But even this won’t propel the nuclear industry into a vibrant, climate-saving era, writes Paul Hockenos.

The US Inflation Reduction Act of 2022 (IRA), which was all about decarbonization and not inflation, devotes $6 billion to nuclear energy. Despite this, there is very little chance that the US will build new nuclear reactors anytime soon. Why? Because they’re far too expensive.

The IRA has been called a ‘moonshot’ moment in US climate policy, meaning that the likely $500 billion in new spending completely changes the calculus of US climate policy by turbocharging the buildout of renewable energies, smart grids, EVs and much more.

Part of that ‘much more’ is nuclear power, for which there is bipartisan backing in the US; in fact, it’s one of the few issues upon which Democrats and Republicans concur. ‘Multiple incentives pave the way for our nuclear energy sector to help ensure energy security and cut U.S. emissions by 40% before the end of the decade,” according to the US Office of Nuclear Energy.  There is $6 billion slated for nuclear projects, even though the US nuclear programme is on hold and will be for some years – if not forever. In fact, within the last decade, it has shut down 12 reactors.

Contrary to the intended perception, the IRA funding does not, as Reuters news agency reported, ‘point to a new era of significant growth and investment for the nuclear industry’.

Although the US is the world’s largest nuclear power – generating half of the nation’s carbon-free electricity – it has, over nearly 30 years, built only one new nuclear plant, namely the Vogtle Electric Generating Plant, located in the state of Georgia. Plant officials say Vogtle’s Unit 3 will go online later this year. Like nuclear plants just about everywhere in the world, the Vogtle project is dramatically behind schedule and hugely over cost. The gobsmacking price tag: $34 billion. This makes it the most expensive power station on earth and a very bad investment.

This is a massive sum of money for one power station, but it’s par for the course these days and is the reason that investors are so scarce. Under-construction reactors in France and the UK are similarly costly, as well as woefully behind schedule. And in Europe, since the late 1990s, only one plant, in Finland, has been planned, built and become operational.

It is foremost these exorbitant costs that have buried nuclear energy as an option in North America and Europe. The US nuclear energy industry has been nearly stagnant since the late 1990s – for exactly the reason that no one wants to bankroll it. There are currently, with the exception of Vogtle, zero reactors under construction in the US. That’s right, none. Unlike most technology, over the course of the preceding years, nuclear power has become ever more expensive: 23% more so over the last decade, according to the annual World Nuclear Industry Status Report (WNISR). In its story on the WNISR report, the Reuters’s headline came closer to the mark: ‘Nuclear energy too slow, too expensive to save climate’.

Yet, the 2021 Biden infrastructure act put six billion dollars (this is a different six billion than the IRA’s) toward existing reactors “that are under economic threat of premature closures because of flawed markets.” The act provides aging, financially troubled nuclear plants a lifeline to stay open and directs billions more for research into next-generation reactors. The IRA offers the industry another crutch with which to limp along longer: a ‘zero-emission nuclear power production credit’ providing up to $15 per megawatt-hour for the electricity produced by operational plants. This is available for facilities in service in 2024 and would last through to 2032, keeping existing reactors competitive with other power generators.

The IRA also provides tax incentives for ‘clean energy technologies, including advanced reactors’. Advanced nuclear reactors, which include modular reactors, could benefit – that is, if they ever generate a kilowatt – by way of the Clean Electricity Production Tax Credit, a technology-ambivalent production credit, which can be applied toward emissions-free power generation that goes online after 2025. The credit is for at least $25 per megawatt-hour for the first 10 years the plant is in operation, adjusted for inflation. The credit phases out in 2032, or when carbon emissions coming from electricity have fallen by 75% below the level of 2022.

So why is the IRA diverting funds from lower cost and proven clean tech for one whose day is over?

‘The [Biden] administration’s concept is to throw everything possible at climate change so that it can’t be blamed for emissions rising,’ says David Schlissel of the Institute for Energy Economics and Financial Analysis. ‘A strategy of trying to do everything – renewables, nuclear, carbon capture, hydrogen – is going to be very expensive and take a long time.’

‘I’m optimistic about the potential of the smaller module reactors in particular,’ Gina McCarthy, a former Biden and Obama official, told the research facility American Academy in Berlin, on 24 April 2023. ‘Nuclear is part of the solution,’ she said.

In fact, the US Department of Energy approved the country’s first permits for a next-generation SMR reactor in January 2023. Less than a year later the project was scuppered due to insufficient investment. In other words: it couldn’t raise enough finance even to get off the ground. The US helped broker a deal for a US nuclear startup to build one in Romania, too. But not a single brick has been laid there either.

Schlissel says that the modular reactors will be every bit as expensive as the larger ones and produce even more waste per kilowatt-hour of electricity generated.

He and other experts predict that the era of the mega-sized reactors, such as those at Vogtle and in the UK, could be over and that of the modular reactors, along the lines of those Bill Gates is building, will be equally expensive. Even rosy prognoses don’t envision them starting up before 2030. ‘Nearly all of the new designs are unproven,’ says Schlissel.

‘I would have thought that the financial disasters at the Vogtle Nuclear Project in the U.S. and the reactors being built in the UK would scare everyone off of trying to build anymore. But, some countries seem to be willing to take the risk,’ adds Schlissel.

The obvious question that this grim analysis of nuclear energy in the US raises: wouldn’t the time and money spent on nuclear energy be better invested in genuine, proven clean technologies?

The views and opinions in this article do not necessarily reflect those of the Heinrich-Böll-Stiftung European Union.