Buddy, can you spare $7.5 billion?

Development of a new nuclear power plant in Maryland suffered a major setback last week with the disclosure that Constellation Energy Group has withdrawn from the federal loan guarantee program. Without those guarantees, it would appear unlikely that Calvert Cliffs 3 will be developed by Constellation and its partner in the project, Electricite de France.

That can't thrill shareholders in Constellation, as the company has already sunk hundreds of millions of dollars into the project, nor EDF, which invested in Constellation in order to participate in what many believe is a coming nuclear renaissance in this country.


But it should be just as troubling to all Marylanders because the proposed 1,600 megawatt plant in Calvert County is widely regarded as a lynchpin to the state's goals of improved air quality, lower greenhouse gas emissions and an affordable and sufficient supply of electricity for many years to come.

Even with expected investments in conservation and new power lines, the loss of Calvert Cliffs 3 would raise serious questions about whether future energy needs can be met. The Mid-Atlantic region will need to draw its electricity from somewhere, and polluting coal-fired plants (and natural gas-powered plants that burn cleaner but still produce greenhouse gases) would be the likely alternatives — if any were even being built.


Constellation's decision was no surprise to those in the nuclear industry. At $880 million, the cost of guaranteeing a $7.5 billion loan was too great a burden to place on shareholders. It's a huge sum to have to pay on top of interest and other charges, and it raises doubts about whether a lot of other nuclear projects will move forward either.

Company officials believe that the way the federal Office of Management and Budget calculates risk is unfair and unrealistic. That's also the position of the nuclear power industry. But it's also clear that market forces have been working against the project as well — the cost of building a nuclear plant is rising (Calvert Cliffs 3 is currently pegged at $9.6 billion) while post-recession energy prices are not.

The solution could lie in the climate change bill pending in Congress that could fundamentally change the economics of electricity generation. But with Republicans likely to gain seats in November, support for carbon tax or trading provisions is down, and climate change skepticism is up. The GOP may be sympathetic to nuclear, but you can bet Democrats won't be on board with any energy bill that doesn't address greenhouse gases. Reforms to the loan guarantee program may also be possible, but that, too, would seem unlikely in the current anti-bailout climate.

That leaves the ball in the hands of EDF, which has far deeper pockets than Constellation. Might the company take over the project, perhaps with a new partner? One can only speculate. Right now the only thing certain is EDF leadership is


with Constellation's Baltimore-based executives.

All of which suggests that while the project suffered a serious setback, it's not dead yet. Calvert Cliffs wasn't projected to go online for many years yet, so Constellation's decision may represent little more than a further delay. But even that is problematic. At some point, America has to get serious about climate change and ensuring the reliability of the power grid, and it can't achieve either goal without significant investments in nuclear projects like this.