WASHINGTON - Two senators unveiled legislation Monday to double U.S. nuclear energy output in 20 years and foster clean energy options with "mini-Manhattan Projects" named for the original U.S. atomic bomb push.

Sen. Jim Webb (D-Va.) and Sen. Lamar Alexander (R-Tenn.), noting they cannot support the cap-and-trade climate bill now churning through the Senate, said their plan could cost $20 billion over 10 years.  It would include $100 billion for carbon-free electricity loan guarantees, expected to chiefly benefit the U.S. nuclear industry.

It would also offer $750 million per year for 10 years to fund carbon-capture-and-storage technology -- sometimes known as "clean coal" -- as well as biofuels made from non-food crops, advanced batteries for electric cars and trucks, solar power, and recycling of used nuclear fuel.

The senators dubbed those initiatives "mini-Manhattan projects," a reference to the World War II-era effort to develop the atomic bomb.

The bill also includes $100 million per year for 10 years to train and educate nuclear engineers, operators, and related skilled workers, at a time when U.S. unemployment is soaring at 10.2 percent, a 26-year high.

Alexander, a fervent foe of White House-backed cap-and-trade legislation, noted that boosting nuclear energy enjoys the support of members of both major U.S. parties as well as President Barack Obama's administration.

Webb, who said he could not vote for the cap-and-trade bill "in its current form," said increasing U.S. nuclear capability was among "things we know we can do" to reduce carbon emissions blamed for global warming.

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Westinghouse's AP1000 reactor design. Federal regulators have expressed serious safety concerns about the design for 14 of the nation's 25 proposed new nuclear reactors, raising questions about the future of what the industry calls its "renaissance."

The Nuclear Regulatory Commission announced last month that Westinghouse failed to demonstrate that the building designed to shield its AP1000 reactor from outside threats such as tornadoes, hurricanes, and earthquakes. In addition, there are concerns about whether the shield building, which also provides a radiation barrier, will be able to support the 8 million-pound emergency cooling water tank that's supposed to sit on top.

"We've been talking to Westinghouse regularly about the shield building since October 2008, and we've consistently laid out our questions to the company," said Michael Johnson, director of the NRC's Office of New Reactors. "This is a situation where fundamental engineering standards will have to be met before we can begin determining whether the shield building meets the agency's requirements."

Pennsylvania-based Westinghouse, which is owned by the Toshiba Group of Japan, downplayed the NRC's concerns, releasing a statement that said it "fully expected that the NRC would require additional analysis, testing, or actual design modifications to the shield building" and that it had "already begun to address certain portions of the design." The company says it remains "confident" it will answer the NRC's concerns.

Whether it does has important implications for the South's energy future, as all of the planned AP1000 reactors are slated for the region. Two AP1000 units have been proposed at each of the following facilities:

But nuclear power watchdogs say the reactor's design problems should mean no taxpayer money in the form of Department of Energy loan guarantees should go toward its construction. Last month, an alliance of 10 nuclear watchdog groups including the Southern Alliance for Clean Energy and the NC Waste Awareness and Reduction Network sent a letter [PDF] to DOE officials calling on the agency to stop issuing conditional loan guarantees to utilities using AP1000 technology.  Among the new nuclear projects with AP1000 reactors that the DOE is reportedly considering for loan guarantees are the Vogtle site in Georgia and the Summer site in South Carolina.

"With billions of taxpayer dollars at stake in the proposed nuclear loan guarantees, the Department of Energy owes it to the public to get on the same page as the NRC about these serious AP1000 reactor design problems," said Sara Barczak, a nuclear power specialist with SACE. "We believe that the DOE should assure the public that utilities considering problematic nuclear reactor designs, such as the AP1000, would not qualify for these loan guarantees."

A report released earlier this year by the Union of Concerned Scientists found that the potential risk exposure to the federal government and taxpayers from guaranteeing loans to build new nuclear plants -- now estimated to cost upwards of $6 billion each -- could range from $360 billion to $1.6 trillion. At the same time, a study put out earlier this year by the Vermont Law School's Institute for Energy and the Environment estimated the per-kilowatt cost of new nuclear plants at two to more than three times the cost of efficiency and renewables.

But the nuclear power industry is pushing hard for more taxpayer assistance -- or what some of its critics are calling a "bailout." Last month, the Nuclear Energy Institute, industry's lobby group, announced that it wanted to build 45 new reactors by 2030 and was seeking $100 billion in additional loan guarantees.

And the industry has key champions in Washington, as several moderate Republicans including Sen. Lindsay Graham of South Carolina have said policies promoting nuclear power would be necessary for them to vote in favor of climate legislation now being considered in Congress.

Did the AP1000 get improper insider help at the NRC?

A major defense contractor and an important player in the post-Katrina reconstruction of the U.S. Gulf Coast, the Louisiana-based Shaw Group is also the largest provider of commercial nuclear power plant maintenance and modification services in the United States.

The company has long been known for working its insider connections. For example, it was one of several firms that won contracts to rebuild the Gulf Coast after Hurricane Katrina with the help of hired lobbyist Joe Allbaugh -- a campaign manager for former President George W. Bush and that administration's first FEMA director.

But now the Shaw Group faces questions about whether improper insider connections at the NRC benefited its commercial nuclear power ambitions.

Back in 2007, the Project on Government Oversight reported that Nuclear Regulatory Commissioner Jeffrey S. Merrifield "vigorously championed several major policy initiatives that directly benefited his future employer": the Shaw Group, who he went to work for 12 days after leaving the NRC.

The initiatives Merrifield promoted included a procedural change for certain types of construction activities at nuclear plants that effectively eased environmental restrictions. "Because Shaw is among the largest construction companies in the nuclear industry, few companies stood to benefit more from this initiative," POGO said at the time.

Then last month, the NRC Inspector General issued a report that confirmed Merrifield twice cast votes during his time on the NRC regarding matters involving companies he had contacted about jobs. The others were Westinghouse and General Electric. The report said the firms could potentially have benefited financially from his votes at the same time Merrifield was negotiating with them for jobs.  

In one of the questionable votes, Merrifield voted to change the criteria for emergency cooling systems, a change that would directly benefit Westinghouse, of which the Shaw Group owned a 20 percent interest. He also approved a plan by the Shaw Group to cooperate with China on building nuclear plants using AP1000 technology. China reportedly wants to have 100 AP1000 units operating by 2020.

Merrifield has denied that his job search affected any decision he made while at the NRC. The IG has referred the case to the Department of Justice.

This story originally appeared at Facing South.

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The Savannah River. Photo courtesy Mountain Hermit via Flickr Earlier this year, President Obama canceled the federal government's plans to store high-level radioactive waste from nuclear power plants and weapons facilities at the controversial Yucca Mountain site in Nevada -- but now there are concerns that South Carolina could become the permanent dumping ground for the dangerous waste.

That state is home to the Savannah River Site, a nuclear materials processing center along the Savannah River 25 miles southeast of Augusta, Ga. Built during the 1950s to refine nuclear material for weapons, the site no longer has any operating nuclear reactors and is engaged in cleanup activities.

Given the demise of Yucca Mountain, business leaders in South Carolina and Georgia are expressing worries that high-level waste at the Savannah River Site may now be left there permanently. Scientists have warned about potential environmental contamination from long-term storage of such highly radioactive waste in the Savannah River watershed.

This week the SRS Community Reuse Organization -- a nonprofit group working to diversify the region's economy and a supporter of the Yucca Mountain site -- released a report [PDF] calling for a special blue-ribbon panel to study options for disposing of the waste.

As the preface states:

The government's about face on this critical issue leaves state and local leaders with more questions than answers. Those responsible for public safety, job creation, image enhancement, and citizen confidence must now lead in a new reality. They must come to terms with their community's lingering -- perhaps permanent -- role as caretaker for the Nation's highly radioactive waste.

As a region, we are now left wondering what's next? How we will come together in unity to address a path forward in the wake of this broken promise -- one that has implications of the longest possible term and a potential chilling effect on the region's future growth and prosperity?

The group's report says that if and when a panel is assembled to plot a new strategy for high-level nuclear waste storage, the Savannah River Site region's leaders should get a "seat at the table."

This story originally appeared at Facing South.

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If I began this column with "some advice for my friends in the nuclear industry," you'd probably brace for a big fat cream pie in the industry's face. I've been a vocal critic of the industry that presided over what Forbes Magazine called "the largest managerial failure in American history." So before offering my advice, I should explain. 

Four years ago, I was appointed to the Executive Board of Energy Northwest (formerly WPPSS), which operates Columbia Generating Station, the Northwest's one remaining nuclear plant.  I accepted the appointment in part because I believe the climate crisis is so severe and imminent that it will force a reexamination of nuclear as an energy option. (It has been over 30 years since a new nuclear plant was ordered in the U.S.). I actually do have friends in the nuclear industry now -- extraordinary people who have taught me a great deal about technology and human organization.

So I offer this advice in good faith: If you believe in nuclear power as a solution to global warming and fossil fuel dependence, you should be leading the charge for a strong national climate policy, with tight, science-based limits on carbon emissions. Nothing would do more to improve the prospects for nuclear power.

However, you should NOT condition your support for national climate policy on lavish subsidies from taxpayers. That sounds like a ticket to Nuclear Boondoggle 2.  We're still paying for the original movie, and there's no audience for a sequel.  If you want a legitimate shot at a nuclear renaissance, keep it simple:  Work to pass a hard cap on carbon and bear your own financial risk.

Our failure to adopt a national climate policy thus far represents a huge and unfair competitive handicap for nuclear power (and all nonfossil-fueled energy sources). The price of energy today does not reflect the exorbitant costs of climate disruption and geopolitical turmoil. 

These are real costs that we pay now in dollars and more precious currencies: the costs, for example, of the widening forest health crisis -- the dollars we pay to fight fires, the lungs we damage by living near them, the loss of habitat and regional identity when the fall colors fade in New England and the aspens die in the Rockies. Or the costs we pay to defend oil supplies, or to clean up after more intense storms and floods, or to build water storage projects to hold the rain that used to fall as snow -- all of them attributable in part to our use of fossil fuels, but not accounted for in the price we pay for those fuels.

Paying these costs amounts to an enormous public subsidy to coal and oil. As long as carbon dumping in the atmosphere is free, and the costs of that pollution are external to the price of fossil fuels, energy markets are artificially tilted against nuclear (and efficiency and renewables.) The best way to level the playing field for nuclear power is to end this subsidy by passing a national climate policy. Cap the carbon, and we'll see what nuclear can do.

This approach is consistent with fundamental values that are deeply ingrained in the nuclear industry: performance and accountability. Nuclear operations are -- by necessity -- rigorous, outcome-driven meritocracies. They are incessantly measuring, evaluating, and striving to identify problems and reduce risks. If they didn't, they would make terribly costly mistakes that would take down the whole industry. 

A national climate policy that fully accounted for the costs of fossil fuel dependence by capping climate pollution would create a fair competition for carbon-free energy. Winners and losers in that competition could emerge on their merits. Nuclear would have a fair chance to prove its value. That hard-nosed, performance-based approach is right up the alley of the people I know who operate Columbia Generating Station. 

