Nuclear Pork — Enough is Enough

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"Nuclear Pork — Enough is Enough"

porkbustersnewsm.jpgOnce your power source has reached, say 10% of the electricity grid, let alone 20%, it should be time to cut the cord to government funding.

Yet after more than $70 billion dollars in direct subsidies, billions more in insurance subsidies, plus another $13 billion available through the energy policy act of 2005 — Sen. McCain and others still feel that climate legislation must not merely create a price for carbon dioxide that would advantage all carbon free sources of energy, but that we must also throw billions of dollars of more pork at the industry. At some point, infatuation has turned to obsession (see “McCain calls for 700+ new nuclear plants (and seven Yucca mountains) costing $4 trillion).

I am not against building new nuclear power plants, far from it (see “Is 450 ppm (or less) politically possible? Part 2: The Solution.”) But when is enough enough in terms of massive taxpayer support for a mature industry? We had such an incredible clamor for welfare reform in the 1990s, to change “government’s social welfare policy with aims at reducing recipient dependence on the government.” If we reduced the poor’s dependence on government, why not the super-duper rich?

TOTAL SUBSIDIES TO NUCLEAR APPROACHING $100 BILLION


Let’s start with a historical subsidies. This 1999 Congressional research service report lists the subsidies for all major sources of energy from 1948 through 1998. This October 2007 Government Accountability Office report, “Federal Electricity Subsidies,” examined federal electricity-related subsidies from 2002 to 2007.

Bottom line: From 1948 to today, nuclear energy R&D exceeded $70 billion, whereas R&D for renewables was about $10 billion. [For the record, from 2002 to 2007, fossil fuels received almost $14 billion in electricity-related tax subsides, whereas renewables received under $3 billion, but that’s fodder for another post.]

But that’s not all. The Price-Anderson Nuclear Industries Indemnity Act which caps the liability for claims arising from nuclear incidents. It reduces the insurance nukes need to buy and puts taxpayers on the hook to cover all claims in excess of the cap. The benefit of this indirect subsidy has been estimated at between $237 million and $3.5 billion a year — suggesting it has been worth many billions of dollars to the industry. Indeed, it could be argued that the value is considerably larger than that, since the industry might not have existed at all without it:

At the time of the Act’s passing, it was considered necessary as an incentive for the private production of nuclear power — this was because investors were unwilling to accept the then-unquantified risks of nuclear energy without some limitation on their liability.

Okay, that was fine for a new, almost completely unknown technology in 1957. But now through 2025? If investors aren’t willing to accept the risks of nuclear energy now, without taxpayers liable for any major catastrophe, maybe that tells you something about the technology.

And then we have the staggering $13 billion in subsides and tax breaks in the Nuclear Giveaway Bill Energy Policy Act of 2005 (not even counting the value of the Price-Anderson act extension). It includes “Unlimited taxpayer-backed loan guarantees for up to 80% of the cost of a project“!! The complete list of subsidies is worth seeing in its entirety, and is reprinted at the end of this post.

And yet for all this pork, Senator McCain put into his 2007 climate bill another $3.7 billion in federal subsidies for new nukes, even though that bill creates a cap-and-trade system that would establish a price for carbon dioxide, which benefits nuclear power and all low-carbon energy sources.

ENOUGH IS ENOUGH

Yet last fall, when Grist asked McCain, “What’s your position on subsidies for green technologies like wind and solar?” he said:

I’m not one who believes that we need to subsidize things. The wind industry is doing fine, the solar industry is doing fine. In the ’70s, we gave too many subsidies and too much help, and we had substandard products sold to the American people, which then made them disenchanted with solar for a long time.

Seriously!

[Note to McCain: The American people were never disenchanted with solar or wind — please identify a single public poll in the past quarter century to support that view. The subsidies certainly left conservatives disenchanted, which is why Reagan and Gingrich and Bush, and you have consistently opposed them. But if any form of power has left the public disenchanted for a long time, it was nuclear. And yet the subsidies go on and on.]

Let me end by reprinting all of the subsidies for nuclear power in the 2005 energy bill (from Public Citizen):

Nuclear subsidies in the conference report include:

R&D subsidies = $2.9 billion

* Authorization of more than $432 million over 3 years for nuclear energy research and development, including the Department of Energy’s (DOE) Nuclear Power 2010 program to construct new nuclear plants, and its Generation IV program to develop new reactor designs [Sec. 951 and 952]

* Authorization of $580 million over 3 years for DOE’s program for research and development of nuclear reprocessing and transmutation technologies, which reverses the long-standing U.S. policy against it and needlessly augments security and environmental threats [Sec. 951 and 953]

* Authorization of $420 million over 3 years for DOE to develop a plan to improve infrastructure at national laboratories for nuclear energy R&D, including a plan for the facilities at the Idaho National Laboratory [Sec. 951 and 955]

* Authorization of $149.7 million over 3 years for DOE to invest 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. This program would further subsidize the nuclear industry and entrench nuclear power research within the university system. [Sec. 941 and 944]

