Congress has been trying mightily to revive the nuclear industry for five years now. This multibillion dollar jumpstart package already includes production tax credits as great as those for new wind, dedicated loan guarantees greater than for any other energy source, unique insurance against regulatory delays, unique relief from liability for nuclear accidents causing above $11 billion in damages and unique assistance in paying for applications for new reactor licenses.

The result has been a first class train wreck. Congress created a 2008 deadline for the filing of NRC license applications to be eligible for many of these benefits. This deadline paid no heed to whether the new reactors were needed or to the fact that the "streamlined" NRC licensing process had not yet certified the standard designs on which the individual plants were to be based.

Economic and technical reality has now overtaken this house of cards. The year 2009 saw multiple cost escalations, ratepayer revolt in Florida when the customers began to realize the rate increases they faced years before the reactors would come on line, falling demand for electricity, falling costs of alternatives and an inability of license applicants to respond in a timely or a satisfactory way to safety questions from the NRC. By the end of 2009, cancellations, delays, application suspensions and/or cost overruns had affected nearly all of the U.S. "nuclear renaissance" plants, none of which had broken ground.

Congress's 2005 intention was to provide encouragement for "a few first mover plants" to test the new designs and the new licensing process. To legislate more support at this point would be to proclaim new nuclear a success when the record to date seems very much the opposite. Having done so much to make matters worse. the last thing Congress should do is apply further doses of the subsidy and shortcut medicine that has so obviously sickened the patient.

Instead, Congress should focus on passing legislation that would put a real price on carbon, creating a long term and stable basis for competition among all low carbon alternatives. Further research and development support should go to those options that have shown an ability to provide climate and security benefits quickly and cost effectively. Until those "few first mover plants" use the benefits already available to prove that new nuclear can meet that test, further taxpayer exposure is not justified.

Ryan Alexander, President of Taxpayers for Common Sense, submitted the following comments:

The time to stop the endless cycle of nuclear subsidies has come. Since the 1940’s the nuclear industry has received more than $100 billion in federal subsidies. From construction to decommissioning, taxpayers have provided generous subsidies for nuclear reactors. But no matter how generous the subsidies, nuclear power continues to be riddled with cost and risk concerns that keep private financial backers away, leaving the industry asking for more and more taxpayer handouts. It’s high time the feds cut our losses and take a cue from Wall Street and just say no before we lose billions more.

In 2005, a suite of subsidies for nuclear power was added to the energy bill, including a massive loan guarantee program. Under the program, Congress has already slated $18.5 billion in loan guarantees for new nuclear reactors. But federal investigators have found nuclear reactors will “result in significant risk to the Government and, therefore, the American taxpayer.” One government report put the default risk for nuclear reactors at well above 50% percent.

With extremely high capital costs, significant technology risks, and private investors on the run--even when times were good--nuclear power has lined up for the federally backed loan guarantees. In fact, they told Congress $18.5 billion wasn’t enough and have requested $122 billion.

For taxpayers, these loan guarantees could have huge financial consequences. The Congressional Budget Office considers the risk of default on the part of the nuclear industry to be very high--above 50 percent--and payments for defaults would come directly from the U.S. Treasury, in other words, the U.S. taxpayer. Additionally, DOE loan guarantees carry an extremely high risk because they can cover the entire value of a loan worth up to 80 percent of a project's total cost--terms far better than any private lender would provide. Consider that cost estimates for new nuclear reactors have risen to at least $7 billion each, and it becomes apparent how serious it would be if these companies default.

DOE recently announced that they would soon issue their first loan guarantee for a new reactor. It is likely that DOE will put the full faith and credit of the US Treasury behind a multi-billion dollar project that has already experienced cost overruns, delays and design flaws even though construction has yet to begin. In fact, many of the new reactors rely on designs that are in financial shambles in other parts of the world.

Given the current financial crisis, asking taxpayers to front risky reactors is fiscally irresponsible. If nuclear power is the future, private industry should find private financing, not come knocking again on the door of federal taxpayers.

Congress is helping solar, wind, oil, gas, natural gas, geothermal, tidal, ocean energy, biofuels, coal, the electricity industry, and many other parts of the energy industry. It surely makes sense also to help out the nuclear industry given the logic of helping out other parts of the energy industry in so many ways. One of my biggest problems with the way this is being done is that our energy policies often seem more like a Jackson Pollack painting than a logical and strategic construct focused in the long run toward improving our energy, economic, environmental and national security.

Giving loan guarantees may help jump start the industry, but these loan guarantees may not be enough to make the jump start sustainable.