So I find it odd when the people who represent the industry in Washington D.C., like the Nuclear Energy Institute, propose a very different approach, based not on merit and performance but on massive public subsidies. They run their plants like Admiral Rickover's nuclear navy, but they want the government to throw money at them like a drunken sailor. 

Look what's on the wish list they're shopping in Congress right now:

Sweet! You have to look at this in context to fully appreciate the audacity and irony.

Congress is tied up in knots over the prospect of offering a very limited public option for health care to a small number of Americans.  Ideological opponents in the Senate fear this is the camel's nose under the tent for socialized medicine. And yet the nuclear industry is proposing a full-tilt single-payer approach for nuclear financing to attract the votes of the very Senators whose free-market principles preclude support for a public option in health care legislation?

And how does this proposal square with the lessons of the Great Recession? What NEI is asking for here is socialization of risk on an epic scale -- shielding the industry from market evaluations of risk by foisting it off on taxpayers. Isn't shucking and jiving and playing shell games with risk exactly what touched off the financial crisis and the 10 percent + unemployment that ensued? And this time, it's not a matter of backing into a bailout because existing institutions are too big to fail. NEI is proposing to prospectively create huge government liabilities in order to foster the development of a new nuclear industry that would stand above market judgments of risk and competitiveness ... and all this to garner votes from Senators who espouse fiscal restraint?

Look, why don't we meet halfway here? I'm not a fan of nuclear power, but I'll concede that it merits another look in light of the climate emergency -- the urgent imperative to decarbonize our energy system on a massive scale. A cap on carbon emissions will do more to improve the competitive prospects for nuclear than all the public subsidies they are likely to win from a Congress that's turning from stimulus mode toward deficit reduction. 

And it's fair.  If nuclear advocates really believe in their technology, why don't they join the fight for a carbon cap and compete for the market space it creates without passing off all the risk to taxpayers? 

To be honest, I'd bet against the nuclear industry in a fair competition like that. It's not because I think they're incompetent; on the contrary, they're among the most capable people I know. It's because I think the technology is inherently too risky, complicated, and expensive. I believe there are cleaner, cheaper, more reliable options that can scale to the climate challenge -- energy solutions we WANT the rest of the world to have. 

But I'd expect the nuclear industry, if it really believes in its product, to take the other side of the bet. And I'd expect Senators who believe in competition, accountability, and fiscal discipline to give the nuclear industry a fair shot, not a free ride at taxpayers' expense.

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I always thought it was conservatives who accused progressives of being driven by their heart and not their brain.  A painfully uninformed David Frum wades into the debate over nuclear power with a post headlined, “Conservatives Heart Nuke Power“:

First Brad Plumer in the New Republic, then Matt Yglesias on his site have marveled at the supposedly strange enthusiasm of conservatives for nuclear power. What’s strange about it? It’s pure cold economic rationality. If you wish to move away from carbon-emitting electricity sources, nuclear is far and away the cheapest choice. If we’re not going to rely more on nuclear power, then the reduction in carbon emissions will have to imply some dramatic reductions in standards of living.

Not.

Former Presidential speechwriter Frum is best known for helping to originating the “axis of evil” metaphor (his first phrase, “axis of hatred,” was changed to “axis of evil” by Michael Gerson, Bush’s chief speechwriter, who wanted to use more “theological language,” as Frum explains in his book on page 238).  He apparently hails from the Bizarro World, whose Code states “Us do opposite of all Earthly things! Us hate beauty! Us love ugliness!”

New nuclear power plants are currently far and away the most expensive form of carbon free power you can (try to) buy -- assuming you could find a nuclear vendor today that was actually willing to guarantee a price for their product in a Public Utility Commission hearing, which you can’t.

Indeed, the French government-owned nuclear giant, Areva threatened work stoppage in late summer at the Finnish nuke they were building over who would pay for cost overruns.  Areva had made clear in May it wasn’t going to keep swallowing the price escalation risk -- see “Areva has acknowledged that the cost of a new reactor today would be as much as 6 billion euros, or $8 billion, double the price offered to the Finns.”

The most detailed independent cost estimate of nuclear power published this year -- here on Climate Progress by a leading expert in power plant costs, Craig A. Severance (see “Exclusive analysis, Part 1: The staggering cost of new nuclear power“) -- puts the generation costs for power from new nuclear plants at from 25 to 30 cents per kilowatt-hour -- triple current U.S. electricity rates!

And that was just one week after Time magazine noted that nuclear plants’ capital costs are “out of control,” concluding:

Most efficiency improvements have been priced at 1 to 3 cents per kilowatt-hour, while new nuclear energy is on track to cost 15 to 20 cents per kilowatt-hour. And no nuclear plant has ever been completed on budget.

The price of power plants has soared here and abroad this year.

Progress Energy in Florida had said in 2008 that the twin 1,100-megawatt plants it intends to build would cost $14 billion, which “triples estimates the utility offered little more than a year ago.” And that didn’t even count the 200-mile $3 billion transmission system utility needs, which brings the price up to a staggering $7,700 a kilowatt. Under Florida law, to pay for these nuclear power plants, Progress Energy can raise the rates of its customers a $100 a year for years and years and years before they even get one kilowatt-hour from these plants.

Ratepayers in the region are being asked to swallow another rate increase (and a 20-month delay) on top of the 25 percent increase they saw in January (see “What do you get when you buy a nuke?“).

Ya gotta “heart” that.  Or perhaps the better pop-culture reference would be to say, “Excellent!”

It isn’t just this country -- see “Turkey’s only bidder for first nuclear plant offers a price of 21 cents per kilowatt-hour.“

Indeed, our nuclear-friendly neighbor up north just saw the mother of all nuclear bids:  “Nuclear Bombshell: $26 Billion cost -- $10,800 per kilowatt! -- killed Ontario nuclear bid“.  And that bid from Atomic Energy of Canada Ltd. was the only “compliant” bid received:

The bid from France’s Areva NP also blew past expectations, sources said. Areva’s bid came in at $23.6 billion, with two 1,600-megawatt reactors costing $7.8 billion and the rest of the plant costing $15.8 billion. It works out to $7,375 per kilowatt,

Areva “was deemed non-compliant, however, likely because Areva wouldn’t guarantee the price.”

That’s right, Areva bid a whopping $23.6, but wouldn’t even guarantee that price.

Ya gotta “heart” that.

Right now, efficiency, recycled energy, wind, biomass, geothermal, new hydro (!), concentrated solar thermal, and even PV [roughly in that order] can deliver low-carbon power cheaper than whatever price you can get guaranteed by a nuclear vendor or utility in this country (see “An introduction to the core climate solutions“).  And that doesn’t even count low-cost fuel switching from coal to natural gas in existing plants (see “Game changer, Part 2: Why unconventional natural gas makes the 2020 Waxman-Markey target so damn easy and cheap to meet“).

Progressives “brain” clean energy!

h/t Yglesias.

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One of the very first new nuclear power plants proposed to be built in the U.S. in over 30 years just hit a brick wall.  It’s the same brick wall — absurdly high cost — being hit around the world (see “Nuclear Bombshell: $26 Billion cost — $10,800 per kilowatt! — killed Ontario nuclear bid” and “Turkey’s only bidder for first nuclear plant offers a price of 21 cents per kilowatt-hour“).

The San Antonio Express News reports today:

The estimated cost of two new nuclear reactors proposed by CPS Energy has gone up as much as $4 billion, prompting the City Council to postpone Thursday’s vote on the project’s financing until January.

CPS officials and Mayor Julián Castro, flanked by every council member except David Medina, held a hastily arranged news conference Tuesday afternoon announcing the delay.

CPS interim General Manager Steve Bartley said the utility’s main contractor on the project, Toshiba Inc., informed officials that the cost of the reactors would be “substantially greater” than CPS’ estimate of $13 billion, which includes financing.

The San Antonio Current notes that “After what can only be considered a sustained Certified Sales Event by CPS Energy matched by Mammoth Media Buildup,” the City Council was set to vote for the $400 Million bond issue this Thursday, which would have put the city “on an irreversible date with” the Toshiba nuke.

Occasional guest CP blogger Craig Severance not only tipped me off to this, but in fact predicted this price rise last month in a post, “San Antonio: New Economy Leader or Nuclear Guinea Pig?” that offers some saner and cheaper clean energy alternatives, which I’ll reprint below.

If you want to see an especially painful press conference from a Mayor who had been putting his foot on the nuclear accelerator, watch this:

Even before the latest jump price jump, the city was planning “a 9.5 percent base rate increase to cover the nuclear expansion and the utility’s other capital projects.”  Such preemptive rate increases years before the plant would even deliver a single kilowatt hour are inevitable when you pursue nuclear power these days, as Florida has painfully found out (see “What do you get when you buy a nuke? You get a lot of delays and rate increases….”).

New nuclear plants are so expensive they are likely to provide electricity at some 15 cents per kilowatt hour (see “Nuclear power, Part 2: The price is not right“) — or possibly more than 20 cents/kWh (see “Exclusive analysis, Part 1: The staggering cost of new nuclear power“).  The precise answer — 50% higher than average U.S. electricity prices or more than 100% higher — is hard to know since it is all but impossible to find a utility willing to stand behind a firm price in a rate hearing.

Some city Council members are now rethinking their commitment to the nuke:

For Council members, the vote delay was not a negotiation tactic. Councilman Justin Rodriquez had been lined up in the “aye” column for the $400-million vote but said the news reveals a serious “chink in CPS’s armour.”  That it is, perhaps, “a mixed blessing.”

“We need to take a step back and look at all the options, including continued investment in renewables,” Rodriquez said.

Perfect timing to review a fact still lost on most residents — and, apparently, many of our elected officials — that we have alternatives capable of delivering the needed 500 megawatts by 2020.

Developed by a team of international energy experts, the report, San Antonio: Leading the Way Forward to the Third Industrial Revolution lays out in broad brushes a way to meet future energy needs, save utility customers a collective $3 billion by 2030, and create, on average, 10,000 jobs a year in a stimulated “green-collar” revolution.

It’s not a bad report, other than the use of uber-high-priced hydrogen storage when other strategies would be far cheaper — see these Craig Severance posts, “The Holy Grail of clean energy economy is in sight: Affordable storage for wind and solar” and “The dynamic duo: Hybrid solar/gas plants provide low-cost, low-carbon power when needed“).

Severance is co-author of The Economics of Nuclear and Coal Power (Praeger 1976) and a former Assistant to the Chairman and to Commerce Counsel, Iowa State Commerce Commission.  He’s been prescient on this San Antonio plant and has also advanced superior alternatives.  Here is his September analysis:

Photo: Mural at Construction site in beautiful downtown San Antonio, TX

SAN ANTONIO, TX — San Antonio’s new Mayor Julian Castro, in office just three months, has inherited a dilemma.  The nation’s 7th largest city is suffering from almost 8% unemployment. With limited resources, the Mayor and City Council are searching for ways to create local jobs.  At the same time, the City, through its municipal utility City Public Service (CPS), is burning through hundreds of millions of dollars on just paperwork, to prepare to spend billions on a new nuclear power plant project some 200 miles away at Bay City, TX.