* Authorization of $1.1 billion over 3 years for the Fusion Energy Sciences program for fusion energy R&D. Authorization for DOE to negotiate an agreement for the United States to participate in the ITER (International Fusion Energy Project). Requirement of DOE to submit a plan for a domestic burning plasma experiment if ITER becomes “unlikely or infeasible.” The fusion process requires deuterium and tritium, and would produce low-level radioactive waste [Sec. 961 and 962]

* Authorization of $100 million for DOE to establish two demonstration projects for the commercial production of hydrogen at existing reactors [Sec. 634]

* Authorization of $18 million over 3 years for DOE to survey industrial applications of radioactive sources and develop a R&D plan for developing small particle accelerators [Sec. 951 and 957]

* Requirement of DOE to use 0.9 % of its applied energy R&D budget for matching funds with private partners to promote “promising technologies” for commercial use, which could include nuclear power technologies [Sec. 1001]

* Authorization of $60 million over 3 years for DOE to give grants to train technical personnel in fields in which a shortage is identified, including the nuclear power industry, which has been very vocal about its shortage of skilled workers [Sec. 1101]

* Authorization of $250,000 for research and development to use radiation to refine oil [Sec. 1406]

Construction subsidies = $3.25 billion +

* 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 [Sec. 638]

* Authorization of more than $1.25 billion from FY2006 to FY2015 and “such sums as are necessary” from FY2016 to FY2021 for a nuclear plant in Idaho to generate hydrogen fuel, a boondoggle that would make a mockery of clean energy goals [Sec. 641-645]

* Exemption of construction and operation license applications for new nuclear reactors from an NRC antitrust review [Sec. 625]

* Unlimited taxpayer-backed loan guarantees for up to 80% of the cost of a project, including building new nuclear power plants. Authorizes “such sums as are necessary,” but if Congress were to appropriate funding for loan guarantees covering six nuclear reactors, this subsidy could potentially cost taxpayers approximately $6 billion (assuming a 50% default rate and construction cost per plant of $2.5 billion, as Congressional Budget Office has estimated) [Title XVII]

Operating subsidies = $5.7 billion +

* Reauthorization of the Price-Anderson Act, extending the industry’s liability cap to cover new nuclear power plants built in the next 20 years [Sec. 602]

* 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 [Sec. 608]

* Weakens constraints on U.S. exports of bomb-grade uranium [Sec. 630]

* Production tax credits of 1.8-cent for each kilowatt-hour of nuclear-generated electricity from new reactors during the first 8 years of operation for the nuclear industry, costing $5.7 billion in revenue losses to the U.S. Treasury through 2025. Considered one of the most important subsidies by the nuclear industry [Sec.1306]

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 [Sec. 1310]

[Final note to McCain — Enough is enough!]

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7 Responses to Nuclear Pork — Enough is Enough

  1. paulm says:

    We are due another nuclear accident/event soon… that will pretty much seal the debate.

  2. Eli Rabett says:

    First world countries have government budgets of 40-50% of GDP including health care and social security. In that huge pot are subsidies for just about everything. You are also comparing apples with pears, when you point out that from 2002 to 2007 fossil fuel electrical generation was supported by $14 billion in subsidies and renewables by $3 billion, one has to ask what was the relative proportion of energy generated?? and so on.

  3. Vince says:

    It wonderful how well the debit accounting was laid out. But you fail to mention the INCOME the Federal Government get from the Nuclear power Industry that goes directly into the general funds.
    Since research before the began on the proposed Yuca Mouontian site; our Uncle Sam has been collecting over 660 MILLION dollars for the disposal/storage of spent nuclear fuel/ OF course the government has only spent about 10 mil. The rest they pocket. That is not to mention all the taxes and fees paid by each nuclear power plant to all the various levels of government in the different locations.

    IF the US government wasnt comming out on top of the equation – Nuclear Power would cease to exist. Thats why the subsidize Airline travel to the extent they do but not the railroads.

    Where the real rub comes from is the locations the monies come and go to. Take for instance New York – which at the moment appears on the surface to be against their Nuclear Power plants; but look closely at where the state has invested its retirement funds and similar ventures and you will find a huge liabiliaty should the state be sucessfull in shutting down their nuclear power plants – all of which will get passed on to their tax paying voters. Let alone the loss of revenue for the local governments

    The fact is all the other prospective alternate energy sources do not provide the returns in other places for the Government to truly subsidize them.

  4. Robert Merkel says:

    * 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 [Sec. 638]

    I think this is fair enough, because using litigation to delay construction has been a deliberate tactic of anti-nuclear groups.

  5. Cyril R. says:

    Yes, that bit is fair. What’s not fair is direct subsidies for projects and near 100% loan guarantees as they make the economics opaque.

    Which means we can’t compare economics of different power sources.

    Which is a bad thing.

  6. msn nickleri says:

    Yes, that bit is fair. What’s not fair is direct subsidies for projects and near 100% loan guarantees as they make the economics opaque.

    Which means we can’t compare economics of different power sources.

    Which is a bad thing.