A new study. titled Analysis of Federal Expenditures for Energy Development challenges the assertion that nuclear power receives large subsidies from the Federal Government. The study, by About Management Information Services, Inc. ( MISI), demonstrates that much of that the Federal investment in nuclear research included a broad spectrum of projects, and was not simply confined to civilian reactor research. MISI has a long history of research of energy and economics issues for the National Academy of Sciences, the U.S. Department of Energy and others.
MISI looked at Federal energy related expenditures between 1950 and 2006. It demonstrates that Federal spending on Nuclear power research peaked during the 1950's and dropped significantly after. The study finds that among energy sources oil, natural gas, coal, and Hydro-electric generation have received larger federal subsidies than nuclear during the time frame.
A review of MISI data, however, reveals that much of the "Federal research and development subsidy" did not in fact benefit the civilian power industry. The study also reveals that most of the so called research subsidy to the "nuclear industry", was not focused on conventional power reactor technologies. Only $5.8 billion, was spent on Light Water Reactors, the only civilian nuclear technology used to generate power in the United States. In contrast various research projects related to the breeder reactor received $23.78 Billion and more that $38 Billion dollars were spent on other reactor research projects that were unrelated to the light water reactor. Only Light Water Reactor research benefited the civilian nuclear power Industry, and thus could be considered a subsidy.
Most Federal spending on reactor research occurred before 1975. Between 1998 and 2003 Federal spending on all reactor research was only about 10% of federal Reactor research levels in the 1970's and 1970's research levels were far lower than during the 1950's. Since 1976 over 50% ($14.5 billion) of Federal reactor research expenditures have been devoted to the LMFRB. In contrast, only 6% ($1.68 Billion) of Federal nuclear research dollars since 1976 have been spent on Light Water Reactor research, despite the fact thatr Light Water Reactors provide 20% of power in the United States. Another $3 Billion was spent on reactor waste management research, but most of that money cannot be considered as a subsidy for the Civilian nuclear industry, because that industry continues to manage and store its own waste in temporary local storage facilities at its own own facilities.
Unlike all other energy sources there has never been a tax based subsidy for the nuclear industry. In contrast, renewables as well as oil, gas, and other energy forms receive heavy tax subsidies. Most of the cost of hydro construction is paid for by the Federal government with no return to the tax payers. Most energy forms have received more money from the Federal Government than they have paid to it. The one exception is the civilian nuclear industry, which has paid $14 billion more to the Government that it has received. The imbalance came about because the Federal Government has failed to provide waste management services to the nuclear industry, which nuclear plants owners are paying for. Thus fat from receiving subsidy from the Federal Government, the civilian nuclear industry has in fact subsidized the Federal Government, and the net value of that subsidy is far greater than the value of all of the benefits that the civilian power industry has received through the Federal Government. If we subtract the $5.8 of R & D expenditures on Light Water Reactors paid by the Federal Government, we find that the Civilian Power Reactor Industry has given the government a net subsidy of $8.2 Billion. In addition unlike other energy technologies including renewables, the civilian nuclear power industry pays 100% of its tax obligations.
<span style="font-weight:bold;">A note on Price-Anderson</span>: Critics of nuclear power consider the Price-Anderson Act to be subsidy. This is a conceptual error. In fact the primary function of the Price-Anderson Act is to create a form of self-insurance for the civilian nuclear power Industry. Under Price-Anderson, the primary insurance obligation falls on the reactor owner. Reactor owners must obtain the largest accident insurance protection available on the insurance market. Beyond that all reactor owners have a joint obligation to pay at least $9.5 Billion into a compensation pool, in the event of a large accident. It is possible that the Federal government could impose an even larger obligation on reactor owners. Only in the event of a larger payout would the Federal Government be under any obligation. Since Government has never paid a cent in accident compensation, and and given the safety features of Light Water Reactors, it is virtually impossible that the Government every will pay out a cent under the Price-Anderson Act, and pays no insurance premium, the Price Anderson Act ought to be considered a potential subsidy, rather than an actual subsidy. The value of Price-Anderson cannot be determined, since it is very unlikely that any compensation will every be paid out by the government under Price-Anderson. In the absence of a Government payout, the Price-Anderson acts that the primary obligation for all claims payments up to $10 Billion rests with the Nuclear Industry.
We ought to compare the Nuclear Industry's obligation under the Price Anderson Act with the insurance of the hydro electric industry. Serious accidents involving large scale damage to property and loss of human life are far more likely with hydro electric dams than a catastrophic failure of a a nuclear plant. Typically nuclear plants have highly redundant safety systems, and place at least 5 levels of protection between radioisotopes trapped in nuclear fuel, and the civilian population. In contrast, dames typically have only one layer of defense between impounded waters and down stream populations and property. The failure of a dangerous dam like the Cedar Creek Dam on the Cumberland could kills thousands of people, and cause billions of dollars in damage. There is no Price-Anderson Act for the hydro-electric industry, perhaps because the Federal Government owns most of the dams.
