Nuclear Power Subsidies: Report Recommendations

Policy recommendations from 2011 UCS report, "Nuclear Power: Still Not Viable without Subsidies."

Future choices about U.S. energy policy should be made with a full understanding of the hidden taxpayer costs now embedded in nuclear power. To accomplish this goal, we offer the following recommendations:

  • Reduce, not expand, subsidies to the nuclear power industry. Federal involvement in energy markets should instead focus on encouraging firms involved in nuclear power—some of the largest corporations in the world—to create new models for internal risk pooling and to develop advanced power contracts that enable high-risk projects to move forward without additional taxpayer risk.
  • Award subsidies to low-carbon energy sources on the basis of a competitive bidding process across all competing technologies. Subsidies should be awarded to those approaches able to achieve emissions reductions at the lowest possible cost per unit of abatement—not on the basis of congressional earmarks for specific types of energy.
  • Modernize liability systems for nuclear power. Liability systems should reflect current options in risk syndication, more robust requirements for the private sector, and more extensive testing of the current rules for excess risk concentration and counterparty risks. These steps are necessary to ensure coverage will actually be available when needed, and to send more accurate risk-related price signals to investors and power consumers.
  • Establish proper regulation and fee structures for uranium mining. Policy reforms are needed to eliminate outdated tax subsidies, adopt market-level royalties for uranium mines on public lands, and establish more appropriate bonding regimes for land reclamation.
  • Adopt a more market-oriented approach to financing the Nuclear Waste Repository. The government should require sizeable waste management deposits by the industry, a repository fee structure that earns a return on investment at least comparable to other large utility projects, and more equitable sharing of financial risks if additional delays occur.
  • Incorporate water pricing to allocate limited resources among competing demands, and integrate associated damages from large withdrawals. The government should establish appropriate benchmarks for setting water prices that will be paid by utilities and other consumers, using a strategy that incorporates ecosystem damage as well as consumption-based charges.
  • Repeal decommissioning tax breaks and ensure greater transparency of nuclear decommissioning trusts (NDTs). Eliminating existing tax breaks for NDTs would put nuclear power on a similar footing with other energy sources. More detailed and timely information on NDT funding and performance should be collected and publicized by the NRC.
  • Ensure that publicly owned utilities adopt appropriate risk assessment and asset management procedures. POUs and relevant state regulatory agencies should review their internal procedures to be sure the financial and delivery risks of nuclear investments are appropriately compared with other options.
  • Roll back state construction-work-in-progress allowances and protect ratepayers against cost overruns by establishing clear limits on customer exposure. States should also establish a refund mechanism for instances in which plant construction is cancelled after it has already begun.
  • Nuclear power should not be eligible for inclusion in a renewable portfolio standard. Nuclear power is an established, mature technology with a long history of government support. Furthermore, nuclear plants are unique in their potential to cause catastrophic damage (due to accidents, sabotage, or terrorism); to produce very long-lived radioactive wastes; and to exacerbate nuclear proliferation.
  • Evaluate proliferation and terrorism as an externality of nuclear power. The costs of preventing nuclear proliferation and terrorism should be recognized as negative externalities of civilian nuclear power, thoroughly evaluated, and integrated into economic assessments—just as global warming emissions are increasingly identified as a cost in the economics of coal-fired electricity.
  • Credit support for the nuclear fuel cycle via export credit agencies should explicitly integrate proliferation risks and require project-based credit screening. Such support should require higher interest rates than those extended to other, less risky power projects, and include conditions on fuel-cycle investments to ensure the lending does not contribute to proliferation risks in the recipient country.

We Need Your Support
to Make Change Happen

We can make nuclear power safer—but not without you. Your generous support helps develop science-based solutions for a healthy, safe, and sustainable future.