CHAPTER TWO: NUCLEAR POWER IS BAD BUSINESS
THIS CHAPTER DISPELS THE MYTH THAT NUCLEAR POWER IS ECONOMICALLY SOUND.
The failure of the U.S. nuclear power program ranks as the largest managerial disaster in business history. The utility industry has already invested $125 billion, with an additional $140 billion to come before the decade is out – and only the blind, or the biased, can now think that money has been well spent.
Forbes Magazine, February 1986
It is clear by now that nuclear power is not economically viable. However, there IS money to be made along the nuclear fuel cycle for those in uranium and those in plutonium and those who make bombs and those who use plutonium in space, and those who make depleted uranium (DU) armaments (see chapter 5 re: DU). But the fact is that nuclear power, which provides about 15% of the world’s electricity, is such an economic disaster that in the 1970’s banks decided they would no longer invest in nuclear facilities. The nuclear backers then went to the government for support and received loan guarantees.
Robert Alvarez, an Institute for Policy Studies senior scholar, who was senior policy advisor to the Energy Department from 1993 to 1999, states:
“Wall Street has refused to finance nuclear power for more than 30 years, rendering new construction impossible. The Obama administration, in a move to placate Senate Republicans, proposes to fund new power reactors with some $54.5 billion in federal loan guarantees. The actual loans will be made by the Federal Financing Bank out of the U.S. Treasury. Last year, the Government Accountability Office estimated that these loans have more than a 50-50 chance of failing. Because of skyrocketing costs, these loans might pay for five reactors and merely expand the nations electrical supply by less than 1 percent.”
“Nukes aren’t the Answer.” Robert Alvarez Feb. 16, 2010
A report by the Union of Concerned Scientists, Nuclear Power: Still not Viable without Subsidies (Feb. 2011 Doug Koplow www.ucsusa.org/publications) catalogues for the first time the full range of subsidies that benefit the nuclear power sector. They not only financed the construction of the nations reactors in the first place, they also enabled their operation for decades. A major goal of the industry now is to shift the vast economic risks and costs associated with nuclear power and radiation waste onto the public. These ongoing subsidies contribute to the perceived cost advantage of nuclear power.
This 100 page report explains that government subsidies to the nuclear power industry over the past 50 years have been so large in proportion to the value of energy produced that in some cases it would have cost tax payers less to simply buy kilowatts on the open market and give them away!
The subsidies come in many forms, including tax breaks, accident liability caps, direct payments and loan guarantees. To read the report go to: www.ucsusa.org/publications.
Nuclear power companies can ignore the financial aspect of insurance and corporate liablility in the case of an accident, which is one less business expense. The Price-Anderson Act of 1957 limits the amount of insurance that nuclear power plants must carry to about two percent of the estimated cost of a serious accident, which could be $200 billion or more. This leaves the U.S. Government and taxpayers responsible. An article in Rolling Stone (Jeff Goodell “The Fire Next Time” Rolling Stone 1130 (5/12/11): 35-38) points out that nuclear industry regulators are ignoring risks and boosting industry profits and proposes:
“An idea might be to simply repeal the Price-Anderson Act and force the nuclear industry to take responsibility for the risks of running these old plants, rather than laying it all off on the taxpayers…if nuke owners had to put their own money where their atoms are, the crumbling old reactors would get cleaned up or shut down in a heartbeat.”
While the numerous subsidies are a financial determinant in favor of nuclear power, it is the lobbyists who shape opinion. An article in the Boston Globe points out that “the nuclear power industry has mounted a concerted lobbying push on Capitol Hill this week to reassure members of Congress who are concerned about the Japanese nuclear plant accident” and has been conducting a “media blitz” as well as increasing political contributions through the political action committee of the industry arm Nuclear Energy Institute. (Theo Emery and Donovan Slack “Lobbyists step up efforts to reassure on nuclear energy” The Boston Globe (March 17 2011). Obviously, through these methods lobbyists can steer political power away from the citizens. If most citizens decided that nuclear power is not an appropriate energy; even then would we have any say in the matter? Some people have observed that corporations now own the legislators and that the rest is just for show. Some even say that Congress is beholden to those who fund their campaigns and no longer responsible to their constituents.
The damaging ramifications of nuclear power have been accepted even though they go against the human instinct towards the preservation of life because nuclear power allows businesses to profit while our life energy deteriorates . (See chapters 1, 3, 4 and 5). Nuclear power is profoundly damaging to human health and the “health” of the planet, and developing and using it requires a willful misunderstanding of the basis of life, as well as a prioritizing of corporate profits above all else.
Dr. John Gofman, medical doctor, nuclear chemist and co-discoverer of plutonium, was a government funded health researcher until he found conclusive data on radiation health damage that officials did not want publicized and his lab was closed down in the 1960’s.
