economy

The Nuclear Information & Resource Service (NIRS) has covered the unfolding story of the US nuclear power industry's clamor for new subsidies and bailouts since it started in 2014. Purely as a spectator sport, it might have been entertaining to watch the country's largest utilities go from proclaiming a "Nuclear Renaissance" a decade ago to peddling the message that "Nuclear Matters".¹

But there is just too much at stake to treat it like a game. The utility industry's ramped-up efforts to block renewable energy and horde billions of our clean energy dollars to prop up old nukes risks both climate and nuclear disaster.² Most of these proposals have been failing, thanks to the dogged persistence of grassroots activists and clean energy groups – and the outrageous sticker price of subsidies the industry needs. In fact, earlier this month, the two-year saga of FirstEnergy's US$8 billion nuclear-plus-coal bailout plan seems to have ended, with what amounts to a consolation gift to a couple FirstEnergy utility companies.³ Still an outrageous corporate giveaway, but no subsidies for nuclear or coal, even after it seemed like a done deal a few months ago.

But New York Governor Cuomo's decision in August to award a 12-year, US$7.6 billion subsidy package to four aging reactors ‒ including reversing Entergy's decision to close the FitzPatrick reactor in January 2017 ‒ has put wind into the industry's sails.⁴ Even that chapter isn't over, with lawsuits already being filed and several more expected.⁵ And environmental groups last week launched a new campaign to get Governor Cuomo to smell the coffee and cancel what will not only be the largest corporate give-away in the state's history, but relegate clean energy to second-class status behind old nukes.⁶

The lingering uncertainty hasn't stopped the industry PR and lobbying machines, though ‒ after all, billions of dollars in free money is at stake! Exelon, FirstEnergy, and other companies touted New York as a national model, and began urging states from Connecticut to Illinois to follow suit. Having to get each state to line up is going to be a tall order. In addition to FirstEnergy's failed Ohio bailout, Exelon hasn't been able to sell a much smaller five-year, US$1.5 billion subsidy in Illinois. And nukes in Connecticut and New Jersey are still making millions in profits each year, without heaping billions more in subsidies onto ratepayers' utility bills.⁷

So the industry has started pushing for a national bailout.⁸ NIRS thought we should take a look at what that might cost. Later this month, we will publish a report showing that a federal nuclear subsidy based on the EPA's estimate of the social cost of carbon would be massively expensive: up to US$280 billion (€255bn) by 2030. Even if it were only applied to reactors that are already becoming unprofitable ‒ more than half of the nukes in the country, according to a recent report⁹ ‒ it would total at least US$160 billion.

Please sign the NIRS petition

NIRS is launching a petition to the next President urging the new administration to say no to a national nuclear bailout, and to end subsidies for nuclear and fossil fuels. We hope you'll sign the petition and help us get to our goal of 100,000 signatures. Whoever wins the election in November needs to know that another nuclear bailout isn't going to fly with the American people. To sign the petition please visit www.tinyurl.com/nirs-petition

References:

1. https://safeenergy.org/2014/10/14/why-nuclear-matters-doesnt-matter/

2. https://safeenergy.org/2016/03/17/the-nuclear-industrys-game-plan-2/

3. www.utilitydive.com/news/updated-ohio-regulators-scale-back-firstenergy-...

4. https://safeenergy.org/2016/08/02/new-york-just-proved-why-bailing-out-n...

5. www.politico.com/states/new-york/city-hall/story/2016/10/national-advoca...

6. www.stopthecuomotax.org/

7. www.njspotlight.com/stories/16/08/04/new-jersey-unlikely-to-follow-new-y...

8. https://gain.inl.gov/SitePages/DOE%20Congressional%20Event.aspx

9. www.nytimes.com/2016/07/20/business/energy-environment/how-renewable-ene...

Several experts have recently commented on the impacts of nuclear disasters on the growth of nuclear power ‒ all of them downplaying the impact of accidents and emphasizing economics instead.

Commenting on the March 1979 Three Mile Island accident, Amory Lovins from the Rocky Mountain Institute writes:¹

"Three months earlier, on Christmas Day 1978, Business Week's scathing 10-page cover story described how nuclear power's US sales had collapsed ‒ and it faced in Europe and Japan "the most serious crisis in its 30-year history" ‒ for lack of a market. US orders had plummeted from 41 in 1973 to zero in 1978; 40 per cent of their cancellations occurred before 1979, leaving many others teetering on the brink and cancelled soon thereafter. Similarly, orders in the past decade so dwindled that global nuclear capacity shrank in two of the three years before the Fukushima disaster.

"The nuclear industry blames Three Mile Island, Chernobyl and Fukushima for scaring off the public. But capital markets had already fled to better returns and lower risks in renewable competitors that got [US]$380bn of investment last year (more than 10 times nuclear's), produce more electricity, and enjoy public enthusiasm. Any remaining pockets of nuclear enthusiasm rely on theology not economics and on conscripted not voluntary investment."

Physicist Frank von Hippel commented on the Chernobyl disaster in Scientific American:²

"Superficially, it is reasonable to leap to the conclusion that fear generated by the Chernobyl disaster turned the public against nuclear power ‒ so strongly that even now, three decades later, there is serious doubt that it will ever be a major alternative to climate-threatening fossil fuels. In the 15 years before the Chernobyl accident, an average of about 20 new nuclear power reactors came online each year. Five years after the accident, the average had dropped to four a year. But the full story is more complex."

von Hippel notes that widespread public concern was not the only reason for the sharp drop in nuclear construction post-Chernobyl:

"Such worries contributed to the drop in new plant construction post-Chernobyl, but there were other reasons. One was that the growth of electric power consumption in developed countries slowed dramatically at around the same time because the price of electricity stopped falling. In 1974 the U.S. Atomic Energy Commission was projecting that the U.S. would require the equivalent of 3,000 large nuclear power reactors by 2016. Today it would take just 500 such plants to generate as much electricity as we consume on average ‒ although more capacity would be required for times of peak consumption.

"Another factor is that, contrary to the claims of boosters in the 1950s that nuclear power would be "too cheap to meter," it is quite expensive. Fuel costs are low, but construction costs are huge, especially in North America and Europe ‒ [US]$6 billion to $12 billion per reactor. This expense has been driven in part by more stringent safety standards but also by the fact that, with fewer plants being built, there are fewer construction workers qualified to build them, resulting in costly construction delays for corrections of mistakes. …

"On the scale needed to shift human energy use away from fossil fuels, therefore, nuclear power has become a helpful but relatively marginal player. Chernobyl damaged its prospects, but it was not the only reason for the technology's decline."

Peter Bradford, a former member of the U.S. Nuclear Regulatory Commission, recently wrote in the Bulletin of the Atomic Scientists:³

"Fukushima did not undermine a budding nuclear renaissance. For economic reasons, there was none. The 30-plus reactors that had applied for licenses in the United States in 2008-09 had shrunk by two-thirds before March 2011. The cost overruns at Olkiluoto and Flamanville were well underway and owed nothing to events in Japan. But Fukushima did tilt many nations away from the needed governmental benevolence sharply."

Projections for global nuclear growth have fallen sharply since Fukushima ‒ the IAEA's current 'low' estimate for nuclear capacity in 2030 is down 29.5% from the pre-Fukushima low estimate, while the high estimate for 2030 is down 21%⁴ ‒ but as the above authors point out, Fukushima isn't the only reason for the retreat.

Lovins is a nuclear critic whereas von Hippel and Bradford are nuclear-neutrals. How do nuclear advocates explain the stagnation of nuclear power and the failure of the nuclear renaissance to materialize? There are plenty of explanations, including blaming (or crediting) anti-nuclear campaigners ‒ often dramatically overemphasizing the impact of anti-nuclear campaigners. Many of the explanations emphasize economics and boil down to the failure of governments to provide sufficient subsidies. Some explanations concentrate on the difficulty of financing capital costs.

Former World Nuclear Association executive Steve Kidd is one of a small number of nuclear advocates who speaks openly and honestly. Kidd writes:⁵

"[T]here is no unique financing mechanism that the relevant institutions can come up with to rescue a nuclear project that has questionable returns or too high a degree of risk for investors. This is the real problem: nuclear projects have largely become too expensive and risky to offer lenders the degree of assurance they require. ... Even with government incentives such as loan guarantees, fixed electricity prices and certain power offtake, nuclear projects today struggle to make economic sense, at least in the developed world. ... World interest rates are currently low, which removes one disadvantage of capital intensive projects. These low rates indicate that there is funding available but a possible shortage of viable projects."

A recent column in the Financial Times illustrates how safety concerns and economics have come together in the mess that is the European Pressurised Reactor (EPR):⁶

"When French and German scientists began in the mid-1990s to design a new reactor, they were also seeking to engineer public opinion. The fruit of their work, the European Pressurised Reactor, was designed to be safer than any that had gone before. ... It is those very safety features, say critics, that are responsible for making the EPR, in the words of Greenwich University energy expert Steve Thomas, "a bastard to build". Projects to construct EPRs in France and Finland have been fraught with difficulty, although another in China appears to be progressing better. ...

"Today, the Finnish plant on Olkiluoto Island is nine years behind schedule and €5.2bn over budget. The project is led by Finnish utility TVO, which has fallen out so badly over costs with main contractor Areva that the two companies have gone to court. The protracted difficulties in Finland helped bring Areva to its knees, prompting January's plan to sell its reactor business to EDF. This has added more stress to EDF, whose finance director Thomas Piquemal resigned this month, saying Hinkley Point could sink the company. ...

"The sheer bulk required by the EPR's design also caused problems once a project to build one in France finally got under way after the avidly pro-nuclear Nicolas Sarkozy replaced Mr Chirac as president in 2007. The project at Flamanville on the Channel coast is, unlike its Finnish cousin, led by EDF. But it has fared little better. It is six years behind schedule and €7.2bn over budget."

The U.S. has been spared the EPR fiasco. A total of seven EPRs were planned at six sites in the U.S.⁷ Four EPR construction licence applications were submitted to the Nuclear Regulatory Commission (NRC) but all four applications have been abandoned or suspended. In February 2015, Areva asked the NRC to suspend work on EPR design certification until further notice.⁸

But nuclear power's economic problems are just as acute in the U.S. A recent article in Power Magazine quoted New York Times reporter Eduardo Porter saying that "nuclear energy is toast" and is "dropping dramatically as a share of global electricity", and nuclear economics are "dismal".⁹

A recent article published by the U.S. Institute of Electrical and Electronics Engineers asks whether nuclear power's 'death spiral' has begun in the U.S.¹⁰ It begins: "U.S. nuclear power plant operators are fighting a war on two fronts: Crashing prices for natural gas and accelerating market penetration of renewable energy have both contributed to dramatic drops in wholesale power price levels ‒ in some states, they've fallen by more than two-thirds over the past decade. This has left nuclear power, whose operating costs are pretty much fixed, with few options other than surrender."

The IEEE article quotes former NRC chair Gregory Jaczko: "It's been a widely held belief that nuclear is incredibly cheap to operate. That was the case 10 years ago, when nuclear plants were cash cows. That's not the case today, especially as the plants age."

References:

1. Amory Lovins, 21 March 2016, 'Capital markets had already fled from nuclear', www.ft.com/intl/cms/s/0/f52d6628-ef54-11e5-aff5-19b4e253664a.html

2. Frank von Hippel, 1 April 2016, 'Chernobyl Didn't Kill Nuclear Power', www.scientificamerican.com/article/chernobyl-didn-apos-t-kill-nuclear-po...

3. Peter A. Bradford, 20 March 2016, 'When the Unthinkable is Deemed Impossible: Reflecting on Fukushima', http://thebulletin.org/commentary/when-unthinkable-deemed-impossible-ref...

4. IAEA series: 'Energy, Electricity and Nuclear Power Estimates', iaea.org

5. Steve Kidd, 11 June 2015, 'Nuclear myths – is the industry also guilty?', www.neimagazine.com/opinion/opinionnuclear-myths-is-the-industry-also-gu...

6. Tom Burgis, Kiran Stacey and Michael Stothard, 20 March 2016, 'EDF's nuclear troubles rooted in caution', www.ft.com/intl/cms/s/0/a31b76ae-ec2a-11e5-888e-2eadd5fbc4a4.html

7. Beyond Nuclear, February 2015, 'Epic Fail: Électricité de France and the “Evolutionary Power Reactor”', http://static1.1.sqspcdn.com/static/f/356082/25937356/1423508130603/Epic...

8. World Nuclear News, 6 March 2015, 'US EPR plans suspended', www.world-nuclear-news.org/RS-US-EPR-plans-suspended-0603157.html

9. Aaron Larson, 23 March 2016, 'Is Nuclear Energy "Toast"?', www.powermag.com/is-nuclear-energy-toast/

10. Peter Fairley, 25 Mar 2016, 'Has U.S. Nuclear Power's Death Spiral Begun?', http://spectrum.ieee.org/energy/nuclear/has-us-nuclear-powers-death-spir...

Belgium is a microcosm of the ageing nuclear power industry. The International Energy Agency predicts a "wave of retirements"¹ − almost 200 reactor shut downs by 2040 − and Oilprice.com argues that it is unclear whether new build will offset the "tidal wave" of reactor shut downs over the next 20 years.² Belgium is at the sharp edge of this new nuclear era: the Era of Nuclear Decommissioning, the END.

Belgium's seven reactors − all pressurized water reactors − are all operated by Electrabel, a GDF Suez subsidiary. Electrabel owns 100% of two reactors, 89.8% of four reactors and 50% of one reactor. EDF and SPE are the other companies with ownership stakes.³

When all seven reactors were operating, they supplied about half of Belgium's electricity. All are due to be shut down by the end of 2025. Belgium's nuclear phase-out law mandates the shut down of six reactors when they have operated for 40 years − with the exception of Tihange 1, which is due to be shut down in 2025 when it has operated for 50 years.

All seven reactors have been in the news over the past year:

• Doel 1: Shut down when its 40-year licence expired in February 2015.
• Doel 2: Now operating but due to be shut down in December 2015. GDF Suez / Electrabel is negotiating a possible licence extension for Doel 1 and 2 to operate for another 10 years, and seeking regulatory approval.
• Doel 3 and Tihange 2: Offline since March 2014 due to concerns about the integrity of reactor pressure vessels; future uncertain.
• Doel 4: Offline for more than four months in 2014 due to suspected sabotage of the high-pressure turbine. Now operating.
• Tihange 1: Now in its fortieth year of operation but licensed to operate for another 10 years. Greenpeace has initiated a legal challenge against the licence extension, because of the failure to carry out an Environmental Impact Assessment and cross-boundary consultation in line with Belgium's obligations under the Espoo Convention (the Convention on Environmental Impact Assessment in a Transboundary Context). Court hearings are scheduled for March 24 and the judge is expected to present his verdict soon after.
• Tihange 3: Briefly shut down following a fire in December 2014. Now operating.

Policies and politics

Nuclear power policies and laws have been in flux over the past two decades:³

• In 1999, the government announced that reactor lifetimes would be limited to 40 years, and banned further reprocessing.
• In 2003, the Belgian Parliament passed legislation banning the building of new power reactors and limited the operating lives of existing reactors to 40 years.
• In 2009, the government decided to postpone the phase-out by 10 years, so that it would not begin before 2025. This would allow the licensing of reactor life extensions. Reactor operators agreed to pay a special tax of €215−245 million (US$227−259m) per year from 2010−14, and more thereafter. GDF Suez also agreed to subsidise renewables and demand-side management by paying at least €500 million (US$528m) for both, and it maintaining 13,000 jobs in energy efficiency and recycling.

