Poisoned beach
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Published on Thursday, 29 July 2010 04:19
TEXT & PHOTOGRAPHS: LYLA BAVADAM
Effluents from an industrial estate destroy the coastal ecology and deprive local people of their livelihood at Tadgam in Gujarat.
Chemical waste from the nearby industrial estate being emptied onto the beach at Tadgam.
FAR from urban influences and pollutants, the beach at Tadgam in Valsad district in south Gujarat should be bustling with life. Gulls, sandpipers, stints and egrets should be foraging for shrimps, crabs, mudskippers, cuttlefish and other creatures that live under the shingle or in the small rock pools that teem with life when the tide is out. And the nearby fishing village of Tadgam should be a living example of coastal prosperity. But one look into the baskets of the fisherwomen and it is clear that this idyll is history. A single small crab and three tiny shrimps crawl about forlornly inside. “This is what we get after being on the beach for more than an hour,” says Parvatibai, a fisherwoman. It has been a long time since Tadgam had signs of normal sea life.
The beach is thick with a stinking, toxic sludge. The steaming effluent pours out of a pipe with a diameter of two feet (0.6 metre). “It flows day and night throughout the year,” says Parvatibai. The 13.34-kilometre-long pipeline originates at the Gujarat Industrial Development Corporation's (GIDC) industrial estate in Sarigam town and has been discharging the toxic brew onto the beach at Tadgam since 1999 when it was laid. The pipeline traverses four villages – Tadgam, Saronda, Nargol and Maroli – with a population of about 30,000 people. Leaks and the consequent seepage into the ground and the dumping of chemicals into small streams would have affected an estimated 25,000 more people.
The untreated chemical effluence has resulted in a huge loss of earnings to the local people, and in some cases resulted in skin and respiratory ailments. “We believe it has affected our health. The polluted water and air has given us rashes, fevers and digestive disorders. When we complain we are asked for proof. What more proof do they need than the fact that we have seen the difference in our lives before and after this pipeline,” says Yatin Bhandari, sarpanch of Nargol village.
The pipeline, 13.34 km long, originates at the Gujarat Industrial Development Corporation's Sarigam industrial estate in Sarigam town and has been discharging the toxic waste since 1999.
An informal observation made by Dharmesh Patel, a local health worker from the primary health centre in Maroli, is that “60 per cent of the population in the three villages has skin and respiratory problems, of which most cases are from Tadgam”. Dashratbhai Rathod, a former sarpanch of Saronda village, said: “The pipeline leaks and poisons our crops. Even the water we draw using the hand-pump is reddish. Dal and rice do not cook easily in it. About 15 wells are spoilt. The water stinks of chemicals.”
Prakash Arekar, who has campaigned against industrial pollution in Sarigam for two decades, says he has seen mango trees go barren because of the pollution. The “sickness is permanent” in some neighbourhoods, he adds. The claims do not seem exaggerated. A few minutes near the outlet at Tadgam cause nausea and shortness of breath, which the residents of Tadgam village and Lord's Seaside Cooperative Housing Society too experience when the breeze blows inland.
Drop in fish catch
According to the Directorate of Fisheries, the fishing industry of Daman and Diu (close to Tadgam) has seen a drop of 64.3 per cent in the catch over the past decade. This has been attributed to the effluents from the industrial estates in Vapi, a more established and larger industrial town than Tadgam. Though no direct study has been done for the smaller fishing industry at Tadgam, its proximity to Daman and Diu could mean that the same findings can apply.
Prakash Arekar, who has campaigned for a clean environment for the past 20 years, says neither the GPCB nor the GIDC is following the rules.
Dashratbhai Rathod recalled how until recently Tadgam, Saronda and Nargol together had a fleet of about 400 fishing boats. He said: “The catch was enormous even in shallow waters…. ravas, pomfret, prawns, lobsters, crabs, Bombay duck…. Lobsters were so plentiful that we caught them with our hands. Now it is a dead sea. For eight months of the year the men go all the way to Porbundar, Veraval, Dwarka and Okha to fish and the women work in the local GIDC estate.”
Says Kusumbai, a fisherwoman: “In two hours of fishing we could catch huge amounts of fish with our hand nets. When the men went off the coast they came back with so much fish that we sent them all the way to Mumbai.”