The nuclear industry needs to have a sense of some policy certainty on many levels. The environmental and energy legislation being debated has lots of uncertainties. These uncertainties have numerous and possibly quite important financial and other implications. There may be also other bills, regulations, laws, and more that could have some hidden surprises for the energy industry in them. The writing of late night addenda is hardly an unusual event in legislative circles.

The cap-and-trade policies that are being developed still seem a bit foggy in their definition as well as in their possible applications. Carbon markets developments seem to be quite variable. There seems to be brittleness in the trading of carbon. This has been shown in the EU and in the post-Copenhagen era. This brittleness can be mostly found in policy uncertainty, both domestically and internationally.

Carbon markets, financial markets and other markets associated with the development of the nuclear industry are often international markets. What we do here and what other countries may do to help their nuclear industries develop could both be very important for what happens here. Money, ideas, and the best managers and engineers are also quite movable.

The nuclear waste policy of the US also needs to be rationalized and clarified. One of the biggest question marks about the future of the nuclear industry is what to do with the waste. Nuclear waste can be turned into a quasi renewable resource with the application of certain basic and already developed technologies and with a much wider use of the Global Nuclear Energy Partnership.

Storing the waste in the backyards of the nuclear plants is not the answer. Finding a long term and sustainable solution to this that is credible to investors, leadership and the public will be needed to really jumpstart the industry.

The potential costs for dealing with nuclear waste could far outstrip many other costs of developing a long term and sustainable nuclear industry as the decades pass by. We need to settle this soon for the sake of our energy security and national security.

Liability issues and other nuclear related issues need to also be clarified to the best extent possible. All of these rules, regulations and laws also need to take into account the environmental and other benefits and costs associated with nuclear plants compared to other sources of electricity. But that is probably asking too much.

As I have said in many places: the nuclear industry is the only energy industry that has been required to manage, control and contain its waste from start to finish. If oil and coal were required to do this they would likely be much less important in our energy portfolios. The nuclear industry is quite smart in dealing with its waste. Nuclear power has also proven to be a lot less dangerous than coal and oil if we are to consider how many people have died or have had health problems from the exploration, extraction, and use of coal and oil worldwide. The diplomatic and military costs of oil and natural gas have also been considerable.

Part of the problem of having a logical discussion about the relative costs and benefits of various energy forms and uses is that few people know the numbers, or care to know the numbers, that can help develop the comparisons across alternative forms of energy production. Passions normally overtake logic fairly quickly in many "debates".

I am not against the use of oil, gas, coal or any other form of fuel for energy production. I see them as part of the very big, flexible, logical, rational, and sustainable portfolio of energy options that we can use over the coming decades. However, the portfolio we have now will likely be very different from the one we will have in 40 to 100 years. It would be best to start thinking about what we need to do in the future now before we are forced to make very costly decisions on the fly as the many time clocks of the environment and fuel sources supplies start to ring their alarm bells much louder. Many energy decisions need to be made with long lead times.

Speaking of time, we will need to streamline and rationalize our permitting, application and siting policies at not just the federal, but also at the state and local levels. The longer the time to build a nuclear plant the more costly it will become. Nuclear plants are not cheap. But the electricity they produce can be.

Laws and regulations associated with nuclear plant construction, operation, decommission, security and more need to be far better clarified and solidified at all levels to really get the industry moving forward. Some states might be big winners if they out compete others in their more accommodating policies towards nuclear plants. But the highly regulated nuclear industry has many constraints put on it by many levels of authority, including public opinion.

Policy uncertainty in one part of the energy industry can spread to other parts of the industry given that many different forms of energy production are substitutable to some extent. Solar, wind, coal, natural gas, geothermal, nuclear and more are far more connected in policy implications than many would like to think. Policy uncertainties are also connected internationally as well as locally. There are many recursive and wide spread policy implications to many of the policies now being considered. Giving loan guarantees seems like a very simple solution to a very complex problem, and likely will have less of an impact than many may think.

Until overall energy policy is clarified many of the major investors in the nuclear industry may still be sitting on the fence. These are smart people. Many of them also face other investment opportunities outside of the nuclear industry. The smart money goes with the best investments. Investments that have lots of uncertainty, particularly multibillion dollar ones like a nuclear plant, make many investors skittish. Also, these investors could send their funds to invest in nuclear plants or other energy or non-energy developments in another country rather easily.

