[Marxism] WHY IS UNCLE SAM SO COMMITTED TO REVIVING NUCLEAR POWER?

["Mike Friedman" <mikedf@xxxxxxxx>]

Rachel's Democracy & Health News #927, September 27, 2007

WHY IS UNCLE SAM SO COMMITTED TO REVIVING NUCLEAR POWER?

[Rachel's introduction: The long-advertised "nuclear renaissance" got
under way this week when NRG Energy applied for a federal license to build
two nuclear power plants in Texas, enticed by an offer of free money from
Uncle Sam. "The whole reason we started down this path was the benefits
written into the Energy Policy Act of 2005," says NRG's chief executive,
David Crame.]

By Peter Montague

The long-awaited and much-advertised "nuclear renaissance" actually got
under way this week. NRG Energy, a New Jersey company recently emerged
from bankruptcy, applied for a license to build two new nuclear power
plants at an existing facility in Bay City, Texas -- the first formal
application for such a license in 30 years.

NRG Energy has no experience building nuclear power plants but they are
confident the U.S. government will assure their success. "The whole reason
we started down this path was the benefits written into the [Energy Policy
Act] of 2005," NRG's chief executive, David Crame, told the Washington
Post. In other words, the whole reason NRG Energy wants to build nuclear
power plants is to get bundles of free money from Uncle Sam. Who could
blame them?

Other energy corporations are nuzzling up to the same trough. The federal
Nuclear Regulatory Commission (NRC) is expecting to receive applications
for an additional 29 nuclear power reactors at 20 sites. The NRC has
already hired more than 400 new staff to deal with the expected flood of
applications.

But the question remains, Can investors be fooled twice? Financially, the
nuclear power industry has never stood on its own two feet without a
crutch from Uncle Sam. Indeed, the nuclear power industry is entirely a
creature of the federal government; it was created out of whole cloth by
the feds in the 1950s. At that time, investors were enticed by offers of
free money -- multi-billion-dollar subsidies, rapid write-offs, special
limits on liability, and federal loan guarantees. Despite all this special
help, by the 1970s the industry was in a shambles. The British magazine,
the Economist, recently described it this way: "Billions were spent
bailing out lossmaking nuclear-power companies. The industry became a
byword for mendacity, secrecy and profligacy with taxpayers' money. For
two decades neither governments nor bankers wanted to touch it."

Now the U.S. federal government is once again doing everything in its
power to entice investors, trying to revive atomic power.

First, Uncle Sam is trying hard to remove the financial risk for
investors. The Energy Policy Act, which Congress approved in 2005,
provides four different kinds of subsidies for atomic power plants:

1. It grants $2 billion in insurance against regulatory delays and
lawsuits to the first six reactors that get licenses and begin
construction. Energy corporations borrow money to build plants and they
must start paying interest on those loans immediately, even though it take
years for a plant to start generating income. The longer the licensing and
construction delays, the greater the losses. Historically, lawsuits or
other interventions by citizens have extended the licensing timeline,
sometimes by years, costing energy corporations large sums. Now Uncle Sam
will provide free insurance against any such losses.

2. Second, the 2005 law extends the older Price-Anderson Act, which limits
a utility's liability to $10 billion in the event of a nuclear accident. A
serious accident at a nuclear plant near a major city could create
hundreds of billions of dollars in liabilities. Uncle Sam has agreed to
relieve investors of that very real fear.

3. The 2005 law provides a tax credit of 1.8 cents per kilowatt-hour for
the first 6,000 megawatts generated by new plants. Free money, plain and
simple.

4. Most important, the law offers guarantees loans to fund new atomic
power reactors and other power plants using "innovative" technology.
Investors need no longer fear bad loans.

One obvious conclusion from all this is that, more than 50 years into the
nuclear enterprise, atomic power still cannot attract investors and
compete successfully in a "free market." This industry still requires an
unprecedented level of subsidy and other government support just to
survive.