Should the Mayor and the City Council question the wisdom of rushing ahead with the nuclear project, or approve CPS continuing to spend hundreds of thousands of dollars a day to prepare applications for CPS to buy a 40% share of two new reactors proposed for the South Texas Project?  CPS says the two new reactors, to be co-owned with NRG Inc., would help the utility meet power demands projected for 2020 and beyond – over 10 years away.

$400 Million Bond Issue. The issue comes to a head next month, when the City Council must approve or disapprove CPS issuing $400 million in bonds to continue its spending on the project.  The monies will not be used to actually begin construction — that would be years away — but to prepare the enormously complex engineering, design, and environmental applications required for a new nuclear power project.

Local citizen groups, however, say a far better use of such monies would be to help CPS fund aggressive energy conservation, Smart Grid, and solar energy programs to help citizens cut utility bills.  Such programs would immediately create local jobs — and cut electric growth so the nuclear projects would not be needed.

“First in U.S.” CPS and NRG, Inc. are rushing the proposal, as they say the South Texas Project expansion will be the first new nuclear plants to be built in the U.S. in over 30 years.  They hope to be first in line to receive Federal Nuclear Loan Guarantees under an $18.5 Billion program authorized by Congress.

Many San Antonions question the wisdom of rushing to be the guinea pig for the nuclear industry, which has a history of  massive cost overruns.   They challenge whether it is even a good idea to be first.  Why not let someone else find out whether the nuclear industry has learned how to build plants on-budget?

Nuclear Debate Held Wednesday, September 16th. With so much at stake, San Antonio civic leaders have taken extraordinary measures to open up the process to public scrutiny.  The San Antonio News Express , led by Editor Robert Rivard, has for months run articles on the nuclear proposal.  Open meetings have been sponsored by the utility in many neighborhoods.

As a peak event in this public discussion, The San Antonio Clean Technology Forum, led by civic leader Michael Burke, organized a sold-out  luncheon debate this past Wednesday, attended by 400 of San Antonio’s leading citizens.  Tables were sold to major companies and organizations, and all news media were invited.

The Clean Technology Forum invited myself and Dr. Arjun Makhijani, President of the Institute for Energy and Environmental Research, to debate the wisdom of the new nuclear project.    Supporting the project were Steve Bartley, CPS Interim General Manager, and Patrick Moore, who is a paid spokesperson for the nuclear power industry.    Mayor Julian Castro keynoted the event,  which was gracefully moderated by Bob Rivard, Express-News Editor.

View the Actual Debate. The video of the full debate can be viewed here:

Click HERE to go to TexasVox site with Videos of Debate.

I encourage readers to view the full debate to hear the exchange for themselves, as it was quite lively.  Each speaker had only 12 minutes, followed by audience Q&A and a 2 minute close, so it’s not too long.

Due Diligence Needed. With hundreds of millions in spending already underway, and billions more to come, the proposal for San Antonio to buy 40% of the South Texas Project expansion is well overdue for an independent “Due Diligence” evaluation.  In other words, does the project actually make business sense?  This was the approach I took in my speech, with six common Business Tests applied.  (See here for the 2 page handout with details of these points.)

Business Test #1:  Financial Stress. If you approach your banker for a $100,000 home improvement loan, the questions asked do not center around whether you like the improvements, how beautiful they are, or even if they will raise the value of your house.  Rather, the first question is can you support a project of such size?  Do you have enough income, and assets, to back up such a huge project?

For the same reason, it does not matter if anyone likes nuclear power,or if they think it’s a cool technology.  It doesn’t even matter if they think it might be a way to reduce carbon dioxide emissions.  The first question is CAN the utility do the project — without severely stressing the financial viability of  the utility, and the City of San Antonio itself?

CPS estimates its 40% share of the 2,700 Megawatt (MW) project will cost $5.2 Billion.  This is a really low estimate by national standards, and other estimates place this closer to $9 Billion.  Just the likely cost overruns are greater than the entire $3.1 Billion Net Worth of CPS.

Proposals to build new nuclear power plants place them among the costliest private construction projects in the history of the world.  For this reason, Wall Street investment banks in 2007 specifically singled out new nuclear power plants as too risky for loans, unless backed by Federal Loan Guarantees.

These same banks are still loaning money for natural gas power plants, wind farms, solar plants — but nuclear power has been deemed a crap shoot, now requiring Federal Loan Guarantees.

A Federal Loan Guarantee might work, but an important question has  arisen.  If San Antonio gets a Federal Loan Guarantee based on the $5.2 Billion estimate, but the project actually costs $9 Billion – where will the City raise the extra money, when Wall Street has already said it will NOT loan money for nuclear?

Another question concerns nuclear’s impact upon the City’s bond ratings.  The bond rating agency Moody’s has — two years in a row — taken the extraordinary measure of  warning utilities that if they pursue new nuclear power plant projects, their bond ratings are likely to be downgraded.

In its June 2009 Special Report, Moody’s coined a new Wall Street technical term for new nuclear power: “Nuclear’s ‘Bet the Farm’ Risk.

“Bet the City” Risk. The municipal utility CPS contributes $282 million to the San Antonio City Budget — the largest source of revenue for the City.  Because the City is so dependent upon CPS, not only is the new nuclear project a “Bet the Farm” risk, it is a “Bet the City Risk”.

Business Test #2:  Is Decision Rushed? Other types of power plants only require 3 to 5 year lead times, so San Antonio actually has a lot more time to decide.  The City could wait 5 more years —  until around 2015 —  to make a decision to build a new power plant,  to meet a 2020 need.  However, the very long lead time for nuclear power is forcing the City’s hand right now.

If there was ever a time to avoid making a huge spending commitment on a speculative10 year forecast, it is this next 10 years. Everything is changing about how we use energy over this next 10 years  – nothing is “Business as Usual” right now.

The nuclear project is like investing billions right now, for a Hummer factory to start selling Hummers in 10 years.  Is that wise?

Business Test #3:  Does the Proposal Match Actual Customer Needs? An amateurish business plan starts with somebody’s idea for a cool product, then tries to find a way to get people to buy it.  Business plans that actually work start with identifiying a customer need, then work backward to design a product that exactly matches that customer need.

The proposal for San Antonio to buy 40% of two new nuclear baseload power plants is the former type of business plan.  Half of the output won’t even be needed by San Antonio for decades — that’’s like buying 4 new cars, and sticking 2 in the garage till your kids grow up.  CPS says it will try to find buyers for the extra power — thus placing San Antonio at risk of losing money on those outside sales.

Another flaw is that the forecast shows only peak load capacity will be needed  by 2020  – which occurs only a few hours of the day or year.  Yet, the proposal is to build nuclear plants, which run 24/7.  What will they do with the kWh’s generated off peak?  More excess power sales will be needed, into a Texas market that often pays close to zero cents per kWh when massive wind farms are running

Business Test #4:  Competition. All business plans must evaluate the competition.  For a power plant, this means two things — the competition about what type of plant to build, and also the competition for selling kWh’s into the open market, if you need to do that.

Another type of power plant San Antonio could build might be a natural gas power plant  (of course, it can wait until at least 2015 to decide to do so, as noted above under “Rushed Decision”).

As noted under #3 “Matching Needs”, CPS admits it will have to sell excess power to other Texas utilities, as it is buying too much power plant.  The price these utilities are willing to pay for power in the Texas market is greatly affected by the price of natural gas.

The CPS natural gas price forecast is dangerously out of date.  CPS assumes very high natural gas prices of around $10 to $12 per million BTU.  Today’s price, however, is closer to $4, because of massive new finds of U.S. natural gas.  The Energy Information Administration (EIA) now forecasts natural gas prices will stay around $7 per million BTU for years to come, and  under $9 all the way to 2030.

CPS has thus overestimated natural gas prices by about 30-40%.   This skewed its analysis against building a natural gas plant.  It also vastly overestimates how much other utilities in the Texas market may be willing to pay for kWh’s that CPS will need to sell to them.

Business Test #5:  Revenue Forecast.

Any project must have adequate revenue to support it.  As noted under Test #4 “Competition”, overestimating natural gas prices has led CPS to the belief it can sell excess kWh’s to other Texas utilities, at high enough prices to cover the costs of the nuclear plant.

In reality, expert opinion indicates CPS has no chance whatsoever to recover all its costs in the ERCOT market, and will lose money trying to sell the excess power to other Texas utilities.

The losses, of course, would have to be made up by San Antonio ratepayers — who have no other choice but to buy from CPS.

OR do they?  If CPS starts raising electric rates, what will people do?  Those who have the means, will invest in energy efficiency and cut their kWh’s used.  They might even choose to generate their own power by installing solar electric, or combined heat and power generation on site.

CPS revenues – even from its own customers — may therefore fall.

This does not help CPS save money on generation. Almost all of a nuclear plant’s costs are fixed – very little is saved if fewer kWh’s are purchased.
Selling fewer kWh’s than forecast, CPS would therefore have to raise rates even higher.

The ones left holding the bag will be the poorest customers, who have no ability to insulate their (mostly rental) properties, to buy more efficient air conditioners, or generate their own electricity.

A spiral could ensue where CPS would try to collect higher and higher electric rates, from poorer and poorer customers.

Business Test #6: Are Cost Estimates Realistic?. As I have covered nuclear cost estimates in many articles in Energy Economy Online, I refer readers here to simply read the “Electricity – Nuclear” column of this website.

Steve Bartley told San Antonio leaders it will be another 2 1/2 years before CPS can come up with its ’final” cost estimate for the project.  In the meantime, it will take hundreds of millions of dollars spent on nothing but paperwork and applications, to get to that point.

My own estimate is that if nuclear cost escalations resume at even half recent levels, the CPS share will cost over $9 Billion, not the $5.2 Billion now estimated by CPS.

This implies total nuclear costs of around 16 cents per kWh from the proposed project.  Since CPS won’t be able to sell kWh’s into the Texas market at anywhere near such rates, actual rates charged to San Antonio ratepayers will need to be even higher, because  losses from outside power sales will need to be charged to CPS ratepayers.

Prudent Way Forward: Start With What You’re Already Doing. CPS calls its new nuclear project its “Plan A” proposal.  However, a true ”Plan A” should start with what you are already doing.

CPS has already committed to having about 1200 MW of wind and solar capacity by 2020 – more MW’s than it wants to buy of the nuclear plant (1,080).   Yet, CPS won’t count the billions it will spend on renewable MW toward meeting Peak Load needs — for the usual excuses “the wind doesn’t blow all the time, the sun doesn’t shine all the time”.   So CPS is proposing spending even more billions of dollars — on the nuclear projects.

For a very modest extra cost, however, CPS could firm up the wind and solar output it is already adding, so that it could count those MW’s toward Peak Load.

For instance, for about $500 Million — about the same amount CPS is spending just on nuclear project paperwork – CPS could firm up with storage about 1,000 MW of wind farms it will already own, to provide about 500 MW of dispatchable peak load capacity from wind.

