TRIPLING LOAN GUARANTEES FOR NUCLEAR POWER WOULD SHIFT UNACCEPTABLE RISKS FROM INDUSTRY TO TAXPAYERS, SCIENCE GROUP SAYS

WASHINGTON (January 29, 2010) - The Union of Concerned Scientists (UCS) today leveled criticism at an expected Obama administration announcement that it will significantly boost federal loan guarantees for new nuclear power plants.

The Wall Street Journal reported today that the Obama administration plans to triple federal loan guarantees for new nuclear reactors, from $18.5 billion to $54 billion. Ellen Vancko, nuclear energy and climate change project manager at UCS, said "increasing loan guarantees for nuclear power beyond what Congress already has authorized would shift unacceptable risks from the nuclear industry to U.S. taxpayers. This is a prime example of pork barrel politics on behalf of special interests."

Both the Congressional Budget Office (2003) and the Government Accountability Office (2008) have estimated that the risk of default for new nuclear reactors could be as high as 50 percent based on the industry's history of cost overruns and plant cancellations. In 2007, six of Wall Street's largest investment banks told the Department of Energy that they were unwilling to accept any financial risk for nuclear power loans: "We believe these risks, combined with the higher capital costs and longer construction schedules of nuclear plants as compared to other generation facilities, will make lenders unwilling at present to extend long-term credit." Pointing to past experience, the banks stated that "lenders and investors in the fixed income markets will be acutely concerned about a number of political, regulatory and litigation-related risks that are unique to nuclear power...." Last June, Moody's Investment Service called investing in new nuclear power a "bet the farm" risk.

"At a time when our country is struggling economically, it is a mistake to force U.S. taxpayers to assume financial risks that the private sector will not by guaranteeing tens of billions of dollars in risky loans to an industry with a track record of cancellations and defaults," said Vancko. "While it may be appropriate to provide loan guarantees to support first-mover reactors, any decision to triple federal loan guarantees could divert critical financial resources from more cost-effective clean energy projects that would come on line much more quickly and put Americans back to work right now."

A March 2009 UCS report, "Nuclear Loan Guarantees: Another Taxpayer Bailout Ahead?," recounts the nuclear industry's disastrous financial history and documents the hundreds of billions of dollars taxpayers and ratepayers already have spent to keep the industry afloat. Another 2009 UCS report, "Climate 2030: A National Blueprint for a Clean Energy Economy," found that the United States does not need to significantly expand its reliance on nuclear to make dramatic cuts in power plant carbon emissions through 2030, and that new nuclear reactors would be uneconomical.

"A forced nuclear resurgence underwritten by taxpayers could make efforts to cut the nation's global warming emissions much more costly, given the rapidly rising cost projections for new nuclear reactors," said Vancko. "There are faster, safer and more cost-effective ways to meet our climate goals."
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The Union of Concerned Scientists is the leading U.S. science-based nonprofit organization working for a healthy environment and a safer world. Founded in 1969, UCS is headquartered in Cambridge, Massachusetts, and also has offices in Berkeley, Chicago and Washington, D.C. For more information, go to www.ucsusa.org.