Sheila McNulty Obama signals refusal to be held hostage by Congress on energy

President Barack Obama is expected to announce this week loan guarantees for two new nuclear reactors, underlining the administration’s impatience to move forward America’s clean energy future given delays by Congress. The loan guarantees, expected to be in the billions of dollars, will provide the financial incentive the industry needs to build the first new nuclear reactor in the US in three decades.

They follow President Obama’s call for new nuclear in his State of the Union Address and a 2011 budget request for $54bn in loan guarantees- almost tripling the size of the existing guarantee program. The budget also calls for $495 million for nuclear energy research and development.

Coming on the heals of the Administration’s move to take on regulation of carbon emissions, the push for new nuclear signals President Obama is determined to move forward  clean energy initiatives that have been held hostage by a Congress that cannot agree on the path toward a low carbon future.

Amy Myers Jaffe, energy expert at the James A Baker III Institute for Public Policy, put it this way:

President Obama has to separate himself from Congress, so he is looking for issues where he can take policy steps and implement them himself without legislation. The president learned from healthcare. He is not going to sit around and see what the Democrats can do on energy.

The Democrats have proved themselves divided on both issues. Besides, analysts say, Congress cannot get public support for cap-and-trade legislation until the government proves it can properly regulate the financial sector. The Administration has to find other ways to move toward clean energy.

President Obama’s first step came late last year, when the Environmental Protection Agency authorized a crackdown on greenhouse gas emissions. The ruling that carbon dioxide and five other gases pose a danger to human health cleared the way for the agency to regulate emissions from large industrial sources without waiting for legislation from Congress.

By supporting nuclear, President Obama is signaling to Republicans he understands whatever is done on energy must be bipartisan, Ms Jaffe said.

That does not mean getting energy legislation through Congress will now be a simple process. As might be expected, the Administration’s focus on nuclear has led to objections from both Democrats and Republicans, who note the high cost of new nuclear and unresolved issues about what to do with nuclear waste.

The department of energy has for years encouraged new nuclear with incentives to apply for licenses to build new plants. The US’ 103 nuclear power plants are so old they are being forced to get 20-year extensions on their 40-year operating licenses. Even though they provide 20 per cent of the nation’s energy, no provisions have been made to continue to expand that supply, once the plants are too old to operate.

Nuclear seemed poised for a revival in 2007, when NRG Energy filed the first application to build the US’ first new reactor in 29 years, hailing nuclear’s clean credentials: It does not emit carbon and, therefore, will not contribute to global climate change. Dozens lined up behind NRG, with plans to build over 30 new plants.

But momentum has been slow. US utilities have for years feared investing in new nuclear, given a bureaucratic application process, high costs and public resistance following the US’ worst commercial nuclear accident, at Pennsylvania’s Three Mile Island plant in 1979.

And the NRG plan hit a roadblock. NRG and CPS, the San Antonio municipal utility, agreed to build the new reactors together, but city officials have raised concerns about the cost, slowing progress. So the $18.5bn already set aside for federal loan guarantees for new nuclear has yet to be spent. The Obama Administration believes more money must be put in to sweeten the pot to get movement in this area. It is right. But money alone will not led to a resurgence in nuclear in the US. The support of Wall Street and the public also are crucial.