Could A Clean Energy Bank Wreck the Economy? Well, yes…… May 14, 2009Posted by angryscientist in Bad Science, Uncategorized, Whistleblower Corner.
This is a bulletin from the Nuclear Information and Resource Service (NIRS), which gives permission to repost this anywhere. It was originally posted at Daily Kos, where there are some comments.
Thu May 14, 2009 at 08:42:44 AM PDT
These days, clean energy ranks right up there with Mom, apple pie and ice cream as an All-American attribute. You can barely sit through a TV show, listen to the radio, or even read a blog without coming across an ad from someone extolling the virtues of some “clean” energy form or another.
Never mind that some of them—from nuclear power to “clean” coal—bear no resemblance to the cleanest solutions like wind, solar and energy efficiency. Some industries have more money to spend on ads than others….
But clean energy has become All-American for good reason: we need clean energy for the 21st century. I’m a huge clean energy advocate, and I spend my days working to encourage implementation of clean, sustainable energy technologies.
So what could be more virtuous than a federal Clean Energy Bank? On the surface, the idea sounds perfect: the federal government would set up a bank to support the development and implementation of clean energy technologies, especially those that private investors can’t or won’t fund. In fact, it’s so perfect the Senate Energy Committee has already approved the concept as part of its upcoming energy bill, and the House Energy Committee is considering adding a Clean Energy Bank proposal from genuinely clean energy advocate Rep. Jay Inslee (D-WA) to the Waxman-Markey cap and trade climate bill.
So why is the environmental community lining up to oppose the Clean Energy Bank and considering it must-defeat legislation?
Well, there are a couple of teeny-tiny little problems with the concept as written in both the Senate energy bill and Inslee bill in the House. Kind of like there were teeny-tiny little problems with unregulated derivatives trading, or lack of federal oversight and regulation, or corporate greed, that brought our economy to its knees last October.
It is not at all far-fetched—indeed, it’s completely foreseeable—that, as the Clean Energy Bank legislation is currently written, we could see trillion dollar or more taxpayer bailouts of “clean energy” technologies within the next decade. You didn’t like TARP? Wait until taxpayers have to bail out the likes of Duke Power, UniStar Nuclear, Southern Company and even your local mom and pop solar and wind concerns at levels that would make even Citigroup or General Motors blush—except that there are a lot more “clean energy” companies and projects out there than there are national banks or car manufacturers.
I could be wrong, of course, but it’s my personal wild guess that taxpayers are getting a little tired of bailing out corporate America. And, if you follow my personal wild guess reasoning, the idea that taxpayers might be forced to bail out a trillion dollars, or even a few hundred billion, in “clean energy” failures would probably destroy any hopes of building a genuinely sustainable energy economy or effectively dealing with the climate crisis; not to mention, coming on the heels of what we are still going through as an economy, raising the specter of permanent recession. And, of course, any presidential administration that oversees such an eventuality is not likely to be around to cope with the next such eventuality. These are high stakes, folks, and all from the innocuous, even virtuous-sounding, Clean Energy Bank.
THE DEVIL IS ALWAYS IN THE DETAILS
A thousand mea culpas. This should have been posted and distributed a few weeks ago, before the Senate Energy Committee even started considering Senate Energy Committee Chairman Jeff Bingaman’s (D-NM) proposal to add a Clean Energy Deployment Administration to his energy bill. But we missed it, and so did everyone else, except, perhaps, the Nuclear Energy Institute.
Let’s face it: it’s pretty tough for environmentalists to oppose something called a Clean Energy Bank, or even a Clean Energy Development Administration, which is starting to sound a little more bureaucratic. Maybe we just wanted to believe.
But here’s the reality: Sen. Bingaman’s Clean Energy Bank bill would provide more concrete government backing for dirty energy technologies than anything any lobbyist for the nuclear power or coal industries could have dreamed of even a year ago. And here’s the rub: even if the Bank funded only renewable energy and energy efficiency technologies, it would still be an economy-wrecker. It is simply unacceptable on any grounds.
And here is why: ‘‘(3) RELATION TO OTHER LAWS.—Section 14 504(b) of the Federal Credit Reform Act of 1990 (215 U.S.C. 661c(b)) shall not apply to a loan or loan guarantee under this section.’’.
What this seeming gobbledygook actually means is that there is NO limit—none whatsoever—to the amount of money that can be directed to “clean energy” technologies by this proposed bank. $10 billion? No problem. $100 Billion? No problem. $1 Trillion? NO PROBLEM!