The Gujarat Pollution Control Board's rules specify that the pipeline must be anchored firmly in cement saddles and buried at a depth of six feet.
Today it is a different story. Says Raju Katu, who lives in Tadgam: “People who were earning around Rs.200 a day now do subsistence-level fishing and on some days eat only one meal.”
The Mitna community has been particularly affected. Its earnings came mainly from catching, selling and eating mudskippers. With the beach in a toxic condition, there are no more mudskippers and those that do exist have mutated dangerously with extra fins, and have skin diseases and external tumours. Earlier, mudskippers were “like a carpet” on the beach and people used to “wade through them, picking them up by the handful”. “Now,” says Yatin Bhandari, “the sight of one mudskipper air hole gets us all excited.”
The residents of the villages say they were not informed when the pipeline was laid. “It crossed our fields with no authorisation,” recalls Dashratbhai Rathod, “and so we protested.” But the protest, according to Bhandari, died out “when the leaders of the movement were bought over by the big companies”. After that the poor fishermen and farmers could not put up a fight. “So, for 10 years we had no protest and all this while the sea continued to be fed these heavy chemicals,” says Bhandari.
Public Interest Petition
At Tadgam, the pipeline has broken loose from its saddles at many places and moves in a wide sweep with the tide, fanning the effluents wider. The unanchored pipeline can be a danger to fishermen during high tide.
Finally, in 2009, the residents of Lord's Housing Society filed a public interest litigation (PIL) petition in the Gujarat High Court. They were later joined by the sarpanchs of the hamlets of Tadgam, Saronda, Nargol and Maroli. The petition was simple – it asked that the pumping of effluence be halted until GIDC Sarigam and the Sarigam Waste and Effluent Management Company could ensure that the effluents met Gujarat Pollution Control Board (GPCB) standards.
One of the requirements for Coastal Regulation Zone (CRZ) clearance was that there should be a responsible authority to look after pollution control. And so the Sarigam Waste and Effluent Management Company came into existence. Prakash Arekar says its members are “company people and it does not have a single ordinary citizen representative…”. “Neither the GPCB nor the GIDC is following the rules,” he adds.
The petitioners say their plea is supported with photographs, video footage, scientific reports and documentation. Furthermore, said a member of the Lord's Society, the legal representative of the Sarigam Waste and Effluent Management Company even admitted in court that his client had defaulted in monitoring the effluence. The onus of proving that the pipeline is legal also lies with the respondents. If procedure has been followed, then the pipeline must have received CRZ clearance. For this to have happened, an Environment Impact Assessment (EIA) must have been conducted since this is a basic requirement for CRZ clearance. Though the petitioners have applied under the Right to Information (RTI) Act to the GPCB for copies of the EIA and other documents, they have received nothing so far. A request to the GPCB from Frontline for the same was met with no answer.
Empty nets in the pools formed by the tide tell their own tale of the deadly impact of the poisons.
Adding to the evidence against the pipeline is the fact that the discharge from it is illegal (and not just that it is untreated waste). Time-bound permission is granted by the GPCB to industrial estates for allowing discharge. This is called Consolidated Consent and Authorisation, or CC&A. The CC&A given to GIDC Sarigam has not been renewed since 2004, according to the petitioners.
After the court heard the petition, it directed the GPCB to take action, and in response the GPCB sent a legal notice to 50 units in Sarigam. It is not clear on what basis these 50 units were chosen and why only 50 since the petition was about the discharge and not against individual units. The notice, dated December 4, 2009, was sent to the Sarigam Waste and Effluent Management Company under Section 33-A of The Water (Prevention and Control of Pollution) Act, 1974.
It said: “[T]he consent granted to you vide order No. 1623 dated 12-2-2004 has lapsed on dated 31-3-2004 hence, at present you are operating industrial effluent disposal system without CC&A of the Gujarat Pollution Control Board under the provision of Water Act.”
COURTESY LORD'S SEASIDE COOPERATIVE HOUSING SOCIETY
Dead fish on the beach.
It further said: “[D]uring the inspection of your plant on 18-11-2009… the analysis reports indicates that the concentration like SS, BOD, COD, Chloride, Ammonical Nitrogen, Phenolic Compound, Zinc, & Sulphides, are most of the time higher than the permissible limit specified by the Board.”
