nuclear subsidies

One of the challenges (albeit a fun one) of any "top ten" list is trying to distill the most important items down from a much bigger list of contenders.  It's not just the fiscal cost that matters.  The degree of environmental damage, the dumping of risks onto taxpayers rather than investors, or the degree to which particular policies mute investments into better long-term energy solutions all come into play. 

This is my second trip through the energy subsidy top ten -- both times at the request of Boston University Professor Cutler Cleveland.  Cutler and his co-editor Christopher Morris developed an entire volume of energy-related top ten lists in their recent book, Handbook of Energy Volume II: Chronologies, Top Ten Lists, and Word Clouds, published by Elsevier this past December.

My contribution, Ten Most Distortionary Energy Subsidies - Update, highlights the subsidies I think top the list in terms of significance and market distortions.  You can also read the as-published version (shorter and without citations) and the original list from 2007.  Thanks are due to Elsevier for permission to repost.

Scale and impact of top ten subsidies seems to be worsening rather than improving

The Handbook of Energy was a big project, and big projects often have a lag between when an article is submitted and when it is ultimately published.  It's been roughly two years since I completed this list for Elsevier, so I thought it useful to review the policies to see if there have been any major changes.  Where there have been, the shifts have unfortunately almost always been in the wrong direction -- with larger amounts of support than two years ago.

1)  Absence of charges on greenhouse gas emissions.  Progress on constraining carbon emissions remains worryingly slow, and the situation seems to have worsened in the past couple of years.  The EU's Emissions Trading System, previously the most important in the world, largely collapsed in 2013 - though attempts to restore functioning continue.  Weaker controls on emissions result in economic gains for carbon-intensive activities and a slower transition to lower-carbon alternatives.

2)  Oil security.  The defense of oil choke points has long been a key mission for the US military.  Though the site-specific risks ebb and flow with geopolitical events, the basic situation regarding defense of oil shipping lanes is largely unchanged.  Fracked oil may have a long-term potential to broaden fuel supply diversity, but this remains some years off.  Further, the recent instability in Ukraine illustrates that supply security is quite important in natural gas markets as well.

3)  Liability caps on nuclear fuel cycle facilities.  Efforts to finalize an international agreement on minimum levels of liability coverage for nuclear accidents continue unrealized.  Even if proposed levels are adopted, the coverage would remain far below appropriate levels. The Fukushima accident helped put to rest the idea that somehow these liability caps aren't subsidies, a frequent industry talking point.  Taxpayer liability for the Fukushima accident in Japan was estimated at about $250 billion two years ago, more than 3 c/kWh of net nuclear power generated since the inception of Japan's civilian nuclear power program.  Current estimates are twice that level, at a staggering $500 billion, with resulting liability subsidies per nuclear kWh rising sharply as well.

4)  Purchase mandates, tax credits and exemptions for ethanol and biodiesel.  Some of the earlier tax breaks and gasoline tax reductions have gradually faded as pre-set expiration dates hit and the policies were are not renewed.  This resulted in a small reduction in subsidy levels according to the International Energy Agency, from about $22 billion in 2011 to $19 billion in 2013.  Mandates remain in effect in key US and EU markets, however, contributing to loss of habitat and biodiversity around the world.  There does seem to be some progress in ensuring EU policies are not accelerating environmental destruction, though more time is needed to see how effective these will be.

5) Cross-subsidies in electricity markets.  Perhaps the most significant development with respect to power cross-subsidies has been a number of US utility districts that have begun levying surcharges on providers of distributed renewable generation for "grid services."  Utilities argue that straight net metering enables some distributed power owners to avoid contributing to the fixed costs of the grid.   In contrast, distributed power generators argue that these charges are being established arbitrarily as a market impediment by utilities that also own a good deal of the generation the distributed resources will outcompete.  Resolution seems a long way off on this issue, and many of the other cross-subsidies remain entirely unaddressed.

6)  Domestic subsidies to energy consumption.  Efforts to reform consumer subsidies continue to percolate in a number of countries.  Globally, however, consumer subsidies to fossil fuels have continued to rise -- from $409 billion in 2010 to $544 billion in 2012.1

7)  Goverment absorption of disposal risks for high-level nuclear waste.  No changes here.  An operating permanent repository still doesn't exist anywhere in the world, the US Yucca Mountain repository remains closed, and risks and responsibilities for this stage of production continue to be shifted to taxpayers.