An energy corporation's motives for buying into this system are clear:
enormous subsidies improve the chance of substantial gain. However, the
federal government's reasons for wanting to revive a moribund nuclear
industry are not so clear. If the "free market" won't support the revival
of nuclear power, why would the federal government want to pay billions
upon billions of dollars to allay investor fears?

It certainly has little to do with global warming. At the time the 2005
energy bill was passed by a Republic-dominated Congress the official
position of the Republican leadership was that global warming was a hoax.
Even now when some Republicans have begun to acknowledge that perhaps we
may have a carbon dioxide problem, science tells us that nuclear power
plants are not the best way to reduce our carbon dioxide emissions.
They're not even close to being the best way. (Lazy journalists are in the
habit it repeating the industry mantra that nuclear power produces no
greenhouse gases. This is nonsense. Read on.)

Substantial carbon dioxide emissions accompany every stage of nuclear
power production, from the manufacture and eventual dismantling of nuclear
plants, to the mining, processing, transport, and enrichment of uranium
fuel, plus the eventual processing, transport, and burial of nuclear
wastes.

A careful life-cycle analysis by the Institute for Applied Ecology in
Darmstadt, Germany, concludes that a 1250 megaWatt nuclear power plant,
operating 6500 hours per year in Germany, produces greenhouse gases
equivalent to 250,000 metric tonnes of carbon dioxide per year. In other
(unspecified) countries besides Germany, the same power plant could
produce as much as 750,000 metric tonnes of carbon dioxide equivalents,
the Institute study shows. (See Figure 3, pg. 5)

The study concludes that, in the emission of global warming gases
(measured per kilowatt-hour of electricity made available), nuclear power
compares unfavorably to...

** conservation through efficiency improvements

** run-of-river hydro plants (which use river water power but require no
dams)

** offshore wind generators

** onshore wind generators

** power plants run by gas-fired internal combustion engines, especially
plants that use both the electricity and the heat generated by the engine

** power plants run by bio-fuel-powered internal combustion engines

Of eleven ways to generate electricity (or avoid the need to generate
electricity through efficiency and conservation) analyzed by the
Institute, four are worse than nuclear from the viewpoint of greenhouse
gas emissions, and six are better.

[For a great deal of additional solid information showing that nuclear
power is no answer to global warming, check in with the Nuclear
Information and Resource Service (NIRS)].

A study completed this summer by the Institute for Energy and
Environmental Research (IEER) in Takoma Park, Maryland concluded that it
is feasible, within 35 to 60 years, to evolve an energy system to power
the U.S. economy without the use of any nuclear power plants or any coal
plants. See the IEER study, Carbon-Free and Nuclear-Free; A Roadmap for
U.S. Energy Policy.

So the rationale for the U.S. government's Herculean efforts to revive a
decrepit nuclear power industry cannot be based on concern for global
warming or energy independence. The facts simply don't support such a
rationale.

Whatever its motivation, the U.S. federal government is doing everything
in its power to revive atomic power. In addition to removing most of the
financial risk for investors, Uncle Sam has removed other obstacles like
democratic participation in siting and licensing decisions.

Throughout the 1970s, energy corporations complained that getting a
license took too long. In response, the Nuclear Regulatory Commission
(NRC) has spent more than a decade "streamlining" the process for building
nuclear plants. Most of the "streamlining" consists of new ways to exclude
the public from information and decisions. For example, members of the
public used to be able to question witnesses during licensing hearings. No
more. There used to be two sets of hearings -- one for siting the plant,
and another for constructing the plant. No more. These two set of issues
have been rolled into a single license and a single hearing. The purpose
is to accommodate the needs of the nuclear industry, to help it survive.
As attorney Tony Roisman observed recently, "The nuclear industry has come
to the agency [the NRC] and said, 'If you don't make it easy for us to get
a license, we are not going to apply for one.'" So the agency is making it
easy.

Perhaps it is natural for NRC commissioners to justify a strong bias in
favor of keeping the nuclear industry alive even if safety and democracy
have to be compromised. After all, if there were no corporations willing
to build new nuclear power plants, soon there would be no need for a
Nuclear Regulatory Commission. So NRC commissioners know in their bones
that their first priority must be to keep the nuclear industry alive.
Every bureaucracy's first priority is self-perpetuation. Furthermore,
historically a position as an NRC commissioner can lead directly to a
high-paying job, often in the nuclear industry itself.