Rohit Prajapati of the Paryavaran Suraksha Samiti, a non-governmental organisation (NGO) fighting for clean environment, said: “This clearly indicates that the treatment facility dumps the effluent at Tadgam village without proper permission and the effluent does not meet the GPCB's norms.” Despite the notices issued by the GPCB there has been no result, which has led the petitioners to conclude that the “the whole thing is a game with the Sarigam GIDC and the Sarigam Waste and Effluent Management Company hand in glove with each other”.
Despite the overwhelming evidence, why has the discharge not been ordered to be stopped until the effluence is monitored and cleaned? the petitioners ask. To make matters worse, a new pipeline is being laid alongside the old one. While the old pipeline spewed 12 mld (million litres a day), the new one has a capacity of 25 mld and a diameter of four feet. Considering that the existing pipeline is under litigation, it is surprising that permission has been granted to lay a second one. The GPCB did not respond when asked to corroborate this.
Effluence treatment
There are over 300 units in the Sarigam industrial estate. Most of them manufacture chemicals, fertilizers, pesticides, herbicides and pharmaceutical drugs. Production happens 24x7 throughout the year. Each industrial unit signs an undertaking to ‘clean' its waste in its effluent treatment plant (ETP) before sending it to the common collection well. At the common collection well, the effluents are supposed to be checked for quality twice a day and if found within limits, pumped into the pipeline that ought to lead out into the sea.
Yatin Bhandari, Sarpanch of Nargol village: "The protests died out when the leaders of the movement were bought over by the big companies."
One big flaw in the system seems to be that there is no way of identifying the defaulting units and this is made worse because the prescribed process is not followed. At the primary stage, neutralisation takes place and the chemical oxygen demand (COD) and the biochemical oxygen demand (BOD) are stabilised (both are measures of the relative oxygen-depletion effect of contaminants). The secondary stage involves bioreactive treatment and is especially necessary for chemical effluence. At the end of the cleaning process, the waste matter is supposed to be completely free of all toxic matter. Some amount of variation is permissible in the BOD and COD indicators.
Even with this leeway, the effluence from the Sarigam pipeline is higher than the permissible levels. Under the GPCB's norms, fish have to survive for 90 days in the sample used in the bioassay test. In an effort to further their case, the petitioners sent a sample of the waste from the beach in March last year to the Central Institute of Fisheries Education (CIFE) in Mumbai for testing. The report of the CIFE said the toxicity in the sample was so high that fish died within 35 minutes in a sample with only 25 per cent effluence. In 100 per cent effluence (collected by the petitioners from the beach), the fish died in five minutes. The Gujarat Ecological Society had, in November 2008, sent a sample of the waste from the beach to the CIFE. The results indicated a “high level of toxicity”.
The common collection well for effluents at the Sarigam industrial estate.
Though the GPCB says that each unit has its own ETP, an informed source at GIDC Sarigam said that most of the units considered “straining” the effluence as adequate cleaning and that “no other treatment is done”. Apart from the ETP, there is also supposed to be a common effluent treatment plant, or CETP, where further cleaning is carried out before discharge. The GPCB is supposed to monitor the CETP on a monthly basis. Judging by the highly polluted quality of the discharge on Tadgam beach over the years (as proved by the reports of the CIFE, the GPCB itself and the Gujarat Ecology Society), either the ETPs or the CETP is not working properly and the GPCB certainly does not seem to be monitoring the process.
According to the GPCB, there are 13 members in the CETP run by the GIDC. A privately run CETP at Sarigam, called Perfect Enviro Control Systems Pvt. Ltd, has seven members, of whom three send effluents for treatment. S.V. Rao, director of the plant, which was built 10 years ago at a cost of Rs.1.6 crore, said the others had zero discharge. Only 0.4 mld of the total of 12 mld that is spewed out onto the Tadgam beach goes through Perfect Enviro's CETP. Thus, of the 257 functional units in Sarigam, only 20 are linked to a CETP.
Responding to a query on how often it monitored the units for pollution control, the GPCB said it checked the performance of the environment management systems of each unit as per its own guidelines. These ranged from sampling the effluence once in three months to once in three years, depending on the size of the industry. The GPCB admits that the GIDC's “CETP Sarigam is not meeting the norms. On date 23/2/2010 GPCB issued closure to CETP in Sarigam for not meeting the norms. At present CETP is under upgradation and the closure order is revoked on 17/5/2010 for upgradation.” But this still does not answer the question why the units have been allowed to continue production for so many years.
