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NUCLEAR LOBBY AT POZNAN COP-14: SNEAK IN THROUGH THE BACK DOOR

Nuclear Monitor Issue: 
#681
17/12/2008
Article

(December 17, 2008) The threat of climate change has become central to the nuclear industries survival strategy. Faced with terminal decline from the late 1980's onwards, they seized the opportunity during the climate negotiations that began after the signing of the Kyoto Protocol in 1997. The critical area of Kyoto for the nuclear industry was Article 12 on the Clean Development Mechanism (CDM), a credit mechanism for industrialized countries where they could finance mitigation projects in developing countries in return of certified emission reductions credits (CERs), to be used to offset their own reduction targets.

 

(681.) Jan Vande Putte - After years of careful preparation, with highlights at the Conferences in The Hague and Bonn, nuclear lobbyists were effectively defeated in Marrakesh in 2001, with a leading role of the AOSIS countries (The Alliance Of Small Island States), being highly critical of the nuclear waste and plutonium shipments from and to Japan through their region as well as by the EU, OPEC and the Central-European countries. A diplomatic compromise was found stating that industrialized countries could not use the credits from nuclear power, thus avoiding an explicit rejection of nuclear technology as such, but effectively blocking it from being part of the game. The congratulations to the NGO folks involved were certainly well-deserved.

 

Long commitment periods needed

After being kicked out of the Kyoto financing mechanisms, the nuclear industry tried to minimize its defeat, by stating that after all, it would not have made any difference. The analysis was that the commitment period was too short, in fact from 2005 (entry into force of Kyoto) till 2012, not being enough to significantly soften the huge upfront investment risks of a nuclear power plant. Although this explanation was in the first place aimed to cover their defeat and to minimize the political stigma of not being part of the solution, it would be a mistake to overlook its deeper significance. In recent discussions on pro-nuclear strategies to get full recognition in the so-called post-Kyoto 'financial architecture', long commitment periods of some 15 years are seen as a minimum to effectively contribute to the nuclear industry's financial problems. Something to keep in mind, given the rumors at Poznan of shortening the next two commitment periods to 5 years.

 

Lessons from the CDM

Quite a lot has been published on the future of CDM in the post-2012 area, as well as on proposals for new financing mechanisms. It is rather generally recognized that CDM had a very poor performance. The Climate Action Network's position paper is clear: it has a net negative impact on the reduction of greenhouse gasses. This is because industrialized countries are offsetting a part of their own reduction obligations by buying credits generated by projects which are not really 'additional', meaning that e.g. Japan is buying credits from a large hydro power plant in China which was going to be built anyway, even without the credits, while the domestic targets of Japan can be lowered because of the credits. Furthermore, projects often neglect environmental criteria or disrupt local communities and most CDM projects are in the largest developing countries such as China or India, with only few projects in Least Developed Countries. Management of the whole CDM is far from kosher. It is done through an 'Executive Board' which members are either defending national or business interests or both. Even UNEP is pretty critical on CDM.

 

But behind the closed doors of the 'informals' during the Poznan Conference, diplomats continue a cynical discourse. It’s worth listening carefully to friendly diplomats reporting from it, in order to understand where they are heading to post-2012. Just to look at three key players. Japan is pushing to 'streamline' the CDM system, to have even less power with the board, less time to approve projects, and going for a much larger-scale application in order to go for large-scale offsetting of its obligations. China on the other hand is looking forward to big volumes of cash from selling credits from large-scale projects and avoiding the bureaucracy of the Bonn-based Board. And Europe is mainly playing a hypocritical game: pushing for an improved system and stricter sustainability criteria knowing that between China an Japan they have little chance, and thus accepting to go for large-scale offsetting as well, thereby avoiding their own domestic responsibilities.

 

Towards the post-Kyoto financial architecture

The political game around CDM is probably the best indicator of where the whole system is heading to. CDM as such will probably be continued as a project-based system, with renewed attempts to remove the nuclear exclusion in the post-2012 'extended' CDM. But the key countries see its limitations, even with a 'streamlining' of the bureaucracy. Approving each project remains a slow process in what could potentially become a trillions-dollar market after 2012. Several new mechanisms have thus been proposed, amongst the most well-known is the so-called Sectoral No-Lose Target (SNLT). This would e.g. recognize the whole Chinese electricity sector as one big 'project' (to use the analogy with CDM). It would begin with an analysis of the projected business-as-usual emissions profile of the whole sector for the crediting period, followed by a calculation as to the effect of existing domestic policies and measures on that emissions profile, which would establish a 'baseline'. Any further reductions below this baseline would then generate credits which would be eligible to be sold on the carbon market. Such approach falls under the group of 'Target and Timetables' approaches. The 'no-lose' qualification refers to the voluntary nature of the target for China, meaning that there are benefits if the emissions remain under the baseline and no penalties if not.

