Should the United States Subsidize Nuclear Energy?
Jonathan Lesser, PhD, President of Continental Economics firm, and an adjunct fellow with the Manhattan Institute, in an Aug. 14, 2019 article, “Can Nuclear Power Be Saved?,” available at nationalreview.com, stated:
“[I]f we must subsidize the current crop of nuclear plants, then those subsidies ought to be as efficient as possible. To begin with, subsidies for wind and solar power ought to be eliminated. Those subsidies help drive down wholesale (but not retail) electricity prices and make it more difficult for existing nuclear plants, along with all other unsubsidized generation, to compete. Subsidizing nuclear plants to overcome the market distortions caused by wind and solar subsidies is a recipe for failed wholesale electric markets.
Instead, nuclear subsidies should be tied directly to wholesale power prices. (The technical term is called a “contract-for-differences.”) If wholesale electricity prices increase, subsidies are automatically reduced, and vice versa. Additionally, subsidies should require nuclear-plant owners to have “skin in the game,” by imposing requirements that those plants increase their operating efficiency over time. Moreover, before other nuclear plants are subsidized, they should be subject to a comprehensive cost-benefit analysis that affirmatively answers the key question: “Can this plant be saved?” We ought not to toss ratepayer and taxpayer dollars at plants that have little or no prospect of improved performance or economic viability…
As electricity becomes ever more important to the U.S. economy, with many politicians demanding electrification to combat climate change, nuclear power should take center stage because it is both clean and reliable. Wind and solar generation will not be able to meet the increased demand of electrification, because the land and battery storage requirements are unrealistic and technologically infeasible.
Nuclear-plant subsidies, carefully crafted, are the best answer to ensure that the nuclear industry survives and evolves to finally meet expectations, after decades of broken promises.”Aug. 14, 2019
180 Scientists and Concerned Citizens, in a letter to the New York Public Service Commission on July 14, 2016, available at environmentalprogress.com, stated:
“We are writing as scientists, environmentalists and concerned citizens to urge you to pass the Clean Energy Standard (CES) proposed by the New York State Department of Public Service (NYSDPS), including the Zero-Emissions Credit (ZEC) subsidy for nuclear power plants. This measure is critical to safeguarding New York’s low-carbon nuclear power, ensuring the security of the electricity supply, and meeting the state’s decarbonization goals.
We are moved by a growing scientific and environmental consensus that nuclear power must play a central role in fighting climate change. That truth is plain to see in New York, whose nuclear plants make the state’s electricity supply one of the cleanest in the country…
Everyone would benefit from the CES and its nuclear subsidy. Communities would benefit from the preservation of thousands of well-paying jobs. New York’s economy would benefit from the continuance of a cheap, reliable electricity supply. The renewables sector would benefit from other CES mandates that give it plenty of support and room to grow.
Most of all, the climate benefits, and with it our children and grandchildren. New York’s nuclear plants have many decades of useful life left in them, generating power while preventing the emission of hundreds of millions of tons of greenhouse gases. They can shoulder much of the burden of transitioning the state towards a cleaner, more sustainable future.
The closure of New York’s nuclear plants would undo all the progress the state has made towards its greenhouse targets. In recognizing the value of all zero-emissions energy sources, treating them fairly and supporting them efficiently, the ZEC ensures that New York would instead go forward decisively in cleaning up its electricity sector and become a global leader in energy policy.”July 14, 2016
Arthur T. Motta, PhD, Professor of Nuclear Engineering and Materials Science and Engineering at Pennsylvania State University, in an Aug. 17, 2016 article, “Nuclear Power Deserves a Level Playing Field,” available at theconversation.com, stated:
“[S]ubsidizing carbon-free sources is justifiable to provide for the future greater good of the country because they provide climate change and clean air benefits. Perversely, however, the U.S. Environmental Protection Agency and most states have declined to consider rewarding the same benefits from existing nuclear power plants.
The main argument for not including existing nuclear power plants – as well as electricity from large hydropower dams – in clean air mandates and subsidies is that contributions from these conventional sources would dwarf new renewable generation, which the federal government wishes to encourage…
This makes no sense.
If these plants are shuttered, their output will be replaced in many cases by natural gas generation, which will increase greenhouse gas emissions, as has occurred after recent nuclear plant closures in Vermont and Wisconsin.
Nuclear power provides other benefits in addition to clean air. Nuclear plants also provide stability to the electrical grid, as their output is constant and reliable. They are available at nearly all times and especially in times of need – for example, during severe winter weather when coal deliveries may be disrupted.