However, an election in April 2010 occurred before the agreed proposals were passed by parliament and thus the nuclear phase-out law remains in place. In July 2012 Belgium's Council of Ministers announced that Doel 1 and 2 were to close in 2015 after 40 years of operation, but Tihange 1 would be permitted to operate to 2025. This was written into law in December 2013. The government said that it had rewritten the 2003 law so that its current stance could not be changed by decree, and therefore the timing of the phase-out "is now final."^3,4

In December 2014 the Council of Ministers from the new ruling coalition government agreed that Doel 1 and 2 could continue operating for a further 10 years, to 2025. Energy minister Marie-Christine Marghem said that it was an "unconditional prerequisite" that the Belgian nuclear regulator − the Federal Agency for Nuclear Control (FANC) − approve licence extensions for the two reactors. She noted that Belgium's planned nuclear phase-out by the end of 2025 remains in place.⁴

The government decision to allow Doel 1 and 2 to continue to operate for a further 10 years was partly a result of problems with other reactors − in particular the outages of Tihange 2 and Doel 3 and uncertainty about their future. GDF Suez / Electrabel is in negotiation with the Belgian government over the Doel 1 and 2 licence extensions but an agreement has not yet been reached − hence the shut down of Doel 1 in February in accordance with the nuclear phase-out law. Further, the regulator FANC has not yet approved licence extensions for Doel 1 and 2.⁴

GDF Suez / Electrabel is unwilling to invest up to €600−700 million (US$634−740m) in necessary upgrades to Doel 1 and 2 unless the government provides a "clear legal and economic framework" to justify the investment. Negotiations include removal of the nuclear generation tax introduced by a previous government − according to the World Nuclear Association, that tax cost the company €397 million (US$419m) in 2014.⁵

As Rianne Teule, campaign director for Greenpeace Belgium, put it: "In order to agree to such a large investment, Electrabel demands 'a clear legal and economic framework'. Read: 'a good deal to reduce the investment risks'. It's the Belgian people who will pay the price, one way or another. If not through increased taxes, when Electrabel's payments to the state decrease, then through increased electricity prices when Electrabel passes on their investments to their clients."⁶

In 2012 the government passed laws increasing the tax on nuclear operators. The government set a total contribution from nuclear operators for 2012 of €550 million (US$581m), of which Electrabel had to pay €479 million (US$506m). In June 2013 Electrabel filed an appeal to Belgium's Constitutional Court, claiming the tax violated a protocol signed by the company and the federal government in 2009, which included a lower tax, and took no account of declining revenue from nuclear power generation. In April 2014 the Court of First Instance in Brussels rejected Electrabel's claim. The company appealed, but the appeal was rejected in July 2014. Electrabel said it would continue "to examine all potential legal means in order to defend its interests" and "examine all options concerning the future of its nuclear activities in Belgium."^3,7

According to Greenpeace, nuclear power is part of the energy security problem, not part of the solution: "The reason for the potential electricity supply problem is Belgium's excessive dependency (55%) on unreliable nuclear power. A political decision to extend the lifetime of two old reactors will not mitigate this acute supply problem. It will take at least a year to implement the necessary safety upgrades, and to order and fabricate new fuel for them. Extending the legally fixed phase-out calendar will undermine investment in real climate solutions such as energy efficiency and renewables."⁸

Tihange 2 and Doel 3 − compromised reactor pressure vessels

Doel 3 and Tihange 2 were taken offline in 2012 when ultrasound testing suggested the presence of cracks in their reactor vessels. Further investigations indicated that the defects are so-called hydrogen 'flakes'. FANC allowed Electrabel to restart the reactors in May 2013. However the reactors were again taken offline in March 2014 after Electrabel reported that tests to investigate the mechanical strength of irradiated specimens of similar material "did not deliver results in line with experts' expectations".⁹ FANC said that "a fracture toughness test revealed unexpected results, which suggested that the mechanical properties of the material were more strongly influenced by radiation than experts had expected."¹⁰

In January 2015, FANC said the process to restart the reactors had been extended from April to July so that Electrabel could answer further questions. In February, FANC announced that additional inspections revealed more extensive flaking within the pressure vessels of the two reactors than previously identified. FANC said 13,047 flaw indications have now been found in the vessel of Doel 3 and 3,149 in that of Tihange 2. Further test results are expected by April.^1,9

FANC Director General Jans Bens said: "This may be a global problem for the entire nuclear industry. The solution is to implement worldwide, accurate inspections of all 430 nuclear power plants."¹¹

Shortly after approving the restart of Doel 3 and Tihange 2 in May 2013 − a decision that was contested at the time and seems unwise in hindsight − Bens was seriously downplaying nuclear risks: "The harbour of Antwerp is being filled with windmills, and the chemical industry is next to it. If there is an accident like a break in one of the wings, that is a guillotine. If that goes through a chloride pipe somewhere, it will be a problem of a bigger magnitude than what can happen at Doel. Windmills are more dangerous than nuclear power plants."¹²

Two materials scientists have said the unexpected flaws in Doel 3 and Tihange 2 could be related to corrosion from normal operation, with potential implications for reactors worldwide. Prof. Digby MacDonald said: "The consequences could be very severe ... like fracturing the pressure vessel. Loss of coolant accident. This would be a leak before break scenario. ... My advice is that all reactor operators, under the guidance of the regulatory commissions should be required to do an ultrasonic survey of the pressure vessels. All of them." Prof. Walter Bogaerts said: "If I had to estimate, I would really be surprised if it ... had occurred nowhere else.^13,14

Electrabel reacted to the latest news by saying that it may be willing to "sacrifice" one of the two reactors to allow destructive testing to learn more about the problem.¹⁵

Doel 3 and 4: Fire and sabotage

On 1 December 2014 at 10:30am, a fire began in the electrical substation transformer building at Doel and led to an emergency shutdown of reactor #3. The fire was put out by the local fire service and the reactor was restarted at 5am the following day.¹⁶ Fires at nuclear power plants pose significant risks to reactor safety due to the potential disruption of the electrical supply to vital reactor safety functions. The risks in Belgium are all the greater because of the high population density and the concentration of seven reactors at just two sites.¹⁷

Sabotage at Doel 4

The Belgium nuclear industry was shaken on 5 August 2014 when it was revealed that sabotage had caused, in Electrabel's words, "significant damage" at Doel 4. Lubricant had been discharged from the high-pressure turbine through a valve which had probably been opened deliberately by a worker. Some 6,000 professionals from 15 companies participated in the repair of the turbine. The repair involved the manufacture of 2500 blades at four plants in China, Croatia, Italy and Switzerland.¹⁸ The reactor was restarted on December 19.¹⁹

The END of nuclear power

When the last reactor is shut down in 2025, that won't be the end of Belgium's nuclear program but the beginning of the END − the Era of Nuclear Decommissioning.

In addition to the decommissioning of seven reactors, Belgians will somehow have to manage: high-level nuclear waste currently stored at Dessel and at reactor plants; larger volumes of low- and intermediate-level waste; and other nuclear facilities now in various stages of decommissioning including a MOX fuel fabrication plant and the Eurochemic reprocessing plant at Dessel.

References:

1. International Energy Agency, 2014, 'World Economic Outlook 2014', www.worldenergyoutlook.org
2. Nick Cunningham, 19 Feb 2015, 'Is There Any Hope Left For Nuclear Energy?', http://oilprice.com/Alternative-Energy/Nuclear-Power/Is-There-Any-Hope-L...
3. World Nuclear Association, 17 Feb 2015, 'Nuclear Power in Belgium', www.world-nuclear.org/info/Country-Profiles/Countries-A-F/Belgium/
4. WNN, 12 Feb 2015, 'Belgian reactor shutdown imminent', www.world-nuclear-news.org/C-Belgian-reactor-shutdown-imminent-1202156.html
5. WNA Weekly Digest, 27 Feb 2015, http://us1.campaign-archive2.com/?u=140c559a3b34d23ff7c6b48b9&id=b933e03098
6. Rianne Teule, 22 Dec 2014, 'Belgium's government is Electrabel's slave', www.greenpeace.org/international/en/news/Blogs/nuclear-reaction/belgiums...
7. World Nuclear News, 18 July 2014, 'Belgian court rejects nuclear tax complaint', www.world-nuclear-news.org/C-Belgian-court-rejects-nuclear-tax-complaint...
8. Eloi Glorieux, 13 Sept 2014, 'Belgium's nuclear reactors are phasing themselves out', www.greenpeace.org/international/en/high/news/Blogs/nuclear-reaction/bel...
9. WNN, 17 Feb 2015, 'Further flaws found in Belgian reactor vessels', www.world-nuclear-news.org/RS-Further-flaws-found-in-Belgian-reactor-ves...
10. FANC, 13 Feb 2015, 'Doel 3/Tihange 2: new update',
www.fanc.be/nl/news/doel-3/tihange-2-new-update/745.aspx
11. 13 Feb 2015, 'Veel meer scheuren in kerncentrales dan gedacht', http://deredactie.be/cm/vrtnieuws/binnenland/1.2238955
12. Justin McKeating, 23 May 2013, 'Fact not fiction: Renewable energy is safer than nuclear power', www.greenpeace.org/international/en/news/Blogs/nuclear-reaction/fact-not...
13. Greenpeace, 17 Feb 2015, 'Thousands more cracks found in Belgian nuclear reactors, Belgian regulatory head warns of global implications', www.greenpeace.org/international/en/press/releases/Thousands-more-cracks...
14. Greenpeace, 15 Feb 2015, 'Nuclear Reactor Pressure Vessel Crisis', www.beyondnuclear.org/storage/kk-links/Briefing_cracking_RPV_Greenpeace_...
15. Greenpeace, 17 Feb 2015, 'Thousands of cracks in Belgian reactors, potentially a global nuclear problem', www.greenpeace.org/international/en/news/Blogs/nuclear-reaction/cracks-i...
16. Greenpeace, 3 Dec 2014, www.greenpeace.org/international/en/high/news/Blogs/nuclear-reaction/bel...
17. Bart Martens, December 2014, 'De Economische Impact van een Kernramp In Doel', study commissioned by Greenpeace Belgium, www.greenpeace.org/belgium/Global/belgium/report/2014/RapportNL.pdf
18. WNN, 5 Dec 2014, 'Doel 4 restart approaches', www.world-nuclear-news.org/C-Doel-4-restart-approaches-0512145.html
19. 19 Dec 2014, 'Doel 4 reactor reopens', http://deredactie.be/cm/vrtnieuws.english/News/1.2186676

Claims in late January from US President Barack Obama and Indian Prime Minister Narendra Modi that they had reached an agreement on accident liability arrangements have been met with scepticism.

In a detailed analysis posted on the website of the (Indian) Institute for Defence Studies and Analysis, G. Balachandran writes:

"In a sort of official statement, US Ambassador to India Richard Verma was reported in the media to have said – although the US Embassy refused to either clarify or deny his having ever made such a statement – that the liability issue was to be resolved through a "memorandum of law within the Indian system" that would not require a change of the Indian law. Later on, the spokesperson of the Indian Ministry of External affairs clarified the situation by the mere statement that "We will indeed be providing you that information and that will be copious in nature, it will answer all your questions." This was done ... in a Frequently Asked Questions (FAQ) format, although this still leaves many questions unanswered. For instance, it does not answer how the understanding between the two sides will be formalised. On the contrary, the FAQ answers raise further questions that need to be answered. Obviously, a FAQ will not carry much weight in business decisions that have to be made in respect of nuclear transfers."¹

Pro-nuclear commentator Dan Yurman said:

"There is no signed piece of paper, joint communique, or treaty between the US and India that says US nuclear firms, including Westinghouse and GE Hitachi, will now be exempt from the provisions of a nuclear liability law enacted with the support of the BJP, the political party that swept PM Nodi into office. ... No one on the US side is buying it. Spokesmen for both Westinghouse and GE Hitachi were noncommittal in response to questions from the news media about the so-called "breakthrough" deal and the insurance pool. At best their responses have been lukewarm."²

Washington Post reporters Annie Gowen and Steven Mufson wrote:

"We've been characterizing it as a breakthrough or breakthrough understanding," said a senior U.S. administration official on Tuesday. But, the official said, "It is not a signed piece of paper but a process that led us to a better understanding of how we might move forward. ..."

The key issue will be whether the conflict between international law and Indian law can be waved away by a memorandum from India's attorney general. The memorandum would have to say that the 2010 liability law "doesn't mean what it says," said a Washington lawyer familiar with the issues but who asked for anonymity to protect his professional relationships. "The fear is that the U.S. government will say this is good enough," the lawyer added. "Even if the [Indian] attorney general comes out with a memorandum saying the law doesn't apply to suppliers, that's not binding on Indian courts."³

The Associated Press reported:

"India and America's declaration of a breakthrough in contentious nuclear energy cooperation has been met with a lukewarm response from industry and analysts. Few expect the potentially lucrative Indian market to suddenly become less complicated for U.S. nuclear companies."⁴

Other obstacles remain in addition to the liability issue, as energy and nuclear policy consultant Mycle Schneider told Deutsche Welle:

"In reality, there is no real market for foreign nuclear companies in India, unless they bring their own funding. Under free market conditions it is not possible anymore to build a nuclear power plant anywhere in the world. So if new reactors are built in India or elsewhere, the projects are highly subsidized, either by the government − the taxpayer − or the ratepayer."⁵

Schneider is a nuclear critic but his views on nuclear economics can also be found in the industry literature. World Nuclear News recently ran an article by Edward Kee from the Nuclear Economics Consulting Group, who notes that of the 69 reactors under construction around the world, only one is in a liberalized electricity market.⁶

References:

1. G. Balachandran, 10 Feb 2015, 'Some issues in respect of Indian's nuclear liability law', www.idsa.in/idsacomments/issuesinIndiansnuclearliabilitylaw_gbalachandra...
2. Dan Yurman, 8 Feb 2015, 'India's Nuclear Deal; Good for Diplomats; Bad for US Nuclear Firms', http://neutronbytes.com/2015/02/08/indias-nuclear-deal-good-for-diplomat...
3. Annie Gowen and Steven Mufson, 4 Feb 2015, 'Is the India nuclear agreement really the 'breakthrough' Obama promised?',
www.washingtonpost.com/world/is-the-india-nuclear-agreement-really-the-b...
4. Associated Press, 27 Jan 2015, India nuke deals still thorny for US despite 'breakthrough' www.washingtonpost.com/business/india-nuke-deals-still-thorny-for-us-des...
5. 28 Jan 2015, Breakthrough in US-India civil nuclear deal 'more symbolism than reality', www.dw.de/breakthrough-in-us-india-civil-nuclear-deal-more-symbolism-tha...
6. WNN, 4 Feb 2015, 'Can nuclear succeed in liberalized power markets?', www.world-nuclear-news.org/V-Can-nuclear-succeed-in-liberalized-power-ma...

In its efforts to promote nuclear commerce with the United States, India's Narendra Modi government has run into a dichotomy that lies at the heart of this industry. While multinational nuclear suppliers, such as G.E. and Westinghouse publicly insist that their products are extraordinarily safe, they are adamant that they will not accept any liability should an accident occur at one of their reactors.

The joint announcement by Mr. Modi and US President Barack Obama in January raised concerns that the government would move to effectively indemnify suppliers, contrary to the interests of potential victims. The list of "frequently asked questions" (FAQs) on nuclear liability released by the Ministry of External Affairs on February 8 confirms the suspicion that the Modi government is trying to reinterpret India's liability law by executive fiat in order to protect nuclear vendors (http://tinyurl.com/india-liability).

The government has disingenuously suggested that it achieved the recent "breakthrough" by establishing an insurance pool to support suppliers. However, to focus on this arrangement is to miss the wood for the trees as even a cursory analysis of the economics of nuclear plants shows.

A section in the Indian law called the "right of recourse" allows the Nuclear Power Corporation of India Ltd. (NPCIL) to claim compensation from suppliers up to a maximum of Rs.1,500 crore (US$240 million; €214m). This pales in comparison with the total cost of the six planned Westinghouse reactors at Mithi Virdi in Gujarat; estimates from similar plants under construction in the US suggest that this may be as high as Rs.2.5 lakh crore (US$40.1 billion; €35.8b). In the US, all nuclear plant operators must have third-party insurance for at least US$375 million (€335m), and suppliers could easily set aside a small portion of their profits to do the same for reactors sold in India.

Problematic principle

What suppliers are worried about is not the amount, but the principle. More concretely, if the law places some responsibility on suppliers, then a future Indian government could use this to gain leverage by forcing them to pay substantially more for a serious disaster. Moreover, their executives could be held accountable under other civil and criminal statutes in India. The FAQs released by the government are meant to reassure nuclear vendors on these counts.

The FAQs claim that the provision allowing the NPCIL a right of recourse "is to be read ... in the context of ... the contract between the operator and supplier." This goes beyond the law, where the right of recourse exists independently of a contract.

In 2010, when a parliamentary standing committee suggested such a linkage, its recommendation was rejected by the Cabinet after a public outcry. Although the FAQs later state that "a provision that was expressly excluded from the statute cannot be read into the statute by interpretation," this is precisely what the government is doing here.

The FAQs suggest that the government is also committed to the interests of the public sector NPCIL which "would insist that ... contracts contain provisions that provide for a right of recourse consistent with Rule 24 of CLND Rules of 2011." However, this is a cunning sleight of hand. A central element of these rules is that "the provision for right of recourse ... shall be for the duration of initial license," which is usually granted only for five years. In contrast, the promised lifetime of modern reactors is 60 years, and failure rates tend to increase in later years. Therefore, linking the right of recourse to a contract is an attempt to water down supplier liability to a meaningless level.

The FAQs also declare that suppliers cannot be "asked to pay more compensation in the future ... than currently provided under the law." However, this ignores the fact that the law itself has a provision for revising liability, which states that "the Central Government may ... from time to time ... specify, by notification, a higher amount."

A revision of the cap with time is only natural. Several decades from now, Rs.1,500 crore may be worth much less than it is currently. Therefore, the government's move to perpetually limit supplier liability to this nominal amount defies basic economic principles, and implies that victims will receive a lower compensation, in real terms, for future accidents.

Finally, the FAQs assert that the liability act, ipso facto, takes away the rights of victims to sue suppliers even under other laws. If this interpretation of the law is correct, then it implies that suppliers cannot be prosecuted even for criminal negligence.

Double standards

This provides a striking example of double standards. Under US law, suppliers can be held legally responsible for accidents. Consequently, for decades, the US refused to join any international convention that would require it to legally indemnify suppliers. When it engineered the Convention on Supplementary Compensation for Nuclear Damage, it inserted a "grandfather clause" to ensure that it would not have to alter its own law. In contrast, the Indian government seems willing to meekly surrender the rights of its citizens.

It is sometimes argued that India must make these concessions to "repay" the US for its help in facilitating India's access to international nuclear commerce. US policymakers pushed for such access in a calculated attempt to induce India to support its geostrategic objectives and to ensure that US companies would have access to the emerging Indian nuclear market. However, just because the Manmohan Singh government accepted this Faustian pact − and even cast an unconscionable vote against Iran at the International Atomic Energy Agency − does not mean that the country needs to repay this self-serving "favour" endlessly by bending its laws and spending billions of dollars on US reactors.

