President Obama is turning his attention to energy. Recently he allowed new drilling for oil and gas along American coastlines. And he's agreed to subsidize new nuclear power plants. Besides satisfying demands for more energy, these actions could help the president win votes for a new climate and energy bill pending in Congress. But restarting the nuclear power industry — which has been treading water for 30 years — won't be easy.
President Obama is turning his attention to energy. Recently he allowed new drilling for oil and gas along American coastlines. And he's agreed to subsidize new nuclear power plants.
Besides satisfying demands for more energy, these actions could help the president win votes for a new climate and energy bill pending in Congress. But restarting the nuclear power industry — which has been treading water for 30 years — won't be easy.
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With Global Warming, New Interest
The threat of global warming might be the best thing to happen to nuclear energy. For three decades, no one built a new plant in the U.S., though some have been built abroad. Now nuclear looks better because it doesn't emit greenhouse gases that warm the planet.
But nuclear power still scares lots of banks and investors. Leslie Kass, director of business policy at the industry's Nuclear Energy Institute, gives two reasons.
"One would be some of the unknowns, because we haven't built here in 30 years," Kass says. "And they want to watch the licensing process work and they want to prove us at our word that we can replicate what's happened overseas."
And No. 2 would be the cost. Kass says American utility companies tend to be smaller than their foreign counterparts. They don't have as much cash, so they have to borrow more. And the typical nuclear project runs about $10 billion, give or take.
"Once you start borrowing almost as much as your net worth, you get penalized by the rating agencies," she says. "Your rating goes down and then your access to capital, the cost of that goes up."
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