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Taxpayers Footing the Bill for the Nuclear Renaissance in Florida

Energy

Adam Chimienti

Participants gathered to protest the expansion of Florida Power & Light's two new nuclear reactors at Turkey Point Nuclear Generating Station in Homestead, FL.

The Wall Street Journal trumpeted the news late last week that the “nuclear renaissance” is alive and well, explaining how the Florida legislature has been instrumental in bringing this point home to its citizens. The problem is, the citizens of the Sunshine State didn’t really have much of a say in the matter.

Actually, it is doubtful that most even knew about the nuclear cost recovery legislation that has been hidden in the energy bills of customers of Florida Power & Light (FPL) and Progress Energy (now a Duke subsidiary) since 2006. The legislation is a way to get new nuclear power plants up and running on the backs of taxpayers. No one denies this. What has been denied is the rights of the people to know the costs that have been hoisted on their backs and what this means in terms of actual benefits. This is what the nuclear renaissance looks like.

Alex Flint of the Nuclear Energy Institute, as quoted in the Wall Street Journal article, was quick with his praise for this encouraging example from the ethically-challenged Florida politicians, for his preferred brand of “democracy”:

Florida's legislators did the right thing in allowing utilities to preserve the most effective option to finance new nuclear energy facilities if warranted by the state's utility regulators. Doing so gives the state the means to supply reliable, affordable, clean energy for future generations of Floridians.

Reliable? Affordable? Clean energy for future Floridians? Perhaps, the people over at the Nuclear Energy Institute don’t read the frightening reports coming daily from Fukushima, or perhaps they do and don’t give a damn. They can afford excellent health coverage and certainly don’t need to be concerned about their state legislators telling the federal government there is no need to extend Medicaid to its impoverished and uninsured citizens (another low-light from the Florida legislature’s most recent session).

If the average Floridian wanted to tune into the mildly-heated debates in the Florida House, they might have learned that one of the amendments added by opponents would have required a clear reference to the "recovery costs" on the utility customer’s bills. The majority of representatives in the House and Senate would not hear of it. They instead opted for the "idea" of functional representative democracy, as opposed to the practice. By claiming that the legislation was all about saving ratepayers money, many in Tallahassee were patting themselves on their backs for their achievements when the session ended last Friday.

Instead, the truth about their leadership and the notion of a nuclear renaissance is rather obvious. Genuine democratic institutions and the marketplace would never go ahead and accede to a nuclear renaissance in the age of Fukushima and the recent news reports about the Hanford site in Washington, San Onofre, and a host of other problematic plants around that should be shut down immediately. The cleanup costs for nuclear plants are astronomically excessive, especially in a time of austerity budgets. There is still no remotely responsible method of dealing with nuclear waste; the recent Federal court decision against the Department of Energy (DOE) that ultimately punishes the U.S. taxpayers for a political deadlock surrounding the dangerous issue of extremely toxic materials. Under the Nuclear Waste Policy Act of 1982, the DOE is primarily responsible for figuring out a solution to this mess. The environmental and economic legacies (inextricably linked) that we are leaving for future generations should be regarded as criminal, in a just world.

Returning to Tallahassee, since no insurers are willing to back these projects and the costs always spiral out of control, Florida had to go about it another way. The lawmakers there were told by their real constituents in the energy industry that the public simply had to pay for plants that shouldn’t and probably won’t ever get built. The bill SB 1472 was sent to Gov. Rick Scott for signing and the utility companies had to pretend that they were on the “losing side” of this “struggle.” After all, now they will have to march all the way over to the Public Service Commission every year to prove that they actually intend to finish the tax-payer funded utility projects. Poor fellows. However, because of loopholes in the law, these utility companies are able to make huge profits if the projects fail and permanently cease. In other words, they win no matter what.

How much are Florida utility customers paying exactly? It is estimated that around $1.5 billion has been raised since the law first came into play over six years ago. Yet, costs are projected to be around $50 a month per household by 2020 and, if you talk to the average Floridian, they probably couldn’t tell you what this money is for and certainly couldn’t tell you where is it going. Yet, these figures obscure some more obscene realities about nuclear power in this state.