Although the question of liability is somewhat abstruse, it deserves greater public attention because it serves as a clear lens to understand the central conflict involved in India's nuclear expansion: the desire of nuclear vendors to have profitability without accountability and the interests of ordinary people who could be potential victims. The government's attempt to resolve this conflict in favour of the industry is a revealing indicator of its priorities.

M.V. Ramana and Suvrat Raju are physicists with the Coalition for Nuclear Disarmament and Peace. Ramana is the author of 'The Power of Promise: Examining Nuclear Energy in India', 2012.

Reprinted from The Hindu, 16 Feb 2015, www.thehindu.com/opinion/op-ed/comment-profitability-without-accountabil...

South Africa's nuclear power program has become a soap opera over the past month. President Jacob Zuma said in his annual State of the Nation address on February 12 that the US, South Korea, Russia, France and China "will be engaged in a fair, transparent, and competitive procurement process to select a strategic partner or partners to undertake the nuclear build programme."

But the National Treasury said on February 1 that it has no idea where the money will come from, and a treasury spokesperson issued a statement saying "the government will not make a financial commitment it cannot afford." Zuma said details on financing would be released in the March budget, but in response the treasury insisted that the "nuclear build is so far not part of those decisions."¹

Zuma is promoting the construction of 9.6 gigawatts of nuclear capacity in addition to the two existing Koeberg reactors (1.8 GW). He said on February 12 that the first new reactor would begin operation in 2023. The following day, Nuclear Industry Association of South Africa managing director Knox Msebenzi said the start date had been pushed back by two years: "The first plant was due in 2023, but it's been very delayed. Part of the delay has to do with politics. The latest date is 2025, but there may be other delays. Maybe we're perceived by government as not read."²

Russia's BOO boys

The September 2014 South Africa−Russia nuclear cooperation agreement has been published by the Mail & Guardian newspaper despite the South African government's refusal to release it. It appears that the agreement was leaked but was later found to be publicly available on the website of the legal department of the Russian foreign ministry.³

The agreement − which is not binding until and unless it is ratified by the National Assembly and the National Council of Provinces − goes well beyond comparable agreements concluded between South Africa and Korea in 2011 and the US in 2009. It creates an expectation that Russian nuclear technology will be used in favour of alternative vendors − and may breach a constitutional requirement for open and competitive tendering. The agreement would indemnify Russian vendors from any liability arising from nuclear accidents. It would provide Russian vendors with regulatory concessions and "special favourable treatment" in tax and other financial matters.³

Officials in the department of energy, international relations, trade and industry, as well as in the treasury and the chief state law adviser, raised concerns about clauses in the draft agreement − but those concerns were largely ignored.^3,4

The Mail & Guardian editorialised: "The way the Russian nuclear deal was handled can only be to ensure a politically driven process, unhampered by technical or financial considerations. ... [I]t is a lopsided, murky and legally fraught arrangement that hands most of the aces to Russia's state-owned nuclear company and carries significant risks for South Africa."⁵

On February 20, the Mail & Guardian reported on a "top secret" presentation by South Africa's energy department, proposing a closed government-to-government procurement of new nuclear power stations instead of a transparent and competitive tender.⁴

'National security' is put forward by a state law adviser as a possible justification to sidestep the constitutional requirement for open and competitive tendering.⁴ Patriotism is the last refuge of the scoundrel and 'national security' is the last refuge of the nuclear industry.

There is one obvious reason why South Africa might favour Russian reactors − an expectation that Russia will provide capital funding under Rosatom's Build-Own-Operate (BOO) model. A draft of the agreement suggested that reactors would be vendor financed, but the final version defers any decision on funding.⁵

It is doubtful whether Russia can afford to employ the BOO model in South Africa given its heavy BOO commitments elsewhere and Russia's broader economic problems.⁶

Spy stories

On February 24 The Guardian newspaper reported on the contents of a cache of secret intelligence documents and cables. A December 2009 file says that foreign agencies had been "working frantically to influence" South Africa's nuclear power program, identifying US and French intelligence as the main players.⁷

The documents also discuss the 2007 break-in at the Pelindaba nuclear research centre. Previously believed to be a failed attempt to steal highly enriched uranium, the documents raise the possibility that the would-be thieves were acting on behalf of China and were seeking to steal design information about South Africa's Pebble Bed Modular Reactor R&D program.⁷ That claim has been met with scepticism.⁸ In any case South Africa abandoned its pebble bed program and it is a low priority project in China.

Meanwhile, Greenpeace Africa announced on February 27 that it had filed papers in the Pretoria High Court to compel the energy minister to update the country’s inadequate nuclear liability regulations. Greenpeace Africa executive director Michael O’Brien Onyeka said: "Shockingly, the levels of financial security for nuclear license holders have not been amended, updated or revised in more than 10 years. This means there is no lawfully applicable determination for the levels of financial security as required by the Act, and what is currently contained in the regulations is both out of date, and completely inadequate, which is in contravention of South Africa’s constitution.”⁹

References:

1. 9 Feb 2015, 'Nuclear News Roundup for February 9, 2015', http://neutronbytes.com/2015/02/08/nuclear-news-roundup-for-february-9-2...
2. 13 Feb 2015, 'Nuclear reactor now delayed until 2025', www.iol.co.za/scitech/technology/news/nuclear-reactor-now-delayed-until-...
3. Lionel Faull, 13 Feb 2015, 'Exposed: Scary details of SA's secret Russian nuke deal', http://mg.co.za/article/2015-02-12-exposed-scary-details-of-secret-russi...
4. 20 Feb 2015, 'Top secret' nuclear plan ducks scrutiny, http://mg.co.za/article/2015-02-19-top-secret-nuclear-plan-ducks-scrutiny
5. 13 Feb 2015, 'Editorial: 'Atomic Tina' blows SA away', http://mg.co.za/article/2015-02-12-atomic-tina-blows-sa-away
6. Lisa Steyn, 20 Feb 2015, 'SA's nuclear deal with Russia is far from done', http://mg.co.za/article/2015-02-19-sas-nuclear-deal-with-russia-is-far-f...
7. Seumas Milne and Ewen MacAskill, 24 Feb 2015, 'Africa is new 'El Dorado of espionage’, leaked intelligence files reveal', www.theguardian.com/world/2015/feb/24/africa-el-dorado-espionage-leaked-...
8. 1 March 2015, 'Ghosts of Pelindaba nuclear site break-in return to haunt South Africa', http://neutronbytes.com/2015/03/01/ghosts-of-pelindaba-nuclear-site-brea...
9. 27 Feb 2015, 'We’re taking the Energy Minister to court: Greenpeace', http://mybroadband.co.za/news/energy/120560-were-taking-the-energy-minis...

In the last issue of Nuclear Monitor, we noted that some nuclear insiders and lobbyists are starting to confront the reality that the global pattern of nuclear power stagnation is likely to continue. With the number of 'operable' power reactors declining from 443 to 437 from January 2005 to January 2015, the rhetoric about a nuclear renaissance is becoming increasingly implausible.

Former World Nuclear Association executive Steve Kidd, for example, states that the "picture of the current reactors gradually shutting down with numbers of new reactors failing to replace them has more than an element of truth given the recent trends."¹

Likewise, in a January 28 article for Nuclear Engineering International, nuclear economics consultant Edward D. Kee is downbeat about prospects in the US: "The US nuclear power industry geared up a decade ago for a nuclear renaissance that did not happen and is not likely to happen. ... Today, only five reactors are under construction in the US. ... Aside from these projects, no new US nuclear projects are expected to start construction in the next decade or longer. ... The US nuclear power industry will likely face unfavourable electricity industry conditions for another 20 years or longer."²

Similar opinions about the uranium industry are becoming increasingly common. Uranium and energy consultants Julian Steyn and Thomas Meade wrote in Nuclear Engineering International last October: "The uranium market is characterised by oversupply, which is forecast to continue through most the current decade. The oversupply situation has been exacerbated by the greater-than-initially-expected decline in demand following Fukushima as well as the increase in primary supply during the same period. Existing production capacity and output from mines under development could cause total supply to exceed demand through the year 2020."³

And in November, investment strategist Christopher Ecclestone from Hallgarten & Company wrote: "There has indeed been a nuclear winter verging on an Ice Age over the last few years with bad news heaped upon bad news within the context of a pretty dismal financing situation for mining all around. ... The yellow mineral had made fools and liars of many in recent years, including ourselves."⁴

Still, there is some hype around uranium, some of it based on implausible projections of nuclear growth. The Seeking Alpha website, for example, claims that uranium demand "is set to soar over the next 15 years as the number of reactors worldwide more than doubles from today's 437, with 557 more reactors already in the works."⁵

But even those prone to hype are mostly arguing that the uranium industry has to pick up because it couldn't get any worse. Thus uranium mining executive Jim Paterson wrote in December: "I believe it is an absolutely stunning time to be an investor in our business. But not stunning like how you feel after being punched in the nose repeatedly for almost four years, as participants in our industry have been. Rather, the valuations of the companies in the uranium sector are so deeply discounted, while the decade's long runway to demand growth is so clearly marked in front of us, that the opportunity for future gains is stunning."⁶

Massive stockpiles

Jim Paterson emphasises China's "staggering" nuclear power growth plans. He forgets that China has a history of failing to meet nuclear power projections and no hope of meeting the current target of 58 gigawatts (GW) by 2020.⁷ And he ignores the fact that China has amassed a huge uranium inventory.

According to Australian investment bank Macquarie, there are "serious question marks" about China's uranium requirements: "China is clearly the most positive story globally when it comes to nuclear-power-capacity expansion. The concern, however, is that China has already procured a substantial amount of uranium well in excess of what it has consumed and that this advance purchasing might limit its need to enter the market to source material over the next few years."⁸

Macquarie believes that China has enough uranium stockpiled to meet domestic demand for about seven years at forecast 2020 consumption rates − which is around three times greater than the current consumption rate.⁸

China is not the only country with large stockpiles. Raymond James analyst David Sadowski said in March 2014 that "many utilities are sitting on near-record piles" of uranium.⁹ Japan is estimated to have stockpiles of around 100 million pounds (or 45,000 tonnes) of uranium oxide.¹⁰ To put that in perspective, world uranium requirements for power reactors last year amounted to around 171 million pounds (78,000 tonnes). It will likely take a decade or more before Japan's stockpile is consumed given the protracted nature of the reactor restart process.

RBC Capital Markets analysts said in June 2014 that worldwide supply currently exceeds demand, and that it does not expect the uranium industry's situation to improve until at least 2021 because of accumulated inventories.¹¹

With stagnant demand and large stockpiles, uranium miners are left clutching at straws. Some hope that supply from Russia might be curbed in response to Western sanctions, thus breathing some life into the uranium industry elsewhere. Some hope that dwindling secondary supply sources − in particular, the end of the US−Russia Megatons to Megawatts uranium downblending program − will breathe life into the uranium industry. But the Megatons to Megawatts program ended a year ago and has had little or no impact.

David Sadowski noted in August 2014: "[T]he end of the Megatons to Megawatts high-enriched uranium (HEU) deal was long anticipated to usher in a new period of higher uranium prices. But the same plants that were used to down-blend those warheads can now be used for underfeeding and tails re-enrichment. In this way, the Russian HEU-derived source of supply that provided about 24 million pounds (24 Mlb) to the market did not disappear completely; the supply level was just cut roughly in half."¹²

And if there was a shortfall, surplus weapons material is just one of the secondary sources that can reduce demand for primary mine production. Other secondary sources are underfeeding at enrichment plants (getting more uranium-235 from a given volume of uranium ore), re-enrichment of tails material, government and commercial inventories, and uranium recycle from reprocessing plants.

Rio Tinto

Rio Tinto has established itself as one of the uranium industry's underperformers. The company used to be one of the world's top five uranium producers, along with Kazatomprom, Cameco, AREVA and ARMZ/Uranium One.³ No more, due to problems at the Ranger mine (Northern Territory, Australia) and the Rossing mine (Namibia), including leach tank failures at both mines in December 2013.

Energy Resources of Australia (ERA), 68% owned by Rio Tinto, operates the Ranger mine. ERA recorded a loss of A$188 million (€130m; US$147m) in 2014¹³, with losses over the past five years totally A$500 million (€345m; US$390m).¹⁴ ERA had to buy uranium on the spot market last year to cover contract shortfalls in the aftermath of the leach tank failure.¹⁵

The open pit mine at Ranger has been exhausted and ERA is milling ore stockpiles and also hoping to develop the Ranger 3 Deeps underground mine project. The company − notorious for its defeated attempt to mine uranium at Jabiluka in the late 1990s despite the unanimous opposition of Mirarr Aboriginal Traditional Owners − will decide this year whether to proceed with Ranger 3 Deeps. If ERA cancels the project, processing of stockpiles will be complete in two years, after which there will be no uranium mining or milling in the Northern Territory.

References:

1. Steve Kidd, 21 Jan 2015, 'Is climate change the worst argument for nuclear?', www.neimagazine.com/opinion/opinionis-climate-change-the-worst-argument-...
2. Edward D. Kee, 28 Jan 2015, 'US nuclear industry in decline', www.neimagazine.com/features/featureus-nuclear-industry-in-decline-4498254/
3. Julian Steyn and Thomas Meade, 1 Oct 2014, 'Uranium market doldrums continue', www.neimagazine.com/features/featureuranium-market-doldrums-continue-439...
4. Christopher Ecclestone, 10 Nov 2014, 'Ecclestone on NexGen Energy – A Survivor of the Nuclear Winter', http://investorintel.com/nuclear-energy-intel/nexgen-energy-nxe-v-surviv...
5. 4 Dec 2014, 'Spot U3O8 And Uranium Miners Rebound And Retrace As Japan Readies Nuclear Reactor Restarts', http://seekingalpha.com/article/2729395-spot-u3o8-and-uranium-miners-reb...
6. Jim Paterson, 21 Dec 2014, 'Stunning Uranium Industry Growth Ahead', http://resourceinvestingnews.com/80036-uranium-price-nuclear-energy-chin...
7. 19 Dec 2014, 'China's nuclear power plans: safety and security challenges', Nuclear Monitor #796, www.wiseinternational.org/nuclear-monitors
8. Rhiannon Hoyle, 17 Jan 2015, 'Uranium Rally Running Low on Juice', http://online.barrons.com/articles/uranium-rally-running-low-on-juice-14...
9. 29 March 2014, 'Conjuring Profits from Uranium's Resurgence: Interview with David Sadowski', http://theenergycollective.com/streetwiser/360291/conjuring-profits-uran...
10. 15 Jan 2015, 'Charting Uranium's Gain, Brent Cook Looks For Sweet Spots In The Athabasca Basin', http://seekingalpha.com/article/2822326-charting-uraniums-gain-brent-coo...
11. Vicky Validakis, 6 June, 2014, 'Price collapse sees junior miner ditch uranium to focus on property development', www.miningaustralia.com.au/news/price-collapse-sees-junior-miner-ditch-u...
12. Peter Byrne, 5 Aug 2014, 'Why predictions of uranium price boom flopped', www.mineweb.com/mineweb/content/en/mineweb-uranium?oid=249357&sn=Detail
13. WNN, 6 Feb 2015, http://us1.campaign-archive2.com/?u=140c559a3b34d23ff7c6b48b9&id=0658a5e...
14. ECNT and ACF, 9 Feb 2015, 'Rio's investment delay adds difficulty to Ranger 3 Deeps mine proposal', media release.
15. 7 Feb 2015, 'Rio uranium unit ERA's loss widens to $188m', www.theaustralian.com.au/business/mining-energy/rio-uranium-unit-eras-lo...

Global nuclear power capacity increased slightly in 2014 according to the World Nuclear Association¹:

• Five new reactors (4.76 gigawatts (GW)) began supplying electricity (three in China, one each in Argentina and Russia), and three were permanently shut down (Vermont Yankee, USA; Fukushima Daiichi #5 and #6).
• There are now 437 'operable' reactors (377.7 GW) compared with 435 reactors (375.3 GW) a year ago. Thus the number of reactors increased by two (0.5%) and nuclear generating capacity increased by 2.4 GW (0.6%). (For comparison, around 100 GW of solar and wind power capacity were built in 2014, up from 74 GW in 2013.²)
• Construction started on just three reactors during 2014, one each in Belarus, the United Arab Emirates, and Argentina. A total of 70 reactors (74 GW) are under construction.

Thus a long-standing pattern of stagnation continues. Global nuclear power capacity grew by 10.6% in the two decades from 1995−2014, and just 2.6% in the decade from 2005−2014.³

The pattern of stagnation is likely to persist. Steve Kidd, a nuclear consultant who worked for the World Nuclear Association for 17 years, wrote in a May 2014 article: "Upper scenarios showing rapid nuclear growth in many countries including plants starting up in new countries now look very unlikely, certainly before the late 2020s. If there is to be a nuclear renaissance, it is now much more likely to happen later, and with a new generation of reactors. On the other hand, predictions that another major accident would shut down nuclear in lots of countries have been negated by the experience of Fukushima. Although there remain some uncertainties, the outlying upper and lower cases are much less credible than before."⁴

Despite 20 years of stagnation, the World Nuclear Association remains upbeat. Its latest report, The World Nuclear Supply Chain: Outlook 2030, envisages the start-up of 266 new reactors by 2030.⁵ The figure is implausible − it would require completion of the 70 reactors under construction, start-to-finish construction of another 196 reactors, and start-to-finish construction of dozens more reactors to replace those that are shut down ... all in the space of 15 years! If only the World Nuclear Association took bets on its ridiculous projections.

