in the absence of a real solution.
We should not be subsidizing a method of power generation that eclipses the cost of renewable energy and leaves regulators with silent shrugs when asked how its resulting mark on the environment will be handled. $8.3 billion buys many wind turbines, solar panels or even natural gas plants. Taylor sums it up succinctly saying, “This whiz-bang technology is still the most expensive source of conventional electricity on the grid…If nuclear power were economically attractive, then no subsidy would be necessary. If it is not, then no subsidy will make it so.”