Manchin Just Gave Biden a Path for His Green Goals: ‘I’m Big on Nuclear’
(Bloomberg) -- West Virginia Senator Joe Manchin, whose opposition is threatening to derail President Joe Biden’s massive social-spending plan, wants to expand at least one of its climate provisions: a tax credit to keep nuclear plants operating.
Manchin, the powerful Democrat from coal- and natural gas-rich West Virginia, backs the credit for nuclear plants that is tucked inside Biden’s Build Back Better legislation. Under the version passed by the House, a credit of as much as $15 per megawatt-hour could be claimed for the next six years. Manchin, whose support is necessary for Senate Democrats to pass the legislation on a party-line vote, wants the tax credit to last 10 years instead, according to three people familiar with the matter.
Nuclear power plants are struggling to survive amid competition from low-cost natural gas and renewables. Analysts, power companies and some environmentalists say that without federal aid a wave of nuclear plants could be shuttered and replaced by facilities that emit greenhouse gases.
That would threaten Biden’s bid to make the U.S. electric grid emission-free by 2035, said Adam Stein, associate director for nuclear innovation at the Breakthrough Institute, an environmental think tank.
“The 2035 target is ambitious as is,” Stein said. “If we are trying to replace fossil fuels to clean up the grid, we can’t also take away existing clean energy; otherwise, we aren’t making progress.”
Manchin is no newcomer to the issue, having consistently used his role atop the Senate Energy and Natural Resources Committee to advocate for nuclear power -- even though the building of new nuclear plants is outlawed in his home state. “Maintaining our fleet and preventing closures of existing nuclear plants is critical to achieving emission reduction goals and ensuring a reliable grid,” Manchin told Biden in a letter last year.
“I’m big on nuclear,” Manchin told reporters on Capitol Hill last week.
Manchin joined fellow Democratic senators Ben Cardin, Sheldon Whitehouse and Cory Booker last June in sponsoring legislation to create the 10-year nuclear production tax credit.
The extended 10-year timeline would mean increasing the price tag for the tax credit -- a potential challenge as Manchin simultaneously pushes Senate Democrats and the administration to scale back the $2 trillion spending package. The nuclear tax credit would cost some $23 billion over seven years, according to an analysis by the Joint Committee on Taxation.
The issue has taken on new urgency amid Biden’s push to clean up the nation’s power grid and his Paris Agreement pledge to at least halve U.S. greenhouse gas emissions by the end of the decade. The nation’s fleet of 54 nuclear power plants -- containing some 93 reactors -- now provide a fifth of the nation’s electricity and supply more emission-free power than all of the nation’s renewable sources combined.
Yet without the new production tax credit or other major policy changes, about 30% of those reactors are at risk of retiring by 2030, said Ben King, a senior analyst with the Rhodium Group, which has a report on how the U.S. can meet its target.
Nuclear plant operators argue the longer credit would help pay for license extensions and site upgrades. “A 10-year credit gives us a lot more certainty,” said David Brown, senior vice president of government affairs and public policy with Exelon Corp. “You’re really just treading water if you’re building new renewables but continue to retire existing nuclear.”
The nuclear production tax credit enjoys support from the White House. But it has detractors in the environmental movement who say that despite the nuclear industry’s zero-emission profile, its trail of radioactive waste makes it anything but clean.
The proposed tax credit represents “an indiscriminate money cannon pointed at a handful of companies,”said Lukas Ross, program manager at Friends of the Earth, a progressive environmental group. “The result will be higher costs for consumers and slower deployment of clean renewables.”
©2022 Bloomberg L.P.