The federal government’s proposed tax law will subsidize nuclear power to reduce carbon emissions. This subsidy would apply to 95% of the U.S.’s operating reactors. The legislation is written in obscure tax-law jargon, but appears to give reactors a 30% tax credit for the first decade of operation, then phase out to 26% and then a permanent 10% by 2026. The subsidy will cost $22-26 billion over the first decade.
Factors for subsidizing nuclear power
A recent report by the Union of Concerned Scientists calls for government subsidies for unprofitable nuclear plants. This report has been welcomed by advocates of nuclear power, who interpret it as a “yes” to the technology. But the report contains many important insights.
The costs are a significant concern for opponents of nuclear power. Although nuclear plants are not expensive to operate, the cost of running them is high, and utilities are experiencing a severe financial setback. In addition, these reactors cannot be deployed quickly and must be bottled up. Ultimately, we need to find a solution to solve climate change while remaining economically viable. Currently, nuclear power costs more than coal and natural gas.
Impacts of subsidizing nuclear power on fossil fuels
The Union of Concerned Scientists (UCS) report on nuclear power calls for government subsidies to help unprofitable nuclear power plants become economically viable. Nuclear power advocates widely welcome the news as a “yes” vote for the technology. No single government can solve climate change alone, and we must be informed about our use of fossil fuels.
The nuclear power industry acknowledges the problems with fossil fuels and argues that nuclear energy is a carbon-free source. This is a false argument because the use of atomic energy is not climate-solving. While nuclear does produce lower-carbon energy than any other source, it has a high-risk factor. Further, nuclear power is expensive, and the risk of contamination is high. But the long-term consequences of atomic power subsidies are a no-win situation for the planet.
Cost of operating nuclear power plants
The costs of operating nuclear power plants are generally higher than those of fossil fuel plants, but this is partly due to the complexity of a nuclear plant and the regulatory issues that arise during its operation. The cost of decommissioning nuclear plants is also included in the fee that electrical utilities charge for generating electricity. For example, in the United States, nuclear-generated electricity is assessed at $0.001 per kilowatt-hour to fund a permanent repository for high-level nuclear waste, yielding $750 million per year to the Nuclear Waste Fund.
In early 2017, the World Nuclear Association published a Nuclear Power Economics and Project Structuring report. It notes that at least 60% of the total cost of a nuclear power plant is the capital expense. Interest charges and the construction period are also important factors when determining the overall cost of capital. According to the International Energy Agency (IEA), some countries have reached the peak of capital costs for nuclear power. Other countries have kept prices low or contained them by implementing continuous development programs.
Impact of subsidizing nuclear power on carbon reduction
The impact of subsidizing nuclear power on carbon reduction is complicated because it does not address the question of how much carbon is emitted. In 2018, 98 reactors in 60 commercial nuclear power plants generated 21% of U.S. electricity, which has remained constant since 1990. While coal and gas have declined in recent years, nuclear power has continued to grow. In addition, eight atomic plants with a total capacity of 11,800 MW are receiving operating subsidies intended to compensate the nuclear power industry for its lack of carbon emissions. These subsidies are designed to preserve jobs and reduce the number of carbon emissions produced by nuclear plants while helping cut the cost of electricity.
While some states have tried to stop nuclear plant closures, others have remained committed to the practice. In Illinois and New York, subsidies for nuclear plants are nearly equal to or higher than the cost of building a replacement plant. Moreover, nuclear plants provide a variety of jobs and economic benefits to local communities, so closing them would have negative economic consequences for these communities. Additionally, subsidies for nuclear power plants come from electric ratepayers, and they block the development of more efficient, climate-friendly alternatives.