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Obama seeks to boost nuclear power in new budget

By Tom Doggett and Matt Spetalnick

WASHINGTON (Reuters) - President Barack Obama's budget proposal will call for tripling government loan guarantees for new nuclear reactors, an administration official said on Friday, a move sure to win over some Republican lawmakers who want more nuclear power to be part of climate change legislation.

The $54 billion in loan guarantees, which follows Obama's pledge in his State of the Union address to expand nuclear power production, will be announced as part of Obama's proposed 2011 budget that will be sent to Congress on Monday.

Obama on Wednesday called on Congress to pass an energy and climate change bill with incentives to make clean energy profitable. "And that means building a new generation of safe, clean nuclear power plants in this country," he said.

"As the world moves to tackle climate change and diversify our national energy portfolio, nuclear energy will play a vital role," said Carol Browner, who advises the president on energy and climate change issues.

Obama, however, is not waiting for Congress to act on climate change. On Friday, the president issued an executive order to reduce U.S. government greenhouse gas emissions 28 percent by 2020.

The government target was based on the combination of individual goals set by 35 federal agencies against an estimated 2008 baseline, the White House said.

Three U.S. senators -- Democrat John Kerry, Republican Lindsey Graham and Independent Joe Lieberman -- are working on a bipartisan bill to cut U.S. greenhouse gas emissions by implementing a nationwide cap-and-trade system that would require utilities, oil refineries and factories to have permits to spew polluting emissions.

To win support for the climate change bill, the legislation would also expand nuclear power and offshore drilling.

Lieberman's spokesman said the senator believes increasing the nuclear loan guarantees "will help engage supporters of nuclear power from both sides of the aisle in the ongoing conversation about energy independence and pollution reduction."

Kerry sees the administration's new loan guarantee initiative "as an important sign of the White House's commitment to addressing climate change and advancing clean energy goals," the senator's spokesman said.

"Nuclear energy has long been the drumbeat for Republican lawmakers on how to reduce greenhouse gases," said Josh Margolis, an executive at CantorCO2e, a carbon broker. "This should help win votes from those lawmakers who doubted the sincerity of those who advocated for climate change goals."

Senator Lisa Murkowski, the top Republican on the Senate Energy Committee, said the extra loan guarantees were "a good first step toward expanding our use of clean nuclear energy."

Supporters of nuclear power argue that more reactors will be needed if the United States wants to tackle global warming, because nuclear is a much cleaner energy source compared with greenhouse gas emissions spewed by coal-fired power plants.

However, nuclear power has the problem of radioactive waste, which is now stored on site at reactor locations around the country.

"Every new nuclear power plant built would be a step backwards when it comes to solving global warming," said Anna Aurilio with Environment America.

The administration on Friday also announced a 15-member commission to consider the future of nuclear waste storage, including alternatives to a proposed site at Yucca Mountain in Nevada, which the administration opposes.

The panel will be headed by former congressman Lee Hamilton and former National Security Advisor Brent Scowcroft. The commission will produce an interim report within 18 months and a final report within 24 months.

The new loan guarantees, if approved by Congress, would be on top of the $18.5 billion allotted by the department.

The nuclear industry has been waiting for months for the department to dole out those loan guarantees.

The Energy Department last year narrowed the list of those energy companies likely to receive loan guarantees to four: Southern Co, Constellation Energy, NRG Energy and SCANA Corp.

The United States now has 104 operating reactors, which generate about 20 percent of the U.S. electricity supply.

"If we're going to stay at 20 percent total capacity, which is where nuclear is today, by 2030, then we need between 25 and 30 nuke reactors, and that is pushing the envelope to get that done," said Christine Whitman, who led the Environmental Protection Agency in the Bush administration and now heads the Whitman Strategy Group that advocates for nuclear energy.

(Additional reporting by Timothy Gardner and Richard Cowan; editing by Jim Marshall, Walter Bagley and Lisa Shumaker)

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