Nuclear Energy Insider is more sober and reflective in an end-of-year review published in December: "As we embark on a new year, there are distinct challenges and opportunities on the horizon for the nuclear power industry. Many industry experts believe that technology like Small Nuclear Reactors (SMR) represent a strong future for nuclear. Yet, rapidly growing renewable energy sources, a bountiful and inexpensive supply of natural gas and oil, and the aging population of existing nuclear power plants represent challenges that the industry must address moving forward."⁶

Steve Kidd is still more downbeat, arguing that nuclear advocates have not made much progress gaining public acceptance over the past few years.⁷ Kidd writes: "[W]e have seen no nuclear renaissance (instead, a notable number of reactor closures in some countries, combined with strong growth in China) ... Countries such as Germany and Switzerland that claim environmental credentials are moving strongly away from nuclear. Even with rapid nuclear growth in China, nuclear's share in world electricity is declining. The industry is doing little more than hoping that politicians and financiers eventually see sense and back huge nuclear building programmes. On current trends, this is looking more and more unlikely. The high and rising nuclear share in climate-friendly scenarios is false hope, with little in the real outlook giving them any substance. Far more likely is the situation posited in the World Nuclear Industry Status Report⁸ ... Although this report is produced by anti-nuclear activists, its picture of the current reactors gradually shutting down with numbers of new reactors failing to replace them has more than an element of truth given the recent trends."

Kidd's comments on renewables are also worth quoting: "The nuclear industry giving credence to climate change from fossil fuels has simply led to a stronger renewables industry. Nuclear seems to be "too difficult" and gets sidelined − as it has within the entire process since the original Kyoto accords. And now renewables, often thought of as useful complements to nuclear, begin to threaten it in power markets when there is abundant power from renewables when the wind blows and the sun shines."⁷

Kidd proposes reducing nuclear costs by simplifying and standardising current reactor designs. Meanwhile, as the International Energy Agency's World Economic Outlook 2014 report noted, nuclear growth will be "concentrated in markets where electricity is supplied at regulated prices, utilities have state backing or governments act to facilitate private investment." Conversely, "nuclear power faces major challenges in competitive markets where there are significant market and regulatory risks, and public acceptance remains a critical issue worldwide."⁹

Four countries supposedly driving a nuclear renaissance

Let's briefly consider countries where the number of power reactors might increase or decrease by 10 or more over the next 15−20 years. Generally, it is striking how much uncertainty there is about the nuclear programs in these countries.

China is one of the few exceptions. China has 22 operable reactors, 27 under construction and 64 planned. Significant, rapid growth can be expected unless China's nuclear program is derailed by a major accident or a serious act of sabotage or terrorism.¹⁰

In the other three countries supposedly driving a nuclear renaissance − Russia, South Korea and India − growth is likely to be modest and slow.

Russia has 34 operating reactors, nine under construction and 31 planned. Only three reactors have begun operation over the past decade, and the pattern of slow growth is likely to continue. As for Russia's ambitious nuclear export program, Steve Kidd noted in October 2014 that it "is reasonable to suggest that it is highly unlikely that Russia will succeed in carrying out even half of the projects in which it claims to be closely involved".¹¹

South Korea has 23 operating reactors, five under construction and eight planned. Earlier plans for rapid nuclear expansion have been derailed by the Fukushima disaster, a major scandal over forged safety documents, and a hacking attack on Korea Hydro's computer network.¹² Growth will be, at most, modest and slow.

India has 21 operating reactors, six under construction and 22 planned. But India's nuclear program is in a "deep freeze" according to a November 2014 article in the Hindustan Times.¹³ Likewise, India Today reported on January 8: "The Indian nuclear programme is on the brink of distress. For the past four years, no major tender has gone through − a period that was, ironically, supposed to mark the beginning of an Indian nuclear renaissance in the aftermath of the landmark India−US civil nuclear deal."¹⁴

India's energy minister Piyush Goyal said in November 2014 that the government remains "cautious" about developing nuclear power. He pointed to waning interest in the US and Europe: "This government would like to be cautious so that we are not saddled with something only under the garb of clean energy or alternate energy; something which the West has discarded and is sought to be brought to India."¹⁵

A November 2014 article in The Hindu newspaper notes that three factors have put a break on India's reactor-import plans: "the exorbitant price of French- and U.S.-origin reactors, the accident-liability issue, and grass-roots opposition to the planned multi-reactor complexes."¹⁶ In addition, unresolved disagreements regarding safeguards and non-proliferation assurances are delaying US and European investment in India's nuclear program.¹⁷

Saudi Arabia last year announced plans to build 16 reactors by 2032. Already, the timeline has been pushed back from 2032 to 2040.¹⁸ As with any country embarking on a nuclear power program for the first time, Saudi Arabia faces daunting logistical and workforce issues.¹⁹ Numerous nuclear supplier are lining up to supply Saudi Arabia's nuclear power program but political obstacles could easily emerge, not least because Saudi officials (and royalty) have repeatedly said that the Kingdom will build nuclear weapons if Iran's nuclear program is not constrained.²⁰

South Africa's on-again off-again nuclear power program is on again with plans for 9.6 GW of nuclear capacity in addition to the two operating reactors at Koeberg.²¹ In 2007, state energy utility Eskom approved a plan for 20 GW of new nuclear capacity. Areva's EPR and Westinghouse's AP1000 were short-listed and bids were submitted. But in 2008 Eskom announced that it would not proceed with either of the bids due to a lack of finance. Easy come, easy go.

Thus the latest plan for 9.6 GW of new nuclear capacity in South Africa is being treated with scepticism. Academic Prof. Steve Thomas noted in a July 2014 report: "Overall, a renewed call for tenders (or perhaps bilateral negotiations with a preferred bidder) is likely to produce the same result as 2008: a very high price for an unproven technology that will only be financeable if the South African public, either in the form of electricity consumers or as taxpayers, is prepared to give open ended guarantees."²²

Pro-nuclear commentator Dan Yurman is also sceptical: "Depending on who's pricing analysis you accept, the reactors alone will cost between [US]$5000 (Rosatom) and $6500/Kw (Eskom) or between $48 billion and $62.4 billion. Adding in balance of plant equipment and power line infrastructure, and the total price tag heads north to between $65 billion and $84 billion. Given that the intended power purchase firm is state-owned Eskom, which is perpetually broke due to government resistance to rate increases, the entire exercise seems implausible at this scale. ... Almost no one believes that as long as Zuma is in power that anything remotely resembling an orderly procurement process is likely to take place."²³

Iran has one operable power reactor. Last year, Russia and Iran signed a contract to build two power reactors, and they signed a protocol envisaging possible construction of an additional six reactors.²⁴

Plans for significant nuclear power expansion in one or two other countries − such as the Pakistani government's plan for 40 GW of nuclear capacity by 2050 − are implausible.²⁵

Nuclear negawatts

Now to briefly consider those countries where a significant decline of nuclear power is possible or likely over the next 15−20 years.

Patterns of stagnation or slow decline in north America and western Europe can safely be predicted. Steve Kidd wrote in May 2014 that uranium demand (and nuclear power capacity) "will almost certainly fall in the key markets in Western Europe and North America" in the period to 2030.⁴ In January 2014, the European Commission forecast that EU nuclear generating capacity of 131 GW in 2010 will decline to 97 GW in 2025.²⁶

The United States has 99 operable reactors. Five reactors are under construction, "with little prospect for more" according to Oilprice.com.²⁷ Decisions to shut down just as many reactors have been taken in the past few years. As the Financial Times noted last year, two decisions that really rattled the industry were the closures of Dominion Resources' Kewaunee plant in Wisconsin and Entergy's Vermont Yankee − both were operating and licensed to keep operating into the 2030s, but became uneconomic to keep in operation.²⁸

The US Energy Information Administration estimated in April 2014 that 10.8 GW of nuclear capacity − around 10% of total US nuclear capacity − could be shut down by the end of the decade.²⁹

The most that the US nuclear industry can hope for is stagnation underpinned by new legislative and regulatory measures favouring nuclear power along with multi-billion dollar government handouts. The situation is broadly similar in the UK − the nuclear power industry there is scrambling just to stand still.

France's lower house of Parliament voted in October 2014 to cut nuclear's share of electricity generation from 75% to 50% by 2025, to cap nuclear capacity at 63.2 GW, and to pursue a renewables target of 40% by 2030 with various new measures to promote the growth of renewables.^30,31 The Senate will vote on the legislation early this year.

However there will be many twists and turns in French energy policy. Energy Minister Segolene Royal said on January 13 that France should build a new generation of reactors, and she noted that the October 2014 energy transition bill did not include a 40-year age limit for power reactors as ecologists wanted.³²

Germany's government is systematically pursuing its policy of phasing out nuclear power by 2023. That said, nothing is certain: the nuclear phase-out policy of the social democrat / greens coalition government in the early 2000s was later overturned by a conservative government.

Japan's 48 operable reactors are all shut down. A reasonable estimate is that three-quarters (36/48) of the reactors will restart in the coming years. Before the Fukushima disaster, Tokyo planned to add another 15−20 reactors to the fleet of 55 giving a total of 70−75 reactors. Thus, Japan's nuclear power industry will be around half the size it might have been if not for the Fukushima disaster.

The elephant in the room − ageing reactors

The problem of ageing reactors came into focus in 2014 − and will remain in focus for decades to come with the average age of the world's power reactors now 29 years and steadily increasing.^33,34

Problems with ageing reactors include:

• the increased risk of accidents (and associated problems such as generally inadequate accident liability arrangements);
• an increased rate of unplanned reactors outages (at one point last year, less than half of the UK's nuclear capacity was available due to multiple outages³⁵);
• costly refurbishments;
• debates over appropriate safety standards for reactors designed decades ago; and
• the costs associated with reactor decommissioning and long-term nuclear waste management.

Greenpeace highlighted the problems associated with ageing reactors with the release of a detailed report last year³⁶, and emphasised the point by breaking into six ageing European nuclear plants on 5 March 2014.³⁷

The International Energy Agency (IEA) said in its World Energy Outlook 2014 report: "A wave of retirements of ageing nuclear reactors is approaching: almost 200 of the 434 reactors operating at the end of 2013 are retired in the period to 2040, with the vast majority in the European Union, the United States, Russia and Japan."⁹

IEA chief economist Fatih Birol said: "Worldwide, we do not have much experience and I am afraid we are not well-prepared in terms of policies and funds which are devoted to decommissioning. A major concern for all of us is how we are going to deal with this massive surge in retirements in nuclear power plants."³⁸

The World Energy Outlook 2014 report estimates the cost of decommissioning reactors to be more than US$100 billion (€89b) up to 2040, adding that "considerable uncertainties remain about these costs, reflecting the relatively limited experience to date in dismantling and decontaminating reactors and restoring sites for other uses."

The IEA's head of power generation analysis, Marco Baroni, said that even excluding waste disposal costs, the final cost could be as much as twice as high as the $100 billion estimate, and that decommissioning costs per reactor can vary by a factor of four.³⁴

Baroni said the issue was not the decommissioning cost per reactor but "whether enough funds have been set aside to provide for it." Evidence of inadequate decommissioning funds is mounting. To give just one example, Entergy estimates a cost of US$1.24 billion (€1.10b) to decommission Vermont Yankee, but the company's decommissioning trust fund for the plant − US$0.67 billion − is barely half that amount.³⁹

Michael Mariotte, President of the Nuclear Information & Resource Service, noted in a recent article: "Entergy, for example, has only about half the needed money in its decommissioning fund (and even so still found it cheaper to close the reactor than keep it running); repeat that across the country with multiple and larger reactors and the shortfalls could be stunning. Expect heated battles in the coming years as nuclear utilities try to push the costs of the decommissioning fund shortfalls onto ratepayers."⁴⁰

The nuclear industry has a simple solution to the problem of old reactors: new reactors. But the battles over ageing and decommissioned reactors − and the raiding of taxpayers' pockets to cover shortfalls − will make it that much more difficult to convince politicians and the public to support new reactors.

References

1. WNA Weekly Digest, 16 Jan 2015, 'Slight increase in nuclear capacity in 2014',
http://us1.campaign-archive2.com/?u=140c559a3b34d23ff7c6b48b9&id=4785fc1...
2. Tierney Smith, 9 Jan 2015, '5 Countries Leading the Way Toward 100% Renewable Energy', http://ecowatch.com/2015/01/09/countries-leading-way-renewable-energy/
3. www.iaea.org/PRIS/WorldStatistics/WorldTrendNuclearPowerCapacity.aspx
4. Steve Kidd, 6 May 2014, 'The future of uranium – higher prices to come?', www.neimagazine.com/opinion/opinionthe-future-of-uranium-higher-prices-t...
5. WNA, 2014, 'The World Nuclear Supply Chain: Outlook 2030, http://online-shop.world-nuclear.org/bfont-size18pxthe-world-nuclear-sup...
6. John Johnson, 5 Dec 2014, 'Nuclear power to change shape in 2015', http://analysis.nuclearenergyinsider.com/small-modular-reactors/nuclear-...
7. Steve Kidd, 21 Jan 2015, 'Is climate change the worst argument for nuclear?', www.neimagazine.com/opinion/opinionis-climate-change-the-worst-argument-...
8. http://worldnuclearreport.org
9. International Energy Agency, 2014, 'World Economic Outlook 2014', www.worldenergyoutlook.org
10. China's nuclear power plans: safety and security challenges, 19 Dec 2014, Nuclear Monitor #796, www.wiseinternational.org/nuclear-monitors
11. Steve Kidd, 6 Oct 2014, "The world nuclear industry – is it in terminal decline?", www.neimagazine.com/opinion/opinionthe-world-nuclear-industry-is-it-in-t...
12. Heesu Lee, 15 Jan 2015, 'Fukushima Meltdowns Pervade S. Korea Debate on Reactor Life', www.bloomberg.com/news/2015-01-14/fukushima-meltdowns-pervade-korea-deba...
13. Shishir Gupta and Jayanth Jacob, 30 Nov 2014, 'Govt plans N-revival, focuses on investor concerns', www.hindustantimes.com/india-news/govt-plans-n-revival-looks-for-answers...
14. Pranab Dhal Samanta, 8 Jan 2015, 'Splitting the liability atom', http://indiatoday.intoday.in/story/obama-republic-day-visit-nuclear-powe...
15. 6 Nov 2014, 'Govt cautious about tapping nuclear energy for power generation', www.thehindu.com/news/national/govt-cautious-on-westdiscarded-nuclear-te...
16. Brahma Chellaney, 19 Nov 2014, 'False promise of nuclear power', www.thehindu.com/opinion/lead/false-promise-of-nuclear-power/article6612...
17. Indrani Bagchi, 19 Nov 2014, 'American officials put up hurdles, try to scuttle India-US nuclear deal', http://timesofindia.indiatimes.com/india/American-officials-put-up-hurdl...
18. Reuters, 19 Jan 2015, http://uk.reuters.com/article/2015/01/19/saudi-nuclear-energy-idUKL6N0UY...
19. Dan Yurman, 24 Jan 2015, 'Saudi Arabia delays its nuclear plans', http://neutronbytes.com/2015/01/24/saudi-arabia-delays-its-nuclear-plans/
20. 18 Sept 2014, 'Saudi Arabia's nuclear power program and its weapons ambitions', Nuclear Monitor #791, www.wiseinternational.org/node/4195
21. 'South Africa's stop-start nuclear power program', Nuclear Monitor #792, 2 Oct 2014, www.wiseinternational.org/node/4193
22. Steve Thomas, July 2014, 'Nuclear technology options for South Africa', http://earthlife.org.za/www/wp-content/uploads/2014/09/nuclear-cost_repo...
23. Dan Yurman, 6 Dec 2014, 'China jumps into the action in South Africa', http://neutronbytes.com/2014/12/06/china-makes-haste-to-develop-its-nucl...
24. 5 Dec 2014, 'Russia to build more reactors in Iran', Nuclear Monitor #795, www.wiseinternational.org/nuclear-monitors
25. 20 Jan 2015, 'N-safeguards steps implemented: IAEA', www.dawn.com/news/1158113/n-safeguards-steps-implemented-iaea
26. WNN, 9 Jan 2014, 'Policies hold European nuclear steady', www.world-nuclear-news.org/EE-Politics-hold-European-nuclear-steady-0901...
27. Nick Cunningham, 9 Feb 2014, 'Wind and Gas Forcing Out Nuclear in Midwest', http://oilprice.com/Latest-Energy-News/World-News/Wind-and-Gas-Forcing-O...
28. Ed Crooks, 19 Feb 2014, 'Uneconomic US nuclear plants at risk of being shut down', www.ft.com/intl/cms/s/0/da2a6bc6-98fa-11e3-a32f-00144feab7de.html
29. Reuters, 29 Apr 2014, 'U.S. expects about 10 pct of nuclear capacity to shut by 2020', http://in.reuters.com/article/2014/04/28/utilities-nuclear-eia-idINL2N0N...
30. 10 Oct 2014, 'France to cut nuclear's share of power market to 50% by 2025', www.platts.com/latest-news/electric-power/london/france-to-cut-nuclears-...
31. Michel Rose, 15 Oct 2014, 'French energy transition law to cut red tape on renewables', http://planetark.org/enviro-news/item/72327
32. Reuters, 13 Jan 2015, 'French energy minister wants new nuclear reactors', www.reuters.com/article/2015/01/13/france-nuclear-idUSL6N0US1P320150113
33. Michael Mariotte, 3 April 2014, 'Nuclear reactors are getting old – and it's showing', www.wiseinternational.org/node/4056
34. Nina Chestney and Geert De Clercq, 19 Jan 2015, 'Global nuclear decommissioning cost seen underestimated, may spiral', www.reuters.com/article/2015/01/19/nuclear-decommissioning-idUSL6N0UV2BI...
35. Nuclear Free Local Authorities, 9 Dec 2014, 'NFLA concerns over the reliability of aging nuclear reactors in the UK', www.nuclearpolicy.info/docs/briefings/A241_%28NB127%29_Aging_nuclear_rea...
36. Greenpeace International, 2014, 'Lifetime extension of ageing nuclear power plants: Entering a new era of risk', www.greenpeace.nl/Global/nederland/2014/Documenten/Rapport%20Lifetime%20...
37. http://out-of-age.eu
38. WNN, 12 Nov 2014, 'Nuclear industry shares IEA concern', www.world-nuclear-news.org/NP-Nuclear-industry-shares-IEA-concern-121114...
39. Robert Audette, 19 Dec 2014, 'Vermont Yankee decommissioning plan submitted to NRC', www.reformer.com/localnews/ci_27171602/vermont-yankee-decommissioning-pl...
40. Michael Mariotte, 5 Jan 2015, 'Nuclear industry goes hysterically ballistic over Yankee shutdown', http://safeenergy.org/2015/01/05/nuclear-industry-goes-hysterical

The US Environmental Protection Agency's plan for 'clean power' are welcome, writes Tim Judson − except for its inclusion of nuclear, and economic distortions and serious omissions that favour the technology. This open letter to EPA Administrator Gina McCarthy calls on the EPA to ditch the 'false and irrational assumptions' used to justify both new and existing nuclear power.