We should expect, given the huge costs involved in developing a nuclear power plant, that many of the future plants will have investors that will be part of large international coalitions. So far this seems to be a building trend. If this will help start a safer, more effective, efficient and environmentally friendly nuclear industry then so be it. However, we also need to be aware of the concerns of the public, our national security institutions and others about foreign investments in nuclear technologies. However, we should not sacrifice our energy, environment and national securities to the false altar of xenophobia.

Given the potentially huge increases in the demand for electricity that may occur, especially if electric cars begin to really take off, there will be enough of a market for just about everyone. Given the potentially massive environmental, health, economic, political and other costs that may result from global warming there will surely be enough open space for many different technologies to begin to replace hydrocarbons in a hopefully smooth manner over the coming decades. Given the possibly hugely increasing demand for desalinated water in the US there could be a lot of strategic and tactical space for nuclear, solar, wind, and other forms of energy to get involved. Given peak oil is coming around the bend in the next few decades there will be a very large need for many alternatives to this most important of energy sources.

Many of our nuclear plants are getting old and will likely need to be shut down and decommissioned. What will replace the 20 percent of electricity they now produce? Even more important: what will be the energy source that will be as reliable and as efficient as nuclear to take the place of these 800,000 million kilowatt hours in the next, let's say, two to three decades?

Believe it or not we are the lead producer of nuclear electric power and have the most nuclear plants of any country. Are we ready to hand over the leadership of yet another high tech industry to another country?

We can revitalize this industry and we can build and development many other energy sources at the same time. Frankly, we will need to do all of that. Our energy future without nuclear in the mix could prove to be a lot more costly than any of us could imagine right now.

No energy source is perfectly clean, reliable, safe, or the perfect economically viable solution to our present and future energy security problems. They key is to think portfolio, think systems within systems and to think of interconnected systems. We need to build a more secure energy, economic, and environmental future for our children, their children and beyond. Are we willing to give up the huge opportunities of nuclear as part of the mix? I for one am not.

This response is written by Kyle Danish and Lisa Epifani. Lisa Epifani is Of Counsel at Van Ness Feldman, P.C., and a former Assistant Secretary at the Department of Energy and Special Assistant to the President on the National Economic Council under President Bush.

A real commitment by Congress and the Obama Administration to the revival of the U.S. nuclear energy industry is needed and would provide a strong foundation for a cleaner environment, greater energy security, and stronger economic health. In the context of climate legislation efforts, anyone sincerely concerned about the need to reduce emissions while maintaining economic growth must embrace a strong role for nuclear power.

Reducing emissions from the electric power sector, the source of one-third of U.S. GHG emissions, will be a key requirement in addressing the climate change challenge. Nuclear power generation emits zero emissions. Today, 104 reactors at 65 nuclear power plants in 31 States provide about 20% of the U.S. electric power with zero emissions. An expansion of nuclear power, which represents the only available large-scale, zero-emission technology, is needed to achieve meaningful reductions without sacrificing economic growth.

The key ingredients to a nuclear revival are federal financial backing, a plan for the spent fuel, and public acceptance. Congress and the Administration must take steps in each of these categories to ensure a cleaner and stronger energy and economic future.

Provide Financial Backing. Given the price tag to build a new nuclear plant (estimated $6 to $8 billion), financial backing by the federal government for the nuclear industry is required. The Energy Policy Act of 2005 authorized the Department of Energy to provide loan guarantees for a variety of technologies that can reduce, avoid or sequester greenhouse gases such as renewable energy and nuclear energy. Progress has been slow in implementing the program and improvements in the application and funding process are needed. The White House should establish a high level official referee to resolve any OMB vs. DOE tensions over the program. Further, the currently available $18.5 billion authorization for nuclear power loan guarantees is not an adequate investment in needed clean baseload power. The Administration should seek – and Congress should provide – a significant increase in the level of loan guarantee authority available for nuclear power.

Plan for the Fuel Issue. Next, Congress needs to ensure that there is a plan to deal with spent fuel (again). Working with Senate Majority Leader Reid, the Administration has made it clear that nuclear waste storage at Yucca Mountain is not an option. To date, however, the Administration has not been clear about whether or when it will withdraw the Yucca Mountain license application DOE submitted in June 2008 to the Nuclear Regulatory Commission (NRC), the agency designated to perform a scientific review of the proposed storage plan. There has not yet been any apparent progress from the Administration on its promised blue-ribbon commission to evaluate options to deal with spent fuel. Congress should take this opportunity to carefully consider the merits of different spent fuel options – ranging from centralized storage to reprocessing – and make a long-term commitment to pursue the selected solution.

