NUCLEAR’S SUBSIDY CRUTCH
After 50 Years, Nuclear Power is Still Not Viable without Subsidies, New Report Finds; Value of Subsidies Often Exceed Price of Nuclear Energy Produced; Obama Administration Wants to Nearly Triple Loan Guarantees
February 23, 2011 (Union of Concerned Scientists)
"Since its inception more than 50 years ago, the U.S. nuclear power industry has been propped up by a generous array of government subsidies that have supported its development and operations. Despite that support, the industry is still not economically viable, according to a report released today by the Union of Concerned Scientists (UCS).
"…[Nuclear Power: Still Not Viable Without Subsidies] found that more than 30 subsidies have supported every stage of the nuclear fuel cycle, from uranium mining to long-term waste storage…[and] often have exceeded the average market price of the power…Pending and proposed subsidies for new nuclear reactors would shift even more costs and risks from the industry to taxpayers and ratepayers. The Obama administration’s new budget proposal would…[bring] the total amount of nuclear loan guarantees to a staggering $58.5 billion, leaving taxpayers on the hook if the industry defaults on these loans."
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"The key subsidies for nuclear power do not involve cash payments…They shift the risks of constructing and operating plants -- including cost overruns, loan defaults, accidents and waste management -- from plant owners and investors to taxpayers and ratepayers. These hidden subsidies distort market choices that would otherwise favor less risky investments.
"The most significant forms of subsidies to nuclear power have four principal objectives: Reduce the cost of capital, labor and land through loan guarantees and tax incentives; mask the true costs of producing nuclear energy through subsidies to uranium mining and water usage; shift security and accident risks to the public via the 1957 Price-Anderson Act and other mechanisms; and shift long-term operating risks such as radioactive waste storage to the public."
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"The report evaluates legacy subsidies that helped build the industry, ongoing support to existing reactors, and subsidies available for new projects…[L]egacy subsidies…were more valuable than the power the subsidized plants produced…The industry continues to benefit from subsidies…The exact value of these subsidies…is difficult to ascertain…[but ranges] from 13 percent to 98 percent of the value of the power produced…[and] [s]ubsidies to new reactors could significantly exceed those enjoyed by the existing fleet…The report estimates that these subsidies could be worth…as much as 200 percent of the projected price of electricity when these plants are built.
"…[The] report recommends that the federal government reduce subsidies to the nuclear power industry…award them competitively to the most cost-effective low-carbon energy technologies…[and] modernize liability systems for nuclear power…[with] regulations and fee structures for uranium mining, waste repository financing, and water usage that fully reflect the technology’s cost and risks…"