Dear Administrator Gina McCarthy,

We strongly support the EPA's goals in the Clean Power Plan draft regulation, and we are grateful for the agency's leadership in setting a critical policy for reducing emissions from the electricity generation sector. We also appreciate the fact that the Clean Power Plan's purpose is to create enforceable goals for states to reduce emissions, and a framework (the Best System of Emissions Reduction / BSER) for them to implement and comply with the targets.

Unfortunately, the treatment of nuclear energy in the draft rule is unsupported by meaningful analysis, and would make it possible for states to implement the rule in ways that are counterproductive to the Clean Power Plan's purpose of reducing emissions.

The role of nuclear power must be re-evaluated

We are, additionally, very concerned about industry proposals to expand provisions to encourage nuclear. We urge the EPA to conduct a thorough and fact-based analysis of nuclear, and to do the following:

• Remove the preservation of existing nuclear reactors from the BSER.
• Do not force Georgia, South Carolina, and Tennessee to finish building new reactors.
• Conduct a thorough and accurate analysis of the environmental impacts of nuclear power, from radioactive waste and uranium mining to reactor accidents and water use.
• Recognize and incorporate the much greater role renewable energy and efficiency can, will, and must play in reducing carbon emissions and replacing both fossil fuels and nuclear.

We recognize that the EPA has undertaken a monumental task in developing the Clean Power Plan − perhaps the most important single step in setting the U.S. on the path to reducing emissions enough to avert the worst of global warming and climate change.

It is essential that we begin making substantial reductions in emissions immediately, and that the institutional inertia and narrow self-interest of utilities and major power companies do not stand in the way of deploying the most cost-effective and environmentally sustainable energy solutions.

For that very reason, it is important the regulation ensures states do not get off on the wrong foot and implement the rule in ways that are counterproductive.

False and irrational assumptions

Unfortunately, the Clean Power Plan's treatment of nuclear incentivizes the preservation and expansion of a technology that is and has always been the most expensive, inflexible, and dangerous complement to fossil fuels.

The Clean Power Plan incorporates nuclear into the BSER in two ways:

• Assumes five new reactors will be completed and brought online in the states of Georgia, South Carolina, and Tennessee, and irrationally estimates the cost of doing so as $0. In fact, billions more remain to be spent on these reactors and there is a great deal of uncertainty about when, if ever, they will be completed, facing years of delays and billions in cost overruns. The cost assumption would force states to complete the reactors no matter the cost, rather than enabling them to choose better ways to meet their emissions goals. Even though renewables and efficiency could be deployed at lower cost than nuclear, the draft rule would make it look like they are much more expensive because of the zero-cost assumption about completing the reactors.
• Encourages states to 'preserve' reactors economically at-risk of being closed, equivalent to 6% of each state's existing nuclear generation. While it is true that about 6% of the nation's operating reactors may close for economic reasons, this provision encourages every state to subsidize existing reactors, greatly underestimates the cost of doing so, and overestimates their role in reducing emissions. Uneconomical reactors have high and rising operating costs, and cannot compete with renewables and efficiency.

The rule also says states may utilize two other ways of adding nuclear capacity as options for achieving the goals, even though they are not incorporated in the BSER:

• New reactors other than those currently in construction. EPA recognizes that new nuclear is too expensive to be included in the BSER, so it should not suggest states consider it as a way of meeting their emissions goals.
• Power uprate modifications to increase the generation capacity of existing reactors. Power uprates are capital-intensive and expensive, and several recent projects have been cancelled or suffered major cost overruns, in the case of Minnesota's Monticello reactor, at a total cost greater than most new reactors (US$10 million/megawatt).¹

Rather than suggesting states waste resources on nuclear generation too expensive and infeasible to be included in the BSER, EPA should include an analysis of these problems so that states can better evaluate their options and select lower-cost, more reliable means for reducing emissions, such as renewables and efficiency.

Serious nuclear concerns ignored

The Clean Power Plan also considers some non-air quality impacts of nuclear generation, as it is required to do under the Clean Air Act. However, the EPA's evaluation is both woefully incomplete and alarmingly inadequate. EPA dismisses concerns about radioactive waste and nuclear power's impact on water resources, simply characterizing them as equivalent to problems with fossil fuel generation.

In fact, radioactive waste is an intractable problem that threatens the environment for potentially hundreds of thousands of years. In addition, nuclear reactors' use of water is more intensive than fossil fuel technologies, and a majority of existing reactors utilize the most water-intensive once-through cooling systems.

Regardless, however, rather than only comparing them to fossil fuels, EPA should have compared these impacts to the full range of alternatives, including renewables and efficiency, which do not have such problems.

EPA leaves out a host of other environmental impacts unique to nuclear, including uranium mining and nuclear accidents. There are over 10,000 abandoned uranium mines throughout the US, which are subject to lax environmental standards, pose major groundwater and public health risks, present serious environmental justice concerns, and could entail billions in site cleanup and remediation costs.

The failure to consider the impacts of a nuclear accident is a glaring oversight, in the wake of the Fukushima disaster. EPA must consider both the environmental and economic impact of nuclear accidents.

Renewables can do the job!

In general, the Clean Power Plan's consideration of nuclear appears to be based on a dangerous fallacy: that closed reactors must be replaced with fossil fuel generation, presumably because other low- / zero-carbon resources could not make up the difference.

In fact, renewable energy growth has surpassed all other forms of new generation for going on three years, making up 48% of all new electricity generation brought online from 2011 to July 2014.²

The growth rate of wind energy alone (up to 12,000 MW per year) would be sufficient to replace all of the 'at-risk' nuclear capacity within two years, at lower cost than the market price of electricity,³ let alone at the subsidized rate for nuclear the draft rule suggests.

Assuming that closed reactors will be replaced with fossil fuel generation both encourages states to waste resources trying to 'preserve' (or even build) uneconomical reactors rather than on more cost-effective and productive investments in renewables and efficiency.

While states are free to develop their implementation plans without using the specific energy sources included in the BSER, the rule should not promote such foolishness.

No amount of spending or subsidies for nuclear has been effective at reducing the technology's costs nor overcoming lengthy construction times and delays, whereas spending on renewables and efficiency has had the effect of lowering their costs and increasing their rate of deployment.

The economic problems facing currently operating reactors merely underscore the point that nuclear is not a cost-effective way of reducing emissions.

We believe that correcting the problems with the way nuclear is considered in the draft rule, and increasing the role of renewables and efficiency, will make the Clean Power Plan much stronger and lead states to implement it more productively and cost-effectively.

References

1. Shaffer, David. 'Xcel management blamed for cost overruns at Monticello nuclear plant'. Minneapolis Star-Tribune, July 9, 2014, www.startribune.com/business/266353511.html
2. Sun Day Campaign. 'Renewables Provide 56 Percent of New US Electrical Generating Capacity in First Half of 2014'. July 21, 2014, www.renewableenergyworld.com/rea/news/article/2014/07/renewables-provide...
3. Lawrence Berkley National Laboratory. '2013 Wind Technologies Market Report'. US Department of Energy. August 18,2014,http://energy.gov/sites/prod/files/2014/08/f18/2013%20Wind%20Technologie...

Russia and Iran have signed a contract to build two VVER power reactors at Bushehr on the Persian Gulf. The two countries also signed a protocol envisaging possible construction of an additional two reactors in Bushehr and another four at an undetermined location. Bushehr is already home to the only power reactor in Iran (and the entire Middle East), a VVER pressurised water reactor which began commercial operation in September 2013.^1,2 Iran has identified 16 potential sites for nuclear power plants − 10 on the coastal rim of the Persian Gulf and the Sea of Oman.³ Consideration is also being given to the construction of desalination plants powered by new reactors.^1,2

Iran's nuclear plants are vulnerable to earthquakes, as discussed by the Nuclear Threat Initiative: "In 2013, a 6.3 magnitude earthquake hit the southwest region of Iran, where Bushehr is located. Given that much of Iran is in a seismic zone, many expressed concerns over [Bushehr's] safety following the earthquake. For example, the United Arab Emirates and Saudi Arabia voiced concerns at the IAEA Board of Governors meeting in June 2013. Iran denied allegations concerning the plant's safety "vulnerability." Simultaneously, Iran reported an electric generator malfunction and "long cracks ... in at least one section of the structure." However, Tehran dismissed the suggestion that the malfunction was connected to the earthquake."⁴

Oil for atoms?

There is no pretence that Iran's nuclear power program is driven by concerns about climate change. Nuclear Energy Insider and the World Nuclear Association state that Iran intends to conserve hydrocarbon reserves for future export.^2,5

In February 2014, Iran's ambassador to Russia Mehdi Sanaei said the two countries have been negotiating Iranian supply of a few thousands barrels of oil per day and "Iran could use some of the proceeds [to pay for] the construction by Russia companies of a second unit at the nuclear power plant in Bushehr."⁶

Neutron Bytes blogger Dan Yurman writes:

"A very real question is how is Iran going to pay for the reactors? The country's economy is on the rocks because of economic sanctions and rapidly dropping oil prices. One possibility is that the Russians are betting the Iranians will offer to pay for the reactors with oil which they will be able to sell on world markets if, and only if, they negotiate a deal with the West on their uranium enrichment program.

"Running the numbers for eight 1000 MW reactors at [US]$5000/kw yields a snapshot value of $5 billion per reactor or $40 billion overall. That kind of money might be helpful to Russia which depends heavily on oil exports to keep its economy afloat. Also, it would pull $40 billion worth of oil out of world markets and put it in Putin's hands perhaps to hold for a future date when market prices have moved north of $100/barrel. At the current price of $75 for barrel oil, $40 billion works out to 533 million barrels of oil. ...

"It still seems plausible then that one motivation for Russia's deal is to prevent Iran's return to world oil markets from depressing the price further. But some experts disagree with this idea. According to the Financial Times, Mark Fitzpatrick, a former US State Department diplomat, says that the whole enterprise is a smoke screen for Iran to justify its uranium enrichment infrastructure. He called it a potential "Putin double cross" of the negotiations being led by the European Union and the U.S."⁷

The US has expressed concern that trade and barter arrangements between Russia and Iran could breach or undermine US-led sanctions over Iran's nuclear program.⁸

Ambassador Mehdi Sanaei said: "Our Russian friends, who have stood by us at difficult moments, should have advantages on the Iranian market. But Russian companies must hurry to get into their niche in our market and not hesitate out of fear of Western sanctions."⁹ Meanwhile, Behrouz Kamalvandi, a spokesperson for the Atomic Energy Organisation of Iran, held out the prospect of Western investment in Iran's nuclear power program: "We welcome different countries' cooperation in this regard and it seems that given the tendency that the Western companies have towards cooperation with Iran, we will use their experiences in future."¹⁰

Weapons proliferation implications

What are the proliferation implications of Iran's plans for more power reactors? Perhaps not much, for these reasons:

• Russia's Rosatom will provide nuclear fuel "throughout the entire lifecycle" of the proposed eight new reactors, and spent fuel will be returned to Russia for reprocessing and storage.^1,2
• The reactors will be subject to International Atomic Energy Agency safeguards.
• Iran already has several potential sources of fissile material for weapons: its enrichment program, the Bushehr power reactor, and a 5 MW research reactor in Tehran (as well as the partially-built IR-40 research reactor).

That said, the plan for new reactors presents several problems and risks.

Russia supplies the operating Bushehr reactor with enriched fuel − but that hasn't stopped Iran citing its nuclear power program as one justification for its enrichment program.¹¹ Daryl Kimball wrote in Arms Control Today in September: "Iran's light-water reactor at Bushehr ... uses fuel supplied by Russia under a 10-year deal that could be extended past its 2021 end date. Russia is obliged to supply fuel unless Iran chooses not to renew the contract. But Iran's leaders are under heavy political pressure to reduce the country's reliance on foreign energy suppliers and to maintain a uranium-enrichment program that could be expanded if and when the country's nuclear energy needs grow."¹²

With several countries willing to engage in nuclear trade with India, and China supporting Pakistan's nuclear program, and Russia supplying new reactors to Iran, previous historical norms and agreements against nuclear trade with countries violating non-proliferation norms and commitments are near-dead.

The politicking around Iran's nuclear program is dripping with contradictions and irony − not least the leading role of the five declared nuclear weapons states, none of which take their NPT disarmament commitments seriously, in pressuring Iran to curtail its nuclear program. There are further contradictions regarding Iran's partially-built Arak research reactor. Iran is being pressured to either modify the reactor to reduce its plutonium production rate (which it seems willing to do), or to abandon the reactor altogether.

With its current design, if completed the Arak reactor could produce 5−10 kgs of weapon grade plutonium annually.¹³ Yet there is no effort to prevent the construction of new power reactors, each of which could produce 150−200 kg of weapon grade plutonium annually.¹⁴

French hypocrisy

France has been leading the charge to have the Arak reactor included in negotiations over Iran's nuclear program.¹⁵ Yet France supplied Israel with a similar 'research' reactor used to produce plutonium for Israel's nuclear weapons.¹⁶

Dr David Lowry, former director of the European Proliferation Information Centre, addresses another aspect of French hypocrisy: "Among the several reasons the Vienna talks on Iran's nuclear program have had to be reconvened this month — and now extended into next year — was that France objected to the deal with Iran being closed off earlier because of Tehran's contested plutonium production plant at Arak. Whatever doubts the French have over Arak, they seem to be sanguine about Iran's involvement in uranium enrichment, so much so that they are in industrial partnership with the Iranians in this technology, and have been for four decades since an agreement with the Shah of Iran in 1975. Oddly, this deal never gets reported in the context of the Iran nuclear negotiations. Is there any good reason why not? It ought to be centre-stage in any public diplomacy, but isn't. ... The hypocrisy of France, as a nuclear technology supplier to Iran, ganging up on its customer with the other self-appointed permanent five members of the UN security council, along with Germany, would be funny if it wasn't so serious."¹⁷

Following France's obstructive role in negotiations about Iran's nuclear program in November 2013, nuclear physicist Yousaf Butt wrote:

"France's torpedoing of the agreement appears less related to genuine nuclear proliferation concerns than with trying to curry favor with anti-Iranian countries like Saudi Arabia and the United Arab Emirates − who commission and buy expensive French military, satellite and nuclear hardware. ... France's reluctance to sign off on the interim agreement is easier to understand through the prism of its lucrative regional trade agreements with Sunni Arab monarchies opposed to Iran. For example, for the first time since 2007, France penned a military contract with the United Arab Emirates in late July. The billion dollar contract for two spy satellites couldn't have been better timed: French military contracts lost a quarter of their value last year.

"Similarly, just a month after the deal with the UAE, France also signed a billion euro contract with Saudi Arabia − a bitter rival of Iran − to overhaul four frigates and two refueling ships. French business interests in Saudi Arabia are not restricted to just the military, however. Last month, the government-controlled French nuclear power conglomerates Areva and Electricite de France (EDF) hosted about 200 Saudi business and industry representatives at a "Suppliers Day" event held in Jeddah.

