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Obama’s Nuclear-Power Plan Set Back by Japan Quake Aftermath

President Barack Obama’s frustrated efforts to revamp U.S. energy policy may face another setback as Japan works to prevent a meltdown at nuclear-power reactors crippled by last week’s earthquake and tsunami.

Obama’s cap-and-trade measure to control carbon emissions failed in the Senate last year, his endorsement of expanded offshore drilling was set aside after the BP Plc oil spill in April and his support for more natural-gas production draws objections from environmentalists who say the techniques being used risk tainting drinking-water supplies.

Now, the president’s call for the government to back a new generation of nuclear plants as part of his “clean-energy” agenda may be challenged as Japan struggles to control damaged reactors. Obama has urged Congress to approve $54 billion in U.S. loan guarantees for nuclear energy, a threefold increase.

“The question is whether this event in Japan makes it more difficult to get support for additional subsidies in Congress,” Tom Cochran, a nuclear physicist and a member of the Energy Department’s Nuclear Energy Research Advisory Committee, said today in an interview. “I think it will.”

Workers battled to prevent a nuclear meltdown after a second blast rocked a plant north of Tokyo following an 9.0- magnitude earthquake and tsunami on March 11. The cooling system failed at Fukushima Daiichi station’s No. 1 and No. 3 reactors after the temblor, and it stopped working today at the No. 2 reactor. Fuel rods in the reactors may have melted when water levels fell, according to Japan’s Chief Cabinet Secretary Yukio Edano. The U.S. Geological Survey today increased the magnitude of the quake from 8.9 reported last week.

Source: Westinghouse

Representative Edward Markey has called for a moratorium on permits for Westinghouse Electric's AP 1000 units. Close

Representative Edward Markey has called for a moratorium on permits for Westinghouse... Read More

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Source: Westinghouse

Representative Edward Markey has called for a moratorium on permits for Westinghouse Electric's AP 1000 units.

‘Overall Energy Plan’

Nuclear power “remains a part of the president’s overall energy plan,” White House Press Secretary Jay Carney told reporters today.

House Majority Leader Eric Cantor, a Virginia Republican, told reporters at the Capitol today that nuclear power is “an essential part of the energy mix of this country.” Senator Lamar Alexander, a Tennessee Republican, said on the Senate floor that the reactor safety systems in Japan so far “appear to have done their job” and that U.S. reactors are “built to the highest standards in the world.”

Democrats on the House Energy and Commerce Committee sent a letter today to Representative Fred Upton, a Michigan Republican who heads the panel, asking for an investigation of U.S. nuclear safety. Upton didn’t respond except to note that Nuclear Regulatory Commission Chairman Gregory Jaczko is scheduled to testify before the Energy and Power subcommittee on March 16 about the commission’s budget.

Photographer: Jiji Press/AFP/Getty Images

Radiation at the Fukushima Dai-Ichi No. 3 reactor was rising to the same levels as those at the No. 1 unit, where a blast occurred. Close

Radiation at the Fukushima Dai-Ichi No. 3 reactor was rising to the same levels as... Read More

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Photographer: Jiji Press/AFP/Getty Images

Radiation at the Fukushima Dai-Ichi No. 3 reactor was rising to the same levels as those at the No. 1 unit, where a blast occurred.

Debate Altered

The outcome of efforts in Japan may not alter the political damage already done to nuclear power in the U.S., Christine Tezak, an energy policy analyst at Robert W. Baird & Co. in McLean, Virginia, said today in a note to clients.

“The debate over a nuclear renaissance has already been altered,” Tezak said. “The U.S. nuclear industry will be challenged to deflect criticisms that nuclear power plants can never be safe enough.”

Approval of new plants may be slowed and operators of existing facilities may have a tough time getting license renewals, Tezak said.

Representative Edward Markey, a Massachusetts Democrat and ranking member on the House Natural Resources Committee, called for a moratorium on permits for U.S. reactors in seismically active areas as well as on AP 1000 units made by Toshiba Corp. (6502)’s Westinghouse Electric Co. Markey has said the AP 1000 may not be able to withstand a strong earthquake.

