Dirty energy loan guarantees stripped from compromise stimulus bill

Clean energy advocates scored a victory yesterday when a provision to provide $50 billion worth of taxpayer loan guarantees for new nuclear and high-tech coal plants was stripped out of the final version of the economic stimulus bill negotiated by the House and Senate.

The guarantees were not in the version of the bill originally approved by the House, but they were added to the Senate version by Sen. Robert Bennett (R-Utah). Bennett has long fought efforts to move the country toward more sustainable energy by opposing vehicle fuel standards, pushing for drilling in the Arctic National Wildlife Refuge and opposing efforts to factor global warming into government planning.

Experts had warned that the provision would not create any new jobs over the next four years and could in fact actually kill jobs. As Climate Progress reported following a discussion with former Nuclear Regulatory Commission member Peter Bradford:

The capital markets are not swimming in credit. If you have billions in taxpayer backed loans for your project, even for a project that will take years to finalize and see actual jobs, you may well suck up money that might be otherwise be available for, say, wind projects that are shovel ready now. Bradford called the nuke loans "straw ready."

Worse, utilities that actually use these loans to build a nuclear plant would face an all but certain drop in their credit rating -- see "Warning to taxpayers, investors -- Part 2: Nukes may become troubled assets, ruin credit ratings." That means we are setting ourselves up to take over more trouble assets, since the Congressional Budget Office estimates the likely default rate of these loans at over 50%. If you liked nationalizing banks and insurance companies, you'll love nationalizing nuclear utilities!

Climate Progress went on to explain how the calculated cost of the loans was based on the same sort of ridiculous financial assumptions that got the United States into the subprime mortgage mess.

The loan guarantees were stripped from the compromise bill after a massive outpouring of public opposition. The Nuclear Information and Resource Service, a Maryland-based watchdog group with offices in North Carolina, reports that Senators received more than 7,600 letters on the issue in one week, House members received more than 3,000 letters in three days, and Senate Majority Leader Harry Reid got more than 1,100 letters in just one afternoon when the negotiations on the compromise measure were taking place.

The final bill is expected to be approved by the House today and by the Senate on Friday and land on President Obama's desk on Monday. It is expected to pass, and no amendments can be added at this point.

"This is a huge win -- for our planet and for taxpayers who want stimulusfunds to be invested wisely," Friends of the Earth said in a statement. "The bailout in question would havethrilled nuclear industry lobbyists but done virtually nothing tostimulate the economy. Taxpayers shouldn't have to foot the bill forthe nuclear industry's failures. Congressional leaders did the rightthing and prevented waste by removing this bailout."

But NIRS warns that the nuclear industry is unlikely to give up on getting the taxpayer subsidies it so desperately wants -- and in fact needs, since private capital has proven unwilling to finance the new reactors planned for the nation, most of which are slated for the South. As the group reported in an e-mail sent out to supporter following yesterday's vote:

Two days ago, for example, they began a new push to have nuclear power declared a "renewable" energy source in Senate Energy Committee Chairman Jeff Bingaman's (D-NM) upcoming Renewable Portfolio Standard bill, which is intended to increase renewable energy production in the U.S. (although first indications are that the bill is much weaker than it should be). This is likely to become a major issue in March.

And there will be new efforts to set up a federal "clean energy bank" to finance nuclear reactors with taxpayer dollars in the coming weeks and months.