[NukeNet] Status of Federal Loan Guarantees for Nukes/Coal

[Mike Ewall]

Legislative Update from Beyond Nuclear

Thursday, December 20, 2007

Contact: Kevin Kamps, Beyond Nuclear, (301) 270-2209

Congress and White House Grant Nuclear Power Industry Federal Loan 
Guarantees for New Atomic Reactors

$20.5 billion risk shifted onto taxpayers, but industry had sought 
over $50 billion

Dear Friends and Supporters of Beyond Nuclear,

Many of you have actively opposed nuclear loan guarantees, by signing 
petitions, phoning, faxing, emailing, writing, and even meeting with 
congressional leaders, as well as your own Members of Congress, or 
their staff. You've also written letters to the editor and op/eds. 
For all your good work, we thank you from the bottom of our hearts. 
And we feel it important to give you the latest on the status of the 
federal loan guarantees for new nuclear reactors.

We succeeded, over the course of several months, in blocking nuclear 
loan guarantees from being included in the energy bill (signed into 
law just yesterday, by the way). We also blocked nuclear loan 
guarantees from being attached to the farm bill. But, unfortunately, 
we failed to prevent their being attached to the appropriations bill, 
despite our best efforts.

As many of you may have already learned, both the U.S. House of 
Representatives and the U.S. Senate passed an Omnibus Appropriations 
Bill this week that did contain nuclear loan guarantees: $18.5 
billion for new nuclear reactors, and an additional $2 billion for 
new uranium enrichment. This $20.5 billion in nuclear loan guarantees 
is for both Fiscal Year 2008 and Fiscal Year 2009, whereas the 
nuclear industry had wanted over $50 billion in nuclear loan 
guarantees over that time period. In that sense, our hard work has 
helped block around $30 billion in nuclear loan guarantees from being 
approved – although $20.5 billion is certainly bad enough.

In addition, nuclear loan guarantee proponents, such as U.S. Senator 
Pete Domenici (Republican from New Mexico) will almost certainly come 
back, perhaps in early 2008, with supplemental appropriations 
legislation seeking yet more nuclear loan guarantees for Fiscal Year 
2009. Thus we must remain vigilant, and even re-double our efforts, 
for this fight will go on.

In addition to the $20.5 billion in loan guarantees for the nuclear 
energy industry, another $8 billion was approved for coal projects, 
and $10 billion for renewables and efficiency (although it appears 
that controversial, large-scale electricity transmission projects may 
have been lumped in with "renewables and efficiency," transmission 
lines that would be needed if giant new atomic reactors are to be 
added to the grid). Thus, outrageously, nuclear loan guarantees 
account for more than half the energy loan guarantees. When nuclear 
power and coal are taken together, the ratio of dirty and dangerous 
energy projects to clean and safe energy projects is three to one! So 
much for an energy loan guarantee program that was supposed to 
support "innovative and clean" projects to address the climate 
crisis! So much for a Democratic Congress supposedly devoted to clean energy!

The way the nuclear loan guarantees will work – according to rules 
set by the Bush administration's Office of Management and Budget, as 
well as the Department of Energy -- is this: up to 80% of the cost of 
a new reactor project will be covered by nuclear loan guarantees, 
backed by the U.S. Treasury (that is, taxpayers). If a new reactor 
would cost $6 billion (a conservative estimate, for the news media 
recently reported that a single reactor could cost $9 billion), then 
80% of that cost ($4.8 billion) could be covered by federal loan 
guarantees. Thus, about three to four new reactors could get off the 
ground thanks to $18.5 billion in nuclear loan guarantees (the other 
$2 billion is devoted to new uranium enrichment facilities). Wall 
Street investment firms and banks will now lend money to nuclear 
utilities pursuing new reactors at a much lower interest rate, 
because of the presence of the federal loan guarantees. If nuclear 
utilities default on their loan repayments to the lenders, then U.S. 
taxpayers will be left holding the bag. This "latent subsidy" is to 
an industry that has already enjoyed lavish subsidies at the expense 
of U.S. taxpayers and ratepayers for the past fifty years. These have 
amounted to hundreds of billions of dollars in research and 
development support, liability coverage in the event of catastrophic 
radiation releases, high-level radioactive waste management costs, 
"stranded cost" transfer of reactor construction debts from highly 
profitable nuclear utilities onto ratepayers' electricity bills in 
some "deregulated" states, and much more.