Communicate Support. Finally, it is imperative that President Obama and Congressional leaders communicate clearly and often to the public their support for the promotion of nuclear power. Given its zero-emission profile, nuclear power should be hailed as often as wind and solar and other renewables as part of our clean energy future. In addition, nuclear power should be recognized by the President and Congress for its potential to contribute to our economic recovery. An expansion of nuclear power will not only deliver clean energy; it will deliver clean energy jobs.

I'm a firm believer that government should not pick winners and losers. A well crafted emissions trading framework or a clear price placed on carbon would go a long way toward spurring new investment in nuclear energy produciton. Much of the risk and cost in nuclear energy production is in the time frame required for permiting and construction. Government could boost private investment in new nuclear plants by standardizing plant design, fast-tracking permits, and moving to the French model of reprocessing fuel.

An entity patterned after the TVA could be created to finance new construction with bonds purchased by investors, and the tax benefit, if any, could be tax treatment similar to municipal bonds.

I've lived my entire life in the shadow of two nuclear plants. They have been great neighbors, investors in our communities, sources of consistently priced energy, and providers of high-paying jobs. The risks of continued introduction of carbon and mercury from coal plants far outweigh the outdated perceived risks of nuclear energy production.

Congress should consider whether to ask the taxpayer to help the nuclear energy electricity industry -- but only along with and in the context of an overall national strategy for clean energy - and not in isolation.

Clean energy is an important national priority - and can be of great help for economic progress, job generation and international competitiveness -- as well as being key to the environment. Many technologies may be needed to provide a robust and reliable clean energy strategy. Nuclear power plants are a possibility, among others such as solar, wind, geothermal, hydroelectric.

But it has to be understood that nuclear cannot by itself be a solution for the climate change problem, not can it be considered a solution for our clean energy needs, and for our energy security.

The reason is that -- in addition to the well known risks of nuclear energy plants -- the unresolved issue of future disposal of nuclear waste as well as major geopolitical issues (think Iran) - nuclear fuel is very limited in supply in the world. Thus nuclear energy cannot replace fossil fuels as a source of energy. Solar energy can, and a combination of technologies including solar can provide a solution.

This and other considerations should drive a national clean energy structure that addresses our economic development as well as our energy security needs. The contribution of nuclear energy is very limited in this respect, as already pointed out -- and the risks associated with it -- in terms of disposal of waste and geopolitical risks -- may tip the balance away from the nuclear industry.

If Wall Street won’t touch new nuclear power, why should taxpayers? Apart from the unsolved waste issues and sticky geopolitics surrounding nuclear energy, the bottom line is that nuclear power is uneconomical.

New nuclear power plants, by and large, are not being built in countries with competitive electricity markets because they are too expensive for taxpayers and ratepayers when compared with other sources of energy, like carbon-free wind power, as well as energy efficiency. According to an “apples to apples” comparison by Amory Lovins, Imran Sheikh, and Alex Markevich in their paper “Nuclear Power: Climate Fix or Folly,” power from a new nuclear plant costs more than twice as much as that from a new wind farm.

Perhaps the United States should look closely at Finland before putting even more taxpayer money behind nuclear power. The Finnish project, a once-heralded emblem of the nuclear “renaissance,” has become a nightmare, plagued by cost overruns and delays, with still no projected start up date. Meanwhile wind farms are going up fast on hillsides around the world.

As my colleague Lester Brown notes in his piece on “The Flawed Economics of Nuclear Power”:

Despite all the industry hype about a nuclear future, private investors are openly skeptical. In fact, while little private capital is going into nuclear power, investors are pouring tens of billions of dollars into wind farms each year.

The reason for this extraordinary gap between the construction of nuclear power plants and wind farms is simple: wind is much more attractive economically. Wind yields more energy, more jobs, and more carbon reduction per dollar invested than nuclear. Though nuclear power plants are still being built in some countries and governments are talking them up in others, the reality is that we are entering the age of wind, solar, and geothermal energy.

Late last year, the bipartisan congressionally mandated Commission on the Prevention of Weapons of Mass Destruction Proliferation and Terrorism, upon which I serve, made several nuclear-related recommendations. Perhaps the most important of these is that the U.S. should work to strengthen the nonproliferation regime by discouraging the use of government financial incentives in the promotion of nuclear power. For all the fiscal and energy policy reasons already detailed on this blog, this recommendation rightly ought to be applied to all energy commercialization projects -- nuclear or nonnuclear -- across the board. Yet, the WMD commission determined that this recommendation was particularly salient in the case of nuclear power because of the serious nuclear weapons proliferation implications of failing to do so.

