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Needed: Clear Conditions for Federal Financing Nuclear Exports

  

Last week, the Development Finance Corporation (DFC), a new federal financing organization that Congress created to help the developing world, announced it was lifting a prohibition on supporting US civilian nuclear exports.  This announcement triggered a 30-day public comment period.

There’s only one problem:  There’s next to nothing to comment on. As I and former US Nuclear Regulatory Commissioners Victor Gilinsky and Peter Bradford note in a letter below to the House and Senate foreign affairs committee chairmen and ranking members, the DFC has yet to reveal what rules would apply to such nuclear projects. 

This all but renders the 30-day comment period meaningless. To fix this, Congress needs to get the DFC to clarify what conditions, if any, the corporation plans to place on such projects. Would the DFC financially support nuclear reactor projects for countries that lacked full-scope International Atomic Energy Agency (IAEA) safeguards on their nuclear activities or were not members of the Nuclear Nonproliferation Treaty (NPT)?  Might the DFC use its new equity investment authority to purchase shares of foreign firms, such as the Saudi Nuclear Energy Holding Company based in Riyadh? 

Would it matter how few American jobs a nuclear project produced compared to alternative investments? Would the DFC evaluate the energy investment it might make (nuclear or nonnuclear) by asking if it was the most economical way to meet a given country’s energy and environmental requirements?  Will the DFC secure such country-specific analyses in advance and, if so, how?  In the case of proposed nuclear projects, will the DFC rely on the assessments of nuclear lobbyists firms say?

The Senate and House foreign affairs committees and their staff should find out. They oversee the BUILD Act that created the DFC. If they are still in the dark on these matters before the 30-day comment period runs out July 8th, the DFC should not proceed to make any nuclear-related decisions. This is all the more so since Congress lets the DFC operate behind closed doors.

 

Jun 16, 2020

 

 

Dear Chairmen Risch and Engel and Ranking Members Menendez and McCaul,

 

Your foreign affairs committees oversee the International Development Finance Corporation (DFC).

On June 9th, the DFC announced its intent to lift the current ban on financing nuclear power programs overseas, reportedly in support of US reactors exports to the developing world. The public has a 30-day window to comment, but DFC has not revealed what rules would apply to such nuclear projects if the DFC decides to support them.

For there to be a sensible comment period it is essential for your committee to get answers to key questions, some of which are appended below. Only the Committee is in a position to obtain answers and make them public in time for the public comment period to have any value.

There is no rush to drop the ban. No advanced US reactors have yet been built or operated. Neither Westinghouse or GE are currently pushing large reactor exports.

DFC has only two members on its seven-man board that are from private industry. The rest are senior Administration officials including the Secretary of State and the Secretary of Commerce. As such, the DFC is not subject to federal sunshine regulations that would otherwise require the DFC to make all of its meetings open the US public. The DFC’s lack of transparency recently made news. The House and Senate Foreign Affairs Committees should insist that the DFC open the record of its deliberations, especially those related to nuclear energy, which carry potential risks to international security.

We urge your committees to secure answers from DFC to the key questions below and make them public well before the 30-day comment period on lifting the ban on supporting nuclear projects runs out July 8th.

 

Sincerely,

Henry Sokolski

Executive Director, The Nonproliferation Policy Education Center (NPEC) Former Defense Department Deputy for Nonproliferation Policy

Victor Gilinsky

NPEC Program Advisor Former US Nuclear Regulatory Commissioner

Peter Bradford

Former US Nuclear Regulatory Commissioner, Former chair, New York Public Utility Commission

 

 

Appendix

Questions on DFC lifting the ban on financing nuclear power programs overseas.

1. Would the DFC restrict extending financial support only to nuclear projects being built in countries that have full-scope International Atomic Energy Agency (IAEA) nuclear safeguards that adhere to the Additional Protocol? Only to countries that are members in full compliance with the Nuclear Nonproliferation Treaty (NPT)? Only to countries that have a formal civilian nuclear cooperative agreement with the United States? Does DFC have written policies on such eligibility? If so, will they be made available to the public before the end of the public comment period? Is the DFC willing to extend the comment period on lifting the proposed ban until it has made a DFC nuclear policy statement publicly available?

2. Would the DFC’s new authority to make equity investments allow it to buy shares of foreign and domestic nuclear holding companies, such as the Saudi Nuclear Energy Holding Company (SNEHC)? Will the DFC finance such exports in support of the construction of non-US nuclear reactor projects in Saudi Arabia or other Middle Eastern states?

3. Would lifting the ban allow the DFC to finance construction of current US reactor designs to states that are not considered to be developing states? (One report indicated that the DFC might finance construction of a large Westinghouse reactor in Poland)?

4. Why would the DFC, which has operated less than a year, lift the ban on financially supporting US nuclear exports now? Does DFC already have specific projects in mind?

5. Did any specific US nuclear firms request the DFC to remove the prohibition? Which ones and when?

6. The DFC reportedly has a budget of roughly $150 million for equity investments, which the Administration seeks to increase to $800 million in FY21. But advanced reactors are projected to cost $500 million to several billion dollars each and large power plants can cost several times more. How much does the DFC intend to allocate for supporting such nuclear exports and when?

7. Platts S & P Global reported this week that “industry sources” said that DFC “lacks the personnel and expertise to properly evaluate the financing of nuclear projects.” If so, who is the DFC using to do such analysis?

8. To what extent might the DFC board’s decisions rely on the board membership, which includes a member in private industry currently engaged in energy-related projects for such insights?

9. Has the DFC yet done any country-specific analysis indicating that nuclear energy is an economically sensible choice to meet specific developing states’ energy and environmental requirements, more so than natural gas systems or renewables or energy efficiency? Will the DFC conduct such analyses for each proposed nuclear project before deciding to lend it support? Will the DFC require that its investments go to projects likely to create U.S. jobs cost effectively?

10. How might such DFC investments support a strategy to compete with China’s One Belt One Road initiative, which is focused on energy related projects? Does the DFC have a strategy statement on this?

11. Is the plan to go toe-to-toe with China, attempting to meet developing states’ energy and environmental requirements with US reactors?

12. Given China’s competitive price advantage in completing capital construction projects, does it make sense to compete with China on the construction of power plants, nuclear or nonnuclear?

The Nonproliferation Policy Education Center (NPEC), is a 501 (c)3 nonpartisan, nonprofit, educational organization
founded in 1994 to promote a better understanding of strategic weapons proliferation issues. NPEC educates policymakers, journalists,
and university professors about proliferation threats and possible new policies and measures to meet them.
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