SACE | Southern Alliance for Clean Energy
Federal Subsidies for Nuclear Power
Government subsidies for energy industries –whether for oil, coal, nuclear or renewable energy sources – are typically intended to help nascent industries or businesses get a toehold in the marketplace without extending excessive initial capital. In reality, though, subsidies often become an expected source of financial support, especially for the producers themselves ultimately locking in dirty energy profits and falsely altering the markets.
While some “smart” subsidies, such as targeted tax breaks, financial incentives or other market mechanisms may benefit the economy by stimulating emerging energy sources, if subsidies exist simply to hold down the price of fuel, then everybody will use more of it, increasing pollution levels as a result. Given that human-induced climate change is one of the most serious and urgent challenges of our lifetime, all possible energy options should be explored and examined in our quest for viable solutions. However, to have an honest and open debate about the merits and shortcomings of each energy option, it is essential to have a clear understanding of the explicit and hidden government subsidies that affect energy and production use.
Nuclear energy has been and continues to be heavily subsidized, during all aspects of the fuel chain, especially the eventual permanent storage of the high-level radioactive waste that is produced, and from the building and eventual decommissioning of a nuclear plant.
The Union of Concerned Scientists issued a comprehensive study, “Nuclear Power: Still Not Viable Without Subsidies,” that examines the massive subsidies supporting existing and future nuclear power production.
For proposed new reactors, taxpayer-financed loan guarantees are a type of subsidy we are particularly concerned about. These guarantees are part of the DOE’s Title XVII Loan Guarantee Program, with $18.5 billion authorized by Congress in 2007 for new reactors, even though a 2003 Congressional Budget Office report found that, “the risk of default of a [nuclear] loan guarantee to be very high–well above 50 percent.”
On February 16, 2010, President Obama announced the first conditional offer — a taxpayer-financed loan guarantee of more than $8 billion for the proposed two Westinghouse AP-1000 nuclear reactors that Southern Company and it’s utility partners are building at the existing Plant Vogtle in Georgia. During a SACE-hosted news conference, High Risk Energy Director, Sara Barczak, and fellow experts Peter Bradford, Henry Sokolski and Dr. Ed Lyman urged the Department of Energy (DOE) to halt controversial plans to issue risky nuclear-loan guarantees through taxpayer bailouts. Listen to the press conference here.
It wasn’t until four years later, February 2014, that two of the three loan guarantees for the Vogtle expansion were finalized: Georgia Power’s and Oglethorpe Power’s. MEAG has received another extension until the end of July 2014. Yet the details and the risks to taxpayers are still unknown, in spite of years of effort by SACE to unearth information from DOE via Freedom of Information Act (FOIA) requests and litigation. Learn more here.
These guarantees mean that if the borrowers, in this case the utilities, default on their loans, U.S. taxpayers will shoulder the burden and pay back the debt. Essentially, another taxpayer bailout for a the wealthy nuclear industry, perhaps a form of nuclear socialism?
Learn more here about subsidies for other high risk energy choices such as coal and fossil fuels.