"The French ambassador to Saudi Arabia explicitly expressed his hope that the Kingdom would seek French help in implementing its "huge program in the nuclear field." Such long-term infrastructure contracts could be worth roughly 40 billion euros to the French. Similar deals have already been signed with the tiny Gulf nation of Qatar, also an adversary of Iran. Given these − and future − lucrative military and infrastructure contracts, it seems likely that France would seek to curry favor with the Sunni Gulf Arab monarchies by holding up a deal with Iran."¹⁸
 

Technology transfer

It seems that there will be little or no technology transfer of proliferation significance associated with the Russia−Iran reactor agreement. Yet there are mixed messages. A World Nuclear News article describes the agreement as a "turn-key" deal but also quotes Rosatom stating that the parties "intend to ensure the maximum possible participation of enterprises and organizations of the Islamic Republic of Iran in all works related to the construction of new power units on the sites, their operation and decommissioning."¹

Rosatom made the mysterious statement that Russia and Iran have "confirmed their intent to cooperate in the field of the nuclear fuel cycle and ecology".¹ However fuel cycle technology transfer may be limited to fuel fabrication rather than more sensitive stages such as enrichment and reprocessing. Nuclear Energy Insider reports that a Memorandum of Understanding was signed on November 19 for Iran and Russia to work together on the feasibility of assembling fuel bundles in Iran, which will be "economic" once all eight new reactors are grid-connected.²

Rosatom will also train Iranian specialists in the operation, servicing and engineering support for the new reactors.^1,2

If nothing else, Iran will be better placed to build and operate indigenous reactors as a result of the collaboration with Russia.

Proliferation and security

Tied to proliferation issues are security issues such as potential military strikes and cyber-attacks on nuclear plants, and the murder of nuclear scientists and others involved in Iran's nuclear program.

Israel has repeatedly threatened to launch military strikes against Iran's nuclear program.²²

In addition to the Stuxnet cyber-attack on Iran's enrichment program, there has been speculation that Bushehr was also targeted and that Stuxnet may have caused problems leading to the removal of fuel from the reactor in early 2011.³⁵

The Bushehr plant (then under construction) sustained damage from numerous Iraqi bombing raids during the 1980−88 war.^19,20

In September 2014, Iran arrested a Ukrainian man suspected of sabotaging the Bushehr plant. The suspect pretended to be an expert from Russia, the Iranian newspaper Hamshahri cited authorities as saying. The nature of the alleged sabotage was not disclosed.²¹

An explosion occurred inside the Arak reactor building in late 2013 according to Israeli sources. According to Israeli website Debkafile, Tehran did its utmost to conceal the blast. Debkafile speculated that the blast resulted from physical sabotage, a viral attack on computers, or the result of inferior steel materials that were unable to withstand intense pressure during testing.²³

In March 2014, the deputy head of Iran's Atomic Energy Organisation, Asghar Zarean, accused "foreigners" of trying unsuccessfully to sabotage the Arak plant.²⁴ Zarean said: "Several cases of industrial sabotage have been neutralized in the past few months before achieving the intended damage, including sabotage at a part of the IR-40 facility at Arak."²⁵

Arak is regarded as particularly vulnerable to attacks in its partially-built state, since attacks could damage or destroy the reactor and associated infrastructure without resulting in widespread radioactive contamination. Israel's former chief of military intelligence, Amos Yadlin, who piloted one of the planes that bombed Iraq's Osirak heavy-water reactor in 1981 before it was due to become operational, said: "Whoever considers attacking an active reactor is willing to invite another Chernobyl, and no one wants to do that."²⁶

In addition to the strike on Osirak in 1981, Israel destroyed a suspected reactor site in Syria in 2007 and has refused to rule out bombing Arak.²⁷

In August 2012, saboteurs blew up power lines supplying Iran's underground uranium enrichment plant near the city of Qom.²⁸

In August 2014, Iran said it had shot down an Israeli drone that was heading for its uranium enrichment site near the town of Natanz.²⁹

At least five people associated with Iran's nuclear program have been murdered since 2007, including the deputy head of Iran's uranium enrichment facility at Natanz (killed by a car bomb in 2012), the head of the country's ballistic missile program, and the head of Iranian cyber warfare (who was shot dead).³⁰⁻³³ In 2012, Iran hanged a man it claimed was a Mossad agent over the killing of an Iranian nuclear scientist in 2010.³⁴

References:

1. WNN, 11 Nov 2014, 'Russia to build eight more reactors in Iran', www.world-nuclear-news.org/NN-Russia-to-build-eight-more-reactors-in-Ira...
2. K. Steiner-Dicks, 20 Nov 2014, 'ROSATOM main partner in Iran nuclear energy scale-up', http://analysis.nuclearenergyinsider.com/new-build/rosatom-main-partner-...
3. Energy Business Review, 17 March 2014, http://nuclear.energy-business-review.com/news/iran-chooses-potential-si...
4. Nuclear Threat Initiative, 'Bushehr Nuclear Power Plant (BNPP)', www.nti.org/facilities/184/
5. WNA Weekly Digest, 14 March 2014.
6. Steve Gutterman, 17 Feb 2014, 'Iran says Russia could build nuclear reactor in exchange for oil', www.reuters.com/article/2014/02/17/us-russia-iran-oil-idUSBREA1G0DM20140217
7. Dan Yurman, 16 Nov 2014, 'Rosatom inks eight reactor deal with Iran', http://neutronbytes.com/2014/11/16/rosatom-inks-eight-reactor-deal-with-...
8. AFP, 9 Sept 2014, 'No barter deal on agenda as Russia, Iran up energy ties', www.globalpost.com/dispatch/news/afp/140909/no-barter-deal-agenda-russia...
9. NTI, 18 Feb 2014, 'Envoy: Russia May Construct Reactor in Iran in Swap for Oil', www.nti.org/gsn/article/envoy-iran-may-swap-oil-reactor-russia/?mgs1=955...
10. 19 Nov 2014, 'AEOI Spokesman: Iran, West Likely to Cooperate in Building N. Power Plants', http://english.farsnews.com/newstext.aspx?nn=13930828001337
11. 13 April 2014, 'AEOI Chief: Iran Entitled to Enrich Uranium to 90% Grade', http://english.farsnews.com/newstext.aspx?nn=13930124000768
12. Daryl G. Kimball, Sept 2014, 'Bridging the Uranium-Enrichment Gap', www.armscontrol.org/act/2014_09/Focus/Bridging-the-Uranium-Enrichment-Gap
13. Mark Hibbs, 24 Oct 2013, 'The IR-40 and Diplomacy', http://carnegieendowment.org/2013/10/24/ir-40-reactor/gr68
14. Jim Green, 2014, 'Can 'reactor grade' plutonium be used in nuclear weapons?', Nuclear Monitor #787, www.wiseinternational.org/node/4067
15. Jonathan Tirone, 11 Nov 2013, 'Iran Signs Nuclear Inspection Accord as Agency Says Work Remains', www.sfgate.com/business/bloomberg/article/Iran-Signs-Nuclear-Inspection-...
16. Friends of the Earth, Australia, 'Case Studies: Civil Nuclear Programs and Weapons Proliferation', http://foe.org.au/sites/default/files/CivMil-CaseStudies2010.doc
17. David Lowry, 'France's double play in Iran nuclear talks', 26 Nov 2014, www.morningstaronline.co.uk/a-d3ee-Frances-double-play-in-Iran-nuclear-t...
18. Yousaf Butt, 14 Nov 2013, 'Column: Too many cooks in the Iran nuclear kitchen', www.reuters.com/article/2013/11/14/us-too-many-cooks-idUSBRE9AD17920131114
19. Robert Tait, 25 Jan 2009, 'Iran Makes First Test-Run of Bushehr Nuclear Reactor,' www.theguardian.com/world/2009/feb/25/iran-reactor-bushehr-trial
20. AP, 18 Nov 1987, 'Iran says nuclear plant hit', The Lewiston Journal,http://tinyurl.com/iraq-iran-1987
21. Vasudevan Sridharan, 7 Sept 2014, 'Iran Arrests Ukrainian for 'Sabotaging' Bushehr Nuclear Plant', www.ibtimes.co.uk/iran-arrests-ukrainian-sabotaging-bushehr-nuclear-plan...
22. Associated Press, 25 Nov 2013, 'Israeli leader Netanyahu condemns Iran nuclear deal as a 'historic mistake' and threatens to use military action if needed', www.dailymail.co.uk/news/article-2513092/Israeli-PM-Netanyahu-condemns-I...
23. Julian Kossoff, 4 Nov 2013, 'Was Iran's Arak Nuclear Reactor Hit by Saboteurs?', www.ibtimes.co.uk/articles/519466/20131104/iran-nuclear-arak-reactor-sab...
24. Umid Niayesh, 17 March 2014, 'Iran gives details of sabotage at IR-40 nuclear site', http://en.trend.az/regions/iran/2253805.html
25. Associated Press, 15 March 2014, 'Iran says sabotage prevented at nuclear facility', www.haaretz.com/news/middle-east/1.579998
26. Julian Kossoff, 4 Nov 2013, 'Was Iran's Arak Nuclear Reactor Hit by Saboteurs?', www.ibtimes.co.uk/articles/519466/20131104/iran-nuclear-arak-reactor-sab...
27. Simon Sturdee / AFP, 13 Nov 2013, 'Iran's Arak reactor: a second route to a nuclear bomb?', www.google.com/hostednews/afp/article/ALeqM5hu6ibS88Ro6pTL6dkTc-Xmb753yQ...
28. www.abc.net.au/news/2013-10-06/iran-says-four-arrested-for-trying-to-sab...
29. Fredrik Dahl, 12 Sept 2014, 'Iran wants U.N. atomic agency to condemn Israeli drone 'aggression'', www.reuters.com/article/2014/09/12/us-iran-nuclear-israel-idUSKBN0H71LL2...
30. Patrick Cockburn, 6 Oct 2013, 'Just who has been killing Iran's nuclear scientists?', www.independent.co.uk/voices/comment/just-who-has-been-killing-irans-nuc...
31. 2 March 2014, 'Obama pushes Israel to stop assassinations of Iran nuclear scientists – report', http://rt.com/news/iran-obama-assassination-scientists-443/
32. 12 Jan 2012, 'Iran's history of nuclear incidents', www.abc.net.au/news/2012-01-12/iran27s-history-of-nuclear-incidents/3769454
33. William Tobey, 12 January 2012, 'Nuclear scientists as assassination targets', http://thebulletin.org/web-edition/features/nuclear-scientists-assassina...
34. 16 May 2012, 'Iran hangs 'Mossad agent' for scientist killing', www.abc.net.au/news/2012-05-16/iran-hangs-27mossad-agent27-for-scientist...
35. BBC, 26 Feb 2011, 'Iran nuclear plans: Bushehr fuel to be unloaded', www.bbc.com/news/world-middle-east-12588621

An October 4 'Business Insider' article presents five charts from economic analysts Citigroup explaining "why nuclear energy is going nowhere":[1]

1) Nuclear now requires an up-front investment (overnight investment cost) five times greater than gas on a per Watt basis, while solar installation costs are cheaper still.

2) Nuclear may have lower operational costs than fossil fuels, but they're still more than the nearly non-existent operational costs of renewables.

3) This explains why, worldwide, nuclear investment is already trailing solar.

4) During the next two decades, demand for renewables will be greater than for nuclear.

5) If you think any help is coming from China, think again − solar capacity alone will eventually be larger than nuclear, and wind capacity will dwarf it.

Citigroup explains: "The capital cost of nuclear build has actually risen in recent decades in some developed markets, partly due to increased safety expenditure, and due to smaller construction programmes (i.e. lower economies of scale). Moreover the 'fixed cost' nature of nuclear generation in combination with its relatively high price (when back end liabilities are taken into account) also places the technology at a significant disadvantage; utilities are reluctant to enter into a very long term (20+ years of operation, and decades of aftercare provisioning) investment with almost no control over costs post commissioning, with the uncertainty and rates of change currently occurring in the energy mix."

Worldwatch Institute report on nuclear stagnation

A new Vital Signs Online report by the Worldwatch Institute notes that global nuclear generation capacity increased in 2012 by 4.2 gigawatts (GW) or 1.1% to 373.1 GW and the number of operational reactors increased by two units to 437.[2,3] The increases are net figures: three reactors with a total capacity of 1.3 GW were shut down in Canada and the UK, while three new plants in China and South Korea with a total capacity of just under 3 GW came online. In addition, two Canadian reactors (0.77 GW each) returned to service after 15 years off-line.

But those marginal increases mask a gloomy outlook for the industry. The report notes that nuclear power generating capacity increased by 75 GW in the quarter-century from 1987−2012; just one-quarter of the increase of 296 GW during the preceding quarter century.

The figures for nuclear generation (as opposed to capacity) are still more depressing (for the industry).[4] Annual nuclear electricity generation peaked in 2006 at 2,660 terrawatt-hours (TWh), falling to 2,346 TWh in 2012 (down 7% compared to 2011, down 12% from 2006). About three-quarters of this decline was due to the situation in Japan, but 16 other countries, including the top five nuclear generators, also decreased their nuclear generation.

The Worldwatch Institute report notes that nuclear power is now the only mainstream energy technology that does not show significant growth. Its share of the world's primary energy supply actually fell, from 6.4% in 2002 to just 4.5% a decade later.

"Three key factors account for the stagnancy of nuclear power," said Alexander Ochs, Worldwatch's Climate and Energy Director and one of the report's co-authors. "The first and most important one is that nuclear energy is not cost competitive with fossil fuels and renewable energy sources. It is just too expensive. Second are safety concerns. After the many accidents we have had over the years − with Chernobyl, Fukushima, and Three Mile Island just a few examples of some of the worst incidents; problems occur on a regular basis. And despite stricter oversight in some countries, public opposition to nuclear energy is high almost everywhere in the world. Finally, the storage of nuclear waste still remains unsolved. Nobody really knows what to do with it and nobody wants to have the hazardous material sit in their backyard."

Citibank report on renewables

Renewable energy will account for more than 70% of investment in new power generation by 2025, according to a Citibank report released in October. Of the nearly US$10 trillion dollars that will be poured into the power sector in the next decade, more than US$2 trillion will be invested in wind, followed by US $1.5 trillion in hydropower and US $1.3 trillion in solar power.[5]

While natural gas has cut into coal's dominance for power generation in the US, the report notes that in the longer run, the lower price of solar will make it increasingly attractive, especially during peak demand periods "Solar steals the most valuable part of electricity generation at the peak of the day when prices are highest," the Citibank report states, noting that German natural gas power plants have already said they are reluctant to build new generation because of the impact of solar power on their profits.

Citibank estimates that more than US$37 trillion will be invested in global energy infrastructure in the next two decades, with nearly half of that amount devoted to electricity generation. Oil production will account for about 37% of total investment, followed by natural gas at 23%.

Germany's energy crisis

Germany's coal and nuclear utilities are in trouble due to the growth of renewables.

Solar and wind energy production accounted for nearly 60% of Germany's electricity use on Thursday October 3 according to a study by energy consultant Bernard Chabot. At peak production − around noon that day − wind and energy were producing about 59.1% of the nation's power.[6] In July, Germany generated 5.1 terawatt hours (TWh) of electricity from solar, a monthly record and 42% higher than July 2012. In January, wind turbines generated 5 TWh of electricity.[7]

RWE, Germany's largest power producer, has decided to radically depart from its traditional business model based on large-scale thermal power production. Confidential strategy documents discussed at a recent meeting of RWE's Supervisory Board make it clear that the company's leadership has accepted that it must shift away from its traditional heavy reliance on coal-fired and nuclear plants it if wants to survive in the new energy world created by Germany's and the EU's Energiewende. "The massive erosion of wholesale prices caused by the growth of German photovoltaics constitutes a serious problem for RWE which may even threaten the company's survival", states the company's Strategic Roadmap.[8]

In August, RWE said 3.1 GW of gas- and coal-fired generating capacity would be taken offline or shut down, representing 6% of its total capacity. The company said the boom in solar energy meant many of its power stations were no longer profitable. German rival E.On said it had shut down or left idle 6.5 GW of generating capacity.[7]

In September 2011, German industrial conglomerate Siemens announced its intention to withdraw entirely from the nuclear industry. Chief executive Peter Loescher said: "The chapter for us is closed." Siemens was responsible for building all Germany's existing nuclear power reactors.[9]

Carbon capture projects losing momentum

The number of projects that capture carbon dioxide emissions from power plants and industrial facilities is losing momentum, dropping from 75 to 65 worldwide since 2012, according to a study released in October. The Global CCS Institute, an Australian-funded research group supporting the deployment of carbon capture and storage technology worldwide, said in its annual survey that despite four new large-scale projects coming online this year, the rate of new projects entering the pipeline has slowed.[10]

References:
[1] Rob Wile, 4 Oct 2013, 'In 5 Charts, Here's Why Nuclear Energy Is Going Nowhere', www.businessinsider.com.au/5-charts-that-show-nuclear-is-declining-2013-10
[2] Worldwatch Institute, 9 Oct 2013 www.worldwatch.org/nuclear-power%E2%80%99s-uncertain-future
[3] http://vitalsigns.worldwatch.org/vs-trend/nuclear-power-recovers-slightl...
[4] World Nuclear Industry Status Report 2013, www.worldnuclearreport.org
[5] Emily Pickrell, 10 Oct 2013, 'Citibank: Renewables will get bulk of world's new power investment', http://fuelfix.com/midland/2013/10/10/citibank-renewables-will-get-bulk-...
[6] Clean Technica, 3 Oct 2013, http://reneweconomy.com.au/2013/solar-wind-energy-generated-up-to-60-of-...
[7] Tierney Smith, 22 Aug 2013, 'Germany's record-breaking renewables push fossil fuel plants to close', http://tcktcktck.org/2013/08/germanys-record-breaking-renewables-push-fo...
[8] Energy Post, 21 Oct 2013, http://www.energypost.eu/index.php/exclusive-rwe-sheds-old-business-mode...
[9] BBC, 18 Sept 2011, 'Siemens to quit nuclear industry', www.bbc.co.uk/news/business-14963575
[10] Guardian, 10 Oct 2013, www.theguardian.com/environment/2013/oct/10/carbon-capture-storage-plant...

