SAN FRANCISCO, Oct 1 (OneWorld) - A leading environmental group launched an Internet ad campaign this week comparing proposed loan guarantees for the nuclear power industry to the widely unpopular $700 billion Wall Street bailout plan.
"First the government bails out the banks, then all of Wall Street, at a cost of over $1 trillion," a gravelly voiced announcer says in the ad, which Friends of the Earth posted Monday on YouTube. "So why would taxpayers ever risk billions on nuclear power plants? The default rate on the loans is over 50 percent and cost over-runs are astronomical."
The ad calls the loan guarantees a "pre-emptive bailout" of the nuclear industry, which, Friends of the Earth argues, would not be able to sustain itself without government support. Last December, Congress approved $18 billion in federal loan guarantees for the construction of new nuclear power plants, and more are possible next year.
On the campaign trail both Barack Obama and John McCain have spoken out in favor of making it easier to build more nuclear plants. The two candidates have struck very different tones, however, with Obama saying the United States needs to find "safer ways to use nuclear power and store nuclear waste," while McCain champions a plan to build 45 new nuclear plants by 2030 as a way of reducing dependence on foreign sources of oil and cutting greenhouse gases that contribute to global warming.
Friends of the Earth's Nick Berning told OneWorld the organization launched its ad campaign to dampen enthusiasm for new nuclear power plant construction regardless of who is elected president.
"No nuclear plants have been built in over 20 years," Berning said. "The reason they stopped building them in the late 1970s was the economics stopped working. Wall Street said we're not going to finance this anymore. Now we're learning just how risky Wall Street is willing to be. Do we really want to be more risky than Wall Street?"
To buoy their point, Friends of the Earth cites two Congressional Budget Office (CBO) reports that reference financial difficulties the nuclear industry faces if it is not backed up by federal loan guarantees.
The first report, from March 2007, concluded that because "Wall Street continues to view new commercial reactors as financially risky," the federal government would need to "bear most of the risk, facing potentially large losses if borrowers defaulted on reactor projects that could not be salvaged."
A separate, 2003 Congressional Budget Office study put the risk of default on federally guaranteed loans "to be very high -- well above 50 percent."
"The key factor accounting for this risk is that we expect that the plant would be uneconomic to operate because of its high construction costs, relative to other electricity generation sources," CBO said.
Nuclear Energy Institute spokesperson Steve Kerekes counters that while environmental groups decry the construction of new nuclear plants on financial grounds they are themselves seeking taxpayer subsidies for "the energy sources they like" -- namely wind, solar, geothermal, and other sources of renewable energy.
Those renewable sources of energy received $6 billion in tax-credit subsidies in the most recent energy bill. Unlike loan guarantees for nuclear power, which could be financially neutral if all the money were paid back, each dollar given in federal tax credits for renewable energy is money lost to the federal treasury.
"To talk about subsidies for one and ignore the other, it's just silly," Kerekes said.
But environmentalists argue that there is no comparing state subsidies for nuclear power with those for renewable energies like wind and solar. Generating nuclear power requires the environmentally destructive process of mining for uranium and produces radioactive waste, which the United States has not yet found a way to safely store.
In addition, Nuclear Regulatory Commission records provided by the Union of Concerned Scientists show many of the United States' existing nuclear power plants have leaked radioactive waste into nearby groundwater, store unsafe amounts of spent fuel above ground, or fail to meet other safety standards set by the government agency charged with guaranteeing the safety of nuclear energy projects.
"The safest, cheapest way for us to reduce greenhouse gasses and reduce our dependence on foreign oil is to increase our energy efficiency efforts," said Friends of the Earth's Berning. "It's just that there's not the same kind of lobby in Washington to encourage people to change out their refrigerator or other kinds of appliances to lower demand. These are the kinds of things we should be doing before we make more risky loans to the nuclear industry."
According to the Web site Opensecrets.org, the Nuclear Energy Insitute has spent over $2.5 million lobbying Congress over the last two years.