President Obama's Risky Nuclear Industry Bailout

President Obama’s Risky Nuclear Industry Bailout

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By Ben Schreiber, Climate and Energy Tax Analyst for Friends of the Earth

President Obama has recently adopted an “anything goes” approach to energy policy. In his State of the Union address, President Obama announced support for increased oil drilling, “clean” coal, and new nuclear reactors. Soon after, the president called for more than $55 billion in government loan guarantees to begin construction on the first new nuclear reactors in the United States in thirty years. Then came the news on February 16 that President Obama was giving out the first loan guarantee, $8 billion to Southern Company, to start building two reactors in Georgia.

It is disappointing to hear President Obama speak about his support for nuclear reactors, but it is not surprising. He’s been backtracking on nuclear reactors for years.   On the presidential campaign trail in Iowa, candidate Obama said, “I am not a nuclear energy proponent.” Just a few months later, however, he took a more nuanced stance on Meet the Press. Obama suggested a more open mind towards nuclear energy, but warned against the many problems with reactor technology. He cited high costs as one barrier, and he assigned the blame for those costs to the companies trying to build nuclear reactors. He also noted the need to “figure out storage and safety issues” before new reactors were built in the United States.    Candidate Obama’s position was not entirely dissimilar to Friends of the Earth’s. Any support for nuclear energy has to be contingent on real solutions to the problems of cost, radioactive waste storage, safety, security, and potential proliferation of weapon-ready material. We have been looking for solutions to these problems for fifty years, and we still have not found them. Yucca Mountain, the government’s only plan for disposing of radioactive waste, was fundamentally flawed (and is now being jettisoned). It is unlikely that any safe solution will present itself before President Obama hands out more loan guarantees and puts more taxpayer money on the hook in support of the Cold War’s energy plan.   Unfortunately, President Obama seems to have backed away from candidate Obama’s level of caution. Even though the problems he identified have not been solved, he is now supporting the expansion of nuclear power, even while admitting that the technology is so expensive and risky that it will require massive government financing and subsidies. Taxpayers have already bailed out Wall Street and the automakers. Now President Obama has set us on a path to give a pre-emptive bailout to the outdated, backwards-looking nuclear industry.   President Obama’s decision to have taxpayers bankroll this gamble on nuclear reactors is especially troubling because the nuclear industry has a well-documented history of losing big. By the government’s own estimate, over half of nuclear reactor projects will default on their loans. Those odds aren’t favorable for anybody, much less taxpayers. It’s no wonder that Wall Street firms are refusing to invest in the nuclear industry unless the government backs them up.
  The president’s strong ties to the nuclear industry could help explain his change of course. Executives at Exelon, a utility company heavily invested in nuclear, contributed at least $227,000 to Mr. Obama’s senatorial and presidential campaigns and two top Exelon officials were among his largest fundraisers. Or maybe it’s a sign that he’s desperate to strike a bargain across party lines on energy policy.
  No matter what the reason, President Obama seems to be trying to insert himself into the licensing process to get reactors with flawed designs approved. The U.S. Nuclear Regulatory Commission (NRC)raised serious concerns about the Southern Company reactor that the president selected for the first bailout award. In an October press release, the NRC said the design “has not demonstrated that certain structural components of the … shield building can withstand design basis loads.” There’s no guarantee that the proposed reactor could stand up to a serious weather event, such as a hurricane or tornado, much less a terrorist strike. Such events could cause radioactive leakages or, in the worst-case scenario, a meltdown, putting Americans at risk. Despite the NRC’s concerns, President Obama has second-guessed the independent regulatory commission and declared the design to be safe.   So who is to blame for the nuclear industry’s inability to compete or find solutions to its environmental and safety problems? The president laid the blame partially on the shoulders of environmentalists:   What I want to emphasize is this: even when we have differences, we cannot allow these differences to prevent us from making progress. On an issue which affects our economy, our security, and the future of our planet, we cannot continue to be mired in the same old debates between left and right; between environmentalists and entrepreneurs.   President Obama is right to say that rehashing old arguments isn’t productive. But warming over old technology is hardly forward-looking. The nuclear industry has had five decades to improve its technology and demonstrate that it can be safe for people and the environment — and so far it hasn’t delivered those advances.
  Friends of the Earth’s staff has been busy highlighting the multiple flaws with nuclear reactors and the greed that underlines the industry’s resurgence. Erich Pica, president of Friends of the Earth, appeared on PBS’s “The News Hour” to discuss these issues and published a featured article in the Huffington Post. Friends of the Earth analysts have been quoted in the New York Times, The Washington Post, the Associated Press, USA Today, Time Magazine, AOL, and on CNN.  We’ve also launched TV ads in South Carolina and Georgia opposing the nuclear bailout.  Tom Clements, our Southeastern Nuclear Campaign Coordinator, is on the ground organizing opposition to new reactor construction and inadequate management of radioactive waste.  Read more about our recent work and media coverage here.   Friends of the Earth doesn’t believe that environmentalism and entrepreneurship are mutually exclusive. There are many newer, safer, and cleaner energy sources that are ripe for investment, such as solar, wind, and energy efficiency. We refuse to accept that taxpayers should have to bankroll dirty, dangerous, and outdated nuclear reactor technology. We will continue to raise awareness about President Obama’s unwise embrace of the nuclear industry, and we will fight to see these policies reversed.