 

The SNLT approach certainly has some advantages for the nuclear industry. While the CDM, as a project-based mechanism, is now effectively blocking nuclear projects, such would be far more complex under a sectoral approach which is not looking into the details of how emissions reductions in the sector are realized. Nuclear trade between the French state-owned Areva, selling EPR's to China would thus generate profit for Areva and loads of credits for China, selling them on the carbon market, to be bought by France to comply with its post-Kyoto commitments (supposing they reach an agreement in Copenhagen or thereafter). It looks much like the closed fuel cycle. Whereas in the case of CDM, there are many loopholes in the mechanism, the SNLT-type of systems could become the loophole. Options to exclude non-sustainable technologies such as nuclear power are certainly conceivable, but might be politically hard to win.

 

A very different approach than setting Targets and Timetables is the Technology Transfer. Given the uncertain nature of the carbon market (e.g. the crash of the European ETS -the Emission Trading Scheme- market), and short commitment periods, the nuclear industry might be looking also into international, regional or even bilateral agreements for technological 'innovation'. Likeminded partners could create niche markets, e.g. developing EPRs in S-Africa. At a broader level, the Generation IV Forum could be financed through a Technology Transfer agreement, with an active participation of countries such as India, Brazil, Argentina, the US, Japan and the EU.

 

Filling the gap will be hard

The three described post-2012 financial instruments are illustrative of a much larger number of options. This might seem to be an impressive nuclear 'coup' with the objective to have a prominent role of nuclear power in the post-Kyoto world. However, the main mechanism of carbon trading will remain rather incompatible with the needs of the nuclear industry to get long-term commitments and stable and high carbon prices. Without this, banks might remain skeptical on funding new reactor projects. Technology Transfer agreements might be very focused on specific projects or programs, but it looks rather unlikely this could generate the thousands of billions to fuel a real nuclear 'renaissance'.

 

Conclusions

It is hard to come up with any clear conclusions. The debate on the post-2012 financial architecture is still at an early stage, fragmented and all options seem to be open. The nuclear industry is however looking very serious into this issue and developing a well-targeted strategy to get nuclear power in as many mechanisms as possible. Furthermore, serious efforts are being put into getting the recognition it missed in 2001 in Marrakesh. As an example, lot of efforts have been put in making the IPCC Assessment Reports more pro-nuclear, by generating biased data through the Nuclear Energy Agency on the costs of nuclear power. This ground-laying work should not be underestimated.

 

Meanwhile, more realistic figures on the capital cost of new nuclear power plants are more and more frequently published in the financial press, with even the World Nuclear Association recently recognizing a cost tag of around 7000 $/kWe installed capacity. These figures, some 2-4 times higher than what the NEA was still publishing earlier this year, will now be trickling down from the more specialized media to the more popular, and to decision makers and the larger public. The IAEA at Poznan started to anticipate this criticism by publishing itself some updated cost figures showing a lower generation cost range for wind than for nuclear. This might be the reason why the nuclear industry is now stressing that its the 'cheapest low-carbon baseload technology'.

 

This looks like a decisive race for the nuclear industry, to get things arranged in time before the truth haunts down its self-fabricated reputation to be the major 'low-carbon' technology. This race might be a close one, and the role of the NGOs exposing the historical failure of the nuclear industry might be decisive. Apart of exposing its excessive costs in terms of climate mitigation, environmental NGOs should also continue to stress its fundamentally unsustainable nature, especially its unresolved waste problems and proliferation risks. During the first week of the Poznan conference, more than 300 NGOs co-signed a position paper to keep nuclear out of CDM, including all main international environmental NGO's. It is encouraging that the environmental movement stands firm against nuking the climate. 

 

Source and contact:  Jan Vande Putte, Greenpeace Belgium

Email: jputte@be.greenpeace.org