Dr. Gofman tells us in his elegantly direct book Poisoned Power (Rodale Press 1979) that:
“The really important questions about nuclear power are ethical: The use of lies and deception by the nuclear industry in order to manipulate public opinion, in order to use people, even kill people, for the benefit of that industry; The acceptance of random murder and denial of the inalienable right to life as the cost of ‘progress’; The need to hold industry employees personally responsible for implementing hazardous and murderous policies, even if such policies are advocated by Congress and the President.”
Appeals to ethics are one thing, but an appeal to the bottom line is another. To quote Forbes magazine of February, 1986:
“The failure of the US Nuclear Power Program ranks as the largest managerial disaster in business history, a disaster on a monumental scale. The utility industry has already invested $125 billion in nuclear power, with an additional $140 billion to come before the decade is out, and only the blind, or the biased, can now think that most of the money has been well spent.”
In blatant disregard of these facts there is an ongoing effort to create a ‘nuclear renaissance’. As of fall 2010, 30 applications for new nuclear reactors are pending. At the same time an article in the New York Times (Matt Wald, Oct. 16, 2010) points out:
“Low natural gas prices, high new reactor construction costs and the on-going economic recession have dimmed the nuclear power industry’s hope for a “renaissance” as one of the lead new reactor proposals at Calvert Cliffs nuclear power plant on the Chesapeake Bay in Maryland may very likely be cancelled.”
There is another example of false optimism in the Olkiluoto nuclear reactor in Finland, which has been plagued with difficulties. Slated to cost $4 billion, it has now nearly doubled in price to $7.2 billion. It is four years behind schedule. The French engineering company Areva is suing its Finnish customer TVO and TVO is countersuing Areva. Finland’s nuclear regulatory agency found that welders had violated procedures: the cement used was not the correct grade and the piping did not conform to regulations.
Researchers from Beyond Nuclear (www.beyondnuclear.org) point out that the nuclear industry, despite federal backing, was a financial catastrophe even before the Three Mile Island (Pennsylvania, US 1979) and Chernobyl (Prypyat, Ukraine 1986) nuclear accidents, due to cost overruns, construction problems and delays. At the same time that the nuclear power industry and associated political supporters proclaim a revival, the financial failure of this industry is crystal clear.
Some key points illustrating this failure are made by the group Beyond Nuclear:
• A 2009 study by Dr. Mark Cooper of the Institute for Energy and the Environment at Vermont Law School, projected that 100 new reactors would cost between $1.9 to $4.4 trillion more than it would take to meet the equivalent electricity demand with efficient and renewable energy sources.
• Another 2009 report by Citigroup Global Markets Inc. entitled “New Nuclear – The Economics Say No,” identified that construction costs, power price and operational costs for new reactors are large and variable enough so as to be dubbed “The Three Corporate Killers.”
• All U.S. nuclear reactors, of the current operating generation, ordered after 1973 were canceled, largely due to excessively high costs and financial risks.
• During the 1970s and ’80s, the nuclear industry abandoned 121 reactors either before or during construction (with sunk costs in the tens of billions of dollars passed onto shareholders and electricity consumers) and those that were completed led to still larger increases in electricity rates.
• A total of $18.5 billion has been congressionally approved in loan guarantees for potential new reactors. However, President Obama has requested a total of $54.5 billion in loan guarantees for new plants and has already awarded the first $8 billion for two new reactors in Georgia. The Department of Energy has also now awarded $2 billion in federal loan guarantees to the French corporation, Areva, for a uranium enrichment facility in Idaho.
• In 2009, Moody’s viewed the nuclear industry’s “bet the farm” adventure as such a gamble that the financial service would take a “more negative view” of companies seeking to build new reactors. Moody’s added that federal loan guarantees “will only modestly mitigate increasing business and operating risk profiles.”
• By 2010, nine of the 26 new reactor units applied for by U.S. nuclear power companies since 2007, have been cancelled or indefinitely suspended including new construction applications submitted by the Missouri-based utility Ameren and Chicago-based Exelon Nuclear.
• More than $30 billion in rate payer funds have gone into the Nuclear Waste Fund even though no viable solution for the radioactive waste problem has yet been found. More than $10 billion of the Fund has already been wasted on the halted Yucca Mountain project.
Takoma Park, MD 20912
Note: As of Spring 2011 the Yucca Mountain repository for nuclear waste is cancelled. There is no long-term plan for storage.
Everything considered, let us encourage the emerging clean energy industries such as wind, geothermal, and solar. It is up to us. Grasp this moment!
A project of the Physicians for Social Responsibility addressing the economic and safety realities of the development of new nuclear reactors.
Beyond Nuclear aims to advocate and activate the public. A lot of up-to-date information.