After posting a video clip of a key segment of Wednesday’s State of the Union address, in which President Obama states:
“But to create more of these clean energy jobs, we need more production, more efficiency, more incentives. And that means building a new generation of safe, clean nuclear power plants in this country.”
I received a lot of comments about the administration’s track record so far and expressing the often repeated notion that “talk is cheap”. This morning, I saw a Twitter post from the Nuclear Energy Institute that pointed to a Bloomberg article titled Obama Said to Seek $54 Billion in Nuclear-Power Loan Guarantees. Dan Yurman at Idaho Samizdat also has produced a post titled Obama to triple nuclear loan guarantees. There is evidence that the action to back up the words has begun.
One reason that I respect President Obama is that he is not only a thinker, but he is an athlete. He plays a sport where there is a lot of talk, but the players who gain respect and keep getting invited to play are the ones who back up their talk by delivering scores and playing hard defense. They might miss on occasion and even go through cold spells. Successful pick-up basketball players are those who keep coming back and occasionally go on hot streaks.
Loan guarantees are important to the nuclear industry because the currently available models are large, capital intensive projects that need a stable regulatory and financial environment. The projects can be financed because they will produce a regular stream of income that can service the debt and still provide a profit, but that is only true if the banks are assured that the government will not step in at an inopportune time to halt progress and slow down the revenue generation part of the project. Bankers do not forget history or losses very easily; they want to make sure that government decisions like those that halted Shoreham, Barnwell’s recycling facility or the Clinch River Breeder Reactor program are not going to be repeated this time around.
For the multi-billion dollar projects being proposed, bankers demand the reassurance that comes when the government is officially supportive and has some “skin in the game” that makes frivolous bureaucratic decisions to erect barriers very expensive for the agency that makes that decision. I have reviewed the conditions established for the guarantee programs pretty carefully – at one time, my company (Adams Atomic Engines, Inc.) was considering filing an application. The loan conditions are strict and do a good job of protecting government interests. They were not appropriate for a tiny company, but I can see where a large company would have less trouble complying with the rules and conditions. The conditions do allow low or no cost intervention in the case of negligence or safety issues, but they put the government on the hook for delays that come from bad bureaucratic decision making.
Loan guarantees are not a subsidy, but the industry and the people who support new nuclear energy developments for many good reasons that include excellent jobs for highly trained workers, affordable energy, domestically produced energy, and emission free energy production need to help others understand this. Be aware that there are plenty of well-funded sources of misinformation that are already firing up their press release mechanisms to try to whack this mole again. Let’s not let it happen again like it did with the stimulus bill.
If you are interested in a wide range of reactions to the State of the Union Address, you might want to visit The Blogometer: Assessing the Speech