The UK Government and French utility EDF have reached initial agreement on terms of a proposed contract for the Hinkley Point C (HPC) nuclear power station in Somerset, paving the way for the construction of the first new nuclear plant in the UK since Sizewell B began operation in 1995. Operation of the first of two 1.6 gigawatt (GW) HPC reactors is scheduled to commence in 2023. The government's October 21 announcement says HPC will "begin the process of replacing the existing fleet of nuclear stations, most of which are due to close in the 2020s."[1]

However the HPC project faces many hurdles and potential delays. The government said the agreement with EDF is not legally binding.[1] EDF said it will not give the go-ahead for construction until and unless the European Commission clears the government/EDF agreement under state aid rules designed to prevent the distortion of Europe's electricity market. EDF said it would make its final investment decision by July 2014, but the European Commission examination may take longer.

Stop Hinkley spokesperson Nikki Clark said the "announcement was much ado over nothing and despite all the fanfare and visits of the rich and famous to Hinkley, there is no legally binding agreement, nor will there be until the government get their plans past the European Commission which, according to various media outlets, would be summer 2014 at the earliest."[2]

Labour MP Alan Whitehead said "it's not much of a deal, more a kind of semi crayoned-in statement of intent and a very expensive one at that. ... At the moment there seem to be a lot more things that we don't know than things we do know about this deal." Whitehead notes that in 2009, EDF said it planned to start producing power at Hinkley C in 2017.[3] So with the current 2023 start-up date, the project is already six years behind schedule.

It may be that economics, along with the myriad implications of the Fukushima disaster, kill off the current HPC project just as Margaret Thatcher's plans for HPC were killed off by economics and Chernobyl.[4]

The government's October 21 announcement states that project partners would be required to start putting money into a fund from the first day of electricity generation to pay for decommissioning and waste management costs associated with HPC.[1] However it is silent on where the waste might be disposed of. Martin Forwood from Cumbrians Opposed to a Radioactive Environment said: "The Government's fetish for nuclear power, which has seen Ministers scraping the world's barrel for investors to support its craving, is only matched by its determination to see the industry's nuclear wastes dumped in suspect geology in Cumbria."[5]

EPRs

EDF plans to build EPRs (European Pressurized Reactor) at Hinkley and Sizewell. No EPRs are operating − or have ever operated − anywhere in the world. The construction of two EPRs in China appears to be on schedule and largely untroubled [6] − though of course the Chinese state is not known for its transparency.

The other two EPR projects − one reactor each in Finland and France − have been disastrous. When the contract was signed in 2003 for a new EPR in Finland, completion was anticipated in 2009. Now, commercial operation is not anticipated until 2015 — six years behind schedule.[7] And utility TVO recently announced that it is "prepared for the possibility" that the plant may not start up until 2016 − seven years behind schedule.[8] The estimated cost has ballooned from 3 billion euros to 8 billion.[9] Project partners Areva and TVO have been engaged in extensive, ongoing litigation regarding cost overruns.[10]

EDF's Flamanville 3 EPR reactor in France is behind schedule — it was originally meant to enter service in 2012 but that date has been pushed back to 2016.[11] Its estimated cost has grown from 3.3 billion euros to 8.5 billion.[12]

The Daily Mail characterised the French EPR project as one "beset by financial mismanagement with rocketing costs, the deaths of workers, an appalling inability to meet construction deadlines, industrial chaos, and huge environmental concerns", and notes that "it continues to be plagued by delays, soaring costs, and litigation in both the criminal and civil courts." A report by France's nuclear safety authority in 2011 found 13 incidents of below-standard safety measures. In 2011, two former EDF employees were jailed for spying on anti-nuclear campaigners and the company was fined £1.2 million for the crime.[13] Italian utility Enel pulled out of the project last December.[14]

Chinese partners

The EDF Group has announced the intent of two Chinese companies, China National Nuclear Corporation (CNNC) and China General Nuclear Corporation (CGN), to invest in HPC as minority shareholders, following the signing earlier in October of a Memorandum of Understanding on nuclear energy cooperation between the UK and Chinese governments.[1]

EDF has been working as a partner with CGN and CNNC for 30 years, including a joint venture to build two EPRs in Taishan, China.[15]

According to Nuclear Energy Insider, EDF will have between a 45% and 50% stake in the project, CNNC and CGN will take 30-40% between them, Areva will take 10%, and EDF is discussing with interested companies about the remaining 15%.[16] The sovereign wealth funds of Kuwait or Qatar are rumoured to be in the running; in 2010 the Kuwait Investment Authority paid 600 million euros for a 4.8% stake in Areva.[17]

Of the four major partners − EDF, Areva, CNNC and CGN − three are 100% state-owned and one is 85% state-owned; two are French and two Chinese.[18]

No UK firms are involved after Centrica pulled out of the HPC project earlier this year. Centrica chief executive Sam Laidlaw said that since its initial investment the "anticipated project costs in new nuclear have increased" while the construction timetable "has extended by a number of years".[19] Other utilities have also given up on the UK nuclear program; for example German utilities E.on and RWE reneged on their promise to invest in new nuclear at Anglesey.[20]

Former Labour Party chancellor Alistair Darling said the government should look at publicly funding new nuclear plants: "It will be the next generation that pay for these very high wholesale prices of electricity and the point is, you need to ask yourself would it be better for the state to do it as opposed to what looks like quite an expensive deal?"[21]

Chinese investment in the UK nuclear program has generated some consternation. Consultant John Large said: "We can see that even with the French operatorship of UK nuclear power stations [through EDF] that there are differences in the regulatory regimes in France and the UK. But these problems would be much more profound with the Chinese, who like the Russians, are rooted in a government system without independent [safety] regulators."[22]

A GMB union leader said it was "almost Orwellian" to allow a country like China, which has been linked to allegations of corporate hacking, to be allowed access to highly sensitive energy infrastructure. A survey of 75 companies in major emerging economies by Transparency International found that Chinese companies were the least likely to publish financial information and vital details about corporate structure that allows them to be held to account.[22]

China's domestic nuclear power program certainly leaves much to be desired. He Zuoxiu, a member of the Chinese Academy of Sciences, said earlier this year that "to reduce costs, Chinese designs often cut back on safety".[24]

Li Yulun, a former vice-president of CNNC, said in October that Chinese "state leaders have put a high priority on [nuclear safety] but companies executing projects do not seem to have the same level of understanding." Li Yulun noted that Westinghouse has yet to receive approval from British authorities for a modified version of the AP1000 reactor design, while Chinese nuclear safety regulators approved it several years earlier.[25]

In August 2009, the Chinese government dismissed and arrested CNNC president Kang Rixin in a US$260 million corruption case involving allegations of bid-rigging in nuclear power plant construction.[26]

The first reactor designed and built entirely by the Chinese — in 1990 at Qinshan — had to be torn down and rebuilt because of faults in the foundation and the welding of the steel vessel that contained the reactor itself.[27]

In 2011, Chinese physicist He Zuoxiu warned that "we're seriously underprepared, especially on the safety front" for a rapid expansion of nuclear power. Qiang Wang and his colleagues from the Chinese Academy of Sciences noted in April 2011 that China "still lacks a fully independent nuclear safety regulatory agency."[27] They also noted that China's nuclear administrative systems are fragmented among multiple agencies; and China also lags behind the US, France, and Japan when it comes to staff and budget to oversee operational reactors.[28]

Cables released by WikiLeaks in 2011 highlight the secrecy of the bidding process for nuclear power plant contracts in China, the influence of government lobbying, and potential weaknesses in the management and regulatory oversight. Westinghouse representative Gavin Liu was quoted in a cable as saying: "The biggest potential bottleneck is human resources – coming up with enough trained personnel to build and operate all of these new plants, as well as regulate the industry."[29]

The UK government / EDF agreement has reinvigorated cross-channel rivalries. The Daily Mail explained "why we can't trust the French with Britain's nuclear future" and complained that "huge profits are expected to be milked from British consumers to go to the French."[13]

Economic jiggery-pokery

Most reports estimate a total construction cost of £16 billion for the two 1.6 GW reactors at Hinkley Point, while World Nuclear News gives a cost estimate of £14 billion.[30] The £16 billion estimate equates to £5 billion / GW (US$8.1 b / GW).

EDF (and its partners) will be guaranteed a minimum price − a 'strike price' − for the electricity generated by HPC. If wholesale market prices are below the strike price, the government makes up the difference; if market prices are higher, EDF will have to pay back to government. The government announcement nominates a strike price of £89.50 / megawatt-hour (MWh), fully indexed to the Consumer Price Index, or £92.50/MWh if EDF does not take a final investment decision on proposed new reactors at Sizewell, Suffolk.[1] Those figures are around twice the current wholesale price.

The government announcement flags various circumstances which would lead to upwards or downwards movement of the strike price. The guaranteed minimum price will apply for 35 years.[1]

Paul Dorfman from University College London's Energy Institute says the deal ties consumers into subsidising one energy source for a whole generation − potentially at a very high level. In contrast, renewable energy sources' shorter contracts mean the subsidy can be cut if the costs of building wind turbines or solar panels fall. Dorfman predicts that the cost of nuclear "will flatline or hike, while renewables will do nothing but go down".[31]

Dorfman said the government/EDF agreement "is essentially a subsidy of what we calculate to be £800 million to £1billion a year that the UK taxpayer and energy consumer will be putting into the deep pockets of Chinese and French corporations, which are essentially their governments."[32]

In addition to the strike price deal, the government has offered to provide a loan guarantee for HPC of up to £10 billion under a scheme whereby the government uses its balance sheet to provide guarantees for major infrastructure projects.[19]

Previous promises that nuclear power would not be subsidised have clearly been breached, notwithstanding disingenuous government claims that the strike price deal and the loan guarantee do not represent subsidies. A number of expert witnesses voiced scepticism at a recent hearing of the UK Environmental Audit Committee. "This is a huge public contribution towards yesterday's energy thinking," said Alan Simpson, a former Labour MP. "I just wonder what we are inhaling."[33]

The government has been indulging in creative accounting and jiggery-pokery. The October 21 announcement asserts that the HPC project "will ... reduce consumer bills over the long-term" [1] but on the same day turncoat LibDem minister Ed Davey said: "I can't guarantee that. There are huge uncertainties here. It would be absurd to say we can guarantee everything in the 2020s."[32]

Since the 2010 promise that there would be "no public subsidy" of new nuclear, ministers have bundled up nuclear with green energy sources to claim that there would be no "unfair" subsidies for nuclear compared to other green sources. That intellectual contortion will need to be unravelled in the coming months as Prime Minister Cameron plans to reduce green levies ... without reducing subsidies available to the nuclear program.

Government claims about job creation have been equally disingenuous. Nuclear critic Tom Burke said: "The Prime Minister proudly boasted that this would create 25,000 jobs. He forgot to mention that only 900 of them will be permanent and that most of the high value jobs will be abroad. He also forgot to mention that the cost per job is over £600,000. This compares rather badly with the 320,000 jobs that could be created spending the same amount on really delivering energy efficiency improvements for British energy consumers."[34]

The government/EDF agreement "is another disgraceful example of profit being privatised and risk being socialised," Burke said.

Greenpeace UK executive director John Sauven said: "Hinkley C fails every test – economic, consumer, and environmental. It will lock a generation of consumers into higher energy bills, via a strike price that's nearly double the current price of electricity, and it will distort energy policy by displacing newer, cleaner, technologies that are dropping dramatically in price."[35]

A Greenpeace briefing paper states that the HPC strike price is not only almost double the current market price for electricity, but also well over twice the Department of Energy and Climate Change's original cost estimate for nuclear power of £38/MWh.[36]

Antony Froggatt from the Chatham House think-tank noted that in 2006, EDF's submission to a government energy review said that EPR-produced electricity would cost £28.80 / MWh in 2013 values. "This more than threefold increase [to £92.50], over eight years, puts the cost of nuclear electricity at about double the current market rate – higher than that produced by both gas and coal-fired power stations, and more costly than many renewable energy options," Froggatt said.[37]

Even nuclear convert George Monbiot weighed in with sharp criticisms: "Seven years ago, I collected all the available cost estimates for nuclear power. ... 8.3 pence was so far beyond what anyone else forecast that I treated it as scarcely credible. It falls a penny short of the price now agreed by the British government. I still support nuclear power. But none of this means that we should accept nuclear power at any cost. And at Hinkley Point the cost is too high."[38]

Monbiot adds: "That's not the only respect in which the price is too high. A fundamental principle of all development is that we should know how the story ends. In this case no one has the faintest idea. Cumbria – the only local authority which seemed prepared to accept a dump for the nuclear waste from past and future schemes – rejected the proposal in January. No one should commission a mess without a plan for clearing it up."

Monbiot's solution is nothing if not quixotic − non-existent liquid thorium reactors and non-existent integral fast reactors.

References:
[1] Edward Davey and David Cameron, 21 October 2013, 'Initial agreement reached on new nuclear power station at Hinkley', https://www.gov.uk/government/news/initial-agreement-reached-on-new-nucl...
[2] Stop Hinkley, 22 Oct 2013, www.stophinkley.org/PressReleases/pr131022.htm
[3] Alan Whitehead, 24 Oct 2013, http://alansenergyblog.wordpress.com/2013/10/24/the-knowns-the-unknowns-...
[4] Allan Jeffery, 31 July 2013, 'The Hinkley nuclear power station will never be built', www.thisiscornwall.co.uk/Hinkley-nuclear-power-station-built/story-19591...
[5] Cumbrians Opposed to a Radioactive Environment, 21 Oct 2013, 'Nothing welcome about Government's new build deal', www.corecumbria.co.uk/newsapp/pressreleases/pressmain.asp?StrNewsID=326
[6] Francois de Beaupuy and Tara Patel, 25 Nov 2010, 'China Builds Nuclear Reactor for 40% Less Than Cost in France, Areva Says', www.bloomberg.com/news/2010-11-24/china-builds-french-designed-nuclear-r...
[7] WNN, www.world-nuclear-news.org/NN-Olkiluoto_3_delayed_beyond_2014-1707124.html
[8] WNN, 24 Oct 2013, 'Symbolic milestone for Finnish EPR', www.world-nuclear-news.org/NN-Symbolic_milestone_for_Finnish_EPR-2410134...
[9] http://online.wsj.com/article/BT-CO-20121213-703038.html
[10] WNN, 11 Feb 2013, 'TVO prepares for further Olkiluoto 3 delay', www.world-nuclear-news.org/NN-TVO_prepares_for_further_Olkiluoto_3_delay...
[11] www.ft.com/intl/cms/s/0/5f849de4-dbf8-11e1-86f8-00144feab49a.html
[12] http://uk.reuters.com/article/2012/12/04/enel-edf-idUKL5E8N4DIJ20121204
[13] Steve Bird, 26 Oct 2013, 'Deaths, chilling safety lapses, lawsuits, huge cost over-runs and delays: Why we can't trust the French with Britain's nuclear future', www.dailymail.co.uk/news/article-2477202/Deaths-chilling-safety-lapses-l...
[14] Reuters, 26 Feb 2013, www.reuters.com/article/2013/02/25/areva-nuclear-idUSL6N0BPK4820130225
[15] Aaron Larson, 23 Oct 2013, 'Agreement Sets Stage for Construction of New Nuclear Plant in UK', www.powermag.com/agreement-sets-stage-for-construction-of-new-nuclear-pl...
[16] K. Steiner-Dicks, 23 Oct 2013, 'Hinkley Point C strikes a price', http://analysis.nuclearenergyinsider.com/new-build/hinkley-point-c-strik...
[17] Reuters, 23 Oct 2013, http://uk.reuters.com/article/2013/10/23/uk-edf-gulf-britain-idUKBRE99M0...
[18]Wales Online, 26 Oct 2013, www.walesonline.co.uk/news/news-opinion/rhodri-morgan-beware-price-promi...
[19] Tom Fitzpatrick, 8 Feb 2013, 'Treasury willing to back Hinkley nuclear plant with UK Guarantee', Construction News, www.cnplus.co.uk/sectors/energy/treasury-willing-to-back-hinkley-nuclear...
[20] Alex Brummer, 21 Oct 2013, 'Nuclear deal is a devastating indictment of the muddled approach of successive governments', www.dailymail.co.uk/news/article-2471115/Nuclear-deal-means-giving-overs...
[21] Construction News, 28 Oct 2013, http://www.cnplus.co.uk/8654752.article
[22] Terry Macalister and Jennifer Rankin, 18 Oct 2013, 'Nuclear expert raises concerns about Chinese role in UK's new nuclear plants', www.theguardian.com/environment/2013/oct/17/nuclear-expert-warning-chine...
[24] He Zuoxiu, 19 March 2013, 'Chinese nuclear disaster "highly probable" by 2030', www.chinadialogue.net/article/show/single/en/5808-Chinese-nuclear-di
[25] South China Morning Post, 7 Oct 2013, 'China nuclear plant delay raises safety concern', www.scmp.com/business/china-business/article/1325973/china-nuclear-plant...
[26] Keith Bradsher, 15 Dec 2009, 'Nuclear Power Expansion in China Stirs Concerns', www.nytimes.com/2009/12/16/business/global/16chinanuke.html?_r=2&
[27] David Biello, 16 Aug 2011, 'China's nuclear ambition powers on', www.abc.net.au/environment/articles/2011/08/16/3293802.htm
[28] 'China needs improved administrative system for nuclear power safety', 22 June 2011, www.eurekalert.org/pub_releases/2011-06/acs-cni062211.php
[29] Jonathan Watts, 25 Aug 2011, 'WikiLeaks cables reveal fears over China's nuclear safety', www.guardian.co.uk/environment/2011/aug/25/wikileaks-fears-china-nuclear...
[30]WNN, 28 June 2013, 'Loan guarantee for Hinkley Point C', www.world-nuclear-news.org/NN-Loan_guarantee_for_Hinkley_Point_C-280613S...
[31] 'An Overview of the New Nuclear Deal in the UK', 21 Oct 2013, www.carbonbrief.org/blog/2013/10/an-overview-of-the-new-nuclear-deal/
[32] Tamara Cohen, 21 Oct 2013, 'Nuclear plant may NOT cut bills, minister admits', www.dailymail.co.uk/news/article-2471071/Nuclear-plant-NOT-cut-bills-adm...
[33] Michael Klimes, 23 Oct 2013, 'Subsidy-Free Nuclear Deal Questioned by Environmental Audit Committee', www.ibtimes.co.uk/articles/515440/20131021/caroline-flint-generation-dav...
[34] Tom Burke, 25 Oct 2013, http://tomburke.co.uk/2013/10/25/third-or-fourth-time-lucky/
[35] Business Green, 21 Oct 2013, www.businessgreen.com/bg/news/2301810/government-hails-historic-nuclear-...
[36] Greenpeace, Hinkley Strike Price Briefing, https://docs.google.com/document/d/1ZLhBTXYpiiUMtB1e7gWQjtjVVhinLaE-ulBi...
[37] Guardian, 21 Oct 2013, www.theguardian.com/environment/2013/oct/21/uk-nuclear-power-plant-contr...
[38] George Monbiot, 22 Oct 2013, 'The farce of the Hinkley C nuclear reactor will haunt Britain for decades', www.theguardian.com/commentisfree/2013/oct/21/farce-hinckley-nuclear-rea...