This was confirmed in discussions yesterday between Senate Energy Committee staff and experts from Union of Concerned Scientists and Natural Resources Defense Council. (We have to wonder if Rep. Inslee—a strong clean energy advocate and not exactly a good friend of the nuclear industry—might have missed the implications too; perhaps he hasn’t fully realized that his bank legislation, which was modeled after Bingaman’s, would set up an unlimited slush fund for the nuclear power industry)
The Bingaman Clean Energy Bank bill, as well as Inslee’s bill (which is nearly identical, with one minor improvement), would authorize this new entity—the Clean Energy Development Administration, which would have an administrator and a nine-member Board of Directors, and virtually no other oversight—to issue as much money in taxpayer-backed loan guarantees as it feels like for any projects that might fall under an exceedingly broad “clean energy” definition.
Let’s take a look at what might be funded under this definition: New nuclear reactors, for one, as many as the industry might consider building, at whatever cost the industry thinks necessary. That alone has the entire environmental community up in arms, since no matter what industry propaganda may say, the environmental movement remains adamant that nuclear power is an unacceptable solution to the climate crisis. It’s dirty—even without a catastrophic meltdown, it releases radiation into the air and water at every step of the nuclear fuel chain; it’s dangerous, because there is always the risk of catastrophic meltdown even with new reactors; it creates lethal long-lived radioactive waste we don’t have the slightest idea how to handle for millennia of millennia; it undercuts non-proliferation efforts abroad; and, even if none of the above were the case, it is the most costly method of producing electricity available and using it would divert resources from the cleaner, safer, cheaper, and faster means of addressing the climate crisis we need to implement.
“Clean coal” could also be funded under this definition, including such environmentally dubious (ok, I mean destructive) concepts as coal-to-liquids (a two-in-one pollution punch), as well as unproven carbon sequestration technologies.
But even if this Bank were only oriented toward renewable energy and energy efficiency, we would still have to oppose it. With all respect and love toward our compadres designing and building new solar PV, solar thermal, wind, geothermal and other 21st century technologies, even they don’t deserve unlimited taxpayer backing for their projects.
The Congressional Budget Office and Government Accountability Office both have already projected a 50% or greater failure rate for loan guarantees for new nuclear reactors. And there is no denying that the failure rate for renewable energy projects is going to be above zero, possibly above 20%. While it’s fine for taxpayers to take some risk for new energy technologies, it’s not fine to bet hundreds of billions of our dollars on new energy projects or take risks of 50% or more, especially on such capital intensive projects as new nuclear reactors, which are now projected to cost some $10 billion or more each.
And, for the skeptics out there, let’s face facts: the nuclear power industry is the one most in need of this money. Why? Because there is no private capital available to support construction of new nuclear reactors. It’s that simple—private investors simply won’t take that risk. If Bank of America or Citigroup have been thinking for the past few years that nuclear reactors are too risky but subprime mortgages aren’t, then I have to think a 50% projected failure rate might be too low. Admittedly, these are somewhat hard times for new renewable energy facilities as well, but until last October money was flowing freely to them, and as the recovery begins, private investment will begin flowing to them again. But private money won’t flow to nuclear power under any circumstances without the taxpayers taking the risk.
The reality is that the nuclear industry has already asked for $122 Billion in taxpayer-backed loan guarantees (most of which would actually be taxpayer-funded as well, through the Federal Financing Bank). And that would cover only about 20 reactors. Getting to the GOP’s dream of 100 new reactors by mid-century (outlined by Sen. Lamar Alexander, R-Tenn, in the GOP Saturday radio address a couple weeks ago), would cost at least five times that amount—and that’s before the cost overruns start rolling in. For comparison, a Department of Energy study of 75 existing reactors found an average cost overrun of 207%. If that level holds true for a new generation of reactors, we’d be looking at trillions of taxpayer dollars at risk.
AND WHAT CAN YOU DO?
Yes, I believe in supporting renewable energy and energy efficiency with taxpayer dollars—but limited taxpayer dollars. The potential for unlimited taxpayer loan guarantees for any technology offers the potential for economy-killing failure, for misdirection of money, for rampant corruption.
Have our Congressmembers learned nothing from the debacle of the banking, mortgage and various other crises? Apparently not.
But hopefully the public has, and together we can stop this nonsense.
Please join us in opposing the absolutely unconscionable Clean Energy Bank proposals now before the Senate and House. Contact email@example.com to get on our e-mail list to be able to take effective action; you can also sign up at http://www.nirs.org. We’ll keep you up-to-date and give you action ideas and opportunities. Or contact the local or national environmental group you’re already a member of—we’re all in this together. But act fast, these bills are moving quickly, even though no one, including Hill staffers, seems to understand exactly what they do.
Note: Rep. Chris Van Hollen (D-Md) has offered a different Clean Energy Bank bill, but it explicitly includes nuclear power and “clean” coal as “clean” energy technologies, and thus, while it doesn’t provide for unlimited loan guarantees, is also unacceptable. But you might want to contact Van Hollen and tell him that if he’ll amend his bill to include only genuinely clean energy technologies, it might be a good alternative to the unacceptable bills making their way through Congress now.
Nuclear Information and Resource Service