Nuclear's Lucky Number
NEWS: Six federal subsidies powering an atomic revival in the United States
April 28, 2008
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Subsidy #1: Federal Loan Guarantees
The 2005 Energy Policy Act promised low-interest loans for 10 technologies that "avoid, reduce, or sequester air pollutants" or greenhouse gas emissions. Nuclear foes such as Public Citizen have estimated that the nuke industry's portion would come to roughly $6 billion, assuming six new plants borrowed $2.5 billion each and defaulted at a rate of 50 percent (as predicted by the Congressional Budget Office). In its 2007 energy bill, Congress capped the available nuclear guarantees at $18.5 billion, a big disappointment to the Nuclear Energy Institute, which, according to the Center for Responsive Politics, spent $1.3 million on lobbying last year. The industry is pushing for a minimum of $35 billion (preferably $50 billion), or legislation enabling unlimited guarantees. Nuclear operators view the cap as a weak vote of confidence, and they have been reluctant to forge ahead with new plants. None has yet made use of this subsidy.
Subsidy #2: Production Tax Credits
This credit rewards plant operators for each unit of power produced. The 2005 energy bill promised 1.8 cents per kilowatt-hour for the first eight years after a new nuclear plant comes online—up to $125 million per facility. The overall subsidy is capped at 6,000 megawatt-hours nationally. The cost to taxpayers could total $5.7 billion by 2025, according to the Energy Information Administration. But that's only if everything really goes well for the industry. Note that wind power enjoys a comparable tax credit, if ultimately less costly due to that industry's smaller size.
Subsidy #3: Liability Limits
The Price-Anderson Nuclear Industry Indemnities Act holds total industry liability to about $10.7 billion in the event of an accident, and spreads that risk among the players. Each nuclear facility must carry $300 million in general liability coverage and set aside a maximum of $95.8 million as compensation in the event of an accident at any nuclear plant. The value of this protection—which also applies to facilities involved in uranium mining, enrichment, reprocessing, and waste transport—is hard to predict, but the partial meltdown at Three Mile Island cost about $1 billion to clean up. Meanwhile, a 1997 analysis out of Brookhaven National Laboratory estimated that the price tag for an accident that leads to a large release of radioactive cesium could be in the hundreds of billions.
Subsidy #4: Waste (Non)Storage at Yucca Mountain
The federal government has spent roughly $11 billion since the early 1980s to plan and build the still-empty Nevada repository, not including the administration's $495 million budget request for 2009. What's more, the Department of Energy predicts U.S. taxpayers will have to pay plant operators $7 billion to store their reactor waste on-site until 2017, and another $500 million a year if Yucca Mountain fails to open as planned—a solid bet if ever there was one. These payouts, combined with lax waste-disposal fees and the shifting of disposal risk away from investors, may cost the U.S. billions of dollars annually, according to subsidy watchdog Earthtrack.
Subsidy #5: Plant Construction Guarantees
The 2005 energy bill provides $2 billion to "indemnify debt service and other costs" for the first six new plants built if their grand openings are held up by factors "beyond the industry's control" such as litigation or delays in NRC licensing. The idea is to shelter latter-day nuclear pioneers from risk while the feds work out any kinks in the regulatory process. The first two plants built can get up to $500 million each, while the next four will score up to $250 million apiece. The energy bill's main sponsors, by the way, were Rep. Joe "Smoky Joe" Barton (R-Tex.) and Sen. Pete Domenici (R-N.M.), who during their careers have accepted $1,106,735 and $505,673, respectively, from electric utilities that operate or invest in nuclear energy facilities—almost half of Domenici's career take came during the 2003-2008 Senate cycle.
Subsidy #6: Nuclear Energy R&D
The Department of Energy is on an atomic bender these days: Its spending for nuclear energy R&D this year soared 47 percent over last year, and the department wants to up the ante another 44 percent in 2009. If the DOE's wishes are granted, nukes will get $630 million for R&D next year, nudging aside coal at $624 million. While it'll likely take even more than that to make a jittery America comfortable with nukes, the nuclear lovefest does feel a bit excessive—especially considering that cheaper investments such as biomass and efficient building technology only got a 13.5 percent bump in the latest budget request, wind 6 percent, and efficient vehicles 4 percent, while much-needed solar-power R&D was cut by 7 percent and hydrogen research slashed a whopping 31 percent.
Who is biomass supposed to be cheaper for? The oil and gas interests again?