June 22, 2005
Nuclear Industry to Receive More Than $10 Billion in Tax Breaks and Subsidies in Senate Energy Bill
Public Citizen Says Nuclear Power Doesn’t Deserve More Taxpayer Handouts; 50-Year-Old Industry Should Stand on Its Own
WASHINGTON, D.C. – In a new cost analysis of the Senate energy bill, Public Citizen today said that the nuclear industry would stand to gain more than $10.1 billion in subsidies and tax breaks, as well as unlimited taxpayer-backed loan guarantees and other incentives.
“The government should not be promoting the construction of new reactors, which will only add to the nuclear waste and security problems while costing taxpayers billions,” said Wenonah Hauter, director of Public Citizen’s energy program. “The nuclear industry is demanding cradle-to-grave subsidies, and the Senate energy bill is an attempt to give it to them.”
The $10.1 billion includes $5.7 billion in production tax credits and $4.4 billion in various subsidies, but does not include the potential costs of loan guarantees or the Price-Anderson Act, which puts taxpayers on the hook for potentially billions in cleanup costs in the event of a major accident or terrorist attack on a reactor.
The production tax credits equal 1.8 cents for each kilowatt-hour of electricity from new reactors (up to 6,000 megawatts) during the first eight years of operation – costing $5.7 billion through 2025, according to the Energy Information Administration. However, only $278 million through 2016 is counted in the $18 billion in tax breaks in the bill, because most of the nuclear credits would be claimed after 2016. This means that the true cost of all the tax breaks, including those for non-nuclear industries, is more than $24 billion.
Separately, the loan guarantees in the Senate bill could prove extremely costly to taxpayers. According to the Congressional Budget Office (CBO), the risk of loan default by industry would be very high – “well above 50 percent” – leaving the public to pay as much as 80 percent of the cost of building a reactor. This provision 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 $6 billion (assuming a 50 percent default rate and construction cost per plant of $2.5 billion, as the CBO has estimated).
Other subsidies for the nuclear industry in the Senate energy bill include:
Reauthorization of the Price-Anderson Act, extending the industry’s liability cap to cover new nuclear power plants built in the next 20 years, which means in the event of an accident or attack, taxpayers would be liable for the remainder of the cost, estimated to be $600 billion for a single serious accident (2004 dollars).
Authorization of more than $432 million over three years for nuclear energy research and development, including the Department of Energy’s Nuclear Power 2010 program to build new nuclear plants, and its Generation IV program to develop new reactor designs. Half the cost of applications for new reactors would be paid for by taxpayers, estimated to be as much as $87 million per reactor.
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. Hydrogen could be a clean fuel of the future, but using nuclear power to produce it negates the benefits.
Existing reactors have been heavily subsidized for decades, receiving 56 percent of the federal energy supply research and development funding between 1948 and 1998, capped insurance rates and limited liability in the case of an accident, and billions in taxpayer bailouts in the 1980s.
“Despite a pro-nuclear push by the Bush administration and some members of Congress, nuclear power is not an acceptable option for the future,” said Hauter. “We have ‘been there, done that’ and it has been a failure. After more than 50 years, the problems of nuclear power are far from solved. In fact, they are more widely recognized than ever.”
In March, e-mails were released indicating that government scientists falsified data related to water infiltration and climate modeling for the proposed Yucca Mountain waste dump site; investigations are still ongoing. Also, recent reports by the National Academy of Sciences and the Government Accountability Office pointed out security vulnerabilities of the highly radioactive waste stored at reactor sites. The energy bill contains no requirements for improving security at these sites.
Nuclear power has made headlines this year as proponents attempt to convince a wary public that nuclear energy can solve the global warming problem. Last week, nearly 300 environmental and public interest organizations sent a letter to Congress flatly rejecting nuclear energy as an “acceptable or necessary” solution to combat rising temperatures on the planet because it is an expensive, dangerous and polluting technology.
“We urge the Senate to remove these unjustifiable subsidies, tax breaks and loan guarantees from the energy bill,” Hauter said. “After 50 years, the nuclear industry should stand on its own. Instead of endless subsidies to nuclear companies, Congress should dedicate funds to harness the promise of energy efficiency and renewable technologies, such as wind and solar energy.”
Last month, Public Citizen released a new fact sheet series outlining the five fatal flaws of nuclear power: cost, waste, safety, security and proliferation (to read them, click here. For more information about the subsidies and other incentives in the Senate energy bill, click here. For a copy of the statement opposing nuclear power, click here.
Yesterday, the Senate added Sen. Chuck Hagel’s climate change amendment, which authorizes additional financial assistance through 2010, including direct loans, loan guarantees, a line of credit and production incentive payments, that could include new nuclear power plants.