Federal Energy Interventions
In 1999 the Federal Energy Information Administration (EIA) undertook a comprehensive study of Federal energy interventions during that year. The EIA undertook a second study in 2007The EIA undertook a second study in 2007. Remarkably the EIA study found that no growth in energy consumption had occurred during the previous 8 years.
The 1999 and 2007 EIA studies actually compliment and amend the 2008 MISI study I discussed in my last post. The MISI study did contain a summery of estimated subsidies from all sources for various segments of the Energy Industry from 1950 to 2006, there is no break down by year, except for R&D expenditures. There are discrepancies between the two reports. Thus The EIA found that nuclear R&D expenditures for 1999 to be $740 million, while the MISI estimated the 1999 nuclear R&D subsidy to be only $125 million. The EIA qualifies its R&D budgeting by describing the 1999 funding as being for "applied" R%D. Thus the entire $740 Million is the DOE budget for applied research, and not every research project is directed toward research that would qualify as a subsidy for the "civilian nuclear power industry".
A further breakout of the 1999 DOE expenditures demonstrates some of the issues.
New Nuclear Plants (Nuclear Energy Research Initiative) 36
Waste/Fuel/Safety (Environmental Management) 530
Other Allocated (Termination Costs and Program Direction) 173
Is any of this a real subsidy for the Civilian nuclear industry? The first line would be, but it would it really be a subsidy unless energy utilities got some benefit from it. Thus if the New Energy Research Initiative produces something that actually benefits the nuclear power industry, it is a subsidy. If not it might be considered a dead end science project. The first line looks like a subsidy, however.
The second line, I have argued, cannot be considered a subsidy, In the DOE Budget the term Environmental Management, refers to the cleanup of old Cold War and WWII AEC sites, that were either being shut down, or in the process of being shut down. The cleanup problems were predominately a legacy of military uses of nuclear power. Most of the civilian research programs that were involved in the subsequent cleanup were not involved with LWR research, and hence the cleanup is not a LWR subsidy,
Finally the third line refers to the shut down of a Cold War Era production plant. The facility in question was involved in weapons related work and its clean up thus was not a subsidy for the civilian power industry.
There are a few items mentioned for the year 1999 in the MISI study of nuclear subsides, that do not seem to be subsidies for the nuclear power industry. Other items might be seen as not real subsidies at the present, but possibly they might have a future subsidizing effect. Thus for example, DOe' grants for University Reactor Infrastructure and Education Assistance, benefit the civilian power industry? The answer is probably yes, and in several ways, But it could also benefit research programs that are unrelated to the nuclear power industry. It could also benefit the United States Navy, since the Navy might recruit naval reactor operators from such programs. The program might also be a source of earmark funds, that were far more about local politics, thn serving th interest of the nuclear power industry. Although the issue demonstrates how problematic determining a subsidy is, I would be inclined to think that the $10 million is a subsidy for the civilian power industry, even if it were not intended to be so.
In order to resolve some issues raised by the Energy Information Administration 2007 study of Federal Energy Interventions, I reviewed the 2009 Federal Budget request for nuclear power research, in order to identify 2008 appropriations.
In 2008 Congress appropriated for the Nuclear Power 2010 program, $133,771,000
For the Generation IV Nuclear Energy Systems Initiative $114,917.000
The Advanced Fuel Cycle Initiative received a 179,353,000 appropriation.
These programs at present cannot be described as nuclear power subsidies, unless or until research leads to a product or concept that benefits the nuclear industry.
In addition to research appropriations, other facilities which might been seen as a subsidy for civilian nuclear power would be the $278,789,000 appropriation for the Mixed Oxide Fuel Fabrication Facilities. However, the MOX Program is part of an ongoing nuclear disarmament/anti-proliferation effort. The long term goal of the MOX program is the lowering of stocks of plutonium by using it as reactor fuel. The MOX facility is designed to manufacture reactor fuel containing plutonium and uranium. I believe that it would be extremely cynical for supporters of nuclear disarmament to describe a disarmament program as a subsidy to the civilian power industry.
Thus the current Federal budget contains few if any real subsides for the nuclear power Industry. Critics of nuclear power charge that the nuclear industry cannot live without subsidies, My review of the current Federal support for nuclear power related research suggests that far from being subsidized by the government of the United States, the nuclear power industry is paying money to the Government but not receiving promised services. Relatively small long range DOE funded nuclear research programs have yet to produce any positive benefits for the civilian nuclear power industry, and may not produce any benefits for some time, if ever, Thus it is very inaccurate to speak of the current nuclear industry as being dependent on subsidies.