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Approved Senate Stimulus Bill Includes $50 Billion in Nuclear, Coal Loan Guarantees

Talks have begun to resolve key differences between the U.S. House’s $819 billion economic stimulus plan and the $838 billion approved by the Senate this week. Among these differences are that the Senate bill includes $50 billion for loan guarantees for new nuclear reactors and clean coal plants.

The Senate passed the American Recovery and Reinvestment Act by a vote of 61-37 on Tuesday. Now both congressional houses must resolve differences to both bills and pass a final recovery package, likely by the end of this week.

According to the nonprofit Center for American Progress, both bills would make significant investments in energy, but the House bill promises to create between 343,000 and 444,000 more jobs.

A more prominent difference in the bills’ energy funding is the transfer of $500 million in federal loan guarantees for renewable energy projects and electric transmission projects to the Innovative Technology Loan Guarantee Program, an initiative established under the Energy Policy Act of 2005. The Senate provision, sponsored Sen. Robert Bennett (R-Utah), could allow the government to provide a guarantee for $50 billion in loans to eligible projects—many of which are nuclear power plants, coal-to-liquids plants, and projects that capture and sequester carbon dioxide.

Different accounting methods used in the two programs allows the $500 million appropriation to permit about $5 billion in loan guarantees under the renewable program, but $50 billion under the broader, existing program, said The Washington Post last week.

Congress had in December 2007 voted to authorize $18.5 billion in loan guarantees for the construction of new nuclear reactors, along with $2 billion for a uranium enrichment plan, $8 billion for various coal technologies, and $10 billion for renewables and efficiency projects.

But in October 2008, the Department of Energy announced (PDF) it had received 19 Part 1 applications to support the construction of 14 nuclear power plants. The Energy Department said that these projects could cost a total of $188 billion, necessitating about $122 billion in loan guarantees—an amount far exceeding the $18.5 billion of available loan funding.

Competition for the loan guarantees has since prompted companies to rethink plans. As POWERnews reported in January, for example, Entergy Nuclear, Dominion, and Exelon are looking to reactor technologies other than GE-Hitachi’s Economic Simplified Boiling Water Reactor (ESBWR) to give projects contending for loan guarantees greater commercial and schedule certainty.

According to the Senate Committee on Appropriations (PDF), the Senate bill also designates funds as follows:

Renewable Energy and Energy Efficiency

  • $2.6 billion for energy efficiency and renewable energy research, development, demonstration and deployment activities to accelerate the development of technologies that will diversify the nation’s energy portfolio. These include biofuels, geothermal, water, wind, solar, and efficiency projects.
  • $4.2 billion for energy efficiency and conservation grants.

Fossil Fuels

  • $4.6 billion for fossil energy research and development, including $2 billion for one or more near-zero-emissions power plants, $1 billion for the Energy Department’s Clean Coal Power Initiative Round III Funding Opportunity Announcement, and $1.6 billion for a competitive solicitation for projects that demonstrate carbon capture from industrial sources.

Transmission

  • The bill includes $4.5 billion for smart grid–related activities, including work to modernize the electric grid, enhance security and reliability, perform energy storage research, development, demonstration, and deployment, and provide worker training.
  • A total of $8.5 billion is provided for new loan guarantees aimed at standard renewable projects such as wind or solar projects and for electricity transmission projects.
  • $6.5 billion of increased borrowing authority is provided to the Bonneville and Western Area Power Administrations ($3.25 billion each) to pursue the construction of new transmission and upgrading of electric power transmission lines and related facilities necessary to deliver power generated by renewable energy resources.

Sources: Center for American Progress, The Washington Post, Senate Committee on Appropriations, POWERnews

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