More information:

• Stop Hinkley: www.stophinkley.org
• UK government: www.gov.uk/government/news/hinkley-point-c
• EDF: http://hinkleypoint.edfenergyconsultation.info/

(Written by Nuclear Monitor editor Jim Green.)

The economy of the Russian nuclear energy industry is the least known and most opaque of all the many facets that make up the vast dominion that is the Russian State Atomic Energy Corporation Rosatom. There is, today, plenty to learn about the environmental, technological, safety, and other aspects of Rosatom’s operations – but economic information, if it is revealed at all, is only made available in relative figures and general data whose accuracy it is impossible to verify. A new report, researched by Leonid Andreev and published by Bellona, offers some estimates of the levels of expenses the Russian nuclear industry bears in its operations.

Still, many experts have made attempts lately to understand and estimate just how much exactly generating electricity from nuclear sources comes to, what it costs the Russian state budget – i.e. the Russian taxpayers – to build new nuclear power plants, including those built by Russia abroad, how big the spending is on managing spent nuclear fuel and radioactive waste, and, ultimately, if it is even worth it to invest billions of dollars into developing an industry that is hardly a cure -all for existing energy woes but instead carries with it an enormous potential threat of killing everything alive on the planet.

The economics of Rosatom’s varied activities has become a topic of interest not just to the public – the ordinary taxpaying citizens, that is – but the Russian financial oversight agencies as well. For instance, one of the reasons that the newly minted draft law “On Management of Radioactive Waste” has not yet been passed, even as it remained on the legislators’ tables all throughout 2010, is the ambiguities in the economic concept of the waste management system the new law was supposed to establish. The Ministry of Finance of the Russian Federation is yet to work out a  definitive position with regard to what sort of expenses the state budget will bear in order to dispose of the radioactive legacy Russia has inherited from the Soviet Union and if the system suggested by the bill – the idea that the management of radioactive waste will be the responsibility of those who produce it – will prove economically effective.

Whichever provisions have been approved in those regulatory and legislative documents that have been adopted since the State Corporation Rosatom was established – starting with the Law “On the State Atomic Energy Corporation Rosatom” – and that have to do with the nuclear authority’s economic activities have, as a rule, been such as to cater to the interests of Rosatom itself, rather than the public or even the Russian state. For instance, a passage in the Law “On the State Corporation Rosatom” stipulates that the Accounts Chamber of the Russian Federation – the federal body with a mandate to exercise oversight over fulfillment of the federal budget – can only perform external control over the corporation’s activities. As for the audits of Rosatom’s internal financial and economic operations, the efficiency of spending government-allocated financial resources or those held in special reserve funds, and other aspects – those are carried out by Rosatom’s own Audit Committee. The public has a stake in knowing how much money has been accumulated on the accounts of special reserve funds that are maintained in order to finance decommissioning of old nuclear power plants and management of radioactive waste, but that, alas, is restricted information.

Rosatom and its daughter enterprises keep to a bare minimum what financial  information they disclose in reports made available for public access or during events such as public discussions or so called forum dialogues. If questions are asked during such events – for instance, how much does reprocessing of one ton of spent nuclear fuel cost? – the answer, as a rule, is: This is commercial secret.

By adopting its financial reporting policy, Rosatom took upon itself the obligation to disclose, in annual reports made available for the public, the results and efficiency of spending funds disbursed from the state budget and other sources. But though they are posted on Rosatom’s website, these reports say almost nothing on the industry’s economy save for some general references or percentage figures which impart information of little practical use.

All of the above would indicate that everything is not as hunky-dory as the upper management’s cheerful reports would have it – something that is furthermore confirmed by many expert studies both in Russia and abroad.

The present report offers some estimates of the levels of expenses the Russian nuclear industry bears in its operations and some arguments that explain why nuclear energy is a loss-making industry today. But the main purpose of this report is to initiate a broader discussion of nuclear energy economics in expert circles and the public domain alike in order to work out a better understanding of whether developing nuclear energy and committing enormous financial resources to this end is ultimately in the public’s interest.

The full report called 'The Economics of the Russian Nuclear Power Industry' (August 2011) is available at: http://bellona.org/filearchive/fil_Economics-of-the-Russian-Nuclear-Powe...

In many ways, Calvert Cliffs-3 was the flagship of the U.S. nuclear renaissance. In the summer of 2007, it became the first reactor to submit even a partial application for a construction/operating license from the NRC in more than 30 years. The company created to build and operate the reactor -UniStar Nuclear- was a combination of giants in the nuclear industry: Constellation Energy (CE) and Electricite de France (EdF), using the most modern reactor design available, the EPR from Areva.

Calvert Cliffs-3 would be built on a site already hosting two reactors and the idea received enthusiastic support from local officials, as well as nearly every statewide public official in Maryland -Democrats and Republicans alike. It would be located in a region with a booming economy that was projecting serious future shortfalls in electricity demand. It had come up with an innovative financing scheme to eliminate financial risk: 100% financing from U.S. and French taxpayers coupled with a protective layer of seven Limited Liability Corporations between the reactor itself and the parent companies.

What could go wrong? As it turned out, just about everything.

When Constellation announced late on Friday, October 8 -through a deliberate leak to the Washington Post- that it was pulling out of the Calvert Cliffs-3 project despite having just been offered only the second taxpayer loan for a new nuclear reactor, the reason given was the conditions attached to that loan. Constellation complained that the upfront cost of the loan -US$880 million for a US$7.5 billion (5,4 billion euro) loan, or less than 12%, was too high. And a second proposal from DOE -to cut the upfront fee to US$300 million if UniStar would simply promise to actually complete the reactor and guarantee it would sell 75% of its electricity, was “onerous.”

Really? The profit margin on a US$10+ billion reactor (UniStar earlier had received a promise of US$2.9 billion from COFACE, the French Export-Import Bank) designed to operate at least 60 years is so narrow that US$300 million would kill the deal? Not likely.

In fact, NIRS had predicted the demise of Calvert Cliffs-3 two months earlier for a bevy of reasons -none related to “onerous” loan conditions- in a lengthy post on DailyKos August 5, 2010. If you want a full explanation of the reasons, you can read the post here.

Briefly, the Calvert Cliffs-3 project collapsed because of a combination of factors, including soaring construction cost estimates; a large drop in electrical demand due to the ongoing recession and the institution of new energy efficiency programs; plummeting natural gas prices; continued revelations of EPR design deficiencies coupled with alarm over the horrific experience of EPR construction in Finland and France; determined opposition from opponents like NIRS; and unforeseen competition from renewable energy sources, especially offshore wind.

Indeed, it may only be coincidence, but almost immediately after Constellation’s announcement, a consortium led by Google announced it would spend US$5 billion to build transmission lines to bring thousands of megawatts of offshore wind power from the mid-Atlantic coast to the mainland. Earlier in the year, a small offshore wind company, Bluewater Wind, which already has received permission to build hundreds of megawatts off the Delaware coast and is seeking approval for larger projects off the coasts of Maryland and New Jersey, was bought by energy giant NRG Energy -bringing a deep-pockets competitor to Constellation’s service area.

Constellation could see the writing on the wall, and began to shift gears. With an option, contained in the contract when EDF purchased 49.9% of Constellation’s five existing reactors to bail out the company from bankruptcy (and Warren Buffett, who almost certainly would have ended the UniStar project) in 2008, to force EDF to buy a handful of ancient coal and gas plants scattered around the U.S. for US$2 billion, Constellation saw another possible future.

Those old plants are worth only about US$500 million combined. Forcing EDF to buy them for US$2 billion would leave US$1 billion plus in profit. Constellation put in a bid to buy a fleet of much more modern gas plants in New England. This would allow it to become a regional electricity powerhouse (three of Constellation’s existing reactors are in the region), and it wouldn’t even have to go into debt to do so. At this writing, Constellation has not yet exercised this “put” option, and is apparently still negotiating with EDF on the issue, but Constellation’s intent is clear.

EDF reacted to Constellation’s announcement it was leaving the project with what appeared to be genuine surprise -although anyone following the investment community’s advice, which was generally consistent in opposing Constellation’s continued involvement in Calvert Cliffs-3, shouldn’t have been shocked. Constellation’s stock went up the first week of trading after its announcement.

In any case, EDF is scrambling to resurrect the project. In an October 13 letter to Constellation, it offered “to shoulder 100% of the risk and burden until construction begins.” Alternatively, the letter said, “EDF is prepared immediately to purchase all of Constellation’s 50% interest in UniStar at fair market value…” But, EDF said Constellation would have to agree not to exercise its US$2 billion “put” option.

Constellation responded immediately, saying it would be happy to sell its share of UniStar -including the land for the reactor- for US$1, plus repayment of US$117 million it has invested in the project. But it said the “put” option was a separate issue.

That should give some idea of the value Constellation believes a new nuclear reactor in a deregulated market like Maryland’s holds -essentially zero.

For EDF to rescue the project, it would have to find another utility to take at least 50% of it -the U.S. Atomic Energy Act prohibits “foreign ownership, control or domination” of a U.S. reactor, and thus EDF could not even get a license to build a reactor. NIRS is already in litigation on this issue in the NRC’s license hearing process; we have charged that the Constellation/EDF UniStar structure is illegal under the Atomic Energy Act, even without additional involvement from EDF. For the moment, at least, that hearing process continues.

And what utility would be crazy enough to take on a US$10 billion+ project in a deregulated electricity market when the largest utility already in that market has been intimately involved with the project for years, and has determined that it is simply far too economically risky to undertake?

Meanwhile, the effects of the Calvert Cliffs case extend far beyond Maryland. Originally, EDF and Constellation had teamed up to build four EPRs in the U.S., with an eye toward additional expansion after that. The collapse of Calvert Cliffs certainly ends the UniStar project to build at Nine Mile Point in New York. An EPR proposed for Missouri, with UniStar involvement, was cancelled last year. And an EPR proposed for Pennsylvania, which even the plant’s owner PPL admits on its website would cost US$13-15 billion for a single reactor -the highest cost acknowledged to date by a U.S. Utility- appears to be on life support.

EDF’s -and the French government’s- dreams of becoming a major player in the U.S. nuclear energy future appear dashed. For its part, Areva now has no orders for reactors in the U.S. and has at least temporarily abandoned plans to build a reactor component plant in Virginia to serve what it once thought would be a growing U.S. market.

But it’s not only EDF, Areva and the French government that are being left behind by the new electricity realities in the U.S. The reactor project that actually got in the first entire application to the NRC -NRG’s South Texas Project- is also in trouble, for many of the same reasons. It too wants a loan from the Department of Energy, and presumably at less cost than offered to Calvert Cliffs. But it too operates in a deregulated market, faces increased cost estimates (one partner, the City of San Antonio, already essentially dropped out of the project due to soaring projected costs), issues of foreign ownership and control, and enormous competition from natural gas and wind power (Texas is already the U.S. leader in wind power). On October 19, NRG CEO David Crane told Associated Press that if natural gas prices are expected to stay low, NRG won’t build South Texas even if they receive a taxpayer loan. And gas prices are expected to stay very low for the foreseeable future.

Source and contact: Michael Marriott at NIRS Washington

Shares and nuclear power. After the news that Constellation Energy Group Inc had cancelled plans to build at third nuclear reactor at Calvert Cliffs in, the companys share price rose by 15 cents to ÚS$32.50. Meanwhile on the other side of the Atlantic, EdF - the largest shareholder in the Constellation Group - saw its share price fall by 3.4 per cent on the news (the share price is down 27 per cent this year).

Source: Greenpeace Nuclear Reaction, 14 October 2010

On October 18, the U.K. listed eight potential sites in England and Wales for new nuclear power stations that should be operational by 2025, the first in 2018. And Energy and Climate Change Secretary Chris Huhne was repeating his mantra: "There will be no public subsidy for new nuclear power."

But 'no public subsidy for nuclear power' is problematic if you actually do want to support new-build, not only political but also financial. So he decided to no longer call it subsidies. Now the text-to-be-explained is as follows, “the U.K. is not ruling out action to take on financial risks or liabilities of nuclear operators for which they (the government) are appropriately compensated or for which there are corresponding benefits” Huhn said. The Lib.Dem. minister campaigned against new nuclear power stations during the election.

The new-nuke-speak provoked several questions by MP’s in the British Parliament. The questions are interesting but the answers are even much more interesting. 

1. “What estimate the Minister has made of the maximum compensation payable to the Government for taking on financial risks or liabilities; and what mechanism he proposes to use to

(a) define and

(b) measure benefits arising from taking on such risks or liabilities ?

Minister of State Charles Hendry, second in line after Huhn: "As the 18 October 2010 statement on 'no subsidy for new nuclear power' made clear, we are not ruling out action by the Government to take on financial risks or liabilities for which they are appropriately compensated or for which there are corresponding benefits. The Government would consider any potential measures in this area on a case-by-case basis, in line with the policy as set out in the statement."

2. “How much support

(a) the Department and its predecessor and

(b) non-departmental public bodies for which the Department is responsible

have provided to the nuclear industry in the form of

(i) full-time equivalent staff,

(ii) facilities, and

(iii) research and development expenditures

in each of the last 10 financial years; and if the Department will indicate in each such case which costs

(A) arise from the UK’s nuclear legacy and

(B) are associated with possible new nuclear power stations.

Charles Hendry: "The Department of Energy and Climate Change does not hold the information requested centrally and providing a breakdown of the support referred to would result in a disproportionate cost."

3. “What information the Department holds for benchmarking purposes on the level of private insurance cover available to operators of nuclear installations in other countries”?

Charles Hendry: "We do not hold any specific information on the level of private insurance cover available to nuclear operators in other countries."

Time for action.
Several groups and individuals in the UK have come together to initiate a more coordinated campaign against new-build. One of the results of these gatherings is the “No Money for Nuclear” (NM4N) campaign-group which believes that the level of support received by the nuclear industry in the UK is unjustified and a serious drain on public finance, especially at a time when the weak and vulnerable are suffering from significant cuts in public expenditure. In addition, the way waste disposal and decommissioning costs of new nuclear power stations are gathered poses a serious risk to the public purse in the future.

The government claims that nuclear power and renewable energy can exist together in a competitive market place. However, the nature of nuclear power is that much of the costs, those for waste disposal and decommissioning, do not materialise until the end of the working life, even though these costs become inevitable once the power station starts operating. The flat rate nuclear levy will act as a substantial subsidy to these capital costs. NM4N believe that it is possible to move to a much more sustainable energy economy without the need for nuclear power.

NM4N spokesperson, Pete Rowberry said “The coalition government has promised that nuclear power stations would not be built if they needed public subsidy. However, they have not changed any of the significant public support which the industry already receives. It also seems that they are determined that support for the nuclear industry will be extended further by allowing it to benefits of the carbon pricing and emissions trading regimes, in spite of the fact that nuclear power is significantly higher producer of CO₂ than any renewable source. It continues to cover the industry’s liability in the case of a nuclear accident, in spite of the statement by Rt Hon Chris Huhne MP, Secretary of State at the Department of Energy and Climate Change that this subsidy would be ended, yet another example of the coalition’s broken promises."

Sources:  Bloomberg, 18 October 2010 / Press release NM4N, 25 October 2010 / email D. Lowry, 27 October 2010