This is only about 1/10 of what CPS proposes spending on the nuclear project — and can meet the 2020 CPS demand need with no need for the nuclear project.

Don’t Go Where There are No Guardrails. While experts were called in to debate these issues, the real decision rests more on common sense.

If you are driving just to get from one place to another, and have several choices of routes, and one of them is a switchback mountain highway with glare ice conditions and no guardrails, you know that is a road you want to avoid.

While you might make it over that road, the consequences of failure are catastrophic — so you simply don’t go there.

The Congressional Budget Office estimated in 2003 that the chances of a utility defaulting on its bonds (in other words, going bankrupt) from attempting to build a new nuclear power plant are “far greater than 50%”.   Wall Street came to similar conclusions — and won’t loan money on new nuclear plants.

Other choices — energy efficiency, solar rebates, Smart Grid, small modular power plants – simply do not  pose this risk of going bankrupt.

Common Sense:  Since there is a significant chance of going bankrupt  if San Antonio tries to build new nuclear plants — shouldn’t the nuclear option simply be ruled out?  Now?

Time Out Needed. Should San Antonio continue to spend more hundreds of millions on paperwork for applications for a nuclear power plant project that will probably end up  being canceled anyway?

Would not a better use of those hundreds of millions be to create new energy economy jobs in San Antonio — energy auditors, insulation and solar contractors — all much needed local jobs?

I’m pretty fiscally conservative.  If I”m going to spend hundreds of millions of dollars, I’d want to get something concrete for that kind of money.

Dr. Arjun Makhijani put it simply at our Wednesday evening meeting in San Antonio – ”If you in a hole, what’s the first thing you should do?”

The audience responded clearly: ‘Stop Digging!”

Getting Back to What Makes San Antonio a Great City. CPS Interim Manager Steve Bartley commented at the Debate that every time he holds a town meeting these days, the nuclear project sucks all the air out of the room.

He can try to talk about the great things CPS is doing for wind and solar and energy conservation, but all the discussion ends up focusing on the nuclear project.

San Antonio citizens are clearly not comfortable with this project.

I’ve said many times a utility manager’s job ”shouldn’t be too interesting”.   Nuclear power plant projects are huge mega-projects with too many things that can go wrong, with catastrophic financial consequences.

Nuclear projects are also passionately opposed by many citizens.  This controversy can “suck all the air out of the room”, and cause rankor in the City for years to come.

Those years of fighting will harm the heart and soul of San Antonio.

San Antonio is well known for being a City that approaches its problems with a “Can-Do”, nonpartisan attitude.  The nuclear projects are just one choice among many.  If they were dropped, San Antonio citizens and community leaders could work together in a cooperative consensus-based approach to develop the City’s energy future.

As Mayor Castro said at the Forum, the City works by putting into place the systems that make a great city run.  People working together is the greatest such “system”.   I personally have seen that San Antonio can do this very well.

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Supporting technical details and citations for this post can be found here: "Four Nuclear Myths" (PDF).

Whole Earth Discipline, by Stewart Brand (Viking, 2009)I have known Stewart Brand as a friend for many years. I have admired his original and iconoclastic work, which has had significant impact. In his new book, Whole Earth Discipline: an Ecopragmatist Manifesto (Viking), he argues that environmentalists should change their thinking about four issues: population, nuclear power, genetically modified organisms (GMOs), and urbanization. Many people have asked me to assess his 41-page chapter on nuclear power, so I'll do that here, because I believe its conclusions are greatly mistaken.

Stewart recently predicted that I wouldn't accept his nuclear reassessment. He is quite right. His nuclear chapter's facts and logic do not hold up to scrutiny. Over the past few years, I've sent him five technical papers focused mainly on nuclear power's comparative economics and performance. He says he's read them, and on p. 98 he even summarizes part of their economic thesis. Yet on p. 104 he says, "We Greens are not economists" and disclaims knowledge of economics, saying environmentalists use it only as a weapon to stop projects. Today, most dispassionate analysts think new nuclear power plants' deepest flaw is their economics. They cost too much to build and incur too much financial risk. My writings show why nuclear expansion therefore can't deliver on its claims: it would reduce and retard climate protection, because it saves between two and 20 times less carbon per dollar, 20 to 40 times slower, than investing in efficiency and micropower.

That conclusion rests on empirical data about how much new nuclear electricity actually costs relative to decentralized and efficiency competitors, how these alternatives compare in capacity and output added per year, and which can most effectively save carbon. Stewart's chapter says nothing about any of these questions, but I believe they're at the heart of the matter. If nuclear power is unneeded, uncompetitive, or ineffective in climate protection, let alone all three, then we need hardly debate whether its safety and waste issues are resolved, as he claims.

In its first half-century, nuclear power fell short of its forecast capacity by about 12-fold in the U.S. and 30-fold worldwide, mainly because building it cost several-fold more than expected, straining or bankrupting its owners. The many causes weren't dominated by U.S. citizen interventions and lawsuits, since nuclear expectations collapsed similarly in countries without such events; even France suffered a 3.5-fold rise in real capital costs during 1970-2000. Nor did the Three Mile Island accident halt U.S. orders: they'd stopped the previous year. Rather, nuclear's key challenge was soaring capital cost, and for some units, poor performance. Operational improvements in the '90s made the better old reactors relatively cheap to run, but Stewart's case is for building new ones. Have their economics improved enough to prevent a rerun?

On the contrary, a 2003 MIT study found new U.S. nuclear plants couldn't compete with new coal- or gas-fired plants. Over the next five years, nuclear construction costs about tripled. Was this due to pricey commodities like steel and concrete? No; those totaled less than one percent of total capital cost. Were citizen activists again to blame? No; they'd been neutralized by streamlined licensing, adverse courts, and Federal "delay insurance." The key causes seem to be bottlenecked supply chains, atrophied skills, and a weak U.S. dollar -- all widening the cost gap between new nuclear power and its potent new competitors.

Today's main alternatives aren't limited to giant power plants burning coal or natural gas. Decentralized sources provide from one-sixth to more than half of all electricity in a dozen industrial countries and, together with more efficient use, deliver the majority of the world's new electrical services. Booming orders did lately raise wind-turbine and photovoltaic prices too, but they're headed back down as capacity catches up; PVs got one-fourth cheaper just in the past year, and reactor-scale PV farms compete successfully in California power auctions. New U.S. wind farms -- "firmed" to provide reliable power even if becalmed -- sell electricity at less than typical wholesale prices, or at a third to a half the cost utilities project for new nuclear plants.

Rather than viewing nuclear power within this real-world competitive landscape, Stewart simply waves away its competitors. He praises efficient use of electricity, but rejects it because he says it can't by itself replace all coal and power all global development. He also dismisses wind and solar power, and omits small hydro, geothermal, waste/biomass combustion, all other renewables, and cogeneration. Yet worldwide these sources make more electricity than nuclear power does, and for the past three years, have won about 10-25 times its market share and added about 20-40 times more capacity each year.

The world in 2008 invested more in renewable power than in fossil-fueled power. Why? Because renewables are cheaper, faster, vaster, equally or more carbon-free, and more attractive to investors. Worldwide, distributed renewables in 2008 added 40 billion watts and got $100 billion of private investment; nuclear added and got zero, despite its far larger subsidies and generally stronger government support. From August 2005 to August 2008, with new subsidies equivalent to 100+% of construction cost and with the most robust nuclear politics and capital markets in history, the 33 proposed U.S. nuclear projects got not a cent of private equity investment.

Nonetheless, Stewart rejects all non-nuclear options, for four fallacious reasons:

I believe each claim is unsupportable:

Baseload: The electricity system doesn't rely on any plant's ability to run continuously; rather, all plants together supply the grid, and the grid serves all loads. That's necessary because no kind of power plant can run all the time, as Stewart says they must do to meet steady loads. I repeat: there is not and has never been a need for any particular plant or kind of plant to run all the time, and none can. All power plants fail, varying only in their failures' size, duration, frequency, predictability, and cause. Solar cells' and windpower's variation with night and weather is no different from the intermittence of coal and nuclear plants, except that it affects less capacity at once, more briefly, far more predictably, and is no harder and probably easier and cheaper to manage. In short, the ability to serve steady loads is a statistical attribute of all plants on the grid, not an operational requirement for one plant. Variability (predictable failure) and intermittence (unpredictable failure) must be managed by diversifying type and location, forecasting, and integrating with other resources. Utilities do this every day, balancing diverse resources to meet fluctuating demand and offset outages. Even with a largely (or probably a wholly) renewable grid, this is not a significant problem or cost, either in theory or in practice -- as illustrated by areas that are already 30-40% wind-powered.

Footprint: Stewart understates nuclear power's land-use by about 43-fold by omitting all land used by exclusion zones and the nuclear fuel chain. Conversely, he includes the space between wind or solar equipment -- unused land commonly used for farming, grazing, wildlife, and recreation. That's like claiming that two lampposts require a parking lot's worth of space, even though 99% of the lot is used for parking, driving, and walking. Properly measured, per kilowatt-hour produced, the land made unavailable for other uses is about the same for ground-mounted photovoltaics as for nuclear power, sometimes less -- or zero, for building-mounted PVs sufficient to power the world many times over. Land actually used per kWh is up to thousands of times smaller for windpower than for nuclear power. If land-use were an important criterion for picking energy systems, which it's generally not, it would thus reverse Stewart's footprint conclusion.

Portfolio: The one paper he cites as proof that we need all energy options (Pacala & Socolow's "Stabilization Wedges") actually says the opposite. There is no analytic basis for his conclusion, and there's strong science to the contrary. We can't afford to stuff our energy portfolio indiscriminately with some of everything, and we shouldn't: some options are less worthy and effective than others. The more you fear climate change, the more judiciously you should invest to get the most solution per dollar and per year. Nuclear flunks both these tests.

Government: If nuclear power isn't needed, worsens climate change (vs. more effective solutions) and energy security, and can't compete in the marketplace despite uniquely big subsidies -- all evidence-based findings unexamined in Stewart's chapter -- then his nuclear imperative evaporates. Of course, a few countries with centrally planned energy systems, mostly with socialized costs, are building reactors: over two-thirds of all nuclear plants under construction are in China, Russia, India, or South Korea. But that's more because their nuclear bureaucracies dominate national energy policy and face little or no competition in technologies, business models, and ideas. Nuclear power requires such a system. The competitors beating nuclear power thrive in democracies and free markets.

---

Stewart's reputation and his valuable prior contributions to clear thinking for a better world may win his nuclear views some attention. Yet judged on its merits, not his history, this nuclear chapter's assertions can only worsen climate and security risks.

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Last week, I struck a hopeful note after GOP Sen. Lindsey Graham expressed interest in a climate bill compromise that included a carbon cap in exchange for support for some nuclear power and coastal drilling. But my expectations it would really happen remained low.

Today, Graham made a deal all but inevitable.

Final compromise language is far from complete. But for the conservative South Carolinian to explicitly back "aggressive reductions in our emissions of the carbon gases that cause climate change" (!) in a joint op-ed with Massachusetts liberal Sen. John Kerry (!!) published in pages of New York Times (!!!), Graham has already done all he could to infuriate the conservative movement and many voters in his conservative state.