George W. Bush has not yet signed the omnibus appropriations bill 
(including nuclear loan guarantees) into law, but he will do so soon. 
Bush gave an "end of year" press conference today, declaring victory 
on the omnibus appropriations bill (such as getting war funding out 
of Congress for Iraq, for example). Responding to a question about 
why the Bush Environmental Protection Agency had just blocked states, 
such as California, from setting stronger standards than the federal 
government on automobile greenhouse gas emissions, Bush said those 
concerned about global warming should be big supporters of nuclear 
power. Bush erroneously stated that nuclear power doesn't release one 
unit of greenhouse gas (he's ignoring the significant greenhouse gas 
emissions from the nuclear fuel chain). He congratulated Congress on 
passing incentives to build new reactors. Bush was referring to the 
nuclear loan guarantees in the omnibus appropriations bill, and 
perhaps also to nuclear subsidies contained in the energy bill he 
signed into law just yesterday – including international expansion of 
the Price Anderson nuclear liability act, which holds U.S. taxpayers 
financially responsible for the vast majority of monetary damages 
caused by a catastrophic atomic accident, potentially into the 
hundreds of billions of dollars.

Although $20.5 billion in nuclear loan guarantees have been approved, 
it is not entirely clear how easy it will be for the U.S. Department 
of Energy (DOE) to disburse those loan guarantees. U.S. 
Representative David Obey (Democrat from Wisconsin), chairman of the 
House Appropriations Committee, inserted a requirement that 45 days 
before energy loan guarantees are disbursed, DOE must present its 
plan to both House and Senate appropriators. Whether or not the 
appropriations committees' approval is required before disbursement 
is less clear. Also, the amount of loan guarantees approved for 
various energy sectors is included only in the omnibus appropriations 
act's report language, but not in its statutory language. This calls 
into question how much force of law those loan guarantee amounts 
actually carry. But an alternative explanation for the loan guarantee 
amounts being only in report language is that it's an end run around 
the Federal Credit Reform Act of 1990, which requires that loan 
guarantees be "scored" by the Congressional Budget Office at 1% of 
their dollar amount value. That means, in the case of $20.5 billion 
in nuclear loan guarantees (also known as "funny money") that 
congressional appropriators would have to come up with 1% of that 
amount (or $205 million) in actual, real-world funding. And given 
record federal deficits and tight budgets, there isn't $205 million 
just lying around at the appropriations committees. In short, such 
wrinkles and complexities could serve as monkey wrenches in the gears 
of the nuclear loan guarantee program, even opening up possibilities 
for lawsuits.

What can we do now? Everyone should call or write their U.S. 
Representative and two U.S. Senators to thank or criticize them, 
depending upon whether they voted against these nuclear loan 
guarantees or for them. Sample letters of thanks or criticism to 
Members of Congress are pasted in below. To see how your House Member 
voted, go to http://clerk.house.gov/evs/2007/roll1171.xml and find 
out. "Yeas" voted wrong (in favor of nuclear loan guarantees), while 
"Nays" voted right (against nuclear loan guarantees). To see how your 
two U.S. Senators voted, go to 
http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=110&session=1&vote=00441 
and find out. Granted, the omnibus appropriations bill contained 11 
separate appropriations bills rolled into one (including the energy 
and water appropriations bill, containing the nuclear loan 
guarantees), so Members may have decided their yea or nay vote based 
on a variety of variables in addition to the nuclear loan guarantee 
issue. But these roll call votes are the only official House and 
Senate floor votes for or against the nuclear loan guarantees that 
can be cited (the additional House vote on the omnibus appropriations 
bill just yesterday had to do with war funding for Iraq).

