US may consider nuclear subsidies

11 May 2021

The White House has indicated privately to lawmakers and stakeholders that it supports taxpayer subsidies to keep nuclear facilities from closing, Reuters reported on 5 May, citing “three sources familiar with the discussions”. New subsidies, in the form of "production tax credits," could be included in President Joe Biden's multi-trillion-dollar legislative effort to invest in infrastructure and jobs, the sources said. Wind and solar power already benefit from tax rebates based on the levels of energy they generate.

Biden has set targets for the US power industry to be emissions free by 2035 and is asking Congress to extend or create tax credits aimed at wind, solar and battery manufacturing as part of his $2,300 billion American Jobs Plan. Although the USA has more than 90 nuclear reactors, which are its main source of emissions-free power generation, a number of ageing plants have closed in face of increased safety costs and competition from natural gas, wind and solar.

Entergy’s Indian Point NPP New York state closed on 30 April, while Exelon has said it might have to close four reactors at two plants by November, unless subsidies are available.

"There's a deepening understanding within the administration that it needs nuclear to meet its zero-emission goals," said a source engaged in the talks and familiar with the White House thinking, Reuters reported adding that the White House had no comment. Two of the Reuters sources said credits also have the support of Democratic Senator Joe Manchin from West Virginia, who holds significant power in the evenly divided Senate. However, Manchin's office also failed to comment.

Preliminary plans for a federal nuclear power production tax credit in deregulated markets would prevent companies from applying in states already offering similar assistance, one of the sources said. Companies also would have to prove financial hardship.

Biden has pledged to boost spending for research on a new generation of advanced nuclear plants but has yet to devise a blueprint to save existing reactors. However, the Biden administration has also supported a Clean Energy Standard (CES) in the infrastructure plan, a mechanism which could support existing nuclear plants. The CES could co-exist with production tax credits, which would set gradually more ambitious targets for the power industry to cut emissions until they hit net-zero.

“We’re racing to cut emissions, create jobs, and shore up local economies -- allowing nuclear plants to close sets us back on all three fronts," said Ryan Fitzpatrick, director of the climate and energy programme at Washington-based moderate think tank, Third Way.

Department of Energy (DOE) Secretary Jennifer Granholm also indicated support for wind and solar energy and nuclear subsidies as likely to give the biggest “bang for your buck” as part of the Biden administration’s bid to decarbonize the electric sector during a House Appropriations Committee hearing on 6 May. “We’re not going to be able to achieve our climate goals if our nuclear power plants shut down, we have to find ways to keep them operating,” she said.

She said that “in terms of the biggest bang for your buck, I think research will demonstrate that it still is in solar and wind”, adding

“Our focus will be both on doing the research that’s necessary but also now on deploying.” On nuclear energy she noted: “This question of some direct subsidy or some way to support these plants to stay open, that’s still an open question, but I know that this administration would be eager to work with Congress on it.” 

Asked about alternatives to the mothballed Yucca Mountain nuclear waste repository in Nevada, Granholm said that the department was “moving forward” to developing an approach to find a consent-based interim storage facility. “The possible steps...include requests for information, engaging with stakeholders and tribal governments, establishing a funding mechanism for interested communities, organisations, maybe tribal governments to explore the concept,” she said, adding that the department hopes to announce next steps “in the coming months.”

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