In other words, Graham has already assumed the political risks for doing a deal. And there's no point in taking those risks unless you actually do the deal. He has crossed the climate Rubicon.

(Though perhaps he can get away without anyone finding out. Amazingly, Sen. Graham appeared on NBC's Meet The Press today and failed to get a single question on the landmark op-ed. The long-standing Sunday show aversion to environmental issues remains stupefying.)

Climate Progress' Joe Romm predicts that Sen. Graham's support would bring along as many as six other Republican senators. While the Democratic caucus remains split along geographical lines, that level of Republican support would make it extremely likely that 60 senators would at least vote to cut off any filibuster attempts.

(Note that the Senate earlier rejected any possibility of passing climate legislation through Senate budget rules that preclude filibusters. It is truly sixty or Bust.)

Also striking, Sens. Graham and Kerry promote a "border tax" to pressure other exporting nations "that do not accept environmental standards" because "we cannot sacrifice another job to competitors overseas."

The House climate bill has that provision, but President Obama spoke out against the carbon tariff upon passage, I believe under the presumption the "free"-trade loving Senate would never go for it. Sen. Sherrod Brown earlier stated the opposite was true: a carbon tariff is politically necessary: "I don't think there's any way we get to even 50 votes if we don't deal with manufacturing in the climate change bill ... We need some sort of border equalization: temporary, not permanent..."

The Massachusetts and South Carolina senators have clearly reached the same conclusion.

Get Energy Smart Now understandably expresses caution that the devil is always in the details. But Romm enthuses: "I expect the final bill will have no deal-breakers for progressives." I would think the latter to be true. I said last week, as unpleasant as compromises on nuclear power and coastal drilling may be, they are unlikely to trump the power of a carbon cap.

Romm observes if Senate deal is forged before December's U.N. climate meeting in Copenhagen, even if the Senate can't quickly move to a formal vote, the U.S. will have much stronger bargaining leverage to seal an international agreement. With Kerry and Graham in agreement on the basic outlines, reaching such a deal by mid-December looks very plausible.

What was that again, oh wise Washington Establishment purveyors of conventional wisdom, about being unable to handle health care and global warming at the same time?

Originally posted at OurFuture.org.

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The greenosphere is all abuzz with the news that a few Republican Senators, led by Lindsey Graham (S.C.), have signaled that they're open to coming around on the climate bill if certain conditions are met. In classic form, Senate Dems have responded by rushing to signal they they are willing -- eager, even! -- to give these Republicans whatever they want.

This isn't actually huge news. Graham and John McCain (R-Ariz.) have been fence-sitters for a while, and it's never been a mystery what could bring them over. Graham's public statements just mark the beginning of the bargaining process. Anyway, Bill Scher and Brad Plumer have covered this pretty well. I'd just add two things.

First, if Dems are going to compromise, they should secure real commitments in return.

Senate Dems (Barbara Boxer in particular) are notorious for telling their interlocutors that they can have whatever concession they are seeking -- without getting, in exchange, any firm commitment to support the resulting bill. What happens then is that said interlocutors take what they got, put it in the bank, and immediately resume badmouthing the bill and asking for more.

This is in sharp contrast to Henry Waxman (D-Calif.) and Edward Markey (D-Mass) in the House, who may have given all sorts of goodies to Rick Boucher (D-Va.) and Collin Peterson (D-Minn.), but by God got their yea votes in return. In fact, Boucher and Peterson did yeomen's work whipping for the bill on the floor.

If Graham, McCain, et al want their nukes and their offshore drilling, John Kerry (D-Mass.) should get their solemn pledge that they will support the bill in the face of what is sure to be immense pressure from their base to bail. Vocal, public support from the likes of Graham and McCain could shift the debate in a huge way and possibly bring several more Republicans along.

Secondly, Dems should compromise with money, not architecture.

There are at least five Senate Dems that are certain no votes on the climate bill. That means you need at least five Republican yeas. To get them, there are going to have to be provisions for nuclear power and offshore drilling. There's no getting around it. But I don't think things are so bleak for those who oppose both those purported solutions to our energy troubles. As long as the compromises do not mandate nukes and drilling, or write them into the architecture of the bill, things should turn out all right.

On offshore drilling, the politics are trending toward opening up new areas for leasing. Once the price of oil and gasoline rises high enough, political pressure will be irresistible. Might as well use it as a bargaining chip while there's still something to get in exchange. As Joe Romm has argued, the fact is that even if the federal and state moratoria on drilling were lifted, there's not a lot of reasons to think oil companies will want to lease these areas. They're not as ignorant on this subject as the GOP and most of the public -- they know these areas represent huge investments of time and money for not much payoff. That's why there are already tons of available leases in the Gulf going unexploited.

So on offshore drilling, you have the makings of what could look like a huge concession from Dems, but could turn out to have fairly modest real-world consequences.

Nuclear has always been a strange subject. Its backers say, "nuclear can work, once we solve those pesky siting, cost, and waste issues." Its opponents say, "nuclear can work, but only if we solve those pesky siting, cost, and waste issues." The differences between them aren't that large. It's just that nuke proponents think the pesky problems can be solved, and nuclear opponents don't.

So the key on a nuclear compromise is not to mess with the basic architecture of the bill. Specifically, Dems should resist efforts to let new nuclear plants qualify as satisfying the Renewable Energy Standard (RES).

They could increase loan guarantees and smooth out regulatory issues around siting and permitting. They could establish some sort of expert panel to figure out a waste solution. They could even make nukes eligible for the same tax credits and subsidies offered to renewables. What these compromises have in common is that they make federal assistance available if a utility wants to build nuclear plants. They do not mandate or fully fund such plants.

So if you're a nuclear opponent and you believe that nuclear plants are never going to attract sufficient private capital, it follows that you think the result of these concessions will be ... not much. Maybe a couple of new plants. Nothing like the silly 100 plants McCain and Lamar Alexander (R-Tenn.) keep talking about.

(Side note: Reid will never, ever concede on nuclear issues until Yucca Mountain is taken completely off the table.)

Point is, both these compromises amount to less than they appear. And if they manage to attract enough Republicans to get the bill through, I will be mind-bogglingly shocked and surprised. It would be a small price to pay, and frankly I've been expecting -- and still expect, really -- a much higher price tag.

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In July, I speculated that Sen. Lamar Alexander might lead some Republicans to back a climate protection bill if Democratic leaders made some concessions regarding nuclear power. The prospect was tantalizing, as I noted then: "The Democratic caucus is not solid enough on climate issues to presume GOP votes are unneeded. Anyone giving a positive signal is at least worth feeling out."

But Alexander quickly buried that possibility, setting wildly impossible goals for nuclear and ramping up intellectually incoherent attacks on the House climate bill.

Now, the possibility of Republican support for "cap and trade" legislation is getting renewed attention. GOP Sen. Lindsey Graham explicitly raised the possibility of a deal, involving more nuclear power and offshore drilling, and Democratic leaders are hearing him out. ClimateWire reports:

Graham made similar comments to the Houston Chronicle, which suggested what a deal may look like:

I am no shill for nuclear power. We still don't have a nuclear waste solution (nor does nuclear-loving right-wing favorite France), and new plants are extremely costly, not exactly small problems.

But I am also not blind to the fact that we already have nuclear power and it's not going away any time soon. So sinking a climate bill over a nuclear compromise will do nothing to change our current reliance on nukes, while also doing nothing to cut carbon emissions.

The Republican whining about nuclear power has always been strange, because the House climate bill already supports nuclear power. A House aide who worked on the bill said, "twice as many new nuclear plants would be built by 2025 under [the House bill] than without the legislation." All we are debating about is "how much" more nuclear, not "if any."

Coastal drilling, it's a similar story. Is it a waste of time to do more? Of course. There just ain't that much oil.

But we already do some coastal drilling. The question is if we can find a way to permit a little more (note that it would take years before any actual hole got drilled anyway, so it may not be that big a concession) without creating significant environmental problems in exchange for a comprehensive plan to sufficiently cap carbon once for all.

Do I have great confidence that a few conservative Republicans are willing to face down the Teabagger fringe and strike a hard bargain? No. But any feeler is worth exploring.

Do I relish the nature of these potential deals? No. But the climate crisis threat is imminent. And it will be impossible to get the Senate to pass a real carbon cap, as it was in the House, without some unpleasant compromises.

The carbon cap is the ultimate big fish, so we should keep our eye on the ball.

Originally posted at OurFuture.org

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The Climate Post is a weekly roundup of climate news, produced by the The Nicholas Institute for Environmental Policy Solutions at Duke University.

First Things First: The Environmental Protection Agency proposed a regulation that if approved would force the largest industrial emitters, including utilities, energy-intensive manufacturing, and refineries, to invest in the cleanest available technology for new projects or major renovations. The announcement’s potential importance overshadowed the nearly simultaneous official release of the Clean Energy Jobs and American Power Act, the latest “climate” bill that dare not speak its name. These twin events occur as global climate negotiators meet in Bangkok to shrink the disagreements now widely expected to eclipse a comprehensive deal in the Copenhagen talks in December.

Zero to 60 (Votes) in Seconds?: The EPA’s proposed regulation imposes restrictions on industrial facilities that emit more than 25,000 tons of carbon dioxide a year. This threshold exempts small businesses and other concerned institutions (i.e., large new schools). The Los Angeles Times characterizes the move as a “warning shot to Congress” that the EPA is ready to move if lawmakers are not. The Washington Post lede looks outward, suggesting that the EPA action and Senate bill could influence the COP-15talks. The rules apply to as many as 7,500 industrial facilities, including 4,000 power plants, all of which under the Clean Air Act must meet requirements for emissions of a registered pollutant. They could take effect in 2011, although legal challenges are expected.

The Senate climate bill tweaks the legislation that barely passed the House of Representatives in late June. The bill, sponsored by Senators Barbara Boxer (D-Calif.) and John Kerry (D-Mass.), would lead to 20 percent emissions cuts below 2005 levels by 2020. It girds against disruptive price swings in the market for greenhouse gas emission permits by letting the EPA auction credits to dampen demand. [For relevant Nicholas Institute policy material, click here.] The new bill also empowers a single federal agency, the Commodity Futures Trading Commission, with preventing fraud and “excessive speculation,” an important consideration after last year’s Wall Street shenanigans and consequent chaos. The key Senate committee, Environment and Public Works, has internal rifts far more serious than anything in memory.

The government has been presenting a menu of options increasingly unattractive to private stakeholders opposing national climate policy. And lately it seems like one option is less desirable than the next, particularly to business interests. Enter the climate lawsuit: A court ruling of potentially great consequence snuck under many newspaper editors’ radar. The 2nd Circuit Court of Appeals ruled in favor of eight states, New York City, and green NGOs, allowing lawsuits charging emissions from coal-burning utilities as a public nuisance.