Large nuclear reactors do not just boil water. They also produce scores of bombs worth of nuclear weapons-usable plutonium annually that can be chemically stripped out from the spent fuel in a relatively short amount of time. In addition, these reactors are fueled with low enriched uranium that can be diverted and enriched into weapons grade uranium. It is no accident, therefore, that every major weapons state first mastered the operation of a large reactor before acquiring its first bomb. France, the U.S., Russia, the U.K. and India all made most of their first plutonium bombs from plutonium produced in reactors tied to the electrical grid. Even the vaunted "proliferation-resistant" light water reactor used by the U.S. produces not just power, but the tritium the U.S. needs for its thermonuclear weapons arsenal. North Korea demanded that the U.S., Japan and South Korea supply it with two modern power reactors so it might have the electricity it needed in exchange for giving up its own nuclear reactor activities . Ultimately, however, the U.S. decided it could not trust North Korea with such machines, each of which could produce roughly 50 bombs worth of near weapons grade plutonium in their first 12 to 15 months of operation. Before the U.S. gave up trying to kill Iran's large power reactor project at Bushehr, both presidents Clinton and Bush opposed its completion on nuclear proliferation grounds.

Nor are such nuclear programs easy to safeguard against illicit military diversions. This much has been demonstrated by the nuclear inspections gaffs we have seen in Iraq, Iran, North Korea, Syria, Algeria, Taiwan, Japan, and South Korea and the many bombs worth of plutonium and uranium products that go missing as "material unaccounted for (MUF) at declared nuclear fuel making plants. Rather than rely in international inspectors, Israel bombed Syria's large reactor in 2007 and Iraq bombed Iran's Bushehr reactor in the early 1980s even though all of these states signed the Nuclear Nonproliferation Treaty and have nuclear safeguards agreements with the International Atomic Energy Agency. These violent votes of no confidence in international nuclear inspections, as well as other deadly covert operations taken against other nuclear projects, highlight the security concerns these "civilian" activities raise when sited in dangerous regions.

What does any of this have to do with whether or not we should pile on additional nuclear subsidies to support the construction of new commercial power reactors in the U.S.? Plenty. If, after more than a half century of government subsidies and federal research and development support, nuclear power should finally turn out to be the cheapest, quickest way to produce electricity and to reduce carbon emissions, it would be difficult to prevent its increased use commercially not only here but abroad. Even if other countries might use this technology to illicitly acquire what they need to make nuclear bombs, the lure of export profits would be hard to resist. The nuclear weapons proliferation risks would simply be an additional price we would pay and try somehow (however fecklessly) to limit.

Yet, if nuclear power is so risky investment that no private bank (domestic or foreign) will invest in building new plants, why should our government go out of its way to do so by offering new, additional loan guarantees or other nuclear-specific subsidies? Wouldn't the granting of such largesse only make it even more difficult for the U.S. to discourage the governments of Syria, Saudi Arabia, Algeria, Iran, Egypt, Jordan, Iraq, Libya, and Turkey from making similar nuclear specific investments? All of these states have access to inexpensive, relatively clean burning natural gas that could fuel much cheaper advanced gas-fired plants but, then, arguably, so does the U.S. On what economic grounds might we be able to object to them building an $8 billion nuclear power plant and spending further billions on related infrastructure? And if we could not, why and how could we reasonably object to them making their own nuclear fuel? True, this is even more uneconomical and unprofitable than building the power reactor, but only slightly so: A small, crude reprocessing plant could be built for a fraction of the cost of a single new larger power reactor. Would we tell them that they cannot be trusted with such technology even though chemical reprocessing is less complicated than nuclear power production?

As it is, Adam Smith's "invisible hand" clearly favors nuclear nonproliferation and sound energy policies. Creating a biased competition with more nuclear-specific federal subsidies for commercial power reactor projects, though, does not. Indeed, it is a bad business, which is best not done at all.

Kevin Knobloch is unavailable to respond this week. Writing in his place is Ellen Vancko, Nuclear Energy and Climate Change Project manager at UCS.

New nuclear plants could reduce carbon emissions, but at what cost? Congress should not provide additional taxpayer subsidies to a mature, 50-year-old industry on top of the massive support the industry already receives. There are safer, faster and more economic ways to meet U.S. energy needs and address global warming.

