The Senate's version of the energy bill, which will soon go into conference committee to be reconciled with the House version, contains a provision that alters federal loan guarantees and will shortchange renewable energy projects and burden taxpayers with funding costly nuclear power projects.

Sen. Pete Domenici (R-N.M.), a long-time nuclear industry ally, inserted language in the Senate version of the bill that would significantly change the Department of Energy loan guarantee program for new energy technologies that reduce global warming pollution. Under the new provision, nuclear power projects could consume the vast majority of loans—more than $50 billion in 2008 and 2009.

"In over 50 years of operating experience, the nuclear industry still has not managed to solve the problems of safety, security, and disposal of highly dangerous radioactive waste," said Jon Block, nuclear energy and climate change project manager for the Union of Concerned Scientists (UCS). "Until that happens, we're much better off investing in safer, cleaner energy sources such as renewable wind, geothermal, tidal, and solar projects."

Historically, nuclear plant construction cost estimates are notoriously inaccurate, Block said, and often result in cost over-runs. Data from the Energy Information Agency (EIA) shows that the first wave of nuclear plant construction had between 209 percent to 381 percent cost over-runs. These, among other factors, led to cancellation of about 50 percent of the planned reactors.

The situation today is no different. New nuclear power projects in the United Kingdom and Finland are experiencing higher-than-anticipated costs and construction delays.

Canada's newest plant, the Darlington Nuclear Generating Station, east of Toronto, cost more than $13 billion (U.S.), seven times more than the first cost estimates.

Under the loan guarantee program, U.S. taxpayers would be automatically required to cover any defaults on the loans. In a February report to Congress, the Government Accountability Office said failure to properly account for default risks in the loan program was one factor that "could result in substantial financial costs to the taxpayer."  A 2003 Congressional Budget Office (CBO) report said the risk of utilities defaulting on loans for new nuclear plants is "very high—well above 50 percent."

"Smart investors walked away from new nuclear power plants decades ago," Block said. "There's no reason to use taxpayer dollars to sweeten the pot for nuclear power, especially when renewable energy sources hold so much promise for the economy and the environment. After half a century, the nuclear power industry should be able to do without massive government subsidies."

If Congress extends loan guarantees to nuclear power projects, UCS supports a guarantee program that is adequately structured and regulated to ensure renewable energy sources have a level playing field on which to compete with nuclear and coal. Moreover, guarantee amounts should not pose an imprudent financial risk to taxpayers.According to UCS, Congress should include a new national renewable electricity standard and guaranteed increases in fuel economy in the proposed energy bill.