8)  Tax exemptions for petroleum used in international air and water transport. Efforts to at least include aviation emissions from international flights under the EU emissions trading system failed in 2012.  Past estimates of these subsidies pegged the value as high as $45 billion; more recent work by the World Bank has even larger figures -- up to $100 billion annually.  There is much that could be gained from reforms in this segment of the transport sector.

9)  Free use of cooling water in the thermal power sector.  Droughts continue in many parts of the world, and the issue of water demands from the energy sector have received increasing attention.  However, elevated attention does not seem to have translated into pricing:  I'm not aware of any progress on the issue of making thermal power plants pay for their water usage.

10)  Feed-in tariffs and purchase mandates for renewable energy.  Subsidy levels to renewable power continued to rise sharply, from the $44 billion in 2010 noted in the Top Ten update to an estimated $82 billion in 2012.  Problematic energy sources such as landfill gas, waste-to-energy plants, and some types of biomass electricity do not appear to face exclusion from eligilibility criteria, as I recommend.  However, as subsidy costs have risen, many countries have begun to cut back on their allowed payments to wind and photovoltaic resources.  Further, key subsidies (such as the production tax credit in the US) are time limited, and older generation will start aging out of the tax breaks in larger numbers.  These two factors can be expected to mute the continued growth of subsidy costs going forward.

Disagree strongly with any policy I've included?  Think I've missed a doozy?  Please let me know by e-mail to comments@earthtrack.net.

• 12012 data from the IEA World Energy Outlook, 2013, p. 25.

In one of their recent blog posts, the Nuclear Information Resource Service (NIRS) called attention to the apparently amazing efficiency of Chinese new build nuclear reactors.  Two new units are being built at a stated cost of roughly $2.5 billion each, significantly less expensive than what it would cost for similar projects in other countries (access the NIRS posting here).  Plant Vogtle in the US State of Georgia, for example, will cost well more than $8 billion for each of two planned new reactors.  Olkiluoto-3 in Finland is now estimated to cost nearly $12 billion (8.5 billion euros).

The Western and Chinese cost figures are literally worlds apart.  Yet the core question with most heavy industry in China is what drives this difference.  What proportion of the cost differential is due to real competitive advantages, and what proportion is the result of simple, old fashioned industrial subsdization policies?

The US nuclear industry likes to point to Asian costs as the "real" economics of nuclear builds.  They frequently blame nuclear opponents for their economic troubles, arguing that irrational opposition drives up costs by elevating safety standards and plant delays unnecessarily.  If only they could just get on with their work, the argument goes, new reactors would be very inexpensive even in the United States.

Such arguments are actually unhelpful, even to the industry itself.  They deflect attention from real structural problems in the way they operate and manage risk, and the sooner they fix those problems, the sooner they have a chance of a competitive market offering without the coddling hand of government. 

The reality is that nuclear has a number of characteristics that make it difficult to build cheaply, regardless of where the plants are built.  The facilities are capital intensive and complex, a combination that often triggers significant construction delays and overruns well beyond the nuclear sector.  Think of big tunnel, highway, and building projects. Financing costs are high not only because the project is big, but also because investors worry a great deal about overruns, and therefore require more compensation for risk.  Interest compounds mightily because large investments take years to begin producing revenues even in the best of times.  This makes the levelized costs of power sensitive to financing costs and delays, as interest on a large investment base continues to compound during delays.   It also means that taxpayers and investors alike are right to favor smaller, quicker-to-build sources of energy or energy efficiency to very large nuclear plants.

Subsidies in the west: cheap money, shifting risks to ratepayers and taxpayers

In Western countries, the industry has focused on trying to get subsidized debt, both through using tax-exempt bonds and through government guarantees on borrowing.  The government loan guarantees subsidize nuclear projects in two ways:  by allowing higher risk projects to borrow at a lower interest rate (the "risk-free" Treasury rate rather than a rate reflective of the project itself); and by enabling them to use much more debt (which is less expensive than equity) than would be possible in a market transaction.  Purchase guarantees have also been popular in the UK.

The states currently developing new reactors have also employed favorable Construction Work in Progess surcharges that "avoid" interest charges altogether by forcing ratepayers to fund the interest costs upfront.  This works, at least for the utilities.  They even get to keep the money if the plant is never completed.  It's not such a great deal for ratepayers though, as can be seen in a $1.5 billion bill faced by customers in the cancellation of Duke Power's planned Levy reactors in Florida.