Drip, Drip, Drip…: Three companies have quit the U.S. Chamber of Commerce in recent weeks, charging the influential voice of business with retarding the national climate debate. Nike’s exodus follows PNM Resources, PG&E’s, and Excelon’s, which also came this week. General Electric remains in the Chamber, the world’s largest business association, but a GE spokesman said, “The Chamber does not speak for us on climate legislation.” The Chamber and many members, along with the National Association of Manufacturers, are key voices of opposition to climate legislation that has been proposed. (Duke Energy quit the NAM in August.) The big question is, would a larger exodus send a political signal to the Senate that industrial opposition to a U.S. carbon program has eroded to the point where lawmakers can strike the deals necessary to put one in place?

However the voices of business organize themselves in the climate debate over the next few months, longer term trends are much clearer. Business schools around the world are internalizing carbon-constrained business and building curricula accordingly [including Duke].

Not So Radioactive Abroad: Nuclear power remains a sticking point in the U.S., but not in India and China. Prime Minister Manmohan Singh has pledged to boost India’s nuclear capacity 100-fold by 2050, to 470 gigawatts, with ("untested”) fast breeder reactors. A longtime nuclear power supporter, China would like to increase its nuclear energy production 10 times by 2020, from 11 plants now in operation.

China may announce in Copenhagen its intention to establish a cap-and-trade system. The Guardian cites Philippe Chauvancy, the head of climate exchange at BlueNext, which is working with China to develop standards for voluntary emission reduction products. The article might overstate the speed at which this system might get up and running, given the complexity of building standards and acquiring know-how to certify carbon credits. More likely, China may run pilot emissions trading systems on sulfur dioxide and water pollution.

Desktop Climate Change: If the major economies enacted the most aggressive suite of climate proposals, how might they soften climate change by 2050? A new climate model attempts to bridge the gap between discussions on the international stage and scientific predictions about the mitigating effects of aggressive energy policy. C-ROADS started as an MIT doctoral dissertation in 1997, and has been developed into a tool that can project, in real time, the climate results of a given suite of policy. The model’s developers have been shopping it around the world, recently introducing it to Chinese climate experts, so that policymakers can better understand the potential implications of plans and decisions at moments in time up to 2100. The Climate Interactive Web site offers “Climate Bathtub Animation” for viewers playing the home game.

What life in the U.S. might look like in 2050 is hard to say, even with a nimble new climate model. The Cleveland Plain Dealer’s business section grapples with this statement, prompted by a chat with Steven Koonin, undersecretary for science at the Department of Energy. John Funk’s article points out the proverbial elephant in the room of climate politics: the risks and cost of inaction. the Nature blog Climate Feedback frames the question as an either-or, asking, “If we are trying to keep global warming to 2 degrees Celsius or less but 4 degrees is possible even within some of our lifetimes, which world do we prepare for?”

The Climate Archipelago: The many specialities and sub-specialities, topics and subtopics within the climate change conversation really might be imagined as a vast group of islands, each not always audible from the others. Residents of one island might know their own really, really well, but not others’. The several islands of climate skepticism are well-represented in the blogosphere.

Steve McIntyre’s Climate Audit is one of the few rigorous skeptic sites that actually scrutinizes scientific statistical data, searching, it appears, for malfeasance and incompetence. McIntyre has earned headlines over the last few years by raising questions about some prominent studies, and laudably forcing a correction or two. But it’s good to keep in mind that disputing one line of evidence of global warming -- kicking it out of the climate archipelago -- still leaves all the other islands untouched: There are many, many lines of evidence suggesting that human industrial activity is changing the climate. The scientists at RealClimate.org, often the target of Climate Audit’s audits, respond to McIntyre’s recent work, pointing out that climate change is sufficiently well-documented that even “a statistical quirk or mistake” doesn’t erase climate risk -- or reduce the size of the archipelago.

Eric Roston is Senior Associate at the Nicholas Institute and author of The Carbon Age: How Life’s Core Element Has Become Civilization’s Greatest Threat. Prologue available at Grist.

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In some hopeful news for sustainable energy advocates, the latest production numbers from the federal government are out -- and they show that the growth rate of renewable sources continues to outpace nuclear and fossil fuels.

The data come as Sens. Barbara Boxer (D-Calif.) and John Kerry (D-Mass.) are expected to introduce legislation today designed to curb man-made climate change, with hearings on their bill  -- a counterpart to the one that narrowly passed the House in June -- expected to begin early next month.

While the politics of the climate bill are likely to be even more contentious than health reform, some note with optimism that a shift toward renewables is already underway.

"As Congress debates energy funding priorities and climate legislation, it would do well to take note of the clear trends in the nation's changing energy mix," says Ken Bossong, executive director of the SUN DAY Campaign, a Maryland-based nonprofit research organization that promotes sustainable energy technologies. "Renewable energy has become a major player -- growing rapidly and nipping at the heels of nuclear power -- while fossil fuel use continues to drop."

According to the latest issue of the Monthly Energy Review published by the U.S. Energy Information Administration, renewable energy sources -- biofuels, biomass, geothermal, hydroelectric, solar and wind -- provided 11.37% of domestic U.S. energy production in June 2009, the most recent month for which data is available. That represents a gain since the first half of 2007, when renewable sources accounted for 9.89% of domestic energy production, and from the same period last year, when they represented 10.2% of production.

At the same time, EIA's latest Electric Power Monthly reports that renewable energy sources provided 11.18% of net U.S. electrical generation for the first six months of 2009 -- a significant gain over renewables' 9.9% share for the first half of 2008.

Renewable energy sources grew by 4.62% during the first half of this year compared to the same period last year. Most of that growth came from wind and hydropower, which expanded by 24.54% and 7.14% respectively in the first half of 2009 compared to the first half of 2008.

In comparison, nuclear power increased by only 1.38%, while domestic fossil fuel production actually dropped by 0.7%. Meanwhile, overall consumption of fossil fuels -- including imports -- declined 7.67%.

The numbers for renewable energy are likely to grow even more in the coming months as planned projects get underway.

Those include a new North Carolina effort to develop offshore wind power. Charlotte, N.C.-based Duke Energy and UNC-Chapel Hill are finalizing a contract that would have the company build one to three wind towers in Pamlico Sound while UNC researchers would study environmental impacts, maintenance and other related issues.

At the same time, though, Duke Energy is still investing heavily in new generation from polluting sources, constructing a new $2.4 billion coal-fired power plant at its Cliffside facility in western North Carolina. The Cliffside plant is expected to release to the air annually 6 million tons of carbon dioxide as well as large quantities of chemicals toxic to human health.

Meanwhile, the rate hike the company requested to help pay for the plant has met opposition at public hearings across the state this month, with one local newspaper describing the scene at this week's public hearing in Macon County, N.C. as "a seeming never-ending procession of citizens stating their considered opposition" to the increase, which is also opposed by a grassroots coalition of 25 environmental and public-health advocacy groups.

(This story originally appeared at Facing South.)

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Sen. Jeff Bingaman (D-N.M.) is chairman of the Energy & Natural Resources Committee and a key player on energy issues. In June, his committee voted to approve S. 1462, the American Clean Energy Leadership Act, an energy bill that may or may not be combined with a climate bill from Sen. Barbara Boxer's Environment & Public Works Committee (and possibly an allowance-allocation bill from Sen. Max Baucus's Finance Committee) into a comprehensive bill to match the House's.

Sen. Bingaman was kind enough to answer a few of our questions. Transcript and comments beneath:

Here's the transcript, with my comments interspersed.

I'm Jeff Bingaman. I'm the chairman of the Senate Energy and Natural Resources Committee, and I'm glad to take questions from Grist.org about climate change issues.

Q: Do you support splitting the comprehensive House bill by passing an energy bill and postponing cap-and-trade for later?

A: Well I favor passing energy legislation, and of course we reported a significant energy bill out of our committee earlier this year. I hope we can bring that up and proceed with it. I also support dealing with greenhouse gas emissions more directly through a cap and trade system. That legislation has not yet come out of committee. It will be up to the majority leader whether we combine those two, or do them separately, and I'm not really in a position to make that decision. But, I would like to see us do both, and do both this year if possible. If we're not able to do both, I'd like to see us do all that we can do this year.

I asked this question because the idea has been floated a few times -- by a group of conservative Democrats (Lincoln of Ark., Nelson of Neb., Conrad and Dorgan of N.D.) and more recently by Sen. Lisa Murkowski (R-Alaska).

Reid still says he wants to do a big bill, but he has pointedly refrained from closing off the option of splitting it. Sen. Bingaman doesn't exactly decry the option either; he supports doing "all that we can." Don't be surprised if the idea of passing an energy bill as a next-best substitute for a comprehensive bill gains steam over the next month or so; if that happens, the chances of a climate bill in Obama's first term all but evaporate.

Q: Are you in favor of a climate bill that includes a "price collar" with upper and lower carbon price limits?

A: Well, one of the key issues that we're dealing with in this debate about climate change, and cap and trade more particularly, is whether or not there ought to be provisions in the law--if we're able to enact a law--that would put an upper limit on the price of allowances and perhaps put a lower limit as well. I believe, myself, that it would make sense to have both. I know that that's being considered by the chairman of the Environment Committee at this time, and I hope that that's what the committee decides to do, and the chairman decides to do. I think that otherwise you have the risk of very substantial volatility in markets for allowances. And, of course, that adversely affects ratepayers and the economy more generally.

Obviously there's only so much you can say in a minute, but an extremely important issue is being elided here. In the past, Sen. Bingaman has supported a so-called "safety valve." (He included one in the climate bill he co-sponsored in 2007.) Under that policy, a hard ceiling would be set on allowance prices under a cap-and-trade program; in effect, when the price hit the ceiling the market would be flooded with unlimited credits. Environmentalists are dead set against the idea, because it compromises the environmental integrity of the program (the cap is a cap in name only) and retards the incentive to invest in low-carbon alternatives.

The "price collar" Boxer will include in her bill is different. ("It is not an off-ramp, and she does not support a safety valve," said a Boxer aide.) It adds two things to a conventional price ceiling. First it also sets a price floor, so allowance value never plunges to nothing (in the face of, say, a massive recession that dampens demand). But more importantly, if the price hits the ceiling, what's introduced to the market are not new allowances but allowances borrowed from future years. That way, the environmental integrity of the cap is preserved.

It's a crucial distinction, but since Bingaman isn't writing the climate bill this year, I wish I'd asked him about Murkowski's shenanigans instead.

Q: Can the climate bill gain the support of conservative Democrats without more funding for nuclear and coal power?

A: Frankly I don't believe that gaining support of conservative Democrats depends upon putting more money into nuclear and coal power. I do think that we've already enacted bills that try to encourage construction of initial nuclear power plants, and I support that. We have also put in law various provisions to try to deal with the emission problems of coal-fired power plants primarily by funding efforts, large demonstration projects for carbon capture and storage. Those are very important to the future of coal as an energy source, but I think what's really needed to get conservative Democrats supporting cap and trade legislation is to be able to put forward a proposal that people are confident will work and that people are confident will not impose an undue burden on rate payers or on our overall economy. And that's some persuading that still has to go on before we'll have the votes I believe to go ahead and enact this legislation.