Polluted Tidal Polls on the beach.
Asked why it had not stopped the discharge of effluents onto the beach for so long, the GPCB claimed that over the years it had taken “actions on every complaint” and that it had issued closure notices regularly to various units. The GPCB said, “GIDC Sarigam pumping station L-2 was in damaged condition hence waste water from this pumping station was discharged in Tadgam Beach. GPCB issued directives for stoppage of discharge into pumping station to 32 units in this regard.” The answer still does not explain why the discharge of effluents continues.
The discharge of untreated effluents is just one of a series of equally serious violations. GPCB rules say the pipeline should discharge 2 km into the sea, that is, 2 km after the low tide line. Thus, at no point should the mouth of the pipeline be visible or out of water.
Broken pipeline
At present, the pipeline discharges right onto the beach. Initially it did go into the sea (though not up to the prescribed distance), but the pipe broke in 2006. Apparently, the diffuser at the mouth of the pipeline was blocked and the chemicals started flowing back down the pipeline. Local people say that it had to be cleaned, but someone broke it instead. Though it has not been possible to verify this story (the GPCB did not respond to the query), there is no doubt that the pipe at Tadgam is broken. The severed section lies somewhere under water while effluents flow continuously from the broken mouth. The GPCB's rules also specify that the pipeline must be anchored firmly in cement saddles and that it should be buried at a depth of six feet. The Sarigam pipeline has broken loose from its cement saddles at a number of places and moves in a wide sweep with the tide. Dragged about by the tidal action, the unanchored pipeline traverses the beach, fanning the effluents wider.
LORD'S SEASIDE COOPERATIVE HOUSING SOCIETY
The pipeline has sprung a leak near the saddle and spews effluents onto the beach.
Said Yatin Bhandari: “When we complain, we are told that this is development. On the one hand they say this is a green belt and that the tourism industry will flourish here, and on the other they poison us. Is this Modi's vibrant Gujarat?”
The GPCB's official stand does not subscribe to the fait accompli that pollution is a necessary evil of development.
Its website says, “The laws stipulate that all development should be carried out with minimal occurrence of pollution. Technologies are available for controlling pollution as per the norms prescribed for different processes. Therefore, the perception that pollution is the price for securing fast development is erroneous.”
A polluted stream at Sarigam. Leaks and the consequent seepage into the ground and the dumping of chemicals into small streams have affected a large number of people.
Apart from the blatant disregard of pollution control laws, there is another aspect to the problem. Parvatibai sums it up well: “For the chemical companies we are nothing. They have the law in their hands and we are nothing. I won't say their aim was to destroy us – we are too small for them to target us…. Their aim was just to get rid of their dirty chemicals from their factories and for them the sea is a kacchro no dabbo (rubbish bin)… so they dump it here. That we are affected is of no concern to them. They know they can get away with this because we are poor.”
There is no doubt that the GPCB is fully empowered to deal with the situation. The FAQ (frequently asked questions) section on its official website states: “The important enforcement powers vesting in GPCB are laying down standards and securing their compliance, inspection and monitoring of all sources of pollution, issuance of notices with time limit to comply with the legal requirements, closure of the defaulter unit in grave cases and prosecution in cases of serious violation.”
The norms for pollution control are also very clear as is the fact that a series of “no objection certificates” and clearances, including those for environmental reasons, have to be obtained. The website also emphasises that the polluter has to pay for cleaning up.
Despite such stringent rules, the ground reality is glaringly different.
Nuclear Energy Loses Cost Advantage
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Published on Tuesday, 27 July 2010 17:38
Nuclear Energy Loses Cost Advantage
DIANA S. POWERS
PARIS — Solar photovoltaic systems have long been painted as a clean way to
generate electricity, but expensive compared with other alternatives to oil,
like nuclear power. No longer. In a “historic crossover,” the costs of solar
photovoltaic systems have declined to the point where they are lower than
the rising projected costs of new nuclear plants, according to a paper
published this month.