Chinese approach:  direct government ownership, very little transparency

Tapping into cheap sources of capital and CWIP has been effective in the US projects that continue to move forward.  But nuclear projects do still face market risk and scrutiny from bond underwriters.  Government subsidy programs are at least moderately visible, and subject to public challenge.  These factors help explain why the vast majority of US nuclear projects announced 7-10 years ago have been cancelled. 

In China, the state is directly involved with key parts of the supply chain and the scale of their interventions is murky at best.  While the World Nuclear Association is often a mere cheerleading squad for the expansion of nuclear power, they do have a good summary of the structure of the Chinese industry.  Many, many of the entities have substantial government involvement, sometimes with ownership shares by both national and provincial interests.  It is likely that somewhere in China, somebody knows how much money has been fronted by the government to each part of their nuclear infrastructure.  One should not expect that analysis ever to see the light of day, however.

Suffice it to say that if the Chinese government views nuclear power as a strategic industry (as it does), the costs they report on any part of the nuclear market need to be taken with a grain of salt.  How much capital is the government putting into not only the reactor projects directly, but into key components in the nuclear fuel chain and related infrastructure?  Are those funds entirely free or at terms more favorable than would be offered in an arms-length transaction?  When there are plant delays or changes in market conditions affecting the value of future power sales, are plant returns and costs adjusted appropriately, or are these costs merely socialized? 

Costs are kept low through other subsidy mechanisms as well:  state funded R&D; less expensive labor, part of which is likely due to fewer options for workers to unionize or organize; and woefully inadequate requirements for accident liability (roughly $45 million --see page 809) -- the losses from Fukushima are $500 billion and counting.  Additional support likely comes through how Chinese nuclear waste is managed and government involvement with uranium mining and enrichment.  Whether Chinese nuclear is really less expensive than reactors in the West, or simply more heavily subsidized, remains an open question.

This challenge is not unique to nuclear investment:  it is very difficult to get data on how China subsidizes any of its energy industries.  This was a clear conclusion of our review of data sources on Chinese fossil fuel subsidies a few years ago.  The trade cases on solar probably identify many of the instruments the government is also using in the nuclear sector to subsidize its investments, though doing a detailed exposition to the nuclear sector would be a fair bit of work.  One interesting aspect that I'd expect to emerge from such a comparison is that the same exact subsidy instrument would turn out to be more valuable to nuclear new build than when it is applied to renewable energy.  This is because the market risks of nuclear are higher (so the difference between subsidized and market interest rates would be bigger on a nuclear project) and the scale of construction is larger as well (so any subsidy will apply to a larger base of money, and often remain in place over a longer period of time).

Homeowners are lucky if they get a 60 day rate lock on their mortgage application.  Nuclear reactor developers seem to have no such problem:  agreements for multi-billion dollar subsidized loans to build two new nuclear reactors at Plant Vogtle in Georgia have been repeatedly extended for four years.1   A credit market meltdown didn't stop the extensions.  Nor did the rise of fracked gas and a recession, both undercutting nuclear plant economics.   Nor did the cancellation of one nuclear project after another, and large cost-overruns at those projects still being pursued.  Every six months or so, the required date of execution would simply be extended, offering a free option contract to project participants. 

Today a smiling Ernest Moniz, Secretary of the US Department of Energy, will be heading to Georgia for the signing ceremony as these loan agreements are finally executed.  He will likely talk about how this is the type of partnership that makes America strong; how the loans are the result of hard work by so many, and all should be proud; and how the US wants to buy and build every form of energy because, well, that's what we need to do.

What ultimately got this agreement to "yes" is not likely something any of the parties will discuss in their prepared remarks.  Perhaps it was because DOE finally got a backbone and refused to extend the original agreement any further.  Maybe the borrowers were getting pressure from shareholders to offload the risk, or because interest rates are creeping up and Southern Company (the parent co. of Georgia Power, the largest partner in the Vogtle consortium) won't be able to roll its short-term financing for next to nothing.  

We'll likely never know the truth.  But regardless of the drivers, the completion of the loan guarantee agreement is really quite a shame.  It puts a tremendous amount of risk on taxpayers and gives nothing in return.  Southern Company's CEO Tom Fanning said they didn't need the public funds, could finance the project privately, and would still build the reactors without the federal guarantee.  So when DOE's press release notes that "[t]he nuclear facility is eligible for loan guarantees since it is expected to avoid nearly 10 million metric tons of carbon dioxide emissions annually, which is the equivalent of removing more than two million vehicles from the roads," the statement of eligibility is technically correct.  But the connection between the loan and CO2 reductions is specious given that even the borrower says the project would have been built anyway; there are many ways to reduce carbon; and our public policy ought to be competing options against each other to buy the lowest-cost reductions first.  South Carolina Electric & Gas is privately financing its construction of two reactors, after all.  Surely the Vogtle team could have done the same. 