‘Real Tremors’

“This is going to cause real tremors in the nuclear investment area,” Markey, a longtime critic of nuclear power, told Bloomberg Television today in an interview.

Obama’s top nuclear regulator, Jaczko, told reporters at the White House today that his agency will review information about Japan’s experience as it becomes available to “see if there are changes we can make.”

“We have a strong safety program in place to deal with seismic events that are likely to happen at any nuclear facility in this country,” Jaczko said.

Even before the Japanese earthquake, John Rowe, chief executive officer of Chicago-based Exelon Corp. (EXC), the biggest U.S. nuclear power generator, questioned whether large reactors can be built profitably even with federal guarantees.

“The government would have to spend $300 billion to $600 billion to get these plants built,” Rowe said in a March 8 speech in Washington. “Congress shouldn’t expand the nuclear loan guarantee program beyond the current $18.5 billion.”

Southern, Vogtle

A group led by Southern Co. (SO) of Atlanta, the biggest U.S. utility owner by market value, has won the only nuclear-loan guarantee awarded by the Energy Department. It will cover about $8.3 billion of the estimated $14 billion needed to build AP 1000 reactors at the company’s Vogtle nuclear plant near Waynesboro, Georgia.

“The public sentiment is obviously going to be negative now because the risks of nuclear generation have been exposed with this event,” Aneesh Prabhu, an industry analyst with Standard & Poor’s in New York, said today in an interview. “The loans were already sluggish because of the economics of low natural gas prices.”

Kevin Book, managing director at ClearView Energy Partners, a Washington policy group, said the Japanese crisis may turn Republican lawmakers against Obama’s effort to expand federal guarantees.

Effects Of Fear

“As long as there is fear, Republicans who never loved nuclear with their wallets anyway will have one more reason not to push for funding,” Book said.

Southern CEO Tom Fanning said his company plans to proceed with its plants for new nuclear reactors. The safety record of Southern as well as the U.S. nuclear fleet has been “outstanding,” he told Bloomberg Television today in an interview.

A clean-energy package Obama proposed in his State of the Union speech in January calls for backing renewable fuels such as wind and solar energy as well as cleaner coal and nuclear power.

Just hours after the quake and tsunami ravaged northeast Japan, Obama said at a news conference that he stood by his goal for 80 percent of U.S. electricity to come from low-polluting fuels such as wind, solar, natural gas and nuclear by 2035.

No Judgment Rush

“We feel good that there hasn’t been a rush to judgment,” Scott Peterson, a spokesman for the Nuclear Energy Institute, a Washington-based trade group for reactor owners and builders, said in an interview. “There is broad recognition among members of Congress and certainly the Obama administration that nuclear energy is going to be part of our energy mix going forward.”

Obama’s push to expand nuclear power has been one of his few energy policy proposals supported by Republican and Democratic lawmakers as well as utilities and some environmental groups.

The U.S., which gets 20 percent of its electricity from 104 nuclear reactors across the country, hasn’t issued a new construction license since a partial meltdown at Pennsylvania’s Three Mile Island in 1979, the worst U.S. nuclear accident.

Obama’s proposal to limit carbon emissions through a cap- and-trade system of pollution allowances passed the House and then stalled in the Senate. Republicans and some Democrats in Congress are trying to block the Environmental Protection Agency’s efforts to impose carbon limits.

The president called March 31 for expanded offshore oil and gas drilling, vouching for the safety of modern exploration technology. The plan was suspended after the April 20 blowout of BP’s Macondo well led to the largest U.S. offshore oil spill.

Environmental and community groups have also challenged hydraulic fracturing, or fracking, being used to extract natural gas from shale. The EPA is studying the issue.

To contact the reporter on this story: Kim Chipman in Washington at kchipman@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at LLiebert@bloomberg.net

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