“Solar photovoltaics have joined the ranks of lower-cost alternatives to new
nuclear plants,” John O. Blackburn, a professor of economics at Duke
University<
http://topics.nytimes.com/top/reference/timestopics/organizations/d/duke_university/index.html?inline=nyt-org>,
in North Carolina, and Sam Cunningham, a graduate student, wrote in the
paper, “Solar and Nuclear Costs — The Historic Crossover.”
This crossover occurred at 16 cents per kilowatt hour, they said.
While solar power<
http://topics.nytimes.com/top/news/science/topics/solar_energy/index.html?inline=nyt-classifier>
costs
have been declining, the costs of nuclear power have been rising inexorably
over the past eight years, said Mark Cooper, senior fellow for economic
analysis at the University of Vermont Law School’s Institute for Energy and
Environment.
Estimates of construction costs — about $3 billion per reactor in 2002 —
have been regularly revised upward to an average of about $10 billion per
reactor, and the estimates are likely to keep rising, said Mr. Cooper, an
analyst specializing in tracking nuclear power costs.
Identifying the real costs of competing energy technologies is complicated
by the wide range of subsidies and tax breaks involved. As a result, U.S.
taxpayers and utility users could end up spending hundreds of billions, even
trillions of dollars more than necessary to achieve an ample low-carbon
energy supply, if legislative proposals before the U.S. Congress lead to
adoption of an ambitious nuclear development program, Mr. Cooper said in a
report last November.
The report, “All Risk, No Reward for Taxpayers and Ratepayers,” was a
response to a legislative wish list developed by the Nuclear Energy
Institute, an industry group. The institute has called for a mix of U.S.
subsidies, tax credits, loan guarantees, procedural simplifications and
institutional support on a large scale.
At the state level, the industry has also pressed the case for “construction
work in progress,” a financing system that requires electricity users to pay
for the cost of new reactors during their construction and sometimes before
construction starts. With long construction periods and frequent delays,
this can mean that electricity users start to pay higher prices as much as
12 years before the plants produce electricity.
The institute’s Web site says the financing system “reduces the cost
ratepayers will pay for power from the plant when it goes into commercial
operation,” by lowering interest payments on capital costs and spreading the
costs over time.
“The utilities insist that the construction work in progress charged to
ratepayers also include the return on equity that the utilities normally
earn by taking the risk of building the plant — even though they have
shifted the risk to the ratepayers,” Mr. Cooper said. “If the plant is not
built or suffers cost overruns, the ratepayers will bear the burden.”
History suggests that the risk of this is not negligible. In 1985, Forbes
magazine dubbed the construction of the first generation of U.S. nuclear
plants “the largest managerial disaster in business history.”
The first round of plants resulted in write-offs through bankruptcies and
“stranded costs” — investments in existing power plants made uncompetitive
by deregulation — which essentially transferred nearly $100 billion in
liabilities to electricity users, said Doug Koplow, an economist and founder
of Earth Track, based in Cambridge, Massachusetts, which campaigns against
subsidies it considers environmentally harmful. “Although the industry
frequently points to its low operating costs as evidence of its market
competitiveness, this economic structure is an artifact of large subsidies
to capital, historical write-offs of capital, and ongoing subsidies to
operating costs,” Mr. Koplow said.
From 1943 to 1999 the U.S. government paid nearly $151 billion, in 1999
dollars, in subsidies for wind, solar and nuclear power, Marshall Goldberg
of the Renewable Energy Policy Project, a research organization in
Washington, wrote in a July 2000 report. Of this total, 96.3 percent went to
nuclear power, the report said.
Still, these costs pale in comparison with the financial risks and subsidies
that are likely to accompany the next wave of nuclear plant construction,
Mr. Cooper said.
A November 2009 research report by
Citigroup<
http://topics.nytimes.com/top/news/business/companies/citigroup_inc/index.html?inline=nyt-org>
Global
Markets termed the construction risks, power price risks, and operational
risks “so large and variable that individually they could each bring even
the largest utility to its knees.”
Those risks were mentioned in a 2009 report by the credit rating
agency<
http://topics.nytimes.com/top/reference/timestopics/subjects/c/credit_rating_agencies/index.html?inline=nyt-classifier>
Moody’s<
http://topics.nytimes.com/top/news/business/companies/moodys_corporation/index.html?inline=nyt-org>.
