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Want to Reduce the Debt? Cut the Billions a Year In Nuclear Subsidies

George Washington's picture




 

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?]

 

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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.

 

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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

Licensing

  • 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.

And perhaps the biggest taxpayer subsidy of all is that nation our nation could spend trillions – or go bankrupt – in the likely event of a major nuclear accident (and see this.)

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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Wed, 03/13/2013 - 12:14 | 3326158 Simit Patel
Simit Patel's picture

it is easy to criticize things. what is the solution? nuclear powers nearly 1/5th of US electricity. what are you going to replace it with? coal -- another heavily subsidized industry, with a higher death/BTU count than nuclear? subsidies exist for all energy sources. natural gas? people will cry about fracking (and wait till prices rise). oil? the original thing to cry about. solar sounds wonderful, till we deal with the harsh reality that even after all this hype it is just 0.5% of global energy production. and good luck finding the rare earths, copper, silver, and perhaps most crucially, LAND needed to make solar a viable replacement for fossil fuels. 

 

 

Wed, 03/13/2013 - 17:28 | 3325230 falak pema
falak pema's picture

GW : why don't you concentrate on the root cause of USA power play : Defense budget; aka 700B of its expenditure.

Where the next nation spends : 145 B.

There is much room for cut back right there! 

As for your remarks on Nuclear, it looks like the industry needs to be better regulated for the whole community to benefit from its margins; instead of subsidies lining corporate profits.

But hey, that is corporate america! And crony capitalism, the coca cola of lobbyism. 

You could say the same thingie about FIRE (fin/ins/RE), Oil, Pharma and Agri sectors. They are ALL subsidised to declare private profits in Caymanista lands!

USA is a huge economic machine to transfer wealth offshore, like the City, and impoverish the 99%.

This globally focussed machine is now running out of fiat generated lubrification and cheap oil energy.

Wed, 03/13/2013 - 01:10 | 3325077 steveo77
steveo77's picture

Kill nuke, any questions?

Wed, 03/13/2013 - 10:17 | 3325721 Dr. Kenneth Noi...
Dr. Kenneth Noisewater's picture

Kill _all_ subsidies:  farm, bank, nuke, oil, middle class, etc.  Stand or fall.

Wed, 03/13/2013 - 09:37 | 3325595 PD Quig
PD Quig's picture

Yes, I have a question: are you always talking about things of which you know little...to parade your ignorance?

http://www.technologyreview.com/news/512321/safer-nuclear-power-at-half-...

BTW: I believe that the US Govt should be subsidizing NOTHING.

Wed, 03/13/2013 - 00:57 | 3325049 q99x2
q99x2's picture

No you want to continue the subsidies. It is the only way sure to collapse the Federal Government. Worked in Russia and Japan and it will work in the United States too when the New Madrid fault goes. Any day now.

Wed, 03/13/2013 - 07:46 | 3325313 The Heart
The Heart's picture

A question: Could all this hub-bub be all about covering up the impending earth changes?

Shake rattle and roll etc?

Eyes to the skies.

Survive to tell about it all if you can.

Wed, 03/13/2013 - 00:03 | 3324967 snblitz
snblitz's picture

Do "Billions" even matter?

Tue, 03/12/2013 - 23:36 | 3324913 brokesville
brokesville's picture

NO ENERGY no future, best keep them coal plants for now

Tue, 03/12/2013 - 23:35 | 3324911 kegman
kegman's picture

No surprise re: private investment not supporting nuclear plant construction.

A few years back Long Island Lighting built a nuclear facility. The locals took the wages and supplied materials and upon completion and after final generator testings the greenies put a stop to putting it on-line. Of course the share holders stock went to near zero. 

Tue, 03/12/2013 - 23:31 | 3324903 news printer
news printer's picture
We petition the obama administration to:

 

Ban Neonicotinoid Pesticides nationwide because they are killing the honey bees and other vital creatures!

The EU recently proposed a neonicotinoid pesticide ban because the European Food Safety Authority found that clothianidin, thiamethoxam and imidacloprid––are shown to present both acute and chronic risks to the survival of honey bees and other beneficial insects. As a beekeeper, it has long been apparent to me that this class of pesticide is the driving force behind the decline in the bee population. I ask the EPA to follow cue and immediately suspend the use of these dangerous pesticides. Neonicotinoids are a newer class of systemic insecticide chemicals that are absorbed by plants and transported throughout the plant’s vascular tissue, making the entire plant toxic to insects. Many of the most scientifically and agriculturally advanced nations are acting on this issue- why isn't the U.S.

Created: Mar 07, 2013 https://petitions.whitehouse.gov/petition/ban-neonicotinoid-pesticides-n...
Tue, 03/12/2013 - 23:45 | 3324928 jballz
jballz's picture

 

 

 

Fuck the bees.

 

 

Wed, 03/13/2013 - 09:54 | 3325660 Stud Duck
Stud Duck's picture

Fuck the jbaltz of this world!

Wed, 03/13/2013 - 10:06 | 3325689 Citxmech
Citxmech's picture

Something close to 1/3 of crops world-wide rely on bees for pollination.  JFC.  

