In a move that's drawn fire from all sides, Obama tacked a new $36 billion of nuclear loan guarantees onto his proposed budget. This addition triples the amount reserved last year in an attempt to jumpstart the construction of new nuclear power plants.
Capital markets have continually refused to fund reactors in recent decades due to their astronomical expense and high risk factor. The Congressional Budget Office has rated the risk of default on a nuclear loan guarantee to be well above 50 percent. In 2005, as Japan, France, and other countries were heavily investing in nuclear energy, Congress authorized loan guarantees for up to six new reactors. Obama's budgetary influx would fund an additional half-dozen and has been praised by nuclear power proponents such as Senators Lamar Alexander and Lisa Murkowski.
In a joint letter to Obama, however, two taxpayer groups plus a conservative think tank and a nonproliferation organization call the new loan guarantees "a program that could easily become the black hole for hundreds of billions" of taxpayer dollars. And the progressive blog Climate Progress worries that the initiative would provide "huge subsidies for nuclear power without securing the support of pro-nuclear senators for comprehensive, bipartisan global warming pollution reduction legislation."
Even the Heritage Foundation, a strong supporter of nuclear power, has come out against the proposal, worrying that "a loan guarantee extension could prevent a dynamic, robust nuclear industry by reducing the need to innovate and create private sector solutions to financing."
Corporate law blogger Stephen Bainbridge floats the idea of letting the Navy do it:
By analogy to the Army Corps of Engineering, we could create a Navy Corps of Nuclear Engineering. It would build and operate dozens of small nuclear power plants around the country. To address security concerns, the first plants would be built on military bases, where the garrison can provide security. Licensing costs would be cut because the government would own and operate the plants.
Obama's push for more nuclear power is a gamble. He's betting federal coffers for green jobs and reduced emissions. But as Derek argues, a gamble that doesn't include cap-and-trade isn't much of a change at all: "Supported by tax credits and subsidies, our new energy policy is a lot like our old energy policy, with a different host of recipients." This time, it's nuclear, not oil, that's lucking out.