Thursday, August 13, 2009

Show Me the Loan Guarantees

JeffCityExteriorLG August isn’t the most exciting news month of the year, largely because our Congress people are checking out the beaches back home and braving an evening with the constituents and because everyone else can barely think in the heat much less make news. So we could forgive the readers of the St. Louis Post-Dispatch if their eyes droop a bit when they confront an editorial about loan guarantees.

Right at the moment, the climate change bill has (somewhat ironically) lost heat while health care sucks up all the news resources. But it’s still in progress and still important. Stanford Levin, Emeritus Professor of Economics at Southern Illinois University Edwardsville, has the elements about right:

Because nuclear power plants are expensive to build — but with relatively low operating costs — loan guarantees are important and may be crucial to their construction. Therefore, it makes little sense that the legislation as now drafted limits any energy source to no more than 30 percent of the total loan guarantees. This ignores the relatively high capital cost of nuclear power plants, and, consequently, their special need for loan guarantees.

That’s a really solid explanation of why loan guarantees for nuclear plants pay off in the long run and a pretty good ding at Congressional skittishness.

Limiting loan guarantees for nuclear power plants probably would result in loan guarantees for energy that is more expensive and uses unproven or less proven technology. That may mean a higher default rate, costing taxpayers more, at the same time contributing less to clean energy and energy independence. Loan guarantees for nuclear power plants without the 30 percent limit would comport with the purpose of the act, limit costs to taxpayers, and provide carbon-emissions-free electricity at the lowest possible cost.

Also about right. We’d probably hesitate to sound such a dire note about “less proven” technology, but in terms of risk based on maturity, it’s hard to argue with this formulation. Read the whole thing. Levin’s background in economics brings an interesting perspective to his op-ed – and he’s that rarity, an academic writer interested in keeping his ideas reader friendly.


The Dispatch doesn’t seem to have weighed in on this topic. We’re sure there’s an editorial on AmerenUE’s efforts earlier this year to have overturned a ban on charging customers for the construction of a new plant, but nothing found (we’d be surprised if it was on Ameren’s side).

They do have some recent editorials on global warming:

Climate change and invasive species

Global warming threatens American security

Missouri doesn't need another casino (we beg to differ)

The capital dome in - Quick – what’s the capital of Missouri? If you guessed correctly – and you’re not from Missouri – a merit badge to you. (There was one for knowing state capitals when I was a Boy Scout.)


Grant Supple said...

Does anyone know why the federal government never got around to stockpiling KI (potassium iodide) like it was supposed to do back in 2002? I understand nuclear power plant workers and their families have been taken care of, but what about the rest of us? Are the guys at right?

DocForesight said...

Oooh - Oooh --Jefferson City! Truth be told, I had to look it up in my handy atlas.

KenG said...

The KI website you reference is muddled. The KI stockpile exists. It is the responsibility of state and local governments to distribute KI as they see fit. Some have and some have not. Nuclear plant workers and their families, in general, do not have KI stocks, although the plants may. For correct info, check the NRC website, not sites that may be fronts for suppliers selling KI.

Grant Supple said...

But didn't Congress pass a law about stockpiling of KI? How is that a state and local government thing?

KenG said...

Grant, please read the linked NRC information as well as the memos linked from that page. The federal law required stockpiling to make the KI available for distribution. The states are responsible for distribution. The 2002 law changed the area of distribution from 10 miles to 20 miles, increasing the size of the stockpile. However, it also allowed the increase to be deferred if a better alternative existed. In 2007, the Federal government determined that evacuation was more effective than KI for those over 10 miles away. Therefore, the stockpile increase was not required.

Even within 10 miles, in many areas evacuation is better than KI. I live within 3 miles of a nuclear plant and KI has never been distributed, because evacuation is very feasible.

Anonymous said...

The problem with KI is that many will misuse it. As a thyroid blocker, it is only useful when there are releases of radioiodine, and that means damage to an operating core or freshly-used fuel, and significant containment failure, both of which are unlikely in the extreme. But there will be many who will ingest it at the first sign of trouble, even if there are no releases. Panicked moms will be popping those pills into their kids as a "precautionary" measure.

In those cases, the risks of taking the KI probably exceed the benefits. The statistics I have seen indicate the chances of severe allergic reaction to KI ranging from 0.5 to 2 per million population. Those are probably worse odds than the chances of harm from an accident involving a small or zero source term.