Last week the Department of Energy and Southern Company announced that they had completed agreements on loan guarantees for the new Vogtle nuclear units. The loan guarantees were made possible for Southern (and for South Carolina Electric and Gas and its partners on the V.C. Summer project) under the 2005 Energy Policy Act. The completion of the long-anticipated agreements was not a reflection of any new policy development.
The Washington Post greeted the news with an article (not, as the headline and story might suggest, an opinion piece) titled, Big Breaks for Nuclear Power. The article began by posing this provocative – and somewhat argumentative – question: “If nuclear power is such a good idea, why does it need financial help from U.S. taxpayers?” But the article provided no context and barely attempted to answer the question. The author cited assessments that the two Vogtle units represent a “deeply subsidized project, that will cost the taxpayers a lot”; mentioned the Fukushima accident and vague safety concerns (with no assessment of applicability to new plants like Vogtle); and quoted the anti-nuclear group Public Citizen on the wisdom (or lack thereof) of the nuclear project. The article made no attempt to assess the policy of loan guarantees, the cost-benefits of nuclear energy, the economics of renewables, or the range of considerations involved in building a diversified (did somebody say “all of the above?”) generation portfolio.
The Post article invokes the specter of Solyndra, comparing that renewable start-up to the Southern Company. That is certainly an interesting comparison at best, given the relative assets, revenues, and capitalization of the two companies. But the comparison is even more ironic given that nuclear generation (both new and existing plants) must compete in many electricity markets with heavily subsidized wind and solar projects. Renewables – through investment and production tax credits, loan guarantees, and state and federal portfolio standards mandating above-market-price power purchases by utilities and distributors – are in fact “deeply subsidized” and “cost the taxpayer a lot.” Based on U.S. Energy Information Administration data, renewables actually consume a full 55% of the total federal subsidies and support for all electric generation in the U.S. This share compares to 21% for nuclear. Much of the nuclear funding is directed at long-term research that has no impact on current project costs. And nuclear represents a far larger number of megawatts actually generated.
This is not to say that renewable projects are bad. The policy behind renewable subsidies is widely understood. But what about nuclear? How does one answer the question posed by the Post columnist (i.e., reporter)? One simple answer was offered by Dr. Ernest Moniz to the Economist in March 2012 – while he was a professor at MIT and before he became Secretary of Energy: “There is only one reason for America to subsidize nuclear, and that is the climate.” Although there are actually several other good reasons, including fuel diversity, grid reliability, air quality, global competitiveness, and local economic development, this is a very good reason indeed.
If the nation believes that carbon emissions can, even potentially, lead to climate change on the order predicted by most scientists, nuclear electricity generation represents by far the most significant near-term step that can be taken to reduce carbon emissions. Renewables might be a distant fourth – after nuclear, reductions of emissions in the transportation sector, and electricity conservation initiatives. While the question posed in the Post article seems more than a bit unfair in singling out nuclear, at a minimum a more fulsome assessment was warranted. A national investment in nuclear power could pay huge future dividends.