To grease the skids for a nuclear revival, the most important change the
NRC has made has been to creatively redefine the meaning of the word
"construction." This change was enacted in April, 2007, with lightning
speed -- six months from initial proposal to final adoption. By way of
comparison, it took the NRC eleven years to adopt regulations requiring
drug testing for nuclear plant operators.

"Construction" has traditionally included all the activities undertaken to
build a nuclear power plant, starting with site selection, evaluation,
testing and preparation, construction of peripheral facilities like
cooling towers, and so on. Even the earliest stages of siting are
crucially important with a facility as complex and dangerous as a nuclear
power plant.

In April of this year, the NRC officially redefined "construction" to
include only construction of the reactor itself -- excluding site
selection, evaluation, testing and preparation, construction of peripheral
facilities and all the rest. At the time, one senior environmental manager
inside NRC complained in an email that NRC's redefinition of
"construction" would exclude from NRC regulation "probably 90 percent of
the true environmental impacts of construction." Under the new rules, by
the time the NRC gets involved, a company will have invested perhaps a
hundred million dollars. Will NRC commissioners have the backbone to toss
that investment into the toilet if they eventually find something wrong
with the site? Or will they roll over for the industry and compromise
safety?

The lawyer who dreamed up the redefinition of "construction" is James
Curtiss, himself a former NRC commissioner who now sits on the board of
directors of the nuclear power giant, Constellation Energy Group. This
revolving door pathway from NRC to industry is well-worn.

One NRC commissioner who voted in April to change the definition of
construction is Jeffrey Merrifield. Before he left the NRC in July, Mr.
Merrifield's last assignment as an NRC commissioner was to chair an agency
task force on ways to accelerate licensing.

In April, while he was urging his colleagues at NRC to redefine
"construction," Mr. Merrifield was actively seeking a top management
position within the nuclear industry. In July he became senior vice
president for Shaw Group, a nuclear builder that has worked on 95% of all
existing U.S. nuclear plants. Mr. Merrifield's salary at NRC was $154,600.
Bloomberg reports that, "In Shaw Group's industry peer group, $705,409 is
the median compensation for a senior vice president."

No one in government or the industry seems the least bit embarrassed by
any of this. It's just the way it is. Indeed, Mr. Merrifield points out
that, while he was an NRC commissioner providing very substantial benefits
to the nuclear industry by his decisions, his concurrent search for a job
within the regulated industry was approved by the NRC's Office of General
Counsel and its Inspector General. From this, one might conclude that Mr.
Merrifield played by all the rules and did nothing wrong. Or one might
conclude that venality and corruption reach into the highest levels of the
NRC. Or one might conclude that after NRC commissioners have completed
their assignment inside government, everyone in the agency just naturally
feels they are entitled to a lifetime of lavish reward from the industry
on whose behalf they have labored so diligently.

As recently as this summer, Uncle Sam was still devising new ways to
revive nuclear power. In July the U.S. Senate allowed the nuclear industry
to add a one-sentence provision to the energy bill, which the Senate then
passed. The one sentence greatly expanded the loan guarantee provisions of
the Energy Policy Act of 2005. The 2005 Act had specified that Uncle Sam
could guarantee loans for new nuclear power plants up to a limit set each
year by Congress. In 2007 the limit was set at a paltry $4 billion. The
one-sentence revision adopted by the Senate removed all limits on loan
guarantees. The nuclear industry says it needs at least $50 billion in the
next two years. Michael J. Wallace, the co-chief executive of UniStar
Nuclear, a partnership seeking to build nuclear reactors, and executive
vice president of Constellation Energy, said: "Without loan guarantees we
will not build nuclear power plants."