And Fanning had complained he didn't like changes DOE had made to loan terms:  "Those terms and conditions just aren't suitable for our application, so we'll just have to see." Did DOE cave and sweeten the terms (most likely by reducing the credit subsidy payment below it's already too-low level), putting taxpayers at even greater financial risk?  Or did the Vogtle investors realize the terms really weren't so bad after all as they saw Wall Street steering well clear of nuclear new build?  Though these are the details that drive taxpayer risk, subsidy magnitude, and competitive distortions across different energy options, it is safe to assume that this area, as well, won't get broached by the smiling faces at the signing.  Nor, absent yet more litigation to force disclosure, will DOE likely reveal them at all. 

Our review of the thousands of pages of internal documents related to DOE's loans to Vogtle that were forced out by litigation (see above link) clearly indicated a messy process with decisions driven by well more than just deal economics and proper financial risk management.   The resulting agreement is no case study in good oversight or democracy.  And yet the result is taxpayer funding equal to 15 Solyndras and 43 Fiskers (an electric car marker that also went bust owing DOE money).  If things go wrong on Vogtle, taxpayer losses on Solyndra and Fisker will be mere footnotes in comparison.

Looking in the crystal ball: what Fisker's bankruptcy can tell us about Vogtle

My colleague Ron Steenblik of OECD recently linked to an article on how Chinese autoparts giant Wianxing just won its bid for the bankrupt assets of DOE-funded electric carmaker Fisker Automotive.  This same firm also bought the distressed assets of DOE-funded battery maker A123 (cleverly renamed B456).  Reporter Katie Fehrenbacher notes that

As with Wanxiang’s deal with A123, controversy will follow the realization that a Chinese conglomerate will likely be taking over an electric car maker that got substantial funding from the U.S. government.

And yet, should this be the point of controversy?  If DOE is going to play the Big League Venture Capitalist game (Secretary Moniz has restated they will), this type of occurrence is part of the drill.  Early money gets diluted in new investment rounds when things aren't going well (as they often don't). Original equity holders get wiped out, and debt holders may as well when the firm goes bankrupt. Getting something back is still better than losing everything. 

DOE's only leverage point here was at the beginning ("to lend, or not to lend, that is the question"). People ought not be surprised that the corporate carcass is sold on the cheap post-default or during a pre-packaged bankruptcy.

In private markets, venture capitalists line up to play this game because enough of their portfolio companies break even or nearly so to stem losses; and, far more importantly, every once in awhile they get back 100x or more with a blockbuster new company such as Google or Facebook. Even a handful of home runs can offset the losers with enough left over for them to buy a summer place in the Hamptons.

Alas, when governments are the investor, this upside disappears.  The government deals, including for Vogtle, are structured to extend huge chunks of debt to borrowers -- often far more than a private lender would extend given the project risks.  And yet, taxpayers get no equity at all:  even if a project receiving $500m or $8.3 billion in taxpayer support is wildly successful, generating Google-like returns, taxpayers still get squat. In a private firm, the partners who decide which firms to fund do well when the firms they've funded do well; if their investments tank, so does their pay.  In public progams such as the Vogtle mega-loan, public dealmakers have no financial tie to how their decisions play out over time; indeed, they have often moved on by then.  Socialized risks, privatized profits is the model that the Vogtle deal seems to have followed to the letter.

The Chinese buyouts of US government-funded firms on the cheap have stirred anger.  But second movers often get the benefit of buying up the residuals of first-mover firms that have failed.  Perhaps we ought not get too teary-eyed about the misplaced $192 million loan to Fisker given that the Vogtle loan puts more than 40x as much taxpayer capital at risk.  The nukes industry has repeatedly said there is nothing to worry about. These are good projects (though not so good, of course, that they just build them with private money), and won't go bust, they repeat again and again.  So we can rest easy -- just like ratepayers facing a $1.5 billion loss from Duke Energy's recent cancellation of the Levy nuclear project in Florida. They weren't supposed to lose money either.

