Wednesday, March 16, 2011

Is Speaker John Boehner a (nuclear) Socialist?

Speaker Boehner and many conservatives view France, which gets 82% of its electricity from 58 nuclear reactors at 20 facilities, as an energy role model. Perhaps conservatives are so supportive of the French nuclear industry, because the French electricity industry emits a small fraction of the carbon, mercury, soot, and other air pollutants that are emitted in the USA.  But strong conservative opposition to EPA regulations of these traditional pollutants that sicken and kill thousands in America also is a political fact of life.

Whatever the motivaition is, today the Speaker again pointed to the French nuclear industry as an example for America. Moreover, the Speaker and the Congressional Republican caucus last year endorsed building 200 new nuclear reactors in the USA that would cost $2 trillion (trillion not billion).

Conservatives trumpeting the French nuclear industry have always been a curious sight to energy experts.  Why?  The French nuclear industry to this day is almost completely owned by the government.

Electricite De France (EDF) is the owner and operator of all 58 nuclear reactors, and the French government owns 85% of EDF.  Areva is the largest nuclear plant builder in the world and the French government owns more than 90% of Areva.  These companies were until recently fully nationalized operations and are still government-owned enterprises.

Here is another fact about the French nuclear industry.  The French government created it entirely starting in 1974, following the first Arab oil embargo. It is industrial policy on steroids.

In short the French government picked nuclear power as the winner in 1974 and made all other energy sources the losers. The invisible hand did not create the French nuclear industry and would not have. Government picking winners and losers is a no-no to right wing ideologues, right?

The French nuclear industry is as pure an expression of socialism as you can find in the world today.  Of course, John Boehner is not a socialist, but he clearly is confused about the economics of nuclear power and this central fact: Only governments build nuclear plants anywhere in the world, including in the USA.

The up-front capital costs of nuclear power are so high ($6-10 billion per unit) that they frighten away private investors. Fear on Wall Street, not "not in my backyard" fright, has stopped new nuclear plants in the USA.

No private US company will build one, unless the government socializes or removes the risk that a nuclear plant could bankrupt an owner.  Consequently a 100% government loan guarantee, the limitation of liability in the event of an accident provided by the Price Anderson Act, production tax credits for nuclear generation and other subsidies are essential to convince any US company to build a plant. 

Other subsidies include charging monopoly ratepayers of Southern Company in states like Georgia for a nuclear plant years before it begins operating, as is the case with the two new US reactors that are most seriously currently under development.  And even with all these inducements, most power companies view a decision to build a new nuclear plant as betting the entire company on a nuclear project and so remain uninterested.

But bi-partisan and growing environmental support for new nuclear was a reality prior to Fukushima. President Obama's current budget proposes a major national commitment to nuclear power in the form of another $36 billion for nuclear loan guarantees.

Finally, Speaker Boehner also is a climate skeptic as is nearly the entire Republican congressional delegation these days.  These elected officials often deny global warming but favor massive taxpayer support for new plants.

Yet, the economic justification in the US for nuclear power entirely rests on placing a substantial cost on carbon pollution and accepting climate science.  The dire science and facts about global warming had moved many environmentalists to support nuclear power prior to Fukushima.  And one result of the Fukushima tragedy will be more carbon in the atmosphere, since the disaster will cut the number of reactors that would have otherwise been built around the world in the next 10 years. 

With all due respect, Speaker Boehner and so many of our top leaders need a much more factual and less ideological understanding of the most important energy issues of our time.

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