I asked this question because Joe Lieberman, long seen as a centrist on climate policy, "believes that including greater funding for coal and nuclear energy could make the bill more attractive to Republicans and conservative Democrats" and his staff "has been meeting quietly with staffers for well over than a dozen senators on both sides of the aisle to draft provisions that would increase funding for coal and nuclear power plants." There is certainly plenty of persuading left to do, but in these situations persuading is often enhanced by prizes for constituents.

I thank Grist.org for inviting me to answer these questions. If you have other questions, please contact us on the committee's website: energy.senate.gov, or my personal website which is bingaman.senate.gov.

Our thanks to Sen. Bingaman for taking the time. Hopefully we'll hear more from him as the Senate climate drama unfolds.

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Alexander unveiled his nuclear plan in July.One of the few Congressional Republicans who talks about the need to address climate change, Sen. Lamar Alexander of Tennessee, made an interesting argument against wind and solar energy this week. He’s concerned about the amount of land required to produce energy from wind and solar, writing in the Wall Street Journal, “I fear we are going to destroy the environment in the name of saving the environment.”

He draws on a recent study by Nature Conservancy scientists who detail how much land is required to produce energy from different sources, an issue they dub “energy sprawl.” Alexander focuses on a small part of their findings—that wind and solar plants require a good deal more physical space than nuclear plants:

It’s a disingenuous argument, because the problem with nuclear power has never been land use. (See Radioactive Waste Disposal, Cost, and Security for more on the very difficult nuclear question.) I’m not arguing here that Alexander’s dead wrong in his long-standing love for nuclear energy, just that this is a thin argument for nuclear.

Oh, and Alexander says he won't support a cap-and-trade climate bill unless it includes his personal wish for 100 new nuke plants.

Bonus second point: If you’re an environmentalist who cares about endangered species and wild places, you shouldn’t be concerned about wind farms or solar plants. You should worry about biofuels.

At least, I’m having a hard time avoiding that conclusion after looking at a key graphic from the energy sprawl report:

Courtesy PLoS ONE

The chart measures the land required per unit (terawatt-hour) of electricity from different sources. Note that the top five sources are all for biofuels, derived from different crops. Note how much less land wind, solar voltaic and solar thermal energy require in comparison.

I won’t rehash the economic and ecological problems with biofuels here, but this should cool off the notion that wind and solar won’t fly for land-use reasons. Of course some places are more sensitive than others, but if there’s room for mountaintop removal coal mining, we have room for wind and solar plants.

There’s a certain man-bites-dog appeal in stories about environmentalists who oppose clean energy projects because they disrupt wild places and endangered species. Take the conflict over solar panels and transmission lines in the Mojave Desert. Or the quarrel over the Cape Wind project at Nantucket Sound. Or the fight over wind turbines in the Flint Hills of Kansas.

These conflicts are intriguing, sure. But the sprawl study, which appeared in PLoS ONE, the online journal of the Public Library of Science, suggests that biofuels such as ethanol pose a far greater threat to open lands.

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Financial Times South Asia Bureau Chief James Lamont has written a flood of environment-as-political-dialogue stories this week! (Well, only two, but that constitutes a deluge in the world of environmental peacebuilding.)

On Monday he wrote about India and China's agreement to work together to monitor Himalayan glacial melt. The potential decline in water availability from seasonal snow and glacier melt is finally seeping into the consciousness of policymakers outside the climate world, including the diplomatic and security communities. Lamont frames the step as a rare instance of cooperation in a strategically sensitive area at the center of a 1962 territorial war between the countries.

While it would be easy to make too much of such an agreement, it is a tangible recognition of the importance of the ecological unit rather than the national one. It highlights how environmental interdependence across national boundaries can force cooperation in the face of politically difficult relations.

On Wednesday Lamont used cheetah diplomacy between India and Iran as an entry point for his story on international attempts to address Iran’s nuclear proliferation threat. India is asking Iran to help reintroduce cheetahs on the subcontinent, where they are now extinct. In what Lamont said would be an "unusual" example of "high-profile cooperation" for the two countries, diplomats are arranging for talks ahead of a regional wildlife conference. This baby step in relations could be even more significant since the United States publicly acknowledged that India may be able to play an interlocutor role with Iran on the hot button nuclear program question.

While both of these developments are relatively small in the scheme of the larger strategic relationships, they are fundamentally aimed at (re)building relationships between countries by establishing patterns of cooperation where interdependence is obvious and necessary. Such efforts are just one tool in the often-neglected toolbox of environmental peacebuilding.

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An observation on the greenhouse gas policy debate: Excluding those who question whether we need a GHG policy at all, the debate is fundamentally one about where certainty is most important.  Some think the most important thing is price certainty and argue for a tax.  Others think the most important thing is emissions certainty and argue for a cap.  Every lobbyist in Washington these days assures us that the most important thing is path certainty and argue for special diversions of resources to their pet cause.

What all agree on is that uncertainty is unacceptable.  And so, not surprisingly, we get policies like Waxman-Markey that are neither a pure cap nor a pure tax nor a pure subsidy, but a bit of certainty scattered hither and thither. Sausage making at it's finest.

But do we really have that much uncertainty?  At least in the electric sector (which is, after all, responsible for over 42% of US CO2 emissions), we have a fairly high degree of certainty on two ponits: in the short term, we'll shift from coal to gas.  And in the long-term, power prices will fall.

Which is probably sufficiently heretical to demand explanation.

Near Term

So why can we be certain of a near term shift to gas?  That's fairly easy: because we don't have any other choice. 

The current US power mix is supplied by coal (49%), natural gas (22%) and nuclear (19%).  Everything else is piddly.  6% hydro, 2% petroleum and 3% from all other renewables combined.  Given the 24+ month timeline required to design, finance, build and commission any new power plant, the only near term response to GHG pricing is to shift the resource allocation amongst those generators that are already built.  And while nuclear is a low-carbon power source, it can't generate any harder than it already is.  As noted here (see Fig 4), the nuclear fleet is currently running at a 90% capacity factor, and on historically trends, appears to have pretty well maxed out.  Which means that short of building new nuclear plants - hardly a quick, near term solution - there's no way to swap coal-fired electricity for nuclear. 

The gas fleet, on the other hand, hardly runs at all.  In 2006, the fleet had a 20% capacity factor.  Roughly speaking, this means that any given plant was shut down for four days out of every five.  Gas fleet capacity factor bounces a bit from year to year, but generally stays in the 20 - 30% range.  Thus, if we immediately put a price on carbon that immediately applies to all generators (color me politically naive if you wish), the immediate impact would be to shut some coal plants off and run some gas plants a bit harder.  It's not a long-term solution, and its cost depends solely on the price spread between coal and natural gas.  But as noted here, it does have the potential to quickly and massively lower the CO2 signature of the US electric sector.

Long Term

Now to the heretical part.

Let's extend our gaze sufficiently far into the future that new capital has been deployed, facilitating the retirement of the old dirty stuff.  What's it likely to look like?

I'm not foolish enough to make technology-specific predictions.  But I will go out on one very small limb: power plants deployed in response to GHG controls will be less GHG-intensive than the ones we build today.  Wind, nuke, solar, CHP, biomass, geothermal... and probably lots of other things we haven't thought of (not to mention lots of end-use conservation).

Here's the unifying feature of all those technologies: they cost less to operate on the margin than the stuff we use today.  That's not to say they're all cheaper.  After all, many of the technologies we will deploy in response to GHG regulation are technologies that today are held back due to high capital costs (solar, nuclear, etc.)  But once a power plant is installed, the decision to run it one more hour isn't based on capital cost recovery, but on the marginal cost of production.  If it costs me $2.50 to make one more widget and I can sell it for $2.51, I'll make that widget regardless of how much the widget factory cost me.  That, in a nutshell is why our nuclear fleet today runs all the time and the gas fleet doesn't.  Inclusive of capital recovery, the gas plants have lower all-in costs... but on the margin, the nuke plants make more sense to run.

This point is key, and too often overlooked.  We assume that new, low-CO2 technologies are held back by economics - but forget that those economics include both capital and variable costs.  And in the long-run, it is only the variable cost that matters.  Shifting to low-CO2 power is therefore a shift to low variable cost power.  Which in turn is a shift to low cost power. 

I should emphasize that it may take a while to get to this point, as initial prices from high-cost construction have to be amortized.  A comparison with nuclear in the 1970s is instructive, when huge cost overruns put upward pressure on prices until the political will was broken and owners went bankrupt... but the plants kept running, and today form the low-cost base for much of our grid.  This will happen again with new low-CO2 sources, for the simple reason that CO2 sources (e.g., fossil fuel) cost money.  Cut the source, save the money.

I should also note that there is one exception to the low cost/low CO2 paradigm: Coal with CCS.  It's low CO2 (if it works) but high cost.  Which is why it will never matter.  It won't be built unless subsidized, and if it is built, it won't run.  I'm certain.

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Power companies pursuing construction of new nuclear plants may find it harder to get credit -- meaning ratepayers could end up shouldering a greater financial burden for the costly and environmentally harmful projects.

Moody's Investors Service, a leading independent credit rating firm, recently released a report that says it's considering taking a "more negative view" of debt obligations issued by companies seeking to build new nuclear plants.

Titled "New Nuclear Generation: Ratings Pressure Increasing," the report raises concerns that investing in new nuclear plants involves significant risks and huge capital costs at a time when national energy policy is uncertain. Yet companies investing in new nuclear projects -- cost estimates for which are hovering in the $6 billion range -- haven't adjusted their finances accordingly, according to Moody's:

Few, if any, of the issuers aspiring to build new nuclear power have meaningfully strengthened their balance sheets, and for several companies, key financial credit ratios have actually declined. Moreover, recent broad market turmoil calls into question whether new liquidity is even available to support such capital-intensive projects.

Fourteen companies have submitted applications to the U.S. Nuclear Regulatory Commission to build 17 new reactors, with the first approvals expected beginning in 2011. Pursuing new nuclear generation increases a company's business and operating risk profile, which in turn puts pressure on credit ratings. While Moody's is optimistic that utility regulators will authorize recovery of costs, that ultimately means higher bills for ratepayers.

Indeed, the report warned of potential "future rate shock" for electricity customers. It also says that proposed federal loan guarantees for nuclear plant construction would "only modestly mitigate increasing risks."

Moody's distinguishes between new reactors located adjacent to existing units and brand-new projects, with the former benefiting from existing infrastructure. But the ratings service still views new nuclear plants as what it calls "bet-the-farm" endeavors, making it more likely that the projects will lead to ratings downgrades, as happened during the last round of plant construction in the 1970s and 1980s.

A step above junk

Of the 17 proposed reactor projects on Moody's list, two already have obligations rated speculative or "junk" grade, and both are in Texas: NRG Energy's South Texas Project in Bay City, which is rated Ba3 ("questionable credit quality"), and Energy Future Holdings' Comanche Peak in Somervell County, rated B3 ("generally poor credit quality"). For details about Moody's ratings, click here.

