On a frigid February day in Washington, Barack Obama became the first president in many years to back the nuclear industry with more than vague promises. In committing $8.3 billion worth of federal loan guarantees to the construction of two new nuclear units at Southern Company’s facility in Georgia, the president has sent a clear message to the country — and to environmentalists — that nuclear will be part of the country’s future energy mix. For that message, he deserves our approbation.
However, the vehicle in which the message rides — loan guarantees — is itself an illustration of the reason why we have not had a new nuclear plant in the United States for 30 years. The permitting process for getting a new nuclear plant built in this country is longer and more arduous than in most of the rest of the world. Litigation by environmental activists is a certainty. Construction also takes a long time (the new plants are predicted to be operational in 2016 and 2017, which is quite fast). Add these together and it can easily be 20 years from beginning the permitting process to turning the switch on, which makes it impossible to put together the requisite financing package without government loan guarantees.
As a result, the nuclear industry is completely dependent on governmental approval, something that has turned it into yet another rent-seeking concern, latching on to the global warming bandwagon as its justification rather than the production of affordable, reliable, sustainable energy. In essence, the industry has happily become a ward of the state. This is not something conservatives should celebrate.
If the president wants to go further in demonstrating his commitment to nuclear energy — and reduce the burden on the taxpayer should something go wrong — he should seek to wean the industry off its reliance on the state. The best way to do that is to streamline the permitting process further. The Nuclear Regulatory Commission’s new permitting process is a good first step in that it reduces the time from application to license issue down to just four years in ideal circumstances; by way of comparison, the United Kingdom’s Labour government has announced a new process whereby planning application and licensing together take just one and a half years. Indeed, the Brits believe that with this new process a whole fleet of new nuclear plants, not a mere two, can be operational from 2018 — without government subsidy. Such a bold step would be an even clearer signal to the market that nuclear is back than loan guarantees and would certainly spur innovation and competition in the sector once more.
One other caveat should apply to the announcement. The president has frequently said that he wants to “meet Republicans halfway” on energy issues, and his speech is being marketed as an example of that. Indeed, a White House official made this explicit, telling Fox News that “Republicans who advocate for nuclear power have to recognize that we will not achieve a big boost in nuclear capacity unless we also create a system of incentives to make clean energy profitable.” So the price for state support for two — count ’em — new nuclear units, when the president’s own economic plans call for 100 over the next two decades, is billions of dollars in green pork that will do little to meet America’s energy needs.
So once again, the president’s plans do not match up to his rhetoric. At least on this occasion, the rhetoric is something conservatives can applaud.