• 1While the Vogtle credits are commonly referred to as loan guarantees, they are actually direct loans since the originator is the Federal Financing Bank, an affiliate of the US Treasury.

In December, the Senate Finance Committee released a plan (links below table), spearheaded by Senator Max Baucus, that aims to simplify tax breaks to energy.  There are some interesting elements to their approach.  For example, they attempt to combine many tax breaks specifying a single energy technology into a pooled provision with more standardized rules for all potential suppliers.  Access to the subsidies is driven by how well a technology can provide electricity or transport fuels with lower ghg-intensities.  This approach should be helpful in making the subsidies more objective-oriented, consistent across sources, and less subject to political carve-outs to narrow constituencies.

However, for reasons I plan to address in a more detailed review of the proposal over the coming weeks, I expect the proposal is also likely to increase overall tax subsidies to energy rather than decrease them.  Further, the approach also seems likely to perpetuate an important bias of current rules, with far more subsidies propping up suppliers of all types than flowing to demand-side management options.

Nuclear power provides a salient example of how the new rules would drive up taxpayer subsidies.  As shown in the table below, all of the existing constraints in current law regarding nuclear's use of energy tax credits will be removed.  Favorable language related to increasing the low-carbon power output from existing facilities is particularly worrying.  It will likely allow every kWh of electricity coming out of a future nuclear plant uprate to receive a 2.3 c/kWh tax subsidy. (Though a separate issue, these rules, in combination with the ability to claim credit on self-consumed power so long as a third party owns the power metering equipment, will also result in large subsidies to primary industries in the metals, petrochemical, and paper industries.  This will further erode the competitive position of secondary, recycled materials.)

Another big change in nuclear tax breaks relate to technological requirements.  Current rules provide production tax credits only to "advanced" reactors; the new rules would apply to any new reactor built, even if using off-the-shelf technology.  These projects would also be able to tap into investment tax credits instead of PTCs, if deemed more favorable by plant investors.

Nuclear subsidies likely to rise sharply under energy tax subsidy reform proposal

Sources:  26 U.S. Code Section 45J; Joint Committee on Taxation, Technical Explanation of the Senate Committee on Finance's Staff Discussion to Reform Certain Energy Tax Provisions, December 18, 2013 (JCX-21-13); Senate Finance Committee, "Chairman's Staff Discussion Draft:  Title ____ - Energy Provisions," Accessed 4 February 2014.

More evidence that nuclear power isn't competitive in the marketplace is coming out of the just-announced deal for Britain's first new nuclear reactors since 1995 -- to be developed at Hinkley Point C, Somerset.  The deal also provides a fairly striking example of just how badly government officials and politicians want to pretend that they didn't really have to provide massive subsidies to make the project happen. Keep a straight face, and maybe nobody will notice...

The following quotes highlight the mental gymnastics so often evident in press reports about these reactor projects:

The British government will finance two-thirds of [the] $26 billion project.  At the same time, it is agreeing to a 35 [year power] purchase agreement that will enable the developers a chance to recoup their construction outlays...One of the more controversial elements of the deal has been the "strike price," or the a[m]ount of money [for] which the plant's electricity will be sold.  While EDF [Electricite de France] had wanted a notably higher price, the UK government did agree to a price that is roughly double that of the wholesale price of power there..

-Ken Silverstein, "Great Britain Sparks Global Hopes by Infusing its Nuclear Energy Program," Energy Biz, 23 October 2013.

For the first time, a nuclear power station in this country will not have been built with money from the British taxpayer.

-Ed Davey, Secretary of State for Energy and Climate Change in Great Britain, as quoted in the Silverstein article.

My earlier summary of the UK's massively subsidizied 'non-subsidy' program can be found here.  Additional details on the new subsidized reactors to be built at Hinkley can be found here.

1)  Nuclear economics continue to worsen.  In addition to widespread cancellations of new nuclear reactors and an increasing number of announced closures of older plants too expensive to repair and keep running (Crystal River in FL, Kewaunee in WI, and San Onofre in CA in the past six months), power uprate projects are also being terminated.  Exelon is taking a $100 million charge associated with ending planned expansions in Illinois and Pennsylvania due to weak market demand.  The firm cancelled two other power uprate projects in 2011.

Increasing output at existing plants, and keeping older plants running longer are two strategies that have historically been financial wins for plant owners.  The power output achieved required much lower overall capital investments than building a new facility with far lower risks of large cost overruns.  Both reduced financial risks substantially.  The continued cancellation and closure trend across the board of nuclear projects is another indication that the long-hyped nuclear "renaissance" is unlikely to happen.

