Two Reasons Not to Cheer Obama’s Nuclear Ambitions
Daniel Indiviglio at The Atlantic lists five reasons to celebrate President Obama’s renewed commitment to nuclear energy. Let’s take a look at numbers one and four:
I’ve complained several times about the government making bets on funding business propositions, like electric cars, that have not yet proven their profitability. If the government is going to throw money at something, then the target should be a known quantity. Nuclear power fits that criterion. The U.S. has been successfully using this energy source for a very long time. As a result, we can be fairly certain that such projects will ultimately be profitable and won’t need government life support forever.
Hmm, that doesn’t seem quite right. In fact, just this morning I read a piece in Mother Jones that said, um, exactly the opposite.
The nuclear industry’s shaky financial outlook is well documented. The nonpartisan Congressional Budget Office estimated in 2003 that the risk of default on loan guarantees is “very high—well above 50 percent.” Yet in a call with reporters on Tuesday, Chu said he had not heard of that CBO study.
Leaving aside the question of how Steven Chu — the current energy secretary, a Nobel Prize-winning physicist and a leading advocate of nuclear energy — could be unaware of the technology’s risks, let’s move on to another point made by Indiviglio:
Probably Not Very Costly
It’s also important to note that this isn’t a direct funding — it’s a loan guarantee. So long as the project can earn back its costs, the U.S. government may end up spending nothing. It’s essentially just making banks more willing to take a risk on the power endeavor. While the taxpayers will ultimately be on the hook if the project goes awry, most government jobs efforts cost taxpayers no matter what. As a result, we should get all this job creation for free.
Yeah, I’m gonna go back to that Mother Jones piece again:
The loan guarantee is conditional upon NRC approval. But if the project ever gets off the ground, there are plenty of red flags signaling that it’s a very bad investment for taxpayers. The nuclear loan guarantees are intended to finance up to 80 percent of the total project cost for new reactors. Southern Company’s most recent estimate for the two reactors is $14 billion, though according to independent projections the true cost of a single reactor may be closer to $12 billion. That means that the government could pour money into a new plant, only to see construction halt when the price tag rises and there are insufficient funds to complete it. Kevin Kamps, a radioactive waste specialist with Beyond Nuclear, points out because the design has not even been finalized or approved yet, “the utility has essentially no idea how much the reactor is going to cost.” (The Vogtle site has an ominous history of massive price overruns: The plant’s existing reactors were originally estimated to cost $1 billion each. But by the time they were completed in the 1980s, the bill had reached nearly $9 billion per reactor.)
People tend to think that environmentalists have some sort of allergic reaction to nuclear because they’re scared of radioactive waste and unsecured nuclear materials. There’s some truth to that, but when it comes down to it, the main point green advocates continue to hammer home is the cost issue: It’s simply a bad investment to pour billions of taxpayer dollars into a nuclear sinkhole when proven technologies such as wind and solar would provide guaranteed benefits.