CLIMATE:

Nuclear title may not be enough to push Senate bill over the top

While supporters of nuclear energy ardently proclaim the power source is necessary to combat climate change, incentives for nuclear power may not be the silver bullet sponsors need to pass climate legislation in the Senate this year.

Both supporters and critics of a climate bill agree that some sort of nuclear title is likely to be included in the measure taken up by the Senate in the fall. But what should go in it and how much impact that might have for the nuclear industry is unclear, making its potential role in climate negotiations muted.

"I expect there will be a modest nuclear title in the bill coming out of committee and we will add to that on the floor," Sen. Tom Carper (D-Del.), chairman of the Clean Air and Nuclear Safety Subcommittee, told reporters earlier this week. This conclusion comes after discussions with Environment and Public Works Chairwoman Barbara Boxer (D-Calif.) and Majority Leader Harry Reid (D-Nev.), he said.

Carper declined to provide details of what might be in the proposal but added Energy Secretary Steven Chu will be visiting with senators before the August recess to discuss what Chu believes should be in the climate bill that would be supportive of nuclear.

Reid this week said he would be open to a nuclear component but, "we just have to do it the right way."

"I think there will be a nuclear title, yes," said Joseph Romm, a senior fellow with Center for American Progress. "I think there will be a nuclear title on incentives for R&D ... but I am not sure what else you can do for nuclear," Romm said. The industry is waiting to get reactor designs approved and construction and operating licenses for the 17 applications for new reactors, he said.

An industry source close to the negotiations said "nuclear will definitely play a more prominent role if a bill is to make it through the Senate" but defining a set of principles to be included in the bill is a work in progress for the industry.

"The challenge is to balance expectations that there is a magic bullet out there for nuclear with the reality that under the best of circumstances a major build out of new plants is still about a decade away since it takes four years to license and another four years to build," the source said.

Dems wait and see; Republicans aren't optimistic

Managing expectations is a difficult task for sponsors who have to rally senators to vote for the whole climate bill, especially when many have other serious problems with a cap-and-trade bill.

"Adding a nuclear title to the climate change bill would be just one of many improvements needed to secure Senator Landrieu's vote," said Aaron Saunders, a spokesman for Sen. Mary Landrieu (D-La.).

Sen. Byron Dorgan (D-N.D.) said nuclear power and other energy issues such as oil and natural gas included in the Energy and Natural Resources Committee energy bill passed in June "stand on their own" and there should be a separate vote for a climate bill. Earlier this year Reid decided the committee energy legislation would be considered with the climate bill.

The energy committee bill has several perks for nuclear energy including a Clean Energy Development Administration, training programs for nuclear education, and exclusion of new nuclear generation or capacity upgrades through efficiency at existing nuclear plants from the power sales baseline used to measure the renewable electricity standard (RES).

The House climate bill, H.R. 2454, also contains a Clean Energy Development Administration -- although it prevents any technology from using more than 30 percent of total available funds. It also includes the exclusion of new nuclear generation from the power sales baseline used to calculate the RES.

When asked if additional nuclear incentives in a climate bill would help win support from the senator from North Dakota -- a heavy coal-production state -- Dorgan simply said, "We'll see."

Fellow fence-sitter Sen. Blanche Lincoln (D-Ark.) also wants to see incentives for nuclear energy in any climate bill she would support but also more for biomass, natural gas and other fuels as part of an "all of the above" approach, Lincoln spokeswoman Katie Laning Niebaum said.

Nuclear energy incentives do not appear to be the clincher for Republican swing voters either.

Sen. John McCain (R-Ariz.), a key potential Republican supporter, told reporters this week including a nuclear title is "vital" to his support for a climate bill. But McCain has also roundly criticized many other parts of the House climate bill, which Boxer has stated is the starting point for her committee draft. McCain said the "1,400-page monstrosity" House bill contains too many giveaways to special interests and trade protection measures (E&E Daily, July 16).

Sen. Bob Corker (R-Tenn.), another possible supporter, said the money or free allocations flowing to special interests is "offensive."

"Certainly our energy bill has nuclear in it and hopefully it sees the light of day, but it is not going to make up for the tremendous defects that occur in the House bill," Corker said.

Sen. Lisa Murkowski, (R-Alaska), ranking member of the Energy and Natural Resources Committee, would welcome a stronger nuclear title in the climate bill but there are several other problems, such as the cost of the bill, said spokesman Robert Dillon.

