Big firms drop support for US climate bill

• BP America, Caterpillar and Conoco end support• Opponents claim climate law is dead in the water

Suzanne Goldenberg
guardian.co.uk, Tuesday 16 February 2010 21.31 GMT
Barack Obama suffered a setback to his green energy agendatoday when three major corporations – including BP America – dropped out of a coalition of business groups and environmental organisations that had been pressing Congress to pass climate change legislation.
The defections by ConocoPhillips, America's third largest oil company, Caterpillar, which makes heavy equipment, and BP rob the US Climate Action Partnership of three powerful voices for lobbying Congress to pass climate change law.
They also undercut Obama's efforts to cast his climate and energy agenda as a pro-business, job-creation plan.
Only hours earlier, Obama and other cabinet officials had made a high-profile announcement that $8.3bn (£5.3bn) was being awarded in loan guarantees for a company building the first new nuclear reactors in America in nearly 30 years.
But the loan decision in favour of Southern Company, which was framed by the White House as a kick-start for new nuclear plants, was upstaged by the departure of the big three firms from the climate partnership.
Officials from BP and ConocoPhillips said that the proposals before Congress for curbing greenhouse gas emissions did not do enough to recognise the importance of natural gas, and were too favourable to the coal industry.
The house of representatives passed a climate change bill last June, but the effort has stalled in the Senate.
"House climate legislation and Senate proposals to date have disadvantaged the transportation sector and its consumers, left domestic refineries unfairly penalised versus international competition, and ignored the critical role that natural gas can play in reducing GHG emissions," said the ConocoPhillips chairman and chief executive, Jim Mulva, in a statement. "We believe greater attention and resources need to be dedicated to reversing these missed opportunities, and our actions today are part of that effort."
Opponents of climate change legislation said the departure of the big three companies had all but killed off Obama's last chances of pushing his agenda through Congress.
"Cap-and-trade legislation is dead in the US Congress and that global warming alarmism is collapsing rapidly," said Myron Ebell, director of global warming for the Competitive Enterprise Institute.
Obama this week is stepping up White House pressure on Congress with a series of events intended to show the job-creating potential of his green energy agenda.
His announcement at a Maryland job training centre of the new nuclear loan guarantees was a key part of the strategy.
"Even though we haven't broken ground on a new nuclear plant in nearly 30 years, nuclear energy remains our largest source of fuel that produces no carbon emissions," he said. "To meet our growing energy needs and prevent the worst consequences of climate change, we'll need to increase our supply of nuclear power. It's that simple." The guarantees would commit the US government to repaying Southern's loans if the company defaulted. They cover some 70% of the estimated $8.8bn cost of building two reactors at the company's Vogtle plant, east of Atlanta.
White House officials said today'syesterday's announcement reinforced Obama's pledge in his state of the union address last month to expand America's use of nuclear energy and to open up offshore drilling.
Obama has also asked Congress to triple loan guarantees for the nuclear industry, to $54bn from the current $18.5bn.
The pledge to the nuclear industry was seen as part of a strategy to win Republican support for the climate and energy bill. Expanding nuclear power, which supplies about 20% of the country's electricity, is one of the few elements of Obama's energy and climate agenda to win broad-based support. A number of Republican senators have demanded Obama help fund the construction of 100 new nuclear plants over the next decade.
Lindsey Graham, the Republican who is working closely with Democrats to draft a compromise cap and trade bill, is also on board with a greater role for nuclear power. His state, South Carolina, gets nearly half of its electricity from nuclear power.
But the subsidies have made some senators as well as environmental organisations uneasy. "It's a heck of a lot of money," said the Vermont senator, Bernie Sanders, who is an independent. "The construction of new nuclear plants may well be the most expensive way to go."The administration is also stuck on a solution for nuclear waste, after shutting down plans to bury the waste in the Yucca Mountain range in Nevada. The administration last month set up a panel to recommend new waste disposal solution.
Obama acknowledged those controversies , saying: "There will be those who welcome this announcement, and those who strongly disagree with it. The same has been true in other areas of our energy debate, from offshore drilling to putting a price on carbon pollution. But what I want to emphasise is this: even when we have differences, we cannot allow those differences to prevent us from making progress. On an issue which affects our economy, our security, and the future of our planet, we cannot continue to be mired in the same old debates between left and right; between environmentalists and entrepreneurs."
The Southern projects must still win licensing approval.
White House officials said the new reactors could come on line by 2016 or 2017, and would generate 2.2GW. Construction alone would create 3,500 jobs, and the plant itself would create 800 operations jobs.
The loan guarantees are the first of some $18.5bn in funding originally approved by Congress in 2005.
Steven Chu, the energy secretary, said the loans were the first of "at least half a dozen, probably more" loans for new nuclear reactor construction. "We have a lot of projects in the pipeline", he told reporters, but did not indicate a time for further announcements.
The Southern reactors are to be built with the new Westinghouse AP1000 design, which Chu said was safer and more economical than the older generation of reactors. "If you lose control, it will not melt down," he said. "Three Mile Island was a partial melt down. It was serious, but on the other hand the containment vessel held."
Chu also disputed a report from the Congressional Budget Office that put the risk of default on loans to the nuclear industry as high as 50%. "We are looking at ways to increase ways of building these projects on time and on budget," he said.