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Remarks as Prepared for Secretary Bodman
Thank you, Ambassador Baker for that warm introduction and for all the good work you and the University of Tennessee are sponsoring through the Baker Center for Public Policy. I also want to thank Representative Hamilton and the Wilson Center for hosting this event on such an important topic.
I'd like to talk with you this afternoon about the role nuclear power plays in our efforts to make America and the world more energy secure.
Enhancing America's energy security has been a priority for President Bush since his first days in office.
And it is central to my efforts as Secretary of Energy to help develop and bring to market safe, clean, reliable sources of energy that can serve as alternatives to the imported fossil fuels on which America must currently rely. This is one of the reasons we have put so much emphasis on bringing about a nuclear renaissance here in the United States.
Nuclear power is safe, clean and reliable. And, for the foreseeable future, it is the only mature, emissions-free technology that can supply the power America will need to meet the projected increase in demand for electricity over the next 25 years.
We've taken a number of steps forward in this regard. And now I'm pleased to announce one more.
Today, the Department of Energy is issuing the final regulations for the loan guarantee program established by Title XVII of EPACT - the Energy Policy Act of 2005. Through this loan guarantee program, the Department of Energy now has a mechanism to support and promote the early commercial use of innovative technologies in projects that will avoid, reduce or sequester air pollutants or greenhouse gas emissions.
In the President's FY 2008, the Department requested up to $9 billion in loan guarantee authority on top of the $4 billion Congress approved earlier this year. This is a necessary investment in America's future.
By putting the full faith and credit of the United States government behind these efforts, DOE's loan guarantees will help mitigate the financial risks inherent in the commercial deployment of innovative technologies. This will help get them to the market faster, which in turn will help America sustain growth in its economy, will yield global environmental benefits and, of equal importance, produce a more stable and secure energy supply.
Under the rule we are issuing today, DOE can guarantee up to 100 percent of a loan or debt instrument. However, in no case will we be issuing guarantees for more than 80 percent of a project's total cost; that is a limitation imposed by EPAct itself. Furthermore, the capital structure of any project receiving a loan guarantee will have to include a significant amount of equity contributed by the project's sponsors.
We do not plan to seek an appropriation to fund the required credit subsidy costs for the loan guarantees. Instead, applicants for loan guarantees will be required to pay these costs, which will be sufficient to cover the risk to the government of future defaults. In addition, the applicants will be required to pay fees and administrative costs associated with the government's activities in running the guarantee program.
This final rule is the culmination of a public rulemaking process. Rest assured, we carefully considered the comments we received after issuing the proposed rule earlier this year before making final decisions.
The projects that the loan guarantees will support move us toward the fulfillment of President Bush's vision of an economy where affordable, clean, alternative sources of energy are readily available.
In addition, we are today inviting 16 of the close to 150 companies who submitted loan guarantee pre-applications last fall to now submit formal applications for Title XVII loan guarantees. While these initial applications are for non-nuclear projects, I hope that Congress will soon provide the Department with additional authority that will enable us to offer loan guarantees to advanced nuclear power technologies.
This new loan guarantee program complements work done through the Department's Nuclear Power 2010 initiative (NP2010), EPAct and other efforts to spur the resurgence of nuclear power.
As you know, a nuclear power plant has not been ordered in the United States in nearly 30 years. Previously, companies had to apply for a license to build a nuclear facility and then a separate license to operate the plant. The federal government streamlined the licensing process in the 1990s but no company sought or was issued a new license. For the first plants that move through the new, streamlined system we are, through EPAct, making risk insurance available to protect project sponsors from licensing or litigation delays beyond their control.
Last week, the Department issued Conditional Agreement templates that will help the first six sponsors of new plants qualify for the insurance, up to $500 million for each of the initial two reactors, and up to $250 million for each of the subsequent four reactors.
Additionally, through the NP2010 program, we've been partnering with industry to reduce the regulatory and technical burdens inhibiting the construction of new plants. We have fostered innovation in regulatory policy without sacrificing safety or security, including the establishment of early site permitting in order to get new plants underway by 2010. Two early site permits have already been issued, one in Illinois and one in Mississippi.
Earlier this year, the Browns Ferry Unit 1 in Alabama was restarted and reconnected to the power grid through the Tennessee Valley Authority, after being shut down for more than two decades.
Last week, NRG Energy filed a combined construction and operating license application with the Nuclear Regulatory Commission for two new reactors it plans to build in Texas. This is the first ever application of its kind and the first for a license to construct a new nuclear plant in about three decades. All told, 17 companies have signaled plans to build more than 29 units in the years to come to further nuclear energy production here in the United States.
These are all signs of a reemerging nuclear power sector here in the United States.
But our commitment to the expansion of safe, clean and reliable nuclear power doesn't end at our borders. We've also taken steps to ensure that the United States will be a leader in the effort to expand the use of nuclear power around the globe.
I know my friend Chairman Bugat of the French Atomic Energy Commission was here yesterday, as was Chairman Kondo of the Japan Atomic Energy Commission. Together we, along with the Russians and the Chinese, worked together to launch an international framework for sharing nuclear power with the developing world in ways that safeguard against proliferation of materials and deal responsibly with spent fuel.
This effort, the Global Nuclear Energy Partnership (GNEP) represents the future of global cooperation in expanding nuclear power. We recently concluded the second GNEP ministerial in Vienna, Austria where, I am pleased to say, we tripled the size of the partnership from the original five to 16. The partners were joined by 19 observing nations and we expect several of those countries to join the partnership soon. The Ministerial set the partner nations on a path to address issues of nuclear fuel services and infrastructure development and work to share the benefits of nuclear power worldwide.
All of this means that the expansion of nuclear power, here in the United States and around the globe, is now almost a foregone conclusion. This is very different from two decades ago, when many energy forecasts predicted the U.S. would let the fleet of existing plants run their course before phasing out nuclear power indefinitely.
We are seeing just the opposite occur.
New plants are being considered. Existing plants are seeking to have their licenses extended. License applications are being filed. And the nations of the world are talking seriously about its expansion in safe, reliable and responsible ways.
Nuclear power has a bright future. With our global need to confront climate change and meet rapidly increasing electricity demand, it is the type of advanced technology we must seek, we must develop and on which we must depend to enhance America's and the world's energy security.
And now, if there's time, I'd like to take a few questions.
Location: The Wilson Center, Ronald Reagan Building in Washington, D.C.
Media contact(s): Megan Barnett, (202) 586-4940