Want to Reduce the Debt? Cut the Billions a Year In Nuclear Subsidies
We’ve previously documented that even top nuclear executives admit that nuclear energy is expensive, and only survives due to massive government subsidies.
Time noted in 2008:
Lovins [a veteran energy expert and chairman of the Rocky Mountain Institute] notes that the U.S. nuclear industry has received $100 billion in government subsidies over the past half-century, and that federal subsidies now worth up to $13 billion a plant — roughly how much it now costs to build one — still haven’t encouraged private industry to back the atomic revival. At the same time, the price of building a plant — all that concrete and steel — has risen dramatically in recent years, while the nuclear workforce has aged and shrunk. Nuclear supporters like Moore who argue that atomic plants are much cheaper than renewables tend to forget the sky-high capital costs, not to mention the huge liability risk of an accident ….
The conservative Cato Institute reported in 2003:
With federal government spending through the roof and projected deficits setting new records every day, it is perhaps surprising that the Bush administration and Congress want to use billions of taxpayer dollars to single-handedly resurrect the moribund nuclear industry. Old habits, however, die hard. The federal government has always maintained a unique public-private partnership with the nuclear industry, wherein the costs of nuclear power are shared by the public but the profits are enjoyed privately. [crony capitalism, anyone?]
A recent report by Scully Capital Services, an investment banking and financial services firm, commissioned by the Department of Energy (DOE), highlighted three federal subsidies and regulations — termed “show stoppers” — without which the industry would grind to a halt. These “show stoppers” include the Price Anderson Act, which limits the liability of the nuclear industry in case of a serious nuclear accident — leaving taxpayers on the hook for potentially hundreds of billions in compensation costs; federal disposal of nuclear waste in a permanent repository, which will save the industry billions at taxpayer expense; and licensing regulations, wherein the report recommends that the Nuclear Regulatory Commission further grease the skids of its quasi-judicial licensing process to preclude successful interventions from opponents. But even these long-standing subsidies are not enough to convince investors, who for decades have treated nuclear power as the pariah of the energy industry.
The most egregious proposal in the energy bill has the federal government providing loan guarantees covering 50 percent of the cost of building 8,400 Megawatts of new nuclear power, the equivalent of six or seven new power plants. The Congressional Research Service estimated that these loan guarantees alone would cost taxpayers $14 to $16 billion. The Congressional Budget Office believes “the risk of default on such a loan guarantee to be very high — well above 50 percent. The key factor accounting for the risk is that we expect that the plant would be uneconomic to operate because of its high construction costs, relative to other electricity generation sources.” But that’s not all. The bill also authorizes the federal government to enter into power purchase agreements wherein the federal government would buy back power from the newly built plants — potentially at above market rates.
Keeping this provision in the energy bill will result in a double taxation: once to build the plants and then to buy back the power from the newly built plants. This would be like paying for your kids’ education and then agreeing to pay them a salary once they graduate.
The Union of Concerned Scientists pointed out in 2010:
The nuclear power industry is seeking tens of billions in new subsidies and other incentives in federal climate and energy legislation that would shift massive construction, financing, operating and regulatory costs and risks from the industry and its financial backers to U.S. taxpayers. Congress should reject these overly generous subsidies to this mature industry whose history of skyrocketing costs and construction overruns already has resulted in two costly bailouts by taxpayers and captive ratepayers—once in the 1970s and 1980s when utilities cancelled or abandoned more than 100 plants, and again in the 1990s when plant owners offloaded their “stranded costs.” [The "stranded costs" totaled more than the entire Saving and Loan scandal.]
Too late …
Beyond Nuclear reports:
In 2005, the Energy Policy Act provided another $13 billion of subsidies, tax incentives and other support for the nuclear power industry. It also created the energy loan guarantee program.
In December 2007, Congress and George W. Bush approved $20.5 billion in nuclear loan guarantees under this program ($18.5 billion for new atomic reactors, $2 billion for new uranium enrichment facilities).
During the week of May 25, 2009, the US House approved a “Clean Energy Bank” that would include nuclear power loans, loan guarantees, and other subsidies.
Physicians for Social Responsibility – which won the Nobel Peace Price – noted that – as of 2010 – nuclear companies received tens of billions of dollars in new subsidies, including:
Research and Development
- Generation IV program to develop new reactor designs
- Research and development of radioactive waste reprocessing and transmutation technologies
- Investment in human resources and infrastructure in the nuclear sciences and engineering fields through fellowships and visiting scientist programs; student training programs; collaborative research with industry, national laboratories, and universities; upgrading and sharing of research reactors; and technical assistance
- Nuclear Power 2010, a taxpayer-industry cost-share program to fund Nuclear Regulatory Commission licensing of new reactors, as well as the certification of Generation 3.5 reactor designs
- One-step construction and operation license application process that limits public participation
Construction subsidies ~ $3.25 billion + $18.5 billion in loan guarantees
- $18.5 billion in loan guarantees for new reactors. According to the Congressional Budget Office, the default rate is “very high – well above 50 percent.”
- Authorization of $2 billion in “risk insurance” to pay the industry for any delays in construction and operation licensing for 6 new reactors, including delays due to the Nuclear Regulatory Commission or litigation. The payments would include interest on loans and the difference between the market price and the contractual price of power.
- Authorization of more than $1.25 billion for a nuclear reactor in Idaho to generate hydrogen fuel
Operating subsidies ~ $5.7 billion + Limited Liability
- Reauthorization of the Price-Anderson Act, extending the industry’s liability cap to cover new nuclear power plants built in the next 20 years
- Incentives for “modular” reactor designs (such as the pebble bed reactor, which has never been built anywhere in the world) by allowing a combination of smaller reactors to be considered one unit, thus lowering the amount that the nuclear operator is responsible to pay under Price-Anderson
- Production tax credits of 1.8-cent for each kilowatt-hour up to 6,000 megawatts of nuclear-generated electricity from new reactors during the first 8 years of operation, costing $5.7 billion in revenue losses to the U.S. Treasury through 2025
Radioactive waste subsidies ~ $22 billion thus far + guaranteed waste removal
- DOE-utility contracts guaranteeing that the nuclear waste will be removed from the site within 10 year of shutdown or the US taxpayer pays for spend fuel storage costs
- One mil (one-tenth of one cent) per kilowatt-hour paid by ratepayers receiving electricity from nuclear reactors to pay for a geologic repository for the spent fuel; the Nuclear Waste Fund currently has $22 billion
Shut-down subsidies ~ $1.3 billion
- Changes the rules for nuclear decommissioning funds that are to be used to clean up closed nuclear plant sites by repealing the cost of service requirement for contributions to a fund and allowing the transfer of pre-1984 decommissioning costs to a qualified fund, costing taxpayers $1.3 billion
The government has paid out substantial sums in new subsidies – including loan guarantees – for expensive new reactors at Vogtle. The reactors are already way over budget … and are plagued by Solyndra-like issues of cronyism, secretive non-disclosure, and mismanagement.
Moreover, the American government has been wholly subsidizing the nuclear industry for decades through its concerted campaign to hide the dangers of radiation … and to cover up the number and scope of accidents. That’s a subsidy worth … as much as all nuclear profits ever. In other words, trillions.
And politicians – including Obama – are also subsidizing the American nuclear industry by lobbying foreign countries like India to impose American-style government insurance for their reactors.
The bottom line is that if we want to reduce the debt, we should stop all nuclear subsidies.
Important Note: Claims that nuclear is good for the environment and reduces climate change are entirely false claims pushed by the nuclear lobby.
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