I'm a huge National Review Online fan and donor. Unfortunately they goof once in a while, and they did it in spades about nuclear power a couple of days ago.

The authors (a libertarian and a Naderophile) complain about the govt's involvement with nuclear power and alleged subsidies via waste processing and others. Giving them credit for fundamental integrity, I must assume that they didn't do much research into the history of the industry.

What is a subsidy? We can play word games, but in essence I would say the kind that ticks people off is when an industry petitions for special treatment and gets it. IMO that is not the case with the nuclear power industry. OTOH, the government wanted "atoms for peace", and to get the most done for its tax dollars, they offered inducements to reluctant electric utilities to get them to put up their capital to build nuclear power plants. I wrote about some of the relevant issues in much more detail about a year ago here and here. IMO it makes a big difference if the subsidy was extracted by political clout, or if it was initiated by the govt to carry out policy.

Some parts of the post were particularly asinine:

The federal government has always maintained a unique public-private partnership with the nuclear industry, wherein the costs of nuclear power are shared by the public, but the profits are enjoyed privately.

The government has always insisted on receiving radwaste to control nuclear proliferation, and it already has huge radwaste processing obligations stemming from medical, industrial and defense uses of nuclear material. It might be more accurate to say that the nuclear utilities did the govt a favor by providing the capital to build nuclear power plants, allowing the govt to achieve strategic objectives without having to raise the money itself. And there's nothing wrong with getting a return on the investment - to suggest otherwise is childish.

Despite extensive and continuous government assistance — including more than $66 billion in research and development alone — no nuclear-power plant has been ordered and built in the U.S. since 1973. After building more than 100 plants between 1954-1973, orders have been cancelled over the last 30 years, and capacity in the industry has stagnated since 1989.

The decline of nuclear power is a result of several factors: The Three Mile Island disaster heightened public-safety fears and citizen opposition to the siting of plants in their neighborhoods grew.

To read that, you'd think all of this happened organically without intervention of years of propaganda and legal skulduggery by what can only be called professional liars such as Greenpeace, the Sierra Club, and the various Nader organizations. Incidentally, one of the authors, Mr. Nayak, is from a Nader organization (US Public Interest Research Group). And considering some of what was left out of their presentation, Mr. Nayak is following the Nader playbook.

What did they leave out? For starters, the regulatory environment became grossly unstable, and existing plants suddenly had to be refitted with new safety measures. Obviously such things affected their financial viability, or would have had such costs been anticipated in advance. But Mr. Nayak apparently doesn't consider the concept of "sunk costs" - given a choice between paying the additional capital costs to be permitted to operate, and suffering a double whammy of losing a major power source and having to write off a major asset, it was clear that the old plants had to be refitted and kept in operation.

And note the extreme hyperbole. The Three Mile Island disaster? Compare the death toll from TMI to that of babies and small adults being killed by airbags in their cars (and while you're at it, note which one Nader supports and which one he opposes). If TMI was a disaster, then what happened at the World Trade Center?

But investors ultimately rejected nuclear power because it simply does not make economic sense. In truth, nuclear power has never made economic sense, and exists purely as a creature of government.

I'm glad to hear that economic sense is a criterion for govt programs. Maybe next these gentlemen will look at the abominations known as Social Security, Medicare and other govt liabilities. And recipients of these programs should shudder to see how these gentlemen are proposing to renege on promises made to nuclear power operators without which the plants would never have been built in the first place. And they can wonder if they aren't next.

Not that I'm conceding anything about economic sense. Nuclear power opponents make such claims by vastly inflating the costs of the allegedly intractable waste problem and the govt's insistence on maintaining custody of the fuel. The former is a strong function of threshold limits that we can set over a wide range, and it appears that traditional models of the biological impact of radiation have overstated the effects.

But don't blame the utilities for those costs. Their main mistake was trusting the govt to maintain a stable regulatory environment and keep their other promises.

In fact, a recent report by Scully Capital Services, an investment-banking and financial-services firm, commissioned by the Department of Energy (DOE), highlighted three federal subsidies and regulations — termed "show stoppers" — without which the industry would grind to a halt. These "show stoppers" include the Price Anderson Act, which limits the liability of the nuclear industry in case of a serious nuclear accident — leaving taxpayers on the hook for potentially hundreds of billions in compensation costs; federal disposal of nuclear waste in a permanent repository, which will save the industry billions at taxpayer expense; and licensing regulations, wherein the report recommends that the Nuclear Regulatory Commission further grease the skids of its quasi-judicial-licensing process to preclude successful interventions from opponents.

I discuss the Price-Anderson Act and waste issues in the links above - the short answer is that private utilities would not have built nuclear power plants without these conditions, so you have no one but the govt to blame for the problem. As for the permanent repository, the govt was to have delivered on that some time back and hasn't, but somehow it keeps collecting the money set aside by nuclear utilities to pay for their disposal.

As for the siting issues, power plants are very expensive capital investments with long lead times. It's not so strange to think that a utility would want to know up front it would be permitted to operate its billion-dollar range investments once it had built them according to the rules. Imagine if you had to buy your housing first before you could know whether you or anyone else could occupy it legally or not.

But even these long-standing subsidies are not enough to convince investors, who for decades have treated nuclear power as the pariah of the energy industry. Nuclear-generated electricity remains about twice as expensive as coal- or gas-fired electricity.

How do they know that? - no plants have been built recently in the US. Cost figures for the most recently constructed plants were inflated by factors that have nothing to do with nuclear power technology per se, and that's assuming that the technology stays stagnant. But in fact there are promising new technologies which would have entirely new cost structures.
Here is something else I wrote about the topic last summer.

Although the marginal costs of nuclear are lower, the capital costs are much higher.

Once you've built the place, the marginal costs *are* the costs. Thus we see operators running their nukes at capacity as much as possible and filling in the additional demand with other sources.

And again, most of the vast increases in capital costs occurred only because of the regulatory uncertainty and other unique conditions (inexperienced utilities and contractors building their first plant, for instance). And there's no reason why that regulatory uncertainty won't ever strike alternatives such as coal-fired plants (Kyoto, anyone?). The result is that no one is building much power capacity at all lately, and the day will come when we pay dearly for this.

And we have groups fearing nuclear proliferation. Fine, let's beat some swords into plowshares - burn up the bomb material in nuclear reactors once and for all. Ultimately the only way to overcome existing problems with nuclear technology is more nuclear technology, and that's why the govt needs to spend the money on R&D for nuclear technology.

I have left out a lot of detail above that may be found in the several links provided. I'll conclude by noting that the version of nuclear power technology currently in operation at US commercial nuclear power plants can stand plenty of improvement, and the govt's way of creating the industry might be questionable. But the technology can be and has been improved in many ways since then. And the real issue is not "subsidies", but whether or not industries of any type dare to trust the govt again.