Last fall, the Nuclear Energy Institute (NEI) asked Congress for hundreds of billions of dollars in new taxpayer subsidies and changes to the federal regulatory process that would shift more risk and costs from the industry to the public. Why? Because Wall Street won’t finance new reactors without federal loan guarantees. Moody’s has characterized new reactors as a “bet the farm risk” and pointed to credit downgrades of companies seeking to build them, while the title of a recent Citi report says: “New Nuclear: The Economics Say No” -- at least not unless massive construction, power price and operational risks are shifted to the public.

NEI’s top priority is to get at least $100 billion in new loan guarantees through a “permanent financing platform” called the Clean Energy Deployment Administration (CEDA). Both the House and Senate versions of energy and climate legislation include a CEDA provision. Most telling, however, is the industry’s vehement opposition to adding a House provision to the Senate bill that would require the bank to prioritize technologies that can reduce greenhouse gas emissions at the lowest cost.

NEI favors the Senate version, which would exempt CEDA from the Federal Credit Reform Act (FCRA) and remove any limits on the amount of federal loan guarantees that could be issued for new nuclear reactors by bypassing the congressional appropriations process. The Senate version also would allow unrestricted financial assistance to go to one technology. That would allow most of the financial assistance to go to the nuclear and fossil fuel industries instead of funding a truly diverse portfolio of least-cost clean energy investments, including renewable resources and energy efficiency.

A recent Congressional Budget Office report found that “in the absence of any statutory limits, [the Department of Energy] would guarantee an additional $100 billion in loans for nuclear power projects over the next 10 years and close to another $30 billion in loans for fossil and other large capital projects.”

Providing the nuclear industry with the permanent financing platform NEI seeks is at odds with the expressed intent of the program, which is to promote domestic development and deployment of a range of “innovative” clean energy technologies that would otherwise not have access to low-cost financing. There is nothing innovative about a middle-aged industry with a long record of massive cost overruns and plant cancellations. If anything, the four-fold increase in cost estimates for new reactors over the past decade should be a warning that history will repeat itself if the industry is given access to unlimited Treasury-backed loans.

NEI also proposed shortcuts to the Nuclear Regulatory Commission’s (NRC) new reactor licensing process that would limit the NRC’s ability to verify that a new reactor was built in strict accordance with its license before it starts operating. NEI further proposed restricting the public’s right to raise reactor construction safety issues by requiring the NRC to use “informal” procedures in public hearings on such issues.

Congress should just say no to more handouts for the nuclear power industry. If $18.5 billion in promised loan guarantees isn’t enough to enable the industry to prove that it can deliver a few first-mover units on time and on budget, then perhaps we should look elsewhere for our climate solutions. If it can, then Wall Street should have no problem financing the rest.

Yes, Congress should be doing more to encourage renewed developed in the nuclear industry as part of a well-rounded domestic energy program aimed at reducing energy costs to consumers that will also create jobs at home.

Nuclear energy is a clean (emission-free), reliable energy form that will help to stabilize domestic energy prices if, and only if, a viable financial structure is put in place through public and private programs to allow federal loan guarantees, access to private capital and a program that ensures an equitable sharing of risks between public and private sector beneficiaries.

The issue with Congressional actions to spur energy development is what is the right amount & type of support? The Department of Energy has a clean energy loan program in place that provides for $18.5B in government loans to spur nuclear and other clean energy development. The problem is that setting aside $18.5B is not nearly enough. Why should Congress provide for additional loans? Because the public will benefit in innumerable ways from this program: lower cost construction financing through loan guarantees means lower cost electricity to the end consumer; each nuclear plant construction translates into an average of 1400-1800 new jobs per plant and 400-700 permanent jobs when the plant is up and running; and finally, construction of new plants will create demand for U.S. commodities, large and small.

And, to be clear, these are loans, not tax credits or government subsidies. All the federal government is doing here is creating an improved environment to spur growth of clean energy and nuclear technologies. The federal government stands to actually make money on these loans. In addition to diversified energy and lower energy cost, the American public gains as the federal government makes money as the loans are paid back.

The best thing the federal government can do is to create an environment to spur energy diversity and create jobs. The sooner we start, the better.

This authorized $18.5 billion in loan guarantees will help build a handful of new nuclear reactors but any expansion of subsidies, tax credits or loan guarantees is a bad idea for taxpayers, consumers, and long-term industry competitiveness.

Continuing subsidies reduce the incentive to contain costs, create government dependence, and stifle competition and technological development within the nuclear energy industry. The anti-nuclear movement should applaud such policy as it diverts attention away from the problems that hinder a real nuclear renaissance—legal and regulatory impediments and the federal government’s ineptitude in the area of waste disposal.