For example, the plant at Crystal River, some 80 miles north of Tampa, closed earlier this year after a long and dangerous history. The plant was plagued by a host of problems making the “watch list” and considered one of the worst-run reactors in 1996. The original operators, Florida Progress Corporation, were cutting corners way back in the early days and this led to a history of problems with reinforcement in the containment building. Eventually, the plant would close multiple times and for long stretches. Duke Energy, a major U.S. nuclear company, had no choice but to close it down for good after it reviewed some very questionable repair estimates upon completing its merger with Progress, thereby forming the largest U.S. utility, in 2012.

On a recent trip to the Crystal River area of western Florida, replete with several national and state parks and a lot more beauty to discover aside from the famous manatees, a few locals told me all these expenses were unnecessary. The Crystal River nuclear plant’s closure was actually due to an absurd plan to replace steam generators, a routine upgrade that was done in dozens of other U.S. reactors by either one of two contractors. Progress wanted to cut costs and in an attempt to save $15 million dollars decided it would do the replacements itself. The ill-fated upgrades in 2009, and maintenance since then, now add up to devastating $1.3 billion, according to Tampa Bay Times. This reckless decision-making surely factored in the taxpayers unwitting support in case a bailout was required.

Meanwhile, the company has plans to build another nuclear power plant nearby in Levy County but costs keep skyrocketing. From original estimates of $5 billion in 2006, current estimates are roughly five times that amount. Worse yet, the date for going online was pushed back from 2016 to 2024. Citizens are outraged and the many seniors in the area are backed by the American Association of Retired Persons, which is opposed to the nuclear costs recovery scheme. Does that affect the overall outcome of the debate around this bilking of taxpayers? Predictably, no.

Florida Power & Light is also planning two new reactors in the Everglades as an addition to their Turkey Point nuclear plant. They are fresh off a public relations victory based on an expansion and upgrades to their existing reactors at Turkey Point and up further north near Port St. Lucie, FL. These plants are in some of the least seismically active places in the country so don’t fret about earthquakes. What is worrisome though are the hurricanes that come sweeping through, with increasing intensity predicted. Hurricane Andrew gave the Turkey Point nuclear plant a thrashing in 1992 when the main water tank and smokestack that were destroyed, in addition to a loss of off-site power. As Alan Farago has pointed out on Counterpunch, there is also the issue of rising seas to contend with and he offers us a glimpse of the nightmarish future in the beautiful and unique swamplands of southern Florida:

Long after seas rise to flood everything around Turkey Point but the 300 acre fill pad to be elevated 20 feet above sea level, [it will look] to future generations like a gargantuan, radioactive flat-topped Mayan temple.

This is what the nuclear industry in a dramatically changing climate looks like.

To circumvent the criticism about this that may come from the camps of Monbiot-bots out there, clearly if nuclear power plants continue to get shut down (Kewaunee in Wisconsin has just been officially closed and California’s San Onofre’s inevitable closure seems likely to follow) the power source must get replaced. It will more than likely get replaced with natural gas and that means more fracking. Of course, this is a terrible choice and I am not about to argue the lesser of two evils. It appears that U.S. citizens need to seriously evaluate the power of their utility companies and challenge them every step of the way forward. They are uniquely influential when it comes to mapping out our energy futures. If left unchallenged, they will make terrible choices that are in their very narrow interests, to hell with their own and everyone else’s grandchildren.

Florida’s energy sector is a classic example of this ridiculous dance the legislators and power company executives do around the citizenry, proclaiming all that hard work of legislating and developing, operating and maintaining power plants is for us. Meanwhile, they grow ever richer and less accountable and average people pay costs that are well beyond the financial realms of existence. Fossil fuels and nuclear are both incredibly dangerous to the health of our planet and species, especially when exploited at the magnitude they are in the 21st century. They threaten our children and our children’s children’s children, unborn and unnamed. They need to be stopped. There is a need for a renaissance but it is of a popular grassroots nature that will roar with intensity and be shaped by the strength and beauty of the affected, who bare their scars and redefine the nature of power.

Visit EcoWatch’s ENERGY and NUCLEAR pages for more related news on this topic.

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Ola Elvestrun, Norway's environment minister, announced Thursday that it is freezing its contributions to the Amazon Fund, and will no longer be transferring €300 million ($33.2 million) to Brazil. In a press release, the Norwegian embassy in Brazil stated:

Given the present circumstances, Norway does not have either the legal or the technical basis for making its annual contribution to the Amazon Fund.

Brazilian President Jair Bolsonaro reacted with sarcasm to Norway's decision, which had been widely expected. After an official event, he commented: "Isn't Norway the country that kills whales at the North Pole? Doesn't it also produce oil? It has no basis for telling us what to do. It should give the money to Angela Merkel [the German Chancellor] to reforest Germany."