The Senate and the House of Representatives are presently arm- wrestling
over the proposed expansion of loan guarantees. In June, the White House
budget office said that the Senate's proposed changes to the
loan-guarantee program could "significantly increase potential taxpayer
liability" and "eliminate any incentive for due diligence by private
lenders." On Wall Street this is known as a "moral hazard" -- conditions
under which waste, fraud and abuse can flourish.

All these subsidies to revive a dead duck run directly counter to free
market ideals and capitalism's credo of unfettered competition. So the
intriguing question remains, Why? Why wouldn't the nation go whole-hog for
alternative energy sources and avoid all the problems that accompany
nuclear power -- routine radioactive releases, the constant fear of a
serious accidents, the unsolved problem of radioactive waste that must be
stored somewhere reliably for a million years, and -- the greatest danger
of all -- the inevitable reality that anyone who can build a nuclear power
plant can build an atomic bomb if they set their minds to it. The recent
experience of Israel, India, North Korea and Pakistan in this regard is
completely convincing and undeniable.

So why is Uncle Sam hell-bent on reviving nuclear power? I don't have a
firm answer and can only speculate. Perhaps from the viewpoint of both
Washington and Wall Street, nuclear power is preferable to
renewable-energy alternatives because it is extremely capital-intensive
and the people who provide the capital get to control the machine and the
energy it provides. It provide a rationale for a large centralized
bureaucracy and tight military and police security to thwart terrorists.
This kind of central control can act as a powerful counterweight to
excessive democratic tendencies in any country that buys into nuclear
power. Particularly if they sign a contract with the U.S. or one of its
close allies for delivery of fuel and removal of radioactive wastes,
political control becomes a powerful (though unstated) part of the
bargain. If you are dependent on nuclear power for electricity and you are
dependent on us for reactor fuel, you are in our pocket. On the other
hand, solar, wind and other renewable energy alternatives lend themselves
to small- scale, independent installations under the control of local
communities or even households. Who knows where that could lead?

Then I think of the present situation in the Middle East. Saddam Hussein
started down the road to nuclear power until the Israelis bombed to
smithereens the Osirak nuclear plant he was building in 1981. That ended
his dalliance with nuclear power and nuclear weapons -- but that didn't
stop Don Rumsfeld and Dick Cheney from using Saddam's nuclear history as
an excuse to invade his country and string him up.

And now something similar is unfolding in Iran. Iran wants nuclear power
plants partly to show how sophisticated and capable it has become, and
partly to thumb its nose at the likes of Don Rumsfeld and Dick Cheney --
and perhaps to try to draw us into another war that would indelibly mark
us for the next hundred years as enemies of Islam, serving to further
unite much of the Arab world against us.

Is this kind of thinking totally nuts? I don't think so. Newsweek reported
in its October 1, 2007 issue that Dick Cheney has been mulling a plan to
convince the Israeli's to bomb the Iranian nuclear power plant at Natanz,
hoping to provoke the Iranians into striking back so that the U.S. would
then have an excuse to bomb Iran. I'm not making this up.

So clearly there are more important uses for nuclear power than just
making electricity. Arguably, nuclear reactors have become essential tools
of U.S. foreign policy -- being offered, withheld, and bargained over.
They have a special appeal around the world because they have become
double-edged symbols of modernity, like shiny toy guns that can be loaded
with real bullets. Because of this special characteristic, they have
enormous appeal and can provide enormous bargaining power. Witness North
Korea. And, as we have seen, nuclear reactors can provide excuses to
invade and bomb when no other excuses exist.

So perhaps Uncle Sam considers it worth investing a few hundred billion
dollars of taxpayer funds to keep this all-purpose Swiss army knife of
U.S. foreign policy available in our back pocket. In the past five years,
we've already devoted $800 billion to splendid little wars in Afghanistan
and Iraq, at least partly to secure U.S. oil supplies. Uncle Sam's
desperate attempts to revive nuclear power can perhaps best be understood
as part of that ongoing effort at oil recovery.

Meanwhile, investors should think twice before buying into the "nuclear
renaissance" because there's another "renaissance" under way as well: A
powerful anti-nuclear movement is growing again and they will toss your
billions into the toilet without hesitation. Indeed, with glee.




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