The Hidden Threat to the Nuclear Renaissance
The revival of the nuclear energy industry carries the risk of a Wall
Street-level financial meltdown, and then some.
SAM MCPHEETERS | February 19, 2010 | web only
The cooling tower of Trojan Nuclear Plant, near Rainier, Oregon, which
has been out of operation since 1993. (AP Photo/Don Ryan)
It’s a little misleading to call America’s renewed interest in nuclear
power a full-blown renaissance. For one thing, the renaissance hasn’t
happened yet. Even with the perfect storm of global warming, dwindling
fossil fuels, and the second Bush presidency, the current zeal for new nuclear power has fed on speculation for the last decade. It will have to do so for a long time to come. Tuesday’s news that President Barack Obama agreed to provide $8 billion in federal backing for two reactors in the state of Georgia — the first nuclear plants cleared for construction in nearly 30 years — ignored the massive financial, political, and technical hurdles between announcement and production.
However, it is fair to say that the unlikely partnership of
Republicans and pro-nuke environmentalists just got a lot stronger.
Candidate Obama’s nuclear support was often read as political
posturing; President Obama’s nuclear support comes with hard cash.
Viable or not, the nuclear revival now has the backing of the most
prominent Democrat in a generation. His 2011 budget proposes to triple
federal loan guarantees for new plant construction, essentially
forcing taxpayers to shoulder the immense risks that Wall Street
learned to shun decades ago. Nuclear power offers all the fiscal risks
of a “too big to fail” bank, with the added risk of being too
dangerous to fail as well.
If this coalition of Democrats, Republicans, and the occasional
environmentalist can get even one new plant built, it’ll have
succeeded in bringing about the most dramatic recovery of any weakened
industry in American history. Since the earliest days of nuclear
power, the industry has quietly nursed a crippling fiscal
vulnerability. In 1957, America’s first civilian atomic plant went
online, Disney released Our Friend The Atom, and Congress passed the
Price–Anderson Nuclear Industries Indemnity Act. This obscure federal
law indemnifies the nuclear industry from full liability in the event
of a nuclear accident. If one of the Indian Point reactors in New York
melted down tomorrow, for example, corporate owners Entergy would only
pay $10 billion toward the permanent evacuation of nearby Manhattan.
By law, the government would foot the rest.
The American atomic industry would’ve languished without such an
investor guarantee. And although current nuclear defenders love to
crow about the free market — especially now, with future emissions
regulations set to increase the operating costs of all other
non-renewable power sources — the industry operates with an
exponential financial handicap over all other energy technologies, gas
and coal included. Factor in overruns, plant cancellations, and
chronic mismanagement, and the only genuine advantage nuclear holds
over renewable energy sources is that its infrastructure currently
exists.
It is an article of faith, among industry advocates, that a
Chernobyl-style meltdown could never happen in the United States. The
Soviet plant was a graphite-moderated RBMK Reactor, a uniquely Russian
design widely condemned as unsafe. And yet globally, there is no exact
way to gauge risk in such an abstruse industry. American plants as a
whole may be better designed and maintained than their former Soviet
counterparts, but the opacity and complexity of the product means we
have no real insight into how any particular plant is run. For
example, GE-Hitachi submitted a 13,000-page preliminary application to
build a new unit at the River Bend plant in Louisiana two years ago.
With this absurdist amount of inscrutable data, informed public review
is a bad punch line.
Assume for a moment that the American nuclear industry really is as
safe as Obama and Bush would like us to believe. Imagine that, for
reasons far too esoteric for laypeople to comprehend, the American
industry has moved past its bad years of backward reactors (San
Onofre, California) and defective concrete (Marble Hill, Indiana) and
erroneous building plans (Grand Gulf, Mississippi) — all those
decades of villainy and ineptitude that would made any American
International Group exec or Keystone Kop blush with shame — and
entered a golden age of reliability and safe operation. That still
leaves the rest of the world.
And here’s the hidden threat to any nuclear renaissance. The American
nuclear industry, repackaged as a model of energy independence, is
itself dependent on the fate of every nuclear plant worldwide. As the
industry likes to point out, Pennsylvania’s Three Mile Island accident
produced no casualties. And yet even that level of nuclear crisis was
enough to scare millions of Americans and inflame the regulatory surge
of the 1980s. Another meltdown like Chernobyl, with all its human
misery visible on laptops and iPhones worldwide, could irrevocably
taint public opinion against nuclear power.
Fear, it turns out, is a very tangible metric. Especially when it is
known as “political viability.” The whirlwind rise of the tea party
movement shows how fast uninformed rage can gel into political muscle.
A meltdown in Indonesia or Bulgaria could easily galvanize millions of
previously nuclear-neutral Americans against the entire industry in
the same way a stock market crash and Wall Street bailout prompted
ordinary people to “go John Galt.” A backlash of that magnitude would
render any investment of taxpayer dollars in nuclear energy
effectively worthless. And without secure political cover, all the
loan guarantees in the world won’t create another atomic power plant.
And, of course, there are no airtight guarantees — beyond the solemn
assurances of pundits, officials, and industry advocates — that there
won’t be an American Chernobyl. After the financial meltdown of 2008,
this nightmare scenario has taken on one further dimension of sci-fi
dread: the possible liability default by an increasingly strapped
federal government. An Indian Point mishap could rack up TARP-scale
costs in a matter of hours, and taxpayers would be left holding the
bag — renewed under the last Bush, Price-Anderson doesn’t expire
until 2025.