Instead of subsidies, the federal government should institute reforms allowing the nuclear industry to succeed (or fail) on its own. For example, creating a more efficient and predictable permitting process would alleviate much of the risk that has resulted in high prices and provides the major justification for subsidies. But simply making the regulatory system work for the dominant technology of the day (large light-water reactors) is not enough. To bring about a nuclear renaissance, the regulatory system must be reformed to support the introduction of new commercial nuclear technologies. This would allow for the emergence of a truly competitive nuclear industry, which would yield lower prices and technological innovation.

And we need to solve the nuclear waste problem. The good news is that this is not a technology problem. Whether we safely store waste in underground repositories, in above ground holding facilities, or recycle it for future use, numerous methods exist to safely manage nuclear waste. The problem is that the federal government is responsible for nuclear waste disposal but it has little incentive to come up with a solution. Indeed, because there are so many special interests involved, any decision will be opposed by some. So, the political temptation is to kick the can down the road. With the status quo, Washington has successfully collected nearly $30 billion in fees for this job but it has not collected one atom of waste. Solving the problem is simple, really. Those that create the waste should be responsible for disposing of it. This would allow for utilities to develop economically rational and predictable plans for waste management. The federal government’s job would be to regulate these activities, just as it successfully does with fuel development and nuclear plant operations.

Energy makes sense when it is cheap enough that consumers are willing to pay for it. The insular world of Capitol Hill equates policy to spending. If the energy debate becomes a war over which technology wins the greatest subsidies, the obvious losers will be consumers and taxpayers.

Whatever one might say about nuclear power – and there exist monumental operational safety and waste safety issues among others – the nuclear industry would be taken far more seriously if it actually endorsed science-based greenhouse pollution reduction standards. There really is no reason why the nuclear industry shouldn’t endorse the 350 ppm of CO2 standard if its energy source is such the miracle its proponents claim. Otherwise, the billions of dollars and headaches that nuclear power whiningly demands should be redirected to truly renewable sources of energy.

Should Congress do more to accelerate deployment of new nuclear power plants, and other low- or zero-carbon technologies? Only if we want to meet growing electricity demand, sustain economic expansion, create jobs, rebuild our manufacturing infrastructure, and reduce the electric sector's carbon footprint.

The U.S. electric industry faces a formidable investment challenge. Consensus estimates show that the electric sector must invest between $1.5 trillion and $2 trillion over the next 20 years in new power plants, transmission and distribution, and environmental controls to meet expected increases in electricity demand and reduce carbon emissions. The investment requirement is unprecedented: the book value of America's entire electric power supply and delivery system today is $750 billion, which reflects investments made over the last 60 years.

The investment challenge can be managed, with appropriate treatment of electricity rates from state regulators, and federal government support in the form of loan guarantees and tax stimulus. Many of the states where new nuclear plants are planned - including Florida, Virginia, Texas, Louisiana, Mississippi, North Carolina and South Carolina - have passed legislation or implemented new regulations to encourage construction of new nuclear power plants by providing financing support and assurance of investment recovery. By itself, this state support is not sufficient. The federal government must also provide financing support for deployment of clean energy technologies in the numbers necessary to meet growing U.S. electricity needs and reduce carbon emissions.

Loan guarantees are a powerful tool and an efficient way to mobilize private capital. The federal government manages a loan guarantee portfolio of approximately $1.1 trillion to ensure necessary investment in critical national needs, including shipbuilding, transportation infrastructure, exports of U.S. goods and services, and affordable housing. Supporting investment in new nuclear power plants and other critical energy infrastructure is a national imperative.

New nuclear plants are expected to cost $6 billion to $8 billion, yet they will produce electricity 24/7 at a competitive cost. In fact, all mainstream analyses demonstrate that new nuclear energy facilities will be among the lowest-cost sources of electricity in a carbon-constrained world. These large, capital-intensive projects do, however, represent a structural challenge for the U.S. electric power sector. America's electric industry consists of many relatively small companies, which do not have the size, financing capability or financial strength to finance power projects of this scale on their own, in the numbers required. Loan guarantees offset the disparity in scale between project size and company size. Loan guarantees also reduce the cost of capital, thereby accelerating the rapid deployment of clean generating technologies at a lower cost to consumers.

The loan guarantee program created by the 2005 Energy Policy Act is an innovative departure from other federal loan guarantee programs. It is structured to be self-financing, so that companies receiving loan guarantees pay the cost to the government of providing the guarantee and all administrative costs. This loan guarantee program is not a subsidy. In a well-managed program, in which projects are selected based on creditworthiness and extensive due diligence, there is minimal risk to the taxpayer. In fact, the federal government will receive substantial payments from project sponsors.

