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July 1, 2010 

Senate Currently Proposing $40 Billion to More Than $140 Billion in Subsidies for Nuclear Industry, New Analysis Finds

New Subsidies for Constructing Reactors Would Shift Financial Risks to Taxpayers

WASHINGTON (July 1, 2010) – Massive government subsidies proposed in two pending Senate climate and energy bills would shift the risk of financing and constructing new nuclear reactors from the industry to U.S. taxpayers, according to an analysis released today by the Union of Concerned Scientists (UCS). Such subsidies would disadvantage more cost-effective, less risky approaches to curbing the heat-trapping emissions that cause global warming, including energy efficiency programs and renewable energy technologies, the group said.

The UCS analysis is the first to quantify the most significant subsidies for the nuclear industry proposed in the American Power Act (APA) and the American Clean Energy Leadership Act (ACELA). Those subsidies include expanded federal loan guarantees, reduced accelerated depreciation periods, a 10 percent investment tax credit, expanded production tax credits, and expanded federal regulatory risk insurance.

Assuming eight new reactors are built over the next 15 years, UCS found those subsidies would amount to approximately $40 billion, or $5 billion per reactor, slightly more than half of what a typical 1,100 megawatt reactor would cost to build today. If the industry is able to secure federal approval to build the 31 new reactors it is expected to request, UCS found that total proposed subsidies could be worth from $65 billion to as much as $147 billion.

"The federal government certainly has an important role to play to ensure innovative, low-carbon technologies can be deployed on a significant scale and become commercially viable," said Ellen Vancko, UCS's nuclear energy and climate change project manager. "But it makes no sense to throw massive subsidies at one technology, especially a mature one like nuclear power, which has a long history of cost overruns, cancellations and bailouts, and already stands to receive billions in government subsidies for new plants."  

Vancko emphasized the word "mature." "The new reactors on the drawing board are based on designs that are not significantly different than those already in commercial operation," she said. "They are neither new nor innovative." Besides, she added, those reactors already are on the short list for $18.5 billion in loan guarantees under the existing Department of Energy (DOE) loan guarantee program and are expected to get more. The Obama administration has called for adding another $36 billion to that program. 

A proposal in the ACELA bill would establish a new clean energy bank, called the Clean Energy Deployment Administration (CEDA). CEDA would offer a range of financing options, including direct loans, letters of credit, loan guarantees and insurance for energy production, transmission and storage projects, emphasizing "breakthrough" technologies that would reduce global warming emissions and energy consumption. Renewable energy, advanced nuclear, and coal carbon capture and storage projects all would qualify for assistance. UCS has urged the Senate to include protections in the CEDA proposal that would limit taxpayer exposure to unnecessary and potentially unlimited risk. (For more details, see the UCS fact sheet, "The Senate Must Fix the Clean Energy Deployment Administration.")

Even without the proposed clean energy bank or the new proposed subsidies, the nuclear industry already benefits from generous subsidies provided by the Energy Policy Act of 2005, including the existing DOE loan guarantee program, production tax credits, and federal regulatory risk insurance, the analysis found. It offered a case study of the proposed new reactor at Calvert Cliffs in Maryland as a prime example. The estimated benefits available to the owners of Calvert Cliffs nuclear plant range from $631 million to more than $1 billion annually. These subsidies could equal or even exceed private investment in the plant.

"Taxpayers and ratepayers have had to bail out the nuclear industry twice – once in the 1970s and 1980s, and again in the 1990s – and shouldn't be asked to do it again," Vancko said. "Available subsidies are more than adequate to allow the industry to demonstrate whether it can build a limited number of 'first mover' units on time, on budget, and operate them safely. Unfortunately, these new proposals vastly exceed what is needed to accomplish that task and defy common sense. Given the hundreds of billions of taxpayer dollars we just spent to rescue the banks, the last thing we need is another industry bailout."


The Union of Concerned Scientists puts rigorous, independent science to work to solve our planet's most pressing problems. Joining with citizens across the country, we combine technical analysis and effective advocacy to create innovative, practical solutions for a healthy, safe, and sustainable future.

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