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Obama Administration Moves Forward with Nuclear Industry Bailout

Posted Feb. 13, 2010 / Posted by: Ben Schreiber

For Immediate Release

Contact:
Ben Schreiber, Climate and Energy Tax Analyst for Friends of the Earth, 301-706-2356, bschreiber@foe.org
Tom Clements, Southeast Regional Nuclear Coordinator for Friends of the Earth, 803-240-7268, tomclements329@cs.com

WASHINGTON, D.C.—Media outlets are reporting that President Obama will announce the issuance of taxpayer-backed loan guarantees for nuclear reactors in Georgia next Tuesday.

Friends of the Earth Climate and Energy Tax Analyst Ben Schreiber criticized the loan guarantees, saying they amount to a preemptive bailout for a failing nuclear industry.

“The last thing Americans want is another government bailout for a failing industry, but that’s exactly what they’re getting from the Obama administration,” Schreiber said. “The Department of Energy is putting taxpayers on the hook for bailing out costly and dangerous nuclear reactor projects when the loans used to finance those projects default. This is great news for Wall Street but a bad deal for Main Street.”

This preemptive bailout reportedly will come in the form of a conditional federal loan guarantee for Southern Company’s Vogtle reactors in Burke, Georgia.

In the absence of such guarantees, the industry has been unable to secure financing from the private sector that it needs for construction of new reactors. Michael J. Wallace, the co-chief executive of UniStar Nuclear, told the New York Times in 2007 that “without loan guarantees we will not build nuclear power plants.” Unfortunately, the Congressional Research Service says such guarantees threaten to leave taxpayers with “potentially large losses.” The Congressional Budget Office estimates that the risk of default on a nuclear loan guarantee is “very high—well above 50 percent.”

“Even Wall Street traders say these reactors are too risky to invest in, and that tells you something,” said Schreiber. “There’s a 50 percent or greater risk of default. Why should taxpayers bear that risk?”

Not only is the risk of default high, but nuclear power remains unsafe and dirty, and the problem of what to do with radioactive waste piling up at reactors around the country has not been resolved, Schreiber said.

Nuclear industry problems were highlighted recently when the Nuclear Regulatory Commission halted review of the Westinghouse AP-1000 nuclear reactor design after determining that it was insufficient to deal with earthquakes, tornadoes, hurricanes and airplane crashes. And in January, officials disclosed that a nuclear reactor in Vermont had been leaking large amounts of radioactive tritium, raising concerns about groundwater contamination.

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