Republican senator attacks McCain energy plans

By Stephanie Kirchgaessner in Washington and Kevin Allison in San Francisco
Published: October 23 2008 18:35

A senior Republican lawmaker has questioned John McCain’s energy proposals, including a plan to build 45 nuclear plants by 2030, given the Republican presidential nominee’s resistance to government subsidies.
Chuck Grassley, the Iowa senator, who has been a staunch supporter of federal subsidies for ethanol production and supports expansion of nuclear power, suggested in an interview with the Financial Times that the Arizona lawmaker’s views on federal subsidies on energy production were inconsistent.

Mr McCain has repeatedly said federal support for ethanol, the corn-based alcohol, distort the market and he has called for the elimination of mandates, subsidies, tariffs and price supports that “prevent the development of market-based solutions”. His energy proposals centre on increased domestic drilling, investments in “clean coal research” and alternative energy, and the construction of 45 new nuclear power plants.
“[You’ve heard McCain] on television saying that he was for solar and wind and he was for nuclear,” Mr Grassley said. “They’re all getting subsidies…So how are these going to get started if they don’t have the subsidy? And how does he justify if he’s for a subsidy for wind and for solar, how he can justify that subsidy and can’t justify one for ethanol?”
A spokesperson for Mr Grassley said that while the senator disagreed with Mr McCain on ethanol, he supported Mr McCain’s candidacy and his views on international trade and other issues.
A spokesman for Mr McCain’s campaign said: “Government incentives have a role in encouraging a market for promising new technologies, but that doesn’t mean all subsidies are good policy.” Mr McCain’s proposed cap and trade system, he said, would make the production of nuclear energy far more competitive as the cost of other carbon-emitting energy sources rose.
“One important barrier to the construction of new nuclear power plants is the federal government’s byzantine regulatory approval process. By streamlining the process for approving new plants, McCain’s plan will reduce that barrier,” the spokesman added.
Mr Grassley is not alone in questioning how Mr McCain might finance a huge expansion in nuclear power.
“While [McCain] doesn’t come right out and say these [new reactors] should be subsidised, it is pretty clear to most people that there is no way these reactors will be built without, in effect, socialising them via massive federal loan guarantees,” says Doug Koplow, founder of Earth Track, which researches subsidies.
He estimates that if a single reactor is 80 per cent federally guaranteed at a cost of $8bn, the federal government could end up subsidizing between $200bn to $290bn, making it the largest subsidy to a single privately owned industrial sector.
Lester Brown, a leading environmentalist and founder of the Earth Policy Institute, also believes it is unlikely new plants will sprout up given the expense.
“If we insist on full cost accounting, then anyone who wants to build a nuclear power plant has to be prepared to pay the cost of disposing of the waste, they have to find someone who will insure the reactor, and they have to include that in the utility rates the cost of decommissioning the plant,” he says. “If we do that, nuclear power just doesn’t get out of the starting blocks.”
Copyright The Financial Times Limited 2008