Nuclear Energy
Nuclear Energy
Despite the immense risks associated with nuclear energy, this form of energy production continues to receive many forms of financial assistance. In Germany, the so-called consensus on nuclear energy (gradually shutting down all nuclear power plants) makes it difficult to abolish these subsidies. Since the consensus, which was negotiated with the power station operators, legally assures the phase out of nuclear energy, the primary aim is less to apply an additional pressure and more to achieve an at least partial reduction in the financial privileges which nuclear energy has enjoyed for decades as a result of various government regulations. Furthermore, since 2005 the nuclear energy sector has effortlessly earned billions of extra Euros because of the higher electricity price caused by emissions trading. The decision to phase out nuclear energy is increasingly questioned by some representatives of the energy industry, the Christian Democrats (CDU) and the Free Democratic Party (FDP). In this respect, it also worth emphasising the preferential treatment of nuclear energy and the possibilities offered by market-based environmental policy instruments in this area, and to call for their implementation.
Possible Improvements
1. Tax on Nuclear Fuel
Although different energy sources have received equal treatment since energy taxes on oil and gas used as fuels in energy production were abolished on 1 August 2006, nuclear energy still holds an additional competitive advantage because of emissions trading. Emissions trading addresses the problems caused by fossil fuels to climate protection, but the particular risks and costs of nuclear energy are not being dealt with in an similar way. Nuclear power plant operators profit especially from rising energy prices caused by emissions trading. For this reason a tax on uranium rods should be introduced.
The fuel tax, in the form of a primary energy tax, should be applied to the use of fuel or the thermal output. The tax rate could be set according to the level of advantage enjoyed by nuclear generation due to price rises resulting from emissions trading. An expected price for emissions certificates of 22-26 €/t CO2 for the second trading period from 2008 implies a rise in electricity prices of 1-4 €cents/kWh, so it would be reasonable to expect that the rate of a tax on nuclear fuel would be of a similar magnitude. The EU Energy Tax Directive is not in conflict with this, since nuclear fuel is not included in its remit.
2. Tax on Lost Heat
The removal of cooling water as well as the emission of lost heat should be taxed, paid for by power plant operators.
3. Tax on Accruals
Energy corporations that operate nuclear power plants have accumulated accruals in the amount of 30 billion Euros. They can use this capital income without restrictions, for example to buy out competitors or for breaking into new markets. There are various possible ways in which this unfair advantage can be abolished:
· The accrual period could be extended to 32 years, which is equivalent to the approximate power plant running time according to the nuclear phaseout legislation. Currently, operators are allowed to save accruals during the first 25 years for decommissioning, and retain an interest advantage from the 26th year until the plant is decommissioned.
· Transferring the accruals for waste disposal into a publicly administered fund.
4. Increasing the Liability Amount
The liability amount for nuclear power plants currently amounts to just 2.5 billion Euros. This bears no relation to the costs originating from a major nuclear accident. According to the German Federal Ministry of Economics, the total damages to the national economy caused by such an accident in Germany total up to 5000 billion Euros. For this reason, the liability amount has to be raised to at least this level.
5. Cancellation of Subsidies
The European Union alone, through the EURATOM agreement, has given out over 400 billion Euros in subsidies since 1957 without parliamentary control. European, as well as national, funding for research should be reconfigured to support sectors such as renewable energy and energy efficiency. This is, however, only possible over the long term; the short-term goal should be a withdrawal from at least that part of the EURATOM agreement which excludes nuclear energy from European competition law. This privilege relieves the high guarantees and cheapened credits, among others for the Finnish reactor Olkiluoto, currently under construction.
6. Transferring the Atomic Energy Authority to One Institution
The German Atomic Energy Authority must be centrally steered by the federal government in order to avoid coordination problems and to make use of synergy effects. The costs of the Atomic Energy Authority must be distributed between nuclear power plant operators. All responsibilities that focus on nuclear energy and are defined by federal law should come under the control of the Federal Ministry for the Environment.
Expected Revenue
A tax on nuclear fuel applied to nuclear electricity at 2 cents/kWh would generate a tax revenue of 3.2 billion Euros. A further 175-800 million Euros could be raised by levying a tax on accruals.
Further Information
Green Budget Germany research report: An Investigation into all Forms of State Aid for Atomic Energy: 1950-2008.
This GBG research report commissioned by Greenpeace investigates state aid for the nuclear industry. It concludes that over 165 billion Euro has been invested in nuclear energy since 1950.
The report can be downloaded here.
