On July 23, 2020, the U.S. International Development Finance Corporation (DCF) announced its intention to open the door to funding opportunities for nuclear projects abroad.
In a summary of its decision following a voluntary 30-day comment period, DCF announced that it has enabled “its full suite of finance products to support all civil nuclear projects that meet the United States’ highest safety security, and nonproliferation standards and laws.” In doing so, it modified the definition of “renewable energy” in its Environmental and Social Policy and Procedures (ESPP) to allow for consideration of nuclear projects. The former ESPP specifically excluded nuclear power from the definition of renewable energy. Removing this prohibition aligns the definition with the United States Energy Information Administration’s definition, as discussed in our previous blog, “US Government Proposes to Lift Ban on Financing Nuclear Energy Projects Overseas.” DCF CEO Adam Boehler boasted that this decision will “accelerate growth in developing economies with limited energy resources,” after the proposal received over 800 comments with overwhelming support and bi-partisan participation.
According to DCF, comments to the proposed policy fell into three main categories:
(1) Driving Global Development: A majority of comments emphasized the increasing need for “affordable, reliable, and clean energy” in developing countries. Prohibition to nuclear project funding deprived communities of energy sources best-suited for their needs. In particular, cost competitive energy options can help contribute to economic growth and development in low income areas. Some comments did pose concerns that nuclear energy would not help those communities that lacked access to energy and argued the benefits of renewables over nuclear energy. However, DCF responded that it will continue to prioritize developing countries, pursuant to the BUILD Act.
(2) Advancing U.S. Foreign Policy: Commenters largely viewed the proposed change as a way to increase U.S. competitiveness in the nuclear industry. Countries like Russia and China have long been the predominant forces in development of nuclear power projects abroad and these changes would help advance the U.S.’s heightened safety and non-proliferation standards. Additionally, comments discussed that DCF funding will carry great weight not only as a monetary mechanism, but also as a demonstration of government support.
(3) Generating Returns for American Taxpayers: Comments that fell into this category were also largely supportive and posited that the proposed changes would lead to an increase in jobs as well as a return on investment to fund future nuclear research and development. While a few comments demonstrated concern that DCF might fund “unproven technologies,” DCF assured that it uses “stringent requirements” when deciding to fund any project and will continue to do so with nuclear projects.
What happens now?
The comments will inform DCF’s implementation strategy for the policy moving forward. In particular, DCF promises to consider a variety of issues, like waste management, when evaluating potential funding for nuclear projects and to implement stringent requirements on safety, security, and non-proliferation standards.
For additional information, please contact blog authors.