Thirteen other proposed nuclear construction projects have credit ratings between Baa1 and Baa3 -- one step above junk status. They include eight in the South: Dominion's North Anna in Louisa County, Va.; Duke Energy's William S. Lee in Cherokee County, S.C.; Entergy's Grand Gulf in Port Gibson, Miss. and River Bend in St. Francisville, La.; Exelon's proposed two-unit plant in Victoria County, Texas; Progress Energy's plant in Levy County, Fla. and its Shearon Harris plant in Wake County, N.C.; and SCANA's Virgil C. Summer plant in Fairfield County, S.C.

The financing problems have already caused some companies to back away from nuclear projects. Earlier this month, AmerenUE announced that it was suspending plans to build a new reactor at its Callaway plant in Missouri. A factor was that state's ban of "Construction Work in Progress," a financing scheme that allows a nuclear utility to recover the construction costs of a reactor from ratepayers before the reactor is up and running.

Earlier this year, Georgia passed a law embracing CWIP. Perhaps not so coincidentally, one of only two nuclear projects that Moody's report deemed investment-worthy was the Southern Co.'s planned reactor at Plant Vogtle in Burke County, Ga., which netted an upper-medium grade A3 rating. The report's top rating for a nuclear project -- Aaa or highest quality -- went to the Tennessee Valley Authority's proposal for two new reactors at its Bellefonte plant in Hollywood, Ala. TVA also wants to finish two partially completed units at the Bellefonte site that were canceled in the late 1980s after a $6 billion investment.

Moody's notes that new nuclear power construction "appears to enjoy strong political and regulatory support in a number of jurisdictions, especially in the southeastern states, where there is now legislation afoot to promote it."

Demanding divestment

The nuclear industry has been critical of Moody's report, with a Nuclear Energy Institute spokesperson telling the Charlotte Business Journal that it's based on old information.

But the report has already gotten the attention of anti-nuclear activists. The North Carolina Waste Awareness and Reduction Network sent a letter [pdf] to State Treasurer Janet Cowell citing the report and asking her to ensure state investment funds exclude the bonds issued by Duke Energy and Progress Energy, since North Carolina law requires all debt holdings to be in top-rated securities.

NC WARN recently appealed to the NRC [pdf] to stop the planned construction of two new reactors at Progress Energy's Shearon Harris plant, noting that the lack of a finalized design makes it impossible to accurately calculate costs.

The financial risks of nuclear power are not the watchdog group's only concern: NC WARN also points out that Duke Energy recently filed for an 18% rate increase in part to cover construction costs at its controversial new Cliffside coal-fired power plant in western North Carolina:

Although Duke has stated that it is financing Cliffside "from its balance sheet," utilities regularly borrow and roll various forms of debt; early this year, a bond sale attempted by Duke was "panned by investors," and the company had to repackage the offering, apparently with higher interest rates.

NC WARN recently asked the state Utilities Commission [pdf] to halt construction at Cliffside, citing the project's financial risks. Though the Moody's report focuses solely on nuclear generation, lenders have also warned about the increasing financial risks of coal plants given the uncertain regulatory environment. The commission has not yet ruled on NC WARN's motion.

"We really need Treasurer Cowell and the Utilities Commission to protect North Carolinians from the power companies' dreams of expansion," says NC WARN Executive Director Jim Warren, adding that officials "must ensure the public doesn't get burned by the utilities' actions."

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Will the proposed clean energy agency become a slush fund for nuclear power?U.S. lawmakers are considering legislation that would create a new independent federal agency to promote government investment in clean energy.

But watchdogs are raising questions about whether the way the proposed agency is structured is unfair to taxpayers and bad for the environment. Among their concerns are its bias toward nuclear power -- a critical issue given the industry's planned revival.

"We support the financing of clean energy technologies to promote the domestic development and deployment of technologies that will reduce greenhouse gas emissions in the most efficient, environmentally sound manner possible," stated a recent letter to lawmakers signed by 17 environmental groups. "However, the proposed Clean Energy Deployment Administration (CEDA) will not achieve these important goals and will in fact, as drafted, pose unnecessary and potentially enormous risks to our environment and to the U.S. taxpayer."

CEDA would be established within the Department of Energy, through legislation titled the "21st Century Energy Technology Deployment Act," introduced by Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-N.M.) and ranking member Lisa Murkowski (R-Alaska), and would be set to be combined with the Senate version of the climate bill. CEDA would provide billions of dollars in taxpayer-financed credit, including loans and loan guarantees, to the private sector to invest in energy technologies.

Similar legislation was also introduced in the House by U.S. Rep. Jay Inslee (D-Wash.), and added via amendment to the recently approved House climate bill, the American Clean Energy and Security Act (H.R. 2454) that passed June 26 by a vote of 219-212.

There are significant differences between the House and Senate CEDA proposals, with the version now being considered in the Senate drawing strong criticism from sustainable energy advocates. Some of the key concerns:

* The Senate version allows unlimited loan guarantees without congressional oversight. It provides an exemption from Section 504(b) of the Federal Credit Reform Act, circumventing the congressional appropriations process and relying instead on the White House Office of Management and Budget's model, calculating default risk and how much of the cost of that risk should be borne by the company. The House version of the legislation doesn't include this exemption, meaning CEDA would have to get congressional approval for requested loan guarantees. Both the Congressional Budget Office and the Government Accountability Office have warned that the default risk cost is hard to calculate and is likely to be underestimated, leaving taxpayers to bail out private companies that can't make their loan payments.

* The Senate version allows one technology to hog all the money. The House caps at 30 percent the amount of total dollars available that can be given to any one technology. However, the Senate version has no caps, which means one technology could enjoy the lion's share of the available subsidies.

* The Senate version does not include a greenhouse gas metric. That is, the bill does nothing to ensure that priority is given to those technologies that cut the most greenhouse gas emissions per dollar invested in the shortest amount of time. The House version, on the other hand, requires that priority be given to projects that cut greenhouse gases the quickest and cheapest.

Given those provisions -- coupled with the Senate climate legislation's general friendliness toward nuclear power, which it calls a "clean and secure domestic energy" whose use should be expanded -- energy policy expert Michele Boyd of Physicians for Social Responsibility said during a recent discussion of the bill that CEDA could essentially act as a "slush fund" for nuclear power. That would be a bad deal for taxpayers, given how costly nuclear power is compared to other more environmentally sustainable energy sources.

How much more expensive? A recent study [pdf] by Mark Cooper of Vermont Law School's Institute for Energy and the Environment estimated that new nuclear plants will cost between 12 and 20 cents per kilowatt-hour compared to an average of 6 cents for efficiency and renewables. Cooper calculated that the plan being promoted by Senate Energy Committee member Lamar Alexander (R-Tenn.) to build 100 new reactors across the United States would result in up to $4 trillion in costs over and above what it would cost to generate the same equivalent power from efficiency and renewables.

How did the Senate's CEDA proposal end up so biased toward nuclear power -- even though the technology is not only expensive but also a poor solution to the global warming problem due to its long construction time, the nuclear fuel chain's sizable carbon footprint, and nuclear plants' considerable heat emissions? It might be helpful to consider the relationship between the measure's primary sponsors and the nuclear power industry.

When he was last up for re-election in 2006, Sen. Bingaman was the top Democratic recipient of campaign cash from the Nuclear Energy Institute PAC, which represents the interests of the nuclear industry, according to the Center for Responsive Politics' OpenSecrets.org database. He received $6,000 from NEI's PAC that year, tied with Independent Sen. Joe Lieberman of Connecticut and surpassed only by three Republicans -- Mike DeWine of Ohio, Rick Santorum of Pennsylvania and James Talent of Missouri -- who received $7,000 each. When co-sponsor Lisa Murkowski was up for re-election in 2004, NEI contributed $6,000 to her campaign, according to OpenSecrets.org. Altogether since 2000, Bingaman has received a total of $7,999 from NEI and Murkowski $9,500.

And Bingaman has gotten more from NEI than just money: In 2006, he also won NEI's William S. Lee Award for Leadership, asking the lobbying group in his acceptance speech to "do your part to use those tools that Congress has put in place to ensure that nuclear power achieves its potential as part of our future energy mix." It now appears the industry is doing just that -- with Bingaman's help.

But watchdogs are fighting back against the legislation's proposed nuclear giveaways. They are calling on concerned citizens to write to their Senators and President Obama and ask them to oppose any additional taxpayer subsidies for the nuclear power industry in the climate legislation. As PSR notes, the industry's own estimates say it already stands to profit by $1 billion a year from a carbon cap.

"We can have nuclear power or we can address the climate crisis," the Nuclear Information & Resource Service says in its call for action on the legislation. "We can't do both."

(A version of this story originally appeared at Facing South.)

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Building energy codes are the key.Are 100 new nuclear plants the solution to our climate troubles? I asked that question in a post last week.

The answer lies buried deep within the 1,428-page Waxman-Markey climate bill (H.R. 2454, the American Clean Energy and Security Act), passed by the House and now under consideration in the Senate. It is Section 201, pages 320-348. It is this section that makes H.R. 2454 worth passing.

No matter what else is compromised or changed in the climate bill as it works its way through the Senate, Section 201 must not be changed or weakened. Why? Because all other energy- and emissions-reduction approaches pale in comparison to what Section 201 will accomplish. Without it, we simply cannot meet the greenhouse gas (GHG) emissions reduction targets called for in the bill. We won't even come close.

Section 201 covers building energy codes -- that's right, building energy codes -- that will transform the entire built environment in the U.S. by 2050. That's because Section 201 affects all new buildings and major renovations, and by 2050 more than three-quarters of the built environment in the U.S. will be either new or renovated.

Section 201 requires updating national building energy codes to meet the following energy reduction targets:

The targets outlined in Section 201 are simply more effective than any other energy and emissions reduction approach. The following graphs compare Section 201 with the call by some in Congress for a massive U.S. effort to build 100 new nuclear power plants in an attempt to move the country toward energy independence and significant GHG emissions reductions:

The proof is in the data. There's simply no comparison. Whereas the 100 nuclear power plants only act as a replacement energy source, the updated building energy codes of Section 201 actually reduce energy consumption, eliminating the need for more plants. The codes also achieve more than six times the emissions reductions of 100 nuclear power plants. The codes accomplish all of this at a fraction of the cost. Here are the facts:

The targets in Section 201 are set at a reasonable and beneficial pace for change that will achieve the reductions necessary within the timeline called for by the scientific community. Implementing these targets will reduce building sector energy consumption by:

Implementing the targets in Section 201 would also reduce building sector CO2 emissions by:

It is clear that the building energy code targets set in Section 201 are not only essential for achieving the energy consumption and GHG emissions reductions needed, but they are also the most cost-effective approach for doing so.

What about China and India? The U.S., through our multi-national architecture and engineering design firms, heavily influence the global built environment. As our firms move the U.S. built environment into the 21st century, they will, in both practice and influence, move China's and India's as well (see a list of multi-state and national firms that have adopted the 2030 Challenge in Appendix B of the Architecture 2030 Fact Sheet [PDF]).

To read Architecture 2030's complete analysis of H.R. 2454, Section 201, with sources and citations, download the Architecture 2030 Fact Sheet [PDF].

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