Obama Would Triple Guarantees for Nuclear Reactors
President Barack Obama’s 2012 budget almost triples U.S. loan guarantees for nuclear power-plant construction, funds development of a new breed of smaller reactors and spends more on “breakthrough” energy research.
The Energy Department would get $29.5 billion, a 12 percent increase, to support Obama’s proposed “clean-energy standard,” which requires 80 percent of U.S. electricity to come from low- pollution sources by 2035, according to the fiscal 2012 budget released today. The proposed standard is part of Obama’s policy “to ensure strong American leadership in the clean-energy economy,” according to the budget plan.
A program that guarantees as much as $18.5 billion in loans for construction of nuclear reactors would expand by $36 billion in 2012, to backstop $54.5 billion in lending. An initiative to develop designs for “small modular reactors” would get $67 million. Such reactors would be about a third the size of those now used by U.S. power companies, according to the department.
“We don’t think nuclear loan guarantees are a very good bet,” given the industry’s history of cost overruns, said Robert Cowin, a Washington representative for the Union of Concerned Scientists based in Cambridge, Massachusetts. “The $36 billion the president has proposed is excessive.”
Obama’s budget, which requires approval by Congress, would also expand loan guarantees for energy-efficiency and renewable- energy programs by as much as $2 billion.
The department’s Office of Science, which has funded research into subjects ranging from lithium batteries to the human genome, would get $5.42 billion, up from $4.96 billion in 2010, the last enacted budget for the agency.
The Advanced Research Projects Agency-Energy, which Secretary Steven Chu refers to as a “swing for the fences” program aimed at innovative technologies, would get $550 million, up from $400 million it received through the economic stimulus law Congress passed in 2009.
Some of the money to pay for the increase would come from a 45 percent cut for the department’s Office of Fossil Energy, to $418 million. The reductions include ending a program that studies how to extract oil and gas from shale, tar sands and other “unconventional sources.” The department will focus fossil-energy research on developing technology that captures and stores carbon-dioxide emissions from coal-fired power plants, according to the budget.
“Fiscal responsibility demands shared sacrifice,” Chu wrote on his blog on Feb. 11.
Obama also wants to repeal tax subsidies for companies that produce oil, natural gas and coal to bring in $3.61 billion in fiscal 2012 and $46.2 billion over 10 years.
“Besides eliminating thousands of new potential jobs, the increases, over the long term, would actually lower revenue to the government by many billions of dollars as a result of foregone revenues from projects the tax hikes would prevent going forward,” said Jack Gerard, president and chief executive officer of the American Petroleum Institute, a trade group in Washington, in a statement.
Lawmakers blocked Obama’s proposal last year to terminate oil, gas and coal tax subsidies, and a revised plan from Senator Bernard Sanders, a Vermont independent, to end $35 billion in fossil-fuel tax breaks was defeated in July on a 35-to-61 vote. Last week, Chu declined to predict whether Obama will succeed this year in repealing the subsidies.
“Let’s see what goes forward and hope that Congress in its wisdom will allow us to do this,” Chu said at a Feb. 9 press conference.
Proposal Last Year
Obama also proposed a $36 billion expansion in nuclear loan guarantees last year for fiscal 2011. Congress failed to pass a budget last year, and lawmakers have been funding the federal government with a series of stop-gap spending measures, or continuing resolutions, which haven’t expanded the nuclear loan- guarantee program.
To contact the editor responsible for this story: Larry Liebert at LLiebert@bloomberg.net.