Another action you can take is to write a letter to the editor, or 
op/ed, to your local paper, condemning the enactment of nuclear loan 
guarantees. Again, samples are below which you can use or adapt.

Taking these further actions, on top of all the good work we've 
already done, is important. We must continue to educate and pressure 
Members of Congress, the news media, and the public about nuclear 
loan guarantees, for the nuclear industry and its friends in Congress 
will be back very soon seeking yet more.

Sincerely,

Kevin Kamps
Radioactive Waste Watchdog
Beyond Nuclear


LETTERS OF THANKS OR CRITICISM TO CONGRESS:

Sample thank you letter to Congress for voting against nuclear loan guarantees

Dear U.S. Representative/Senator ____________,

Thank you for voting against the omnibus appropriations bill this 
week. It contained an objectionable nuclear loan guarantee provision.

Federal loan guarantees for new atomic reactors just approved in the 
congressional omnibus appropriations bill are a major financial risk 
to taxpayers. The nuclear industry has obtained $20.5 billion in 
guarantees, and will likely lobby for more in the near future.

The Congressional Budget Office (CBO) has predicted nuclear utilities 
will default on new reactor loan repayments more than 50% of the 
time, leaving taxpayers holding the bag. CBO also reports the U.S. 
Energy Dept. will likely underestimate the subsidy fee it charges 
borrowers up front, meaning taxpayers could end up on the hook for 
tens of billions of dollars in liability when new reactor loans 
inevitably go bad.

What makes this astronomical nuclear giveaway even more outrageous is 
that this industry is 50 years old, and has already been very heavily 
subsidized – to the tune of hundreds of billions of taxpayer and 
ratepayer dollars.

The climate crisis demands energy subsidies go to the cleanest, 
safest, least expensive, and quickest options available. Energy 
efficiency is seven times more cost effective at reducing greenhouse 
gas emissions than nuclear power. Congress should subsidize 
efficiency and renewables like wind and solar, but stop co-signing 
the American taxpayer onto risky nuclear loans.

In addition to nuclear power's financial risks, there are also: the 
safety and security risks; routine intentional releases of 
radioactivity into the environment, as well as accidental leaks that 
harm human health and ecosystems; the 65-year-high and still growing 
mountain of radioactive waste that has no safe, sound solution; and 
the risk of nuclear weapons and "dirty bomb" (radiological weapons) 
proliferation that goes hand in hand with nuclear power's expansion.

Thanks again for opposing the omnibus appropriations bill and the 
outrageous nuclear loan guarantees it contains. I strongly urge you 
to oppose any further nuclear loan guarantees in the future.

Sincerely,

Sample letter of criticism to Congress for voting in favor of nuclear 
loan guarantees

Dear U.S. Representative/Senator ____________,

I am writing to express my displeasure at your vote in favor of the 
omnibus appropriations bill this week, for it contained an 
objectionable nuclear loan guarantee provision.

Federal loan guarantees for new atomic reactors just approved in the 
congressional omnibus appropriations bill are a major financial risk 
to taxpayers. The nuclear industry has obtained $20.5 billion in 
guarantees, and will likely lobby for more in the near future.

The Congressional Budget Office (CBO) has predicted nuclear utilities 
will default on new reactor loan repayments more than 50% of the 
time, leaving taxpayers holding the bag. CBO also reports the U.S. 
Energy Dept. will likely underestimate the subsidy fee it charges 
borrowers up front, meaning taxpayers could end up on the hook for 
tens of billions of dollars in liability when new reactor loans 
inevitably go bad.

What makes this astronomical nuclear giveaway even more outrageous is 
that this industry is 50 years old, and has already been very heavily 
subsidized – to the tune of hundreds of billions of taxpayer and 
ratepayer dollars.