"At this point she is not supporting a cap-and-trade bill," Dillon said. "No one can give us a clear estimate about the cost. ... There are more questions than answers that people need to have before they are going to say they are going to start supporting this bill."

Sen. Lamar Alexander (R-Tenn.), who was also thought by many to be a possible supporter of a climate change bill, said this week no amount of nuclear incentives would tempt him to support a climate bill that involved cap and trade (E&ENews PM July 13).

"The bill needs to be junked," Alexander said at a press conference this week unveiling a "blueprint" for constructing 100 nuclear power plants in 20 years. Alexander said he would be pursuing his goal in separate legislation to boost loan guarantee funds, increasing resources for the Nuclear Regulatory Commission and more money to nuclear research and development.

Looking for love in all the wrong places

The underlying question for sponsors: If nuclear incentives are not enough to get undecided senators on board with cap and trade, what is the point of including them at all?

"I think the question is who do you get who you weren't going to get?" Romm said. "I think that obviously there is no point in adding stuff to the bill if you are not adding more votes for it. Republicans like nuclear, but I don't think they are going to vote for this bill."

Romm believes it will be an agreement with China on reducing emissions or even natural gas that will get the necessary senators on board. For instance, the natural gas industry sat out of negotiations in the House but have said they want more input into the Senate bill. And Louisiana, Arkansas, Pennsylvania and "a lot of interesting states" -- i.e. senators who may vote for the climate bill -- have discovered a good reserve of potential natural gas recently, Romm said.

Boxer does not appear to be willing to go much further in adding nuclear provisions to the bill. Boxer and Alexander have had lengthy disagreements about the role of nuclear during committee hearings on the climate bill this week.

The nuclear issue dominated much of the debate at a hearing on Tuesday intended to focus on the climate bill's potential for agriculture and forestry. Alexander and other Republicans on the panel touted the proposal to build 100 nuclear plants by 2030, but Boxer fired back at them that her bill would be the better way to go.

"I think it's very important we understand that the approach we're taking, we don't pick winners or losers. We put a cap on carbon and let the marketplace do it," Boxer said. She highlighted the U.S. EPA analysis of the House bill that estimates it could lead to 260 new 1,000 megawatt nuclear plants by 2050.

After Alexander called on President Obama to support his proposal for more nuclear plants, Boxer replied: "It is very clear he doesn't have to support your proposal. His [support of the House bill] results in more nuclear power plants being built."

Boxer added after a hearing yesterday, "I think if you look at Waxman-Markey, the prediction is there being well over 100 nuke plants. I don't know that we'll need to have more than that. But we'll certainly look at all of these issues."

Nuclear lobby split

The Nuclear Energy Institute, the lobbying arm of the U.S. nuclear industry, has stayed relatively quiet on the climate change negotiations as its members, including Exelon Corp. and Southern Co., have different positions on the House bill.

NEI has strongly pushed for more funding in the loan guarantee program and backs the new clean energy bank but has not issued many other demands.

"What we are hopeful for in any climate bill are those provisions. One, the recognition of nuclear as a clean energy source so if someone has nuclear in their portfolio they should be recognized for that and, two, recognition that to move forward we are going to have to private-public partnership of government and private enterprise," said Derrick Freeman, senior director, of NEI's legislative programs.

Individual utilities, as well as the Edison Electric Institute -- which represents investor-owned utilities -- have taken the lead on lobbying their interests in climate legislation. But their main target is the distribution of the free emission allocation provisions for utilities.

"Exelon is particularly pleased that free allowances will be allocated to local utilities to help mitigate the impact of increased prices on consumers," a statement from Exelon said after the House vote last month. The statement also included approval of the strong support for protection of consumers the bill provides, according to Exelon, but did not mention any of the nuclear measures or lack thereof.

Similarly a letter from Duke Energy Corp. sent to House Majority Whip James Clyburn (D-S.C.) the day before the bill was scheduled for a vote supports the allocation scheme, criticizes the offsets and cost-containment mechanisms among other subjects, but makes no mention of the nuclear provisions either for better or for worse.

Jim Rogers, Duke's CEO, said yesterday he has spoken to Boxer about including in the climate bill a provision to shorten licensing approval process under the Nuclear Regulatory Commission to two years and a provision that deals with "the waste confidence issues in a straightforward way."

Reporters Allison Winter, Alex Kaplun and Darren Samuelsohn contributed.

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