According to its website, the Amazon Fund is a "REDD+ mechanism created to raise donations for non-reimbursable investments in efforts to prevent, monitor and combat deforestation, as well as to promote the preservation and sustainable use in the Brazilian Amazon." The bulk of funding comes from Norway and Germany.

The annual transfer of funds from developed world donors to the Amazon Fund depends on a report from the Fund's technical committee. This committee meets after the National Institute of Space Research, which gathers official Amazon deforestation data, publishes its annual report with the definitive figures for deforestation in the previous year.

But this year the Amazon Fund's technical committee, along with its steering committee, COFA, were abolished by the Bolsonaro government on 11 April as part of a sweeping move to dissolve some 600 bodies, most of which had NGO involvement. The Bolsonaro government views NGO work in Brazil as a conspiracy to undermine Brazil's sovereignty.

The Brazilian government then demanded far-reaching changes in the way the fund is managed, as documented in a previous article. As a result, the Amazon Fund's technical committee has been unable to meet; Norway says it therefore cannot continue making donations without a favorable report from the committee.

Archer Daniels Midland soy silos in Mato Grosso along the BR-163 highway, where Amazon rainforest has largely been replaced by soy destined for the EU, UK, China and other international markets.

Thaís Borges.

An Uncertain Future

The Amazon Fund was announced during the 2007 United Nations Climate Change Conference in Bali, during a period when environmentalists were alarmed at the rocketing rate of deforestation in the Brazilian Amazon. It was created as a way of encouraging Brazil to continue bringing down the rate of forest conversion to pastures and croplands.

Government agencies, such as IBAMA, Brazil's environmental agency, and NGOs shared Amazon Fund donations. IBAMA used the money primarily to enforce deforestation laws, while the NGOs oversaw projects to support sustainable communities and livelihoods in the Amazon.

There has been some controversy as to whether the Fund has actually achieved its goals: in the three years before the deal, the rate of deforestation fell dramatically but, after money from the Fund started pouring into the Amazon, the rate remained fairly stationary until 2014, when it began to rise once again. But, in general, the international donors have been pleased with the Fund's performance, and until the Bolsonaro government came to office, the program was expected to continue indefinitely.

Norway has been the main donor (94 percent) to the Amazon Fund, followed by Germany (5 percent), and Brazil's state-owned oil company, Petrobrás (1 percent). Over the past 11 years, the Norwegians have made, by far, the biggest contribution: R$3.2 billion ($855 million) out of the total of R$3.4 billion ($903 million).

Up till now the Fund has approved 103 projects, with the dispersal of R$1.8 billion ($478 million). These projects will not be affected by Norway's funding freeze because the donors have already provided the funding and the Brazilian Development Bank is contractually obliged to disburse the money until the end of the projects. But there are another 54 projects, currently being analyzed, whose future is far less secure.

One of the projects left stranded by the dissolution of the Fund's committees is Projeto Frutificar, which should be a three-year project, with a budget of R$29 million ($7.3 million), for the production of açai and cacao by 1,000 small-scale farmers in the states of Amapá and Pará. The project was drawn up by the Brazilian NGO IPAM (Institute of Environmental research in Amazonia).

Paulo Moutinho, an IPAM researcher, told Globo newspaper: "Our program was ready to go when the [Brazilian] government asked for changes in the Fund. It's now stuck in the BNDES. Without funding from Norway, we don't know what will happen to it."

Norway is not the only European nation to be reconsidering the way it funds environmental projects in Brazil. Germany has many environmental projects in the Latin American country, apart from its small contribution to the Amazon Fund, and is deeply concerned about the way the rate of deforestation has been soaring this year.

The German environment ministry told Mongabay that its minister, Svenja Schulze, had decided to put financial support for forest and biodiversity projects in Brazil on hold, with €35 million ($39 million) for various projects now frozen.

The ministry explained why: "The Brazilian government's policy in the Amazon raises doubts whether a consistent reduction in deforestation rates is still being pursued. Only when clarity is restored, can project collaboration be continued."

Bauxite mines in Paragominas, Brazil. The Bolsonaro administration is urging new laws that would allow large-scale mining within Brazil's indigenous reserves.

