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updated: 2/16/2010 12:24 PM

Obama touts nuclear loan guarantee as just a start

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LANHAM, Maryland -- President Barack Obama announced Tuesday he is making roughly $8 billion in federal loan guarantees available for the first new U.S. nuclear power plant in nearly three decades, underscoring the administration's efforts to reduce dependence on foreign oil.

Discussing a plant envisioned for Burke County, Georgia, Obama told a union audience that the initiative will create thousands of construction jobs and 800 permanent jobs. He called it "only the beginning" of efforts to develop "safe, clean" energy-efficient technologies.

Obama cast his move as both economically essential and politically attractive as he sought to put more charge into his broad energy agenda. Obama called for comprehensive energy legislation that assigns a cost to the carbon pollution of fossil fuels, giving utility companies more incentive to turn to cleaner nuclear fuel.

"On an issue that affects our economy, our security, and the future of our planet, we can't continue to be mired in the same old stale debates between left and right, between environmentalists and entrepreneurs," Obama said in a stop at a job training center outside Washington. "Our competitors are racing to create jobs and command growing energy industries. And nuclear energy is no exception."

Rising costs, safety issues and opposition from environmentalists have kept utility companies from building new nuclear power plants since the early 1980s

Obama has been arguing that the country must develop cleaner energy technologies and modernize the means by which it powers itself. At the same time, he has said that policymakers must not conclude they have to choose between a cleaner environment and sufficient energy supplies to meet demand. Also, nuclear energy would help reduce U.S. dependence on foreign oil and other fossil fuels.

Energy has served as a major plank of the president's domestic agenda, but his focus on building a green energy economy has broadened in the past month to include nuclear power, offshore oil drilling and development of clean-coal technology, all energy sources championed by Republicans. The shift came after Republican Scott Brown won a special election in Massachusetts to replace the late Democratic Sen. Edward M. Kennedy, depriving Democrats of the votes needed to keep Senate Republicans from blocking their agenda.

Republicans like Sen. Lindsey Graham welcome the shift, but some pro-nuclear Republicans remain nervous about the heart of the Obama-backed climate bill -- a plan to limit heat-trapping pollution, which will raise energy costs.

Obama's budget proposal for 2011 would add $36 billion in new federal loan guarantees to $18.5 billion already budgeted but not spent -- for a total of $54.5 billion. The new $8.3 billion in federal loan guarantees will go toward the construction and operation of a pair of reactors in Burke County, Georgia, by Southern Co.

Federal loan guarantees are seen as essential to spurring construction of new reactors because of the huge expense. Critics say the guarantees are a form of subsidy that will put taxpayers at risk given the industry's record of cost overruns and loan defaults.

Even in promoting his case, the president conceded that nuclear energy has "serious drawbacks." He said a bipartisan group of leaders and nuclear experts will be tasked with improving and accelerating the safe storage of nuclear waste, and that the plants themselves must be held to strictest safety standards.

"That's going to be an imperative. But investing in nuclear energy remains a necessary step," Obama said.

But construction of the reactors -- and the jobs the project is expected to create -- are years away.

Southern Co.'s application for a license to build and operate the reactors is pending with the Nuclear Regulatory Commission, one of 13 such applications the agency is considering. The earliest any could be approved would be late 2011 or early 2012, an NRC spokesman said.

Southern Co. says the Georgia project would create about 3,000 construction jobs, while the new reactors would generate power for about 1.4 million people and permanently employ 850 people.

Obama called for "a new generation of safe, clean nuclear power plants" in his State of the Union address last month, and followed that by proposing to triple new federal loan guarantees for new nuclear plants. The president's budget proposal for 2011 would add $36 billion in new federal loan guarantees to $18.5 billion already budgeted but not spent -- for a total of $54.5 billion.

That sum is enough to help build six or seven new nuclear plants, which can cost at least $8 billion apiece.

Rising costs, safety issues and opposition from environmentalists have kept utility companies from building new nuclear power plants since the early 1980s. The 104 nuclear reactors currently operating in 31 states provide about one-fifth of U.S. electricity.

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