The climate crisis demands energy subsidies go to the cleanest, 
safest, least expensive, and quickest options available. Energy 
efficiency is seven times more cost effective at reducing greenhouse 
gas emissions than nuclear power. Congress should subsidize 
efficiency and renewables like wind and solar, but stop co-signing 
the American taxpayer onto risky nuclear loans.

In addition to nuclear power's financial risks, there are also: the 
safety and security risks; routine intentional releases of 
radioactivity into the environment, as well as accidental leaks that 
harm human health and ecosystems; the 65-year-high and still growing 
mountain of radioactive waste that has no safe, sound solution; and 
the risk of nuclear weapons and "dirty bomb" (radiological weapons) 
proliferation that goes hand in hand with nuclear power's expansion.

Again, the nuclear loan guarantees contained in the omnibus 
appropriations bill are an outrage, and I am displeased that you 
voted in favor of them. I strongly urge you to oppose any further 
nuclear loan guarantees in the future.

Sincerely,

SAMPLE LETTERS TO THE EDITOR AND OP/ED:

Below are two sample Letters to the Editor on loan guarantees for new 
reactors, as a risk to taxpayers, or a foreign coup d'etat and raid 
on the U.S. Treasury. Why all this focus on financial risks to 
taxpayers? Because, incredibly, many Members of Congress see 
"anti-nuclear" as a dirty word, despite nuclear power's many other 
risks -- safety and security risks; routine intentional releases of 
radioactivity into the environment, as well as accidental leaks that 
harm human and ecosystem health; the 65-year-high and still growing 
mountain of radioactive waste that has no safe, sound solution; and 
the risk of nuclear weapons and "dirty bombs" proliferation that goes 
hand in hand with nuclear power's expansion; etc. Thus, focusing on 
risks to taxpayers is probably one of the most effective ways to 
criticize this $20.5 billion boondoggle that just got approved on Capitol Hill.

Of course, if you want to write letters to the editor opposing 
nuclear loan guarantees because of the risks to public health, 
safety, security, and the environment, we would cheer you on—we need 
to educate Congress, the media, and the public that nuclear power is 
a nightmare for the planet, not just our pocketbooks!

Sample Letter to the Editor on federal loan guarantees for new atomic 
reactors as risk to American taxpayers:

(198 words)

Dear Editor,

Federal loan guarantees for new atomic reactors just approved in the 
congressional omnibus appropriations bill are a major financial risk 
to taxpayers. The nuclear industry has obtained $20.5 billion in 
guarantees, and will likely lobby for more in the near future.

The Congressional Budget Office (CBO) has predicted nuclear utilities 
will default on new reactor loan repayments more than 50% of the 
time, leaving taxpayers holding the bag. CBO also reports the U.S. 
Energy Dept. will likely underestimate the subsidy fee it charges 
borrowers up front, meaning taxpayers could end up on the hook for 
tens of billions of dollars in liability when new reactor loans 
inevitably go bad.

What makes this astronomical nuclear giveaway even more outrageous is 
that this industry is 50 years old, and has already been very heavily 
subsidized – to the tune of hundreds of billions of taxpayer and 
ratepayer dollars.

The climate crisis demands energy subsidies go to the cleanest, 
safest, least expensive, and quickest options available. Energy 
efficiency is seven times more cost effective at reducing greenhouse 
gas emissions than nuclear power. Congress should subsidize 
efficiency and renewables like wind and solar, but stop co-signing 
the American taxpayer onto risky nuclear loans.

Sincerely,

Sample Letter to the Editor on federal loan guarantees for new 
nuclear reactors as a foreign coup d'etat and raid on the U.S. Treasury:
(199 words)

Dear Editor,

Federal loan guarantees for new nuclear reactors included in the 
congressional omnibus spending bill risk tens of billions of American 
taxpayer dollars to benefit foreign corporations and workers. The 
nuclear industry has obtained $20.5 billion in guarantees thus far, 
but the U.S. Chamber of Commerce sees this as "an apparent 
advantaging of foreign commercial technologies over domestic technologies."

