After a year of uncertainty, the U.S. administration will go big on the atom. This coming week’s budget request will include a proposal to triple the amount set aside for loan guarantees for new nuclear projects, from just over $18 billion to $54 billion. This is the clearest signal yet that Obama has swung away from the mainstream green thinking that characterized his earlier statements about energy and environment policy. And it presents an interesting dilemma for Canada, whose environment minister today told the world that this country will cut carbon emissions by 17 percent from 2005 levels by 2020.
That’s the same year the government promised, in the Throne Speech that followed the October 2008 federal election, to have 90 percent of Canada’s electricity coming from zero-emission sources. As I have pointed out elsewhere, nuclear power must be a big part of this or we just won’t get anywhere near that target.
Which begs a giant-size question. As I mentioned last week, Canada’s wait-for-Obama strategy when it comes to energy and environment policy has worked well so far. The U.S. president has not done very much of what green lobbyists want. The latest announcement on nuclear, and his call for new offshore oil drilling, are huge signals Obama is swinging hard away from the greens.
This is good news for Canada when it comes to the oilsands; we can continue to ride the pro-Obama media frame as long as the greens don’t successfully attack the president (and they won’t). But Canada and the U.S. are now in a bit of a battle to achieve the 2020 target. Obama is putting aside US$54 billion to see that nuclear replaces a big portion of the coal-fired plants that currently provide half of America’s electricity.
That $54 billion is for loan guarantees, to encourage private sector investors to put money into new nuclear plants. Private sector involvement is exactly what Canada wants, as it tries to sell at least part of the national reactor maker, AECL. Would loan guarantees, similar to what the U.S. government will offer, achieve something similar?