Hydro / Halvor Molland / Flickr

Alternative Amazon Funding

Although there will certainly be disruption in the short-term as a result of the paralysis in the Amazon Fund, the governors of Brazil's Amazon states, which rely on international funding for their environmental projects, are already scrambling to create alternative channels.

In a press release issued yesterday Helder Barbalho, the governor of Pará, the state with the highest number of projects financed by the Fund, said that he will do all he can to maintain and increase his state partnership with Norway.

Barbalho had announced earlier that his state would be receiving €12.5 million ($11.1 million) to run deforestation monitoring centers in five regions of Pará. Barbalho said: "The state governments' monitoring systems are recording a high level of deforestation in Pará, as in the other Amazon states. The money will be made available to those who want to help [the Pará government reduce deforestation] without this being seen as international intervention."

Amazonas state has funding partnerships with Germany and is negotiating deals with France. "I am talking with countries, mainly European, that are interested in investing in projects in the Amazon," said Amazonas governor Wilson Miranda Lima. "It is important to look at Amazônia, not only from the point of view of conservation, but also — and this is even more important — from the point of view of its citizens. It's impossible to preserve Amazônia if its inhabitants are poor."

Signing of the EU-Mercusor Latin American trading agreement earlier this year. The pact still needs to be ratified.

Council of Hemispheric Affairs

Looming International Difficulties

The Bolsonaro government's perceived reluctance to take effective measures to curb deforestation may in the longer-term lead to a far more serious problem than the paralysis of the Amazon Fund.

In June, the European Union and Mercosur, the South American trade bloc, reached an agreement to create the largest trading bloc in the world. If all goes ahead as planned, the pact would account for a quarter of the world's economy, involving 780 million people, and remove import tariffs on 90 percent of the goods traded between the two blocs. The Brazilian government has predicted that the deal will lead to an increase of almost $100 billion in Brazilian exports, particularly agricultural products, by 2035.

But the huge surge this year in Amazon deforestation is leading some European countries to think twice about ratifying the deal. In an interview with Mongabay, the German environment ministry made it very clear that Germany is very worried about events in the Amazon: "We are deeply concerned given the pace of destruction in Brazil … The Amazon Forest is vital for the atmospheric circulation and considered as one of the tipping points of the climate system."

The ministry stated that, for the trade deal to go ahead, Brazil must carry out its commitment under the Paris Climate agreement to reduce its greenhouse gas emissions by 43 percent below the 2005 level by 2030. The German environment ministry said: If the trade deal is to go ahead, "It is necessary that Brazil is effectively implementing its climate change objectives adopted under the [Paris] Agreement. It is precisely this commitment that is expressly confirmed in the text of the EU-Mercosur Free Trade Agreement."

Blairo Maggi, Brazil agriculture minister under the Temer administration, and a major shareholder in Amaggi, the largest Brazilian-owned commodities trading company, has said very little in public since Bolsonaro came to power; he's been "in a voluntary retreat," as he puts it. But Maggi is so concerned about the damage Bolsonaro's off the cuff remarks and policies are doing to international relationships he decided to speak out earlier this week.

Former Brazil Agriculture Minister Blairo Maggi, who has broken a self-imposed silence to criticize the Bolsonaro government, saying that its rhetoric and policies could threaten Brazil's international commodities trade.

Senado Federal / Visualhunt / CC BY

Maggi, a ruralista who strongly supports agribusiness, told the newspaper, Valor Econômico, that, even if the European Union doesn't get to the point of tearing up a deal that has taken 20 years to negotiate, there could be long delays. "These environmental confusions could create a situation in which the EU says that Brazil isn't sticking to the rules." Maggi speculated. "France doesn't want the deal and perhaps it is taking advantage of the situation to tear it up. Or the deal could take much longer to ratify — three, five years."

Such a delay could have severe repercussions for Brazil's struggling economy which relies heavily on its commodities trade with the EU. Analysists say that Bolsonaro's fears over such an outcome could be one reason for his recently announced October meeting with Chinese President Xi Jinping, another key trading partner.

Maggi is worried about another, even more alarming, potential consequence of Bolsonaro's failure to stem illegal deforestation — Brazil could be hit by a boycott by its foreign customers. "I don't buy this idea that the world needs Brazil … We are only a player and, worse still, replaceable." Maggi warns, "As an exporter, I'm telling you: things are getting very difficult. Brazil has been saying for years that it is possible to produce and preserve, but with this [Bolsonaro administration] rhetoric, we are going back to square one … We could find markets closed to us."

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