US removes restrictions on nuclear financing

27 July 2020

The US International Development Finance Corporation (DFC) has announced a change to its Environmental and Social Policy and Procedures (ESPP) to enable support for nuclear power projects and align the definition of renewable energy with the US Energy Information Administration's (EIA’s) definition.

“Today marks a significant step forward in US efforts to support the energy needs of allies around the world. The change also positions DFC to accelerate growth in developing economies with limited energy resources,” said DFC CEO Adam Boehler.

“We look forward to exploring opportunities to leverage this new capability to deliver affordable, reliable, and emission-free energy where it is needed most. At the same time, these efforts will also advance innovative technologies that adhere to the United States’ high safety, security, and non-proliferation standards.”

The move was welcomed by Secretary of Energy Dan Brouillette. “Over the past three years, Department of Energy officials have met with government and private industry around the world who are eager to import American civil nuclear technology, yet funding challenges prevented them from doing so as a result of the Overseas Private Investment Corporation’s legacy ban on financing of nuclear projects. Reversing this ban is a common-sense action that will increase global energy security and help other countries meet their own emissions reduction goals while providing their citizens with reliable baseload generation.”

The announcement follows a voluntary 30-day public comment period on the proposed change and broad external engagement with stakeholders representing Congress, peer US government agencies, NGOs, and the private sector. DFC received more than 800 responses during the public comment period, with 98% in support of the proposed change. Based on feedback, DFC will prioritise support of advanced nuclear technology in emerging and frontier markets that adhere to the highest safety standards.

DFC said the change removes a legacy prohibition on support of nuclear power projects. “This update recognises the vast energy needs of developing countries as well as new and advanced technologies such as small modular reactors and microreactors that could be particularly impactful in these markets.” It will also “offer an alternative to the financing of authoritarian regimes while advancing US nonproliferation safeguards and supporting US nuclear competitiveness”.

The change implements recommendation made in the report issued by the Nuclear Fuel Working Group (NFWG) in April. DFC is the US development bank, which “partners with the private sector to finance solutions to the most critical challenges facing the developing world today”.

In 2010, DFC’s predecessor, the Overseas Private Investment Corporation (OPIC), changed its Environmental and Social Policy Statement to prohibit OPIC participation in projects that included the “production of or trade in radioactive materials, including nuclear reactors and components thereof”. This restriction, along with the entire OPIC ESPS was transferred to DFC.

In 2019, the NFWG was set up charged with developing governmental actions that can be taken to “address the concerns identified by the Secretary [of Commerce] regarding domestic uranium production and to ensure a comprehensive review of the entire domestic nuclear supply chain.”

The NFWG’s report concluded that “America has lost its competitive global position as the world leader in nuclear energy to state-owned enterprises, notably Russia and China, with other competitor nations also aggressively moving to surpass the United States.”

It report contained several recommendations aimed at restoring US nuclear leadership, and specifically called upon DFC to “fix legacy policies that disallow support for nuclear projects”, and ensure that US financing institutions “support the civil nuclear industry to compete against foreign state financing”.

DFC said it “will take a thoughtful, rigorous, and sound approach to implementing the new policy”. This will include the careful consideration of best practices within the government related to nuclear projects, “including EXIM’s Nuclear Financing Policy, Guidelines, and Standards, as well as international best practices related to the financing of nuclear projects”. DFC said the change will support US nuclear technology leadership, “including new and advanced reactors that can be smaller, safer, and scalable to meet the needs of developing countries as they pursue access to affordable, reliable, and emission free energy to meet growing demand and environmental objectives”.

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