US finalizes 'clean energy' loan guarantees
05 October 2007
The US nuclear industry has welcomed the announcement by the US Department of Energy (DOE) of final regulations for a loan guarantee programme that will pave the way for federal support of clean energy under the Energy Policy Act of 2005.
"Loan guarantees aim to stimulate investment and commercialization of clean energy technologies", Secretary of Energy Samuel W Bodman said, adding that the regulations were bringing the US "one step closer to being able to use new and novel sources of energy on a mass scale to reduce emissions and allow for vigorous economic growth and increased energy security."
Under the new ruling, the DOE may issue guarantees for up to 100% of the amount of a loan, subject to the Energy Policy Act limitation that it may not guarantee a debt instrument for more than 80% of the total cost of an eligible project. DOE does not plan to use taxpayer funds to pay for the credit subsidy costs of loan guarantees. To be eligible for the loan guarantees, projects must employ new or significantly improved technologies that avoid, reduce or sequester air pollutants or anthropogenic emissions of greenhouse gases compared to commercial technologies currently in use in the USA.
Frank L (Skip) Bowman, president and CEO of US nuclear industry policy organization the Nuclear Energy Institute, welcomed the ruling. "We are pleased that the Department of Energy has taken this important step to implement the loan guarantee provisions of the Energy Policy Act. Electric generating companies have begun to file license applications for new nuclear plants with the Nuclear Regulatory Commission, and it is imperative that the Energy Department have in place a loan guarantee program that will support the financing for these large, capital-intensive power plant projects," he said.
His sentiments were echoed by Michael J Wallace, executive vice president of Constellation Energy, which recently filed a partial Combined Operating licence (COL) application for a new nuclear unit at its Calvert Cliffs site. The rulemaking "recognizes the need for federal loan guarantees that mitigate the inherent risk in bringing innovative technologies to the marketplace," he said, adding: "We have consistently maintained that a workable loan guarantee program is essential to ensure nuclear power delivers on its promise as the only safe, reliable, emission-free technology that can meet the nation's energy needs in the 21st century. Today's announcement appears to provide for such a workable framework."
Wallace described the regulations as a "substantial improvement" on earlier proposals, and said that Constellation would spend the next few weeks carefully reviewing the new rules to gain a full understanding of their impact on pursuing new nuclear development activities.
DOE has invited 16 project sponsors who have already submitted pre-applications now to submit full applications for loan guarantees. The list is made up of projects covering advanced fossil energy, industrial energy efficiency, solar energy, electricity delivery and energy reliability, hydrogen, alternative fuel vehicles and biomass.
Further information
Department of Energy (DOE)
Nuclear Energy Institute (NEI)
Constellation Energy
WNA's Radioactive Wastes information paper
WNA's US Nuclear Power Industry information paper
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