French and Japanese atomic companies, already heavily subsidized by 
their own governments, would be the major beneficiaries of our 
subsidies. Most major equipment, such as reactor pressure vessels and 
steam generators, cannot be built at U.S. factories, but must be 
outsourced to Asian and European firms. Thus, most nuclear 
manufacturing jobs paid for by American subsidies would go overseas.

For example, the nuclear firm Areva is 80% owned by the French 
government. Its prototype new reactor, under construction in Finland, 
is $2 billion over budget and 2 years behind schedule. Yet, nuclear 
utilities hope to build five Areva reactors here. Any loan defaults 
due to cost over runs or schedule delays would be paid back at U.S. 
taxpayer expense.
American taxpayer investment in efficiency and home-grown, clean 
renewables like wind and solar would achieve genuine energy 
independence and provide U.S. jobs.
Sincerely,

Sample Op/Ed piece
(496 words)

Dear Editor,

Federal loan guarantees for new nuclear reactors in the congressional 
omnibus appropriations bill will be a major financial risk to the 
American people, and represent a foreign raid on the U.S. Treasury.

The nuclear industry has already obtained $20.5 billion in 
guarantees, and will likely seek more next year. The Congressional 
Budget Office (CBO) has predicted nuclear utilities will default on 
new reactor loan repayments more than 50% of the time, leaving 
taxpayers holding the bag. CBO also reports the U.S. Energy Dept. 
will likely underestimate the subsidy fee it needs to charge to 
borrowers up front, meaning taxpayers could end up on the hook for 
tens of billions of dollars in liability when new reactor loans 
inevitably go bad.

What makes this astronomical nuclear giveaway even more outrageous is 
that this industry is 50 years old, and has already been very heavily 
subsidized – to the tune of hundreds of billions of taxpayer and 
ratepayer dollars – every step of the way.

Wall Street had turned its back on investing in nuclear power for 
several decades because of the huge cost overruns and construction 
delays of the 1970s and 1980s, when some reactors came in 380% over 
budget. The last reactor built in the U.S. took 23 years to complete, 
at a cost of over $7 billion. The nuclear industry and its friends in 
Congress have now transferred the grave financial risks onto 
taxpayers, in order to entice private investors.
These new reactor loan guarantees would risk tens of billions of 
American taxpayer dollars to benefit foreign corporations and 
workers. The U.S. Chamber of Commerce sees this as "an apparent 
advantaging of foreign commercial technologies over domestic technologies."

French and Japanese atomic companies, already heavily subsidized by 
their own governments, would be the major beneficiaries of our 
subsidies. Most major equipment, such as reactor pressure vessels and 
steam generators, cannot be built at U.S. factories, but must be 
outsourced to Asian and European firms. Thus, most nuclear 
manufacturing jobs paid for by American subsidies would go overseas.

For example, the nuclear firm Areva is 80% owned by the French 
government. Its prototype new reactor, under construction in Finland, 
is $2 billion over budget and 2 years behind schedule. Yet, nuclear 
utilities hope to build five Areva reactors here. Any loan defaults 
due to cost overruns or schedule delays would be paid back at U.S. 
taxpayer expense.

American taxpayer investment in efficiency and home-grown, renewable 
sources of electricity, like wind and solar, would achieve genuine 
energy independence and would provide American workers with jobs. The 
climate crisis demands energy subsidies go to the cleanest, safest, 
least expensive, and quickest options available. Energy efficiency is 
seven times more cost effective at reducing greenhouse gas emissions 
than nuclear power. Congress should subsidize efficiency and 
renewables like wind and solar, but stop co-signing the American 
taxpayer onto risky nuclear loans. Given the accelerating climate 
crisis, we cannot afford to squander tens of billions of taxpayer 
dollars on a risky nuclear relapse.

Sincerely,


Beyond Nuclear at NPRI
6930 Carroll Avenue, Suite 400
Takoma Park, MD 20912
Tel: 301.270.2209 Fax: 301.270.4000
Email: info at beyondnuclear.org
Web: www.beyondnuclear.org