Additionally, nuclear power is a technology-intensive industry in which the United States has traditionally led the world. With each closure of an operating U.S. nuclear power plant, the infrastructure built over the past 50 years – including suppliers, vendors, operators, maintenance and manpower – becomes increasingly imperiled as it serves a dwindling number of plants. If the industry disappears here, it will be very difficult to rebuild as China and Russia becomes world leaders in nuclear technology.”Aug. 17, 2016
Will Boisvert, freelance journalist, in a July 18, 2016 article, “Renewables Subsidies Are Killing Nuclear and Threatening Climate Progress,” available at environmentalprogress.org, stated:
“[N]uclear plants’ financial woes… could be remedied by subsidies substantially smaller than those given to renewables… The immediate problem is a depressed electricity market that chokes off nuclear plants’ revenue. But beneath that are counterproductive energy policies that will result in a wasteful glut of capacity, perpetually falling prices and rising costs…
But the impact of market forces has been worsened by public policy that neglects nuclear power and adds to the pressure it faces. Federal, state and local governments have massively intervened in energy markets to support renewable power with subsidies and mandates, but given virtually no support to existing nuclear plants. These biases tilt the playing field for commercial competitors of nuclear plants…
Nuclear subsidies would help correct the biases plaguing energy policy… Politicians, regulators and planners need to sit down with a broader array of stake-holders and systematically plan the transition to a sustainable energy supply. They should do so with a clear understanding of the strengths and limitation of energy technologies, and take care to foster orderly markets that avoid the boom-and-bust cycles of the last two decades. And they should think carefully about how to value and conserve America’s vast resource of clean nuclear power.”July 18, 2016
Alex Trembath, Deputy Director at Breakthrough Institute, in a Nov. 19, 2019 article, “Should the Government Subsidize Nuclear Power? Advocates Square Off,” available at wsj.com, stated:
“[I]t is crucial to subsidize nuclear power. It is an immensely effective technology, yet the industry is facing steep economic obstacles outside of its control…
Critics raise a number of objections to subsidies. For instance, they point to cost overruns and poor management of some plants—and, yes, those are fair complaints. We have long since lost the ability to build large, light-water reactors in the U.S. on time and under budget. This isn’t a reason to abandon, or accelerate the closure, of existing nuclear plants—or to abandon subsidies.
Consider that federal subsidies for solar and wind have been remarkably successful. Those technologies have reduced costs dramatically, especially over the past 10 to 15 years. Nuclear policy should learn from the success and subsidize a new generation of nuclear reactors that can bring similar cost declines and commercial success…
Ultimately, the right question isn’t whether to subsidize nuclear and other clean-energy technologies, but how.
Subsidies and other government policies should prioritize a new generation of nuclear reactor—smaller and built with modular components—and a new, more entrepreneurial generation of energy companies.”Nov. 19, 2019
Environmental Working Group, in a July 17, 2019 article, “Federal Energy Subsidies: What Are We Getting for Our Money?,” available at ewg.org, stated:
“Through tax breaks, funding for research and development, and other federal government programs and policies, American taxpayers subsidize the spectrum of energy sources: oil, natural gas, coal, nuclear, wind, solar and other renewables. So what are we getting for our money?
…Since the beginning of the nuclear age, federal funding just for research and development of nuclear power have topped $100 billion, says the Congressional Research Service. AWEA’s estimate for all federal subsidies to the nuclear industry during that period is nearly twice that much. ROI: Huge cost overruns passed on to utility customers; aging and crumbling reactors riskily kept running longer than they were built for; tens of thousands of tons of radioactive waste that will remain dangerous for many millennia…
The Congressional Research Service’s estimate of $100 billion in federal nuclear subsidies goes back more than 70 years. But it’s still mounting.
The research service says that since 2010, nuclear power has received in excess of $4 billion more in taxpayer support for technology development than renewables have. Taxpayers for Common Sense reports that the new units at Georgia Power’s Vogtle nuclear plant, under construction since 2013, have received more than $12 billion in loan guarantees but now are projected to cost twice as much as initially estimated.
In addition, a study by Stanford University estimates federal taxpayers are paying about $500 million a year to utility companies for storing radioactive waste onsite at nuclear plants. The Department of Energy has responsibility for storing the waste – not the companies whose reactors generated it – but concerns about safety have repeatedly stymied efforts to site a national dump for waste that will remain dangerous for more than 10,000 years. The Government Accountability Office says the waste stored at reactor sites has reached 90,000 metric tons and would fill the area the size of a football field 66 feet deep…
It is past time for the nation to shift tax resources to accelerating the urgently needed transition to clean, renewable power, instead of accelerating the climate crisis and harming public health to boost the profits of the fossil fuel and nuclear industries.”July 17, 2019
Union of Concerned Scientists, in a Feb. 23, 2011 article, “Nuclear Power: Still Not Viable without Subsidies,” available at ucsusa.org, stated:
“Nuclear power subsidies vary by type of ownership (public or private), time frame of support (legacy, ongoing, or new), and the type of cost (or “attribute of production”) they address—from startup capital to decommissioning and waste disposal. Subsidies can take many forms, including tax breaks, accident liability caps, direct payments, and loan guarantees.
