Conspicuously absent from industry press releases and briefing memos touting nuclear power’s potential as a solution to global warming is any mention of the industry’s long and expensive history of taxpayer subsidies and excessive charges to utility ratepayers. These subsidies not only enabled the nation’s existing reactors to be built in the first place, but have also supported their operation for decades.
The industry and its allies are now pressuring all levels of government for large new subsidies to support the construction and operation of a new generation of reactors and fuel-cycle facilities. The substantial political support the industry has attracted thus far rests largely on an uncritical acceptance of the industry’s economic claims and an incomplete understanding of the subsidies that made—and continue to make—the existing nuclear fleet possible.
Such blind acceptance is an unwarranted, expensive leap of faith that could set back more cost-effective efforts to combat climate change. A fair comparison of the available options for reducing heat-trapping carbon emissions while generating electricity requires consideration not only of the private costs of building plants and their associated infrastructure but also of the public subsidies given to the industry. Moreover, nuclear power brings with it important economic, waste disposal, safety, and security risks unique among low-carbon energy sources. Shifting these risks and their associated costs onto the public is the major goal of the new subsidies sought by the industry (just as it was in the past), and by not incorporating these costs into its estimates, the industry presents a skewed economic picture of nuclear power’s value compared with other low-carbon power sources.
SUBSIDIES OFTEN EXCEED THE VALUE OF THE ENERGY PRODUCED
This report catalogues in one place and for the first time the full range of subsidies that benefit the nuclear power sector. The findings are striking: since its inception more than 50 years ago, the nuclear power industry has benefited—and continues to benefit—from a vast array of preferential government subsidies. Indeed, as Figure ES-1 (p. 2) shows, subsidies to the nuclear fuel cycle have often exceeded the value of the power produced. This means that buying power on the open market and giving it away for free would have been less costly than subsidizing the construction and operation of nuclear power plants. Subsidies to new reactors are on a similar path.
The most important subsidies to the industry do not involve cash payments. Rather, they shift construction-cost and operating risks from investors to taxpayers and ratepayers, burdening taxpayers with an array of risks ranging from cost overruns and defaults to accidents and nuclear waste management. This approach, which has remained remarkably consistent throughout the industry’s history, distorts market choices that would otherwise favor less risky investments. Although it may not involve direct cash payments, such favored treatment is nevertheless a subsidy, with a profound effect on the bottom line for the industry and taxpayers alike.
Reactor owners, therefore, have never been economically responsible for the full costs and risks of their operations. Instead, the public faces the prospect of severe losses in the event of any number of potential adverse scenarios, while private investors reap the rewards if nuclear plants are economically successful. For all practical purposes, nuclear power’s economic gains are privatized, while its risks are socialized.