Tripling Nuclear Power Bailouts Triples the Risk and the Waste
At the beginning of February, the Obama administration asked Congress to triple the pot of money available for new nuclear reactors to $54.5 billion. Later in the month, President Obama announced the Energy Department’s intention to give Southern Company $8.3 billion for two new reactors in Georgia. On the uranium enrichment front, the Department of Energy says it intends triple money available to new uranium enrichment plants—to $6 billion—by transferring money now slated for mixed energy efficiency, renewable energy, and fossil fuel projects.
The entire nuclear bailout program poses enormous risk to U.S. taxpayers. A new nuclear reactor costs $10 billion, and that price tag is steadily rising. So a $54.4 billion pot is good for only about 5 new reactors. Although the loan guarantees supposedly are not direct taxpayer funding of private utility companies, the Congressional Budget Office has predicted that more than half of new reactor owners will default on their loan repayments based on the industry’s history of cost overruns and plant cancellations.
Closer to home, forcing U.S. taxpayers to underwrite loans to back new uranium enrichment plants such as the one French government-owned Areva wants to build in eastern Idaho would be extraordinarily risky and wasteful. First, though Areva is the largest nuclear supplies in the world, with 2006 sales of $14 billion, it is seriously overextended as it tries to position itself to grab the lion’s share of the nuclear renaissance, even as the renaissance has failed to appear. In fact, an Areva spokesperson acknowledged in November that without cheap capital from U.S. taxpayers, the company would simply return to France. Second, it’s likely that, with $6 billion in underwriting (Areva wants $2 billion), we’ll build more worldwide uranium enrichment capacity than would be needed even if requirements grow, too.
Furthermore, the nuclear bailout program is part of a larger effort to encourage innovative energy technologies private capital might not be willing to invest in. Areva’s proposal doesn’t fit that goal. Consider: Urenco, a German company, is almost done building a gas centrifuge uranium enrichment plant in New Mexico. The plant’s technology is virtually identical to that proposed by Areva. So Areva’s plan is hardly innovative. As important is that Urenco has built its plant without U.S. government subsidies.
Since the 1940s, the nuclear industry has gotten more that $100 billion in federal subsidies, leading Taxpayers for Common Sense to conclude that “the time to stop the endless cycle of nuclear subsidies has come.” Certainly, promising new technologies that help us address climate change with clean, safe, cheap energy deserve public support such as investment tax credits and production tax credits for investments in wind, solar, and geothermal power production. But let’s not bet the farm on a mature industry that has had more than half a century to prove it’s worth the investment.
Taxpayers for Common Sense and the Union of Concerned Scientists both have a wealth of solid information about problems with the nuclear loan guarantee program on their web sites. The links arewww.taxpayers.org/search_by_category.php?action=search_by_category&category=Energy and www.ucsusa.org/nuclear_power/