Obama Killing US Nuclear Industry

After all the fanfare a few months back, when US President Obama announced government loan guaranties for a new nuclear power plant in Georgia, the truth is emerging—Obama is quietly letting the nuclear Renaissance die from neglect and broken promises. Trying to distract green critics and the public with its approval of plans to build the world's biggest solar-thermal power plant in the Southern California, the administration ignored the faltering plans to expand an existing power plant on the Chesapeake Bay. Constellation Energy sent a letter to the US DOE stating that the terms offered by the government to guaranty financing for expanding the Calvert Cliffs nuclear power plant were “unworkable” and that the project could not go forward. Despite paying lip service to reviving nuclear power by providing government backed loans, the extreme greens in the Obama administration are trying to kill the nuclear power industry.

The Calvert Cliffs nuclear plant, on the western shore of Chesapeake Bay, currently has two 2.7 GW (thermal) nuclear reactors. Built by Combustion Engineering in 1975 and 1977, just before Three Mile Island, the plant has quietly and safely been providing clean energy for more than three decades. In 2000, the Nuclear Regulatory Commission extended the license of the plant for 20 additional years, making Calvert Cliffs the first nuclear plant in the United States to receive such an extension.

I have a particularly fond spot for Calvert Cliffs because I lived for several years in a house on top of those same cliffs, only a few miles south of the power plant. Every winter, local fishermen gathered near the plant because warm water from the plant drew a profusion of marine life to the location. It has been years since I lived in the area, but evidently the locals continue to enjoy the plant's presence.


The Calvert Cliffs Nuclear Power Plant.

In 2007, the US Nuclear Regulatory Commission received an application for a third reactor, to be installed on the same site. This seemed like a straight forward and rapid path to expanding US nuclear power, since the proposed site already possessed all the necessary permits and impact studies. Unfortunately, the partnership between Constellation Energy and French nuclear power consortium EDF was counting on financial help from the government which Constellation found unacceptable:

In a letter sent to DOE, Constellation Energy said the cost of the loan guarantee that is calculated by the Office of Management and Budget (OMB) is unreasonably burdensome and would create unacceptable risks and costs for our company. There is a significant problem in the way OMB calculates the credit cost. After repeated unsuccessful attempts to resolve this issue with DOE and OMB, we no longer see a timely path to reaching a workable set of terms and conditions.

Contractors have all but stopped work on Calvert Cliffs reactor #3. EDF has sent some signals that it is willing to proceed with the project on its own. According to Constellation spokesman James L. Connaughton: “Depending on whether the US effort fits in with their overall strategy, they [EDF] may yet decide to carry this through the next stage.” But there are legal barriers to foreign involvement with American nuclear projects. Even if the lawyers find a way around them, it's far from clear that EDF has the financial resources to carry off such a larger project simply to gain entry into the US market.

Amazingly, at least one critic has blamed the failure of the Calvert Cliffs expansion on lack of an energy bill from the US Congress. While Congress is at least partially to blame for the sad state of American nuclear power this is a bit of a different take as to why. According to Jay Hancock of the Baltimore Sun:

Nuclear energy would have been very attractive if a proper price were placed on carbon emissions from fossil-fuel electricity generation. Coal, which fires a large portion of U.S. electricity generators, is carbon-intensive, not to mention that it's a source of pollutants such as mercury and sulfur dioxide. Nuclear generators consume carbon in their construction, in the mining of the uranium and so forth. But using uranium to make megawatts is carbon-free.

Department of Energy Secretary Chu, one of the few bright spots in an otherwise dismal array of Obama science advisers, has publicly stated that the absence of clear signals to industry keeps the US energy policy stuck in low gear. In the mean time, the green neo-Luddites in the administration keep pushing for expanded renewable energy projects like the recently announced California solar project.

According to the Wall Street Journal, the $6 billion project is being developed by Solar Trust of America on 7,025 acres of federally owned land near Blythe, Calif. The approval clears the way for the developers to seek federal grants and loan guarantees. This is interesting because Solar Trust is a joint venture between Solar Millennium AG and privately held Ferrostaal AG, both German companies. The project is also the sixth solar-energy installation approved for public lands. Looks like foreign companies can build on public lands with US government money if they are the right shade of green.


A Concentrating Solar Power Plant.

The project could be eligible for a $900 million cash grant from the US Energy Department and the US Treasury Department in lieu of a tax credit. The Obama administration said the Blythe solar-power project will create 1,066 temporary jobs during construction and almost 300 permanent jobs when the facility becomes operational. That's only $3,000,000 for each “green” job, what a deal! This reinforces what others around the world have learned—green jobs are not a viable way to revive a nation's economy and, instead, can drive a country into bankruptcy.

