It’s been something of a week for reading reports here at Nuclear Reaction. It might sound a dry and dull job but you don’t have to dig very far to find some very interesting items indeed.

On Monday it was the International Energy Agency’s Energy Technology Perspectives with its bad news for the nuclear ‘renaissance’. Yesterday it was the EUROTOM Supply Agency and its figures that show that nuclear power isn’t bringing - and can’t bring - energy security to Europe.

Today it’s a report released this week by the US Government Accountability Office (GAO) which demonstrates the bias and favouritism shown to the nuclear industry by government and politicians. The GAO has been looking at the US Department of Energy’s (DOE) loan guarantee program (LGP).

A loan guarantee is ‘a promise by one party (the guarantor) to assume to the debt obligation of a borrower if that borrower defaults’. In this instance, the DOE guarantees to repay energy companies’ debts if those companies find themselves unable to pay.

Billions of dollars worth of guarantees are involved so, as you can probably imagine, the application process for a loan guarantee is a long, complex and expensive one. This is where we see the bias and favouritism for the nuclear industry. The GAO found:

DOE treats applicants with nuclear projects differently from applicants proposing projects that employ other types of technologies. For example, DOE allows applicants with nuclear projects that have not been selected to begin the due diligence process to remain in a queue in case the LGP receives additional loan guarantee authority, while applicants with projects involving other types of technologies that have not been selected to begin due diligence are rejected (see app. III). In order for applicants whose applications were rejected to receive further consideration, they must reapply and again pay application fees, which range from $75,000 to $800,000. DOE also provided applicants with nuclear generation projects information on how their projects ranked in comparison with others before they submitted part II of the application and 75 percent of the application fees. DOE did not provide rankings to applicants with any other types of projects.

Basically, if a nuclear project fails to win a loan guarantee it can stay in the queue for consideration in case more guarantees become available. If a renewable energy or energy efficiency project fails in its application it must drop out and make another expensive attempt. Why is this?

It’s at this point you have to ask why nuclear power even needs loan guarantees. It’s had 60 years in which to perfect its financial and economic model. So why has it failed so badly? Largely because the first reactors were built as part of nuclear weapons projects and so were funded by secret government budgets. Finding itself addicted to public money the nuclear industry has been unable to kick the habit ever since.

If the DOE gets its way, US loan guarantees between 2008 and 2011 for nuclear will be triple those for renewables and energy efficiency (see page 4 of the GAO report). Yet the nuclear ‘renaissance’ is struggling to get off the ground while renewables are positively thriving. You do the math.