“Moody’s is considering taking a more negative view for those issuers
seeking to build new nuclear power plants,” the report said. “Historically,
most nuclear-building utilities suffered ratings downgrades — and sometimes
several — while building these facilities. Political and policy conditions
are spurring applications for new nuclear power generation for the first
time in years. Nevertheless, most utilities now seeking to build nuclear
generation do not appear to be adjusting their financial policies, a credit
negative.”
Adding to the risks facing any reactor construction program, only one of
five proposed designs under consideration by U.S. utilities has ever been
built, the Nuclear Regulatory
Commission<
http://topics.nytimes.com/top/reference/timestopics/organizations/n/nuclear_regulatory_commission/index.html?inline=nyt-org>
said.
“No one has ever built a contemporary reactor to contemporary standards, so
no one has the experience to state with confidence what it will cost,” said
Stephen Maloney, a utilities management consultant. “We see cost escalations
as companies come up the learning curve.”
Market risk has been heightened by the recent
recession<
http://topics.nytimes.com/top/reference/timestopics/subjects/r/recession_and_depression/index.html?inline=nyt-classifier>.
“The current crisis has decreased energy demand even more than the 1970s oil
price shocks,” Mr. Cooper said. The recession “appears to have caused a
fundamental shift in consumption patterns that will lower the long-term
growth rate of electricity demand.”
Meanwhile, most of the projects that have created the increase of license
applications to the regulatory commission have already experienced
difficulties. “About half of the projects that have been put forward at the
start of the next generation of reactors have been delayed or canceled,” Mr.
Cooper said. “Those that have moved forward have suffered substantial cost
escalation and several have received negative financial reviews.
“Of the 19 applications at the N.R.C., 90 percent have had some type of
delay or cancellation, run into a design problem, suffered cost increases
and/or had the utility bond rating downgraded by Wall Street.”
Despite the economic challenges, the nuclear power industry remains unfazed.
“This is not a hospitable environment in which to commission any large
base-load power plant,” said Marvin Fertel, president and chief executive of
the Nuclear Energy Institute, in a briefing to the financial community.
Still, he said: “Fortunately new nuclear plants won’t be in service until
2016 or later, so today’s market conditions are not entirely relevant.”
Mr. Cooper said the industry’s equanimity was based, at least partially, on
the supportive cushion provided by loan guarantees and work-in-progress
financing. “With such financing the utility is making a one-way bet,
allowing it to make a profit even when the project fails,” he said. “The
people bear the risks and costs; the nuclear utilities take the profits.
Without loan guarantees and guaranteed construction work in progress, these
reactors will simply not be built, because the capital markets will not
finance them.”
Without public guarantees, nuclear projects often cannot get financing.
AmerenUE, the Missouri utility, suspended in April 2009 plans to build a $6
billion, 1,600-megawatt reactor at its Callaway County nuclear site, after
trying unsuccessfully to get the State Legislature to repeal a longstanding
ban on work-in-progress financing. The continued existence of the ban “makes
financing a new plant in the current economic environment impossible,” the
utility said.
Similarly, Florida Power and
Light<
http://topics.nytimes.com/top/news/business/companies/fpl_group_inc/index.html?inline=nyt-org>
said
in January that it would not proceed beyond licensing with plans to build
two new reactors at its Turkey Point site, after the FloridaPublic Service
Commission<
http://topics.nytimes.com/top/reference/timestopics/organizations/p/public_service_commission/index.html?inline=nyt-org>
rejected
its request to pass on a $1.27 billion cost increase to its users.
Yet, despite episodic resistance at the local level, financial support for
the industry at the U.S. government level has been increasingly evident in
successive versions of climate and energy bills before the U.S. Congress,
including the most recent, the American Power Act, which is delayed in the
Senate until after the summer recess.
Nuclear subsidies in the Senate proposal include five-year accelerated
depreciation; tax credits for investments and production and eligibility for
the advanced energy tax credit; an increase in government insurance against
regulatory delays; access to private activity bonds; and a $36 billion
increase in loan guarantees, bringing the total to $56 billion.
That remains less than the Nuclear Energy Institute’s goal of $100 billion,
an amount it describes as “a minimal acceptable loan volume.” Still, Mr.
Fertel said in his financial briefing that “‘strong political support’
understates our position.”
