WASHINGTON — President Barack Obama on Tuesday announced his administration's first nuclear energy loan guarantee — $8.33 billion to build the first new U.S. reactors in nearly 30 years.
The loan guarantee offer was granted Georgia Power, a subsidiary of Southern Co., and its investment partners for the construction of two reactors at Plant Vogtle near Waynesboro, Ga., where the utility operates two existing reactors.
The new reactors are expected to provide 800 permanent jobs and electricity for 1.4 million people. Compared to similar-sized coal plants, they'll reduce greenhouse gas emissions by 16 million tons annually, or the equivalent of taking 3.5 million cars off the road each year.
The Obama administration hopes to back more nuclear loans. It recently requested lending authority for $36 billion in the 2011 budget, or enough for seven to 10 reactors. A range of critics across the political spectrum oppose the nuclear loan guarantees, saying they put too much taxpayer money at risk of default.
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Obama said that other countries are building new nuclear power. "Whether it is nuclear energy or solar or wind energy, if we fail to invest in these technologies today, we'll be importing them tomorrow," he said.
An expansion of U.S. nuclear energy was essential "to meet our growing energy needs and prevent the worst consequences of climate change," Obama said. "It's that simple."
Obama also said the country will need to develop more offshore oil and gas and make investments in advanced biofuels and in technology that makes it possible to capture and store carbon dioxide from coal combustion, all policies Republicans back. Democrats need more Republican support to get an energy and climate bill passed in the Senate.
The president explicitly made a pitch to pro-nuclear Republicans to support a pending bill that would limit greenhouse gas emissions from large power generators, including coal-fired power plants.
"Energy leaders and experts recognize that as long as producing carbon pollution carries no cost, traditional plants that use fossil fuels will be more cost-effective than plants that use nuclear fuel," Obama said. "That is why we need comprehensive energy and climate legislation to create a system of incentives to make clean energy profitable."
"The fact is, changing the ways we produce and use energy requires us to think anew and act anew," the president said. "And it demands of us a willingness to extend our hand across old divides, to act in good faith, to move beyond the broken politics of the past."
Sen. Lindsey Graham, R-S.C., who is working with Sens. John Kerry, D-Mass., and Joe Lieberman, I-Conn., on a compromise energy and climate bill, said the loan guarantees were "a significant step forward in jumpstarting what I hope will be a renaissance in nuclear energy."
Obama said that the U.S. also must speed up its search for a safe way to dispose of nuclear waste. The administration has decided not to pursue a permanent repository at Yucca Mountain, Nev. Obama appointed a bipartisan panel headed by former Indiana Rep. Lee Hamilton and Brent Scowcroft, a former national security adviser to President George H.W. Bush, to find a solution. Until a permanent facility is found, the waste is stored at individual plants.
Energy Secretary Steven Chu said Georgia Power would use Westinghouse AP1000 reactors. He said the newer design is safer and more economical, but the Nuclear Regulatory Commission must approve it before the loan guarantee is made final.
Southern Co. said in a statement that Georgia Power's portion of the government-guaranteed loan would be $3.4 billion, or not more than 70 percent of its expected costs. The rest of the loan guarantees would go to its partners, which include Oglethorpe Power Corp., the Municipal Electric Authority of Georgia and the city of Dalton, Ga.
The Congressional Budget Office, a nonpartisan congressional agency, reported in 2003 that the risk of default on a nuclear loan guarantee could be "well over 50 percent." Chu told reporters that it would be much lower.
Four groups expressed opposition to the loan guarantees in a Jan. 29 letter to Obama.
"With hundreds of billions in bailouts already on the shoulders of U.S. taxpayers, the country cannot afford to move forward with a program that could easily become a black hole for hundreds of billions more," the letter said.
It was signed by the presidents of the National Taxpayers Union, a tax issues lobby group; Taxpayers for Common Sense, a centrist group that fights waste in spending; the Nonproliferation Policy Education Center, a group that advocates policies that prevent the spread of nuclear weapons; and the George C. Marshall Institute, a conservative public policy organization that opposes the scientific mainstream views of climate change.
Sierra Club executive director Carl Pope said in a statement Tuesday that the environmental group also opposes the loan guarantees. The group supports Obama's "overall vision for America's energy future," he said, but added: "We need to prioritize the cleanest, cheapest, safest, and fastest ways to reduce emissions and nuclear power is neither clean, cheap, nor fast, nor safe."
He also argued that retrofitting buildings for energy efficiency would result in greater emissions reductions at less cost.
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