Wed, 03/13/2013 - 07:02 | 3325270 Lost My Shorts
Lost My Shorts's picture

Give it your best shot, but don't complain if you get stung in sensitive spots.

Tue, 03/12/2013 - 23:29 | 3324896 Walt D.
Walt D.'s picture

"My brother is crazy - he thinks he's a chicken".

Psychiatrist - "Do you want me to have him commmitted?"

"No - I need the eggs! "

The USA government may be crazy to subsidize the Nuclear Industry .... but they need the eggs! -  (where else are they going to get fuel to enrich to make bombs?).

Tue, 03/12/2013 - 23:26 | 3324885 lolmao500
lolmao500's picture

Nuclear power plants need to go... Switch to liquid thorium powerplants instead. Much safer.

Tue, 03/12/2013 - 23:30 | 3324902 Walt D.
Walt D.'s picture

Let China do it. Then we can buy the technology from them, just like everything else.

Tue, 03/12/2013 - 23:13 | 3324828 tony bonn
tony bonn's picture

as almost always, george, you are right again. on the other hand, the savings relative to the monstrous toxic spending of the usa is negligible....yet it should be terminated.

as a former nuclear zealot, i can only say that fukushima has irretrievably changed my mind about nuclear power - and now comes the economics lesson....and fucktarded americans (as i once was) think everything is hunky dory....every single nuclear power plant should be scheduled for shutdown and replaced with something safer....even if it is a coal plant....

we are only in the very earliest stages of the death watch of fukushima.....japan has been literally destroyed by this bankster greed....the problem is that the destruction is not immediately evident....fukushima and macondo are the gifts which keep on giving....the tragedies are already great and will multiply as the years progress....the fukushima fallout is only just beginning....cherynobl was nothing but a dress rehearsal....

Tue, 03/12/2013 - 23:03 | 3324816 NoWayJose
NoWayJose's picture

Hey, it worked for the Japs - turn off your nuke plants, then pass along that 15% utility rate increase! Happy voters will make sure every Congressman gets re-elected! Sure...

Tue, 03/12/2013 - 22:55 | 3324798 fatman51
fatman51's picture

I have another suggestion Washington might like. Cut billions of dollars spent every year on "climate research". We clean house, lets go all the way

Wed, 03/13/2013 - 01:12 | 3325080 Boris Alatovkrap
Boris Alatovkrap's picture

Boris is develop super organic biodegradable solution to climate research. Is call it "calendar" - In November is get cold, in March, is get warm. Or if is live in Siberian Gulag, is always cold.

Sat, 03/16/2013 - 10:25 | 3335001 Ctrl_P
Ctrl_P's picture

We use adifferent scale here in aus. From march its warm, from november it's fucking hot.

I use a watch for my weather, daytime = hot, night time is not so fucking hot.

Tue, 03/12/2013 - 20:43 | 3324442 Tombstone
Tombstone's picture

Government should be banned from spending money on subsidies and favoritism; as in pork spending attatched to almost every bill.  Ethanol, windmills and stupid panels to name a few...

Wed, 03/13/2013 - 01:07 | 3325068 Boris Alatovkrap
Boris Alatovkrap's picture

Stupid Panels? Are to mean panel for decide on approval of health care procedure? Is called Death Panel in Amerika, no? Of course, government is not monopoly on stupid, but have is many stupid panel.

Tue, 03/12/2013 - 22:17 | 3324701 XitSam
XitSam's picture

Yes. Leave it to "george" to miss the point. 

Tue, 03/12/2013 - 20:15 | 3324377 disabledvet
disabledvet's picture

Hate to agree with this but I do. Hate to think of the cost of decommissioning as well...the Federal Government is going to have to build a new nuker just to handle waste disposal. (Bill Gates of Microsoft fame has already discussed at great length the "way forward" in that regard. "one plant could generate all the electrical needs for a thousand years for all of North America" stood out to me...among many other conclusions.) what I think is the right place to start is to tell the industry as Germany currently does that "waste disposal is the responsibility of the industry" and go from there. If the American taxpayer is to continue to massively subsidize "your non waste transfer" solution courtesy of a couple of NIMBY Politico's who apparently think "Fkushima was an aberation" simply goes to the heart of the problem that "democracy is not a suicide pact" as it so clearly seems to have become.

Wed, 03/13/2013 - 01:04 | 3325062 Boris Alatovkrap
Boris Alatovkrap's picture

Maybe is just conspiracy theory, but why is Amerika and Russia is still use Uranium reactor? Why is create much is waste!? Maybe is to producing weapon grade fissile material, no?! Why is not explore cold fusion? Why is not explore Thorium Fluoride salt reactor? Efficient nuclear energy is not for profitable Military Industrial Complex... and when run out of cows (and horse), extremely large mutation rat is future for food stuffs?

Wed, 03/13/2013 - 07:15 | 3325280 Bicycle Repairman
Bicycle Repairman's picture

The nuclear "industry", like the airlines "industry" is just another arm of the MIC.  Nuclear power = nuclear weapons.  One man's "subsidy" is another man's "appropriation".

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