While the exact value of these subsidies can be difficult to pin down, even conservative estimates add up to a substantial percentage of the value of the power nuclear plants produce—approaching or even exceeding 100 percent in the case of legacy subsidies and subsidies to new privately-owned reactors…
Subsidies were originally intended to provide temporary support for the fledgling nuclear power industry, but the promised day when the industry could prosper without them and power from nuclear reactors would be “too cheap to meter” has yet to arrive. It is unlikely to arrive any time soon, as cost estimates for new reactors continue to escalate and the nuclear power lobby demands even more support from taxpayers. Piling new subsidies on top of existing ones will provide the industry with little incentive to rework its business model to internalize its considerable costs and risks.”Feb. 23, 2011
Adam Millsap, PhD, Senior Fellow, Economic Opportunity at the Charles Koch Institute, in an Apr. 19, 2019 article, “State Nuclear Subsidies Not Needed,” forbes.com, stated:
“Some supporters of the nuclear subsidies are broadening the goal to include supporting zero-emissions energy to combat climate change. But it’s not clear that subsidizing inefficient nuclear plants is the most economical way to address climate change , since subsides have problems of their own.
First, subsidies reduce rather than raise the cost of energy. This lower price will increase the quantity demanded and if the source isn’t truly zero-emissions or has other costs to the environment—such as solar panel waste—this increase will diminish some of the benefits. Subsidies also often favor one energy source over another or some providers over others even if there is no economic reason to do so. This could be the result of miscalculating subsidies across different energy sources or due to political bargaining that results in favoritism towards certain producers.
Finally, subsidies to nuclear plants are also likely to crowd out new, more efficient electricity plants. Total electricity generation in the United States has declined slightly since 2010 despite economic growth in the form of real GDP per capita…
[J]ust because a subsidy has the potential to improve economic efficiency doesn’t mean it will. A subsidy that is too small will not generate enough of the good or service. A subsidy that is too large can generate too much, leading to more inefficiency than no subsidy at all. The bureaucratic costs of estimating the correct subsidy, implementing it, and administering it must also be considered. If these costs outweigh the potential gains in efficiency from the subsidy, then the economy would be better off without it.”Apr. 19, 2019
Ken Cook, President and Cofounder of the Environmental Working Group, in a Nov. 19, 2019 article, “Should the Government Subsidize Nuclear Power? Advocates Square Off,” available at wsj.com, stated:
“Nuclear power has been subsidized more than any other power-generation technology in the U.S. It’s time to stop…
Since 2016, legislators in five states have saddled customers with more than $15 billion in utility-bill surcharges to prop up money-losing reactors—and bailout attempts may continue, given the desperation of nuclear utilities.
Most of the U.S. fleet of aging reactors are near the end of their licensed operating lives. Keeping old plants running with subsidies raises the risk of accidents, as components weaken and grow brittle. Now the industry is begging for federal subsidies to develop smaller, modular reactors—a pipe-dream technology that could cost taxpayers more hundreds of billions…
What’s more, keeping nuclear-power plants on line crowds out cheaper, and genuinely clean, energy options. True, government research and development and subsidies continue for renewables. But the results have been far superior to that of nuclear power. Costs are dropping, technologies are improving, private investment is increasing, and job growth has been substantial…
Taxpayer subsidies for nuclear power make as much sense as trying to revive the whale-oil industry. Nuclear power simply has no place in the renewable-energy revolution that’s attracting huge investments and creating good jobs. When the nuclear industry comes knocking for handouts, policy makers should slam the door.”Nov. 19, 2019
M.V. Ramana, PhD, Simons Chair in Disarmament, Global and Human Security at the School of Public Policy and Global Affairs at the University of British Columbia, in a Dec. 3, 2018 article, “Should We Subsidize Nuclear Power to Fight Climate Change?,” available at blogs.scientificamerican.com, stated:
“[T[he question in essence is how to deal with a dying source of electricity generation in the United States. Globally, the share of nuclear energy in the world’s electricity generation has been declining continuously since 1996. The UCS report is a plea to keep the nuclear industry on life support by states providing subsidies to nuclear power plants that are not profitable, provided the operators of the nuclear plants and the states play by some rules. Regardless of these subsidies, it remains the case that over the next few decades, the reactor fleet will have to be retired. Some of these reactors are nearly half a century old, and some have a checkered past…
All told, the economic basis for subsidies is uncertain at best; more likely, it is flawed. Either way, it may be best to get onward with the transition from fossil fuels and nuclear power to renewables.”Dec. 3, 2018