Federal loan guarantees cut nuclear construction financing costs by allowing
the utilities to sell bonds at a lower interest rate. But at the same time
the guarantee means that “the U.S.
Treasury<
http://topics.nytimes.com/top/reference/timestopics/organizations/t/treasury_department/index.html?inline=nyt-org>,
and therefore the taxpayers, are on the hook for the value of the loans
should they go bad,” Mr. Cooper said.
According to the U.S. Government Accountability
Office<
http://topics.nytimes.com/top/reference/timestopics/organizations/g/government_accountability_office/index.html?inline=nyt-org>,
the average risk of default for such Department of Energy loan guarantees is
about 50 percent, which is the historic rate for the nuclear industry.
Mr. Koplow of Earth Track said two of the other subsidies in the Senate
bill, the investment tax credit and five-year accelerated depreciation,
would together “be worth between $1.3 billion and nearly $3 billion on a net
present value basis per new reactor.
“This is equivalent to between 15 and 20 percent of the total all-in cost of
the reactors, as projected by industry.”
Over all, Mr. Koplow said, the proposed subsidy package would undermine the
equity requirements of the nuclear loan guarantee program, designed to
ensure that investors have a strong interest in the long-term success of the
venture. “Although investors will get all the profit if the reactor project
is successful, they will bear virtually none of the financial risk if the
project fails,” he said. “This is a disastrous incentive structure.”
By distorting energy markets, these subsidies would “effectively make the
government the chooser of which energy technologies will be winners and
which will lose,” he said. The American Power Act “does not build a neutral
policy platform on which all energy technologies must compete.”
The tax breaks for nuclear would “greatly impede market access for competing
energy sources,” Mr. Koplow said.
He said handing out huge subsidies would also cloud the transparency of
decision-making. “This approach,” he said, “which replaces price signals
with decisions by a handful of often unnamed individuals within the U.S.
Department of Energy<
http://topics.nytimes.com/top/reference/timestopics/organizations/e/energy_department/index.html?inline=nyt-org>,
plays to none of the inherent strengths of the U.S. market system to spur
innovation and effectively allocate risks and rewards. Further, the basis,
and sometimes scale, of these subsidy decisions is largely hidden from the
public view.”
For Mr. Cooper, the core issue at stake is one of opportunity cost. “While
the cost estimates of nuclear power continue to rise, the potential for
energy efficiency measures to reduce the need for energy are far cheaper,”
he said.
Lower-cost, low-carbon technologies are already available, and cost trends
for several others indicate that a combination of efficiency and renewable
technologies could meet projected power needs while also achieving
aggressive carbon-reduction targets, Mr. Cooper said.
In a June 2009 report drawing on several earlier studies, Mr. Cooper said
that energy efficiency, cogeneration and renewable sources could meet power
needs at an average cost of 6 cents per kilowatt hour, compared with a cost
of 12 cents to 20 cents per kilowatt hour for nuclear power.
Choosing the nuclear route, and constructing 100 new reactors, would
translate into an extra cost to taxpayers and electricity users of $1.9
trillion to $4.4 trillion over the 40-year life of the reactors, compared
with the costs of developing energy efficiency and renewable sources, the
report said.
Mr. Cooper said it would make sense for policy makers, standing in the place
of the market, to choose the least costly alternatives first.
“In an attempt to circumvent the sound judgment of the capital markets,
nuclear advocates erroneously claim that subsidies lower the financing costs
for nuclear reactors and so are good for consumers,” he said. “But shifting
risk does not eliminate it. Furthermore, subsidies induce utilities and
regulators to take greater risks that will cost the taxpayers and the
ratepayers dearly.
“The risks that have dismayed Wall Street should be taken seriously by
policy makers because they would cost not just hundreds of billions of
dollars in losses on reactors that are canceled, but also trillions in
excess costs for ratepayers when reactors are brought to completion by
utilities that fail to pursue the lower-cost, less risky options that are
available.
“The frantic effort of the nuclear industry to increase federal loan
guarantees and secure ratepayer funding of construction work in progress
from state legislatures is an admission that the technology is so totally
uneconomic that the industry will forever be a ward of state, resulting in a
uniquely American form of nuclear socialism.”
http://www.nytimes.com/2010/07/27/business/global/27iht-renuke.html?_r=1