Nuclear Subsidies Past and Present

Nuclear Subsidies Past and Present

Energy & Natural Resources,  | Analysis
Dec 12, 2008  | 8 min read | Print Article

Since the beginning of nuclear energy the federal government has provided billions in handouts to the industry. More than $85 billion has been spent on the nuclear industry since 1948 (see Table 1). Over the years, nuclear power has received billions in federal handouts but despite these subsidies continues to be unable to stand on its own two feet in the marketplace.

According to a recent Energy Information Administration report, in 2007, the nuclear industry received nearly $1.3 billion in subsidies and tax incentives; an additional $30.7 million was awarded to research projects under the Department of Energy’s Nuclear Energy Research Initiative in FY2007.1 2 On top of these subsidies, the industry has already been awarded more than $20 billion in Treasury-backed loan guarantees and billions in lucrative tax breaks and subsidies in the Energy Policy Act of 2005.

It is clear the billions will continue to add up if Congress and the Administration continue on the current track. In the 2008 Omnibus Appropriations Bill, Congress awarded the nuclear industry with more than $18.5 billion for nuclear facilities and $2 billion for uranium enrichment for loan guarantees, and the Fiscal Year 2009 Continuing Appropriations resolution extended this budget authority through March 2009.

Summary of Federal Subsidies

Below is a summary of a few of the most egregious subsides the nuclear industry receives. The potential risk the US government bears with nuclear power is a cost well beyond any other federal subsidy. When it comes to Research and Development the US has also invested far more funds in nuclear power than any other energy source. Table 1 shows a summary of historical subsidies to the nuclear industry (excluding the Price-Anderson Act); Table 2 shows the projected impacts of more recent subsidies, primarily from the Energy Policy Act of 2005. Tax breaks, loan guarantees, and direct subsidies to the nuclear industry are estimated to amount to more than $24 billion through 2015. This estimate does not include expenditures for research and development.

Table 1: Summary of Historical Nuclear Subsidies
Historical Subsidies Value (2007$)
Nuclear Waste Technical Review Board (since 1987) 70,000,000
Uranium Facilities Decontamination and Decommissioning Fund (since 1994)3 2,100,000,000
Research & Development (since 1948) 83,700,000,000
Total 85,870,000,000
Sources: Office of Management and Budget, “Public Budget Database”, http://www.whitehouse.gov/omb/budget/fy2009/db.html; Nuclear Energy Research Initiative, FY2007 annual report; Congressional Research Service Issue Brief, Energy Efficiency: Budget, Oil Conservation, and Electricity Conservation Issues, April 18, 2005.

 

Table 2: Summary of Recent Nuclear Subsidies
Recent Subsidies Value, $ (2005-2015)
Nuclear Production Tax Credit 280,000,000
Modification to Special Rules for Nuclear Decommissioning Costs 1,290,000,000
Decommissioning Pilot Program 16,000,000
Demonstration Hydrogen Production4 100,000,000
Stand-by Support5 2,000,000,000
Loan Guarantees for Nuclear and Uranium Enrichment 20,500,000,000
Total 24,186,000,000
Sources: Joint Committee on Taxation, “Estimated budget effects of the conference agreement for Title XIII of H.R. 6, the “energy tax incentives act of 2005””, July 2005; Public Law 109-58, “Energy Policy Act of 2005”, August 2005; Department of Energy Loan Guarantee Program, “Title XVII 2008 Omnibus Report Language.”

 

Nuclear Research and Development

From 1948 to 1972 the federal government spent $24.3 billion (2003 dollars) for research and development programs and almost double that amount, $49.1 billion, from 1972- 2003. During those same 30 years the federal government only awarded $24.8 billion for fossil fuels, and $14.6 billion for renewable energy technologies. From 1948-1998, the DOE’s nuclear research and development received 56% of total federal R&D funding.6

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For FY 2009, the Department of Energy requested $1.4 billion for nuclear power expansion, $300 million more than requested for fossil fuels and $150 million more than for energy efficiency and renewable programs. An additional $500 million was requested for the Office of Civilian Radioactive Waste Management, which manages the Yucca Mountain nuclear waste disposal project.7

Production Tax Credit – This tax credit was included in the Energy Bill of 2005 to promote the building of new nuclear reactors. It provides advanced nuclear facilities with a 1.8 cent per kilowatt hour tax credit for reactors constructed before 2021 for the first 8 years of operation. The Energy Information Administration has estimated that it could cost taxpayers as much as $5.7 billion over its lifetime.8

Price-Anderson Act – Protecting the Nuclear Industry

The Price-Anderson Act has been limiting the liability of the nuclear industry for decades. Under this 1959 law that has been extended time and again, in the case of an accident each nuclear facility is limited to $15.9 billion in liabilities, with the rest picked up by the taxpayer. One analysis has put the cost of one type of nuclear reactor accident at 143,000 cancer deaths, and $599 billion in property damage.9

Treasury Backed- Loan Guarantees- Title XVII of the Energy Policy Act of 2005 authorized the Department of Energy (DOE) Loan Guarantee Program to guarantee loans for new, innovative technologies. While the program’s intent was for emerging energy technologies, mature energy industries like coal and nuclear, that have already received billions of dollars in subsidies for decades, are eligible as well. In 2007, the nuclear industry made it clear that they wanted $50 billion in loan guarantees for 2008 and 2009 and Congress has already responded with $18.5 billion for nuclear facilities and $2 billion for uranium enrichment through March 2009. Several policymakers have even attempted to pass legislation that will allow the DOE to disperse unlimited loan guarantees without congressional oversight. The Congressional Budget Office found that the default rate for nuclear power plant loans to be “well above 50 percent”, meaning taxpayers will be on the hook for billions.10

Cost of Long-term Nuclear Waste Disposal

The Department of Energy’s Office of Civilian Radioactive Waste Management (OCRWM) has studied the cost of the Yucca Mountain project, which is being designed as the permanent repository for U.S. nuclear waste. Historical costs of the Yucca Mountain project from 1983-2006 are $13.54 billion (in 2007 dollars). The estimated cost from 2007 through permanent closure and decommissioning of the repository is $83 billion (in 2007 dollars).11 To date, the costs have been covered by payments by nuclear power generators into OCRWM’s Nuclear Waste Fund.12

It is time to end the flow of subsidies…

For decades the nuclear industry has heavily benefited from subsidies provided by U.S. taxpayers and they continue to ask for billions more. With a growing economic crisis and federal deficits and debt mounting, taxpayers, now more than ever, cannot afford to shoulder the burden of nuclear subsidies. It is time to end handouts to a mature energy industry that has already received billions from taxpayers.

For more information, please contact Autumn Hanna at (202) 546-8500 x112 or autumn[at]taxpayer.net

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