As we said in The Energy Gap, if the government made a firm commitment to nuclear power a huge number of long term, high paying jobs would be created. Nuclear plants have a working life of 30 to 50 or more years and require a highly educated work force. We estimated that to fill the highest skilled jobs at the hundreds of new power plants would require producing 10,000 new nuclear engineers over the next 10 years. What's more:

A top notch university costs about $50,000 per year, or around $200,000 for a four year engineering degree. This means that even if the government picked up the entire tab, 10,000 new engineers could be educated for a paltry $2 billion. This certainly makes more sense than paying temporary workers to fill potholes.

It also makes more sense than building concentration solar plants in the high desert employing only 300 full-time workers for $900 million a go. The nuclear energy jobs don't end with the engineers either; a large number of supporting personnel would be need as well, as many as a quarter million good jobs would be created. When will those who believe in big government accept the truth—government spending is the worst way to create new jobs.

Given the spotty success of large solar and wind projects in California (see “Solar Fuel Snake Oil & Political Sabotage” and “California Greens Oppose Transmission Line for Solar & Geo Power”) there is no guaranty that the Blythe plant will ever be completed. So far, Obama's record on energy is totally negative: he shut down the Yucca Mt. waste repository, halted offshore drilling, and now is letting the best option for America's energy future die from neglect.

The DOE has awarded an $8 billion loan guarantee for one plant and has around $12 billion in remaining authority, enough to approve one more application, but not enough for the two that are hoping for the next monetary loan award. Speaking before a Senate appropriations subcommittee in May, Energy Secretary Steven Chu said an additional $13 billion in loan-guarantee authority is needed if the DOE is to award three more nuclear-power projects. This amounts to a drop in the bucket.

If the Obama administration is serious about reducing fossil fuel use and securing America's energy future it needs to get its head out of the sand and strongly support nuclear energy, instead of killing it with hostile neglect. If not, there are always the 2012 elections.

Be safe, enjoy the interglacial and stay skeptical (particularly of politicians).

details

does anyone have any details of said "unworkable" deal? cause for all we know they could just be positioning for a better deal even though the current deal is workable.

i reserve judgment on this issue until i can see just what the deal is and what is wanted.

Loan details

I don't think that there is any question that Constellation was trying to get better terms. The real question is, was their stand a reasonable one and were the government terms significantly different from other such guaranties? According to the Wall Street Journal:

Constellation blamed its withdrawal in a large part on costs the federal government planned to impose as part of a loan guarantee. The company said it would have to pay $880 million in an upfront fee as way to mitigate risks of a potential default, rendering the project uneconomic.

The company, according to a letter sent to the U.S. Department of Energy, said the fees came from a flawed approach the White House Office of Management and Budget has taken. It warned the problem would stretch beyond just its project to threaten other new nuclear development plans.

A spokesman for the Office of Management and Budget said it was surprised by Constellation's decision, adding the federal government was working with the company up until being notified of its withdrawal. The office urged Constellation to look at a new set of terms and continue working on the project. The office declined to release the new set of terms it offered.

There are also rumors that Constellation was trying to get EDF to buy 12 coal-fired power plants for a total of as much as $2 billion as part of the deal, so perhaps the DOE terms were a convenient out. Still, build a solar plant and collect $900 million, build a nuclear plant and pay $880 million. Somehow that doesn't seem like enthusiastically backing a nuclear power resurgence.

Other plans for new reactors are moving forward under different terms from the Calvert Cliffs deal and some say that the DOE is just being careful with taxpayer money. I find the overall paucity of government funds and continued red tape at the DOE more telling than this one example. The truly cynical take the position that the $8 billion for the Georgia plant was simply a ploy to get Republicans to sign on to the administration's moribund Cap & Tax bill.

on this we agree

I find the overall paucity of government funds and continued red tape at the DOE more telling than this one example.

now there i couldn't agree more. but with the mass of uninformed "beliefs" many have regarding nuclear i am not surprised, though saddened.

Still, build a solar plant and collect $900 million, build a nuclear plant and pay $880 million

now that is more telling. it disgusts me how quickly the governments are to almost force feed our tax dollars to anything green, in spite of the unfavorable returns they currently show. should we be investing in them? you bet! but throwing money hand over fist in what appears to me to be nothing more then attempts to show off their greenness isnt helping.

sorta how i also feel about the TSA and all the money wasted to make us "feel" safer, but thats a rant for another site.

maybe with the republicans taking back over the house maybe they will get some more money sent to nuclear and do something good for the country, in spite of themselves.