2)  Southern Company CEO Tom Fanning upset government money isn't cheap enough.  One of the only remaining new reactor projects in the US is Vogtle 3 and 4 in Georgia.  Southern Company, through its Georgia Power Subsidiary, is a big player in that effort both in terms of ownership stake and its role in project management.  The Vogtle construction is by no means a case study in market economics:  the project benefits from a host of subsidies, including tax exempt debt, construction work in progress rules that shift financing costs onto current customers, long-term power purchase agreements with municipal customers that require payout even if the reactor is never completed or the power is above-market, and multi-billion dollar loan guarantees. 

But Southern is upset that DOE money in the form of a $3.5 billion loan guarantee (separate loans with different terms apply to the other Vogtle owners) is too expensive.  CEO Fanning refers to changes in the terms following the Solyndra loan guarantee default as being unwarranted.  A reasonable observer might instead suggest that the Fukushima nuclear accident, credit market meltdown, and plunging demand for electricity (as well as lower prices) due to recession and fracked gas, were also factors.  Such an observer might also point out that such changes on the part of a lender were both prudent and reasonable; and that Southern had been an important player in dragging out negotiations with DOE long enough such that the worsening market conditions could be addressed in the terms of the open loan. 

Or at least we can hope they were.  The most recent available version of the draft loan agreement between DOE and GPC (from January 2013) can be accessed here.  It is long and detailed, but still has some important gaps.  For example, much remains unknown about specific credit subsidy amounts DOE has proposed (2010 was the latest release of credit subsidy cost figures) and how collateral and owner repayment obligations would play out in a real bankruptcy.

The draft agreement includes a number of clauses about an obligation to repay the feds in the case of a Vogtle default.  However, a corporate guarantee from Georgia Power would provide less solace to creditors about being made whole than would one from its Southern Company parent.  Detailed clauses on collateral continue to suggest that there may be limits well short of the entire firm on what the borrower would be on the hook to use for full repayment in the case of a default.  It is notable that at least through the middle of 2012, many of the open issues between DOE and Georgia Power involved disagreements over what collateral DOE could tap into in the case of a project failure.

If the federal money is really too expensive, Fanning always has the option to forgo the federal loan entirely and tap private capital markets instead.  That is a course of action I personally would be quite happy to see.  It might actually be in the long-term best interest of the nuclear industry as well were it to demonstrate that new reactors could be (mostly) privately financed.

A review of issues related to the proposed Vogtle loans by Earth Track and Synapse Energy Economics released in January can be accessed here.

3)  Maybe this is one factor in why their reactor costs are so low.  Multi-country reviews of nuclear power costs, such as this one by OECD in 2010 quoted by the World Nuclear Association, regularly show South Korea as the lowest or near-lowest in the World.

Nuclear overnight capital costs in OECD ranged from US$ 1556/kW for APR-1400 in South Korea through $3009 for ABWR in Japan, $3382/kW for Gen III+ in USA, $3860 for EPR at Flamanville in France to $5863/kW for EPR in Switzerland, with world median $4100/kW. Belgium, Netherlands, Czech Rep and Hungary were all over $5000/kW. In China overnight costs were $1748/kW for CPR-1000 and $2302/kW for AP1000, and in Russia $2933/kW for VVER-1150. EPRI (USA) gave $2970/kW for APWR or ABWR, Eurelectric gave $4724/kW for EPR.

The figures for countries with extensive state involvement in particular sectors -- Eastern Europe and much of Asia are common examples -- are hardly clean market metrics.  Governments routinely provide large amounts of direct financing or credit support, and often underwrite accident, operating, and post-closure risks.  Where supplier firms are state-owned, economic murkiness grows still further.

But far more troubling than the role of an opaque state is the recent disclosure of corruption within the South Korean nuclear sector, deploying sub-standard equipment in reactor projects around the world.  The firms involved include core industry players, raising the obvious question as to whether the corruption and parts problem have been a factor in the domestic nuclear market as well.

4)  UK Parliament broad review of energy subsidies.  The UK Parliament has recently launched a significant information gathering effort on energy subsidies to inform the country's energy policy going forward.  The main link to background reports and testimony is here.  A brief submittal by Energy Fair, a UK organization focused on nuclear issues, covering UK nuclear subsidies, can be accessed here.