Congress has authorized loan guarantee volume of $18.5 billion for new nuclear plants-scarcely enough for two or three projects. All independent analyses of climate change agree that a large expansion of nuclear energy will be necessary to meet aggressive carbon reduction targets.

Congress should take the following steps to help ensure that nuclear energy facilities will be there when American needs them:

• Provide enough additional loan guarantee authority - in addition to the $18.5 billion authorized - in the FY2011 budget to support the first wave of new nuclear projects.

• Create an expanded financing platform, like the Clean Energy Deployment Administration approved last year by the Senate Energy and Natural Resources Committee, to provide loans, loan guarantees and other financial support to clean energy facilities, including new nuclear energy facilities and new nuclear energy equipment manufacturing facilities.

• Provide federal tax stimulus and other forms of financial support for workforce development and for companies that expand capacity to manufacture nuclear plant components.

Construction of new nuclear plants and expansion of the nuclear supply chain will serve several national imperatives. New nuclear plants will produce the large amounts of electricity necessary to drive our digital economy. They will reduce the electric sector's carbon footprint. They will create hundreds of thousands of new, high-wage jobs. Each new reactor will create 1,400-1,800 jobs during construction and 700 permanent jobs when the plant starts operating. Building an additional 40 to 45 nuclear plants by 2030 would create approximately 90,000 direct and indirect jobs, and more than 150,000 construction jobs, not counting jobs in the nuclear supply chain. Over their lifetimes, these plants would generate $288 billion in federal taxes, $77 billion in state and local taxes, and $154 billion in wages paid during operation.

Given these enormous benefits, and the attractive return on its investment, why wouldn't the federal government provide financing support for new nuclear power plant construction?

Should Congress do more to help revive the nuclear energy industry?

Though there can be legitimate debate over whether climate change will disadvantage future generations, there’s no doubt their prospects are grim if Washington continues on its current debt and spending binge. To that end, further government support for industry -- nuclear or other -- is a path to stifling innovation and hampering the economy.

When the Senate first started debating the Energy Policy Act of 2005, lawmakers included a proposal for limited loan guarantees for the first few new nuclear plants as a way to jump start the industry. By the time the bill passed, that limited amount had ballooned. And now the nuclear industry is looking for $100 billion in guarantees.

The inability of utilities to raise sufficient capital to fund new plants is telling in and of itself. If private capital markets had confidence that government, federal and state, were serious about supporting nuclear power growth, they’d likely provide the necessary funds at a reasonable cost. But there is no basis for confidence. Congress can change the ground rules on a whim, regulatory agencies can bow to pressure and impose unreasonable burdens, environmentalists can stir up political and public opposition, and trial lawyers could have a field day in court.

Except when employed in limited circumstances, subsidies are very poor public policy instruments that waste tax dollars and reward those who gain from government what they can't win in competitive market. Subsidies should be avoided like the plague. Instead of using taxpayer funds to substitute for private capital and create a moral hazard, government would better serve the interests of increased, cleaner energy by creating incentives for the private sector to make prudent investments. For instance, lawmakers could remove the continuing uncertainty about waste disposal, streamline the licensing process, re-examine regulations governing sitting and operating nuclear facilities, and offer tax credits for a fixed period of time.

New nuclear plants can cost between $2 and $4 billion -- an amount that far exceeds the cost of a new clean coal or gas plant. If the cost of nuclear plants can not be made competitive by removing excessive regulatory and legal burdens and by standardizing designs, then taxpayers shouldn’t be forced to make up the difference with subsidies.

The renewed push for this plan is driven partly by environmentalists’ relatively stronger abhorrence of coal compared to nuclear. The other support comes from politicians who are more concerned about quickly negotiating a legislative package capable of getting 60 Senate votes than carefully crafting energy policy that makes economic or environmental sense.

America’s projected energy needs over the next several decades indicate that we must utilize all economically and technologically viable sources. There’s no margin of error to arbitrarily pick and choose. As such, nuclear power can potentially play a larger role in our energy future. Government should provide the right regulatory and investment climate, but it’s up to the industry to demonstrate that it can compete on a level playing field without rent seeking.

While the debate over how to give new life to the nuclear power industry has been taking place, technology has made shale gas both abundant and cost competitive. Why therefore should taxpayers subsidize an uneconomic electric power source when utilities can lower emissions and avoid higher rates by investing more in natural gas?