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ITER: costs overruns, again.

Nuclear Monitor Issue: 
WISE Amsterdam

In 2005, after deadlocked discussions, it was agreed to site I International Thermonuclear Experimental Reactor (ITER) at Cadarache, in southern France. The deal involved major concessions to Japan, which had put forward Rokkasho as a preferred site. 1996 was originally supposed to have been the year when the countries involved in the project would decide where the reactor would be located. But costs are skyrocketing. Now, the European Commission is asking member states for another 1400 million euro to cover just two years of extra spending.

The years 2012 and 2013 are linked to the FP7-Euratom budget that, due to treaty limitations, only runs over five years 2007-2011. (The general research budget runs over seven years.) The EU as host party will contribute around 45% of ITER's estimated construction costs while the rest is equally divided amongst the other six parties: US, China, Japan, India, Russia, South Korea.

The European Commission has adopted a Communication to the European Parliament and the Council which concludes that in view of substantial overall cost increases for International Thermonuclear Experimental Reactor (ITER), which have more than doubled the costs for Europe (to around €7.2 billion instead of an initial expected €2.7 billion), a sustainable financial framework should be established. Member States should provide a clear financial commitment throughout the life of the project and a mechanism for dealing with any further overruns should be agreed, subject to an overall cap. In particular, a total of around €1.4 billion is needed to meet the estimated cost increases in the Euratom Community contribution to ITER in 2012 and 2013. This funding should be found either by raising the ceiling in the EU budget or through additional finance directly from the Member States.

EU's commitments to the ITER Agreement is delivered through the European Joint Undertaking for ITER – "Fusion For Energy" (F4E), established as the European Domestic Agency by the Council in March 2007.

The European Union wants to “ensure the success of the project at acceptable cost and with reasonable financial and technical risks”. The critical step for the project is now for the international partners in ITER to agree on the project's “Baseline”, in other words its scope (specifications of the fusion reactor to be built), the schedule (time table for construction) and the cost. The aim is for this to be agreed at the next meeting of the ITER Council, which includes representatives of all the participating countries, scheduled for mid-June 2010.

How is ITER financed?
During the construction phase Euratom contributes a value of 5/11 (around 45%) of the total, of which 80% is funded from Euratom and 20% from France, the rest being equally divided among the other 6 ITER Parties (1/11 or around ~9% each). During the subsequent operation and deactivation phases, Euratom will contribute 34% of the total costs.

The 2001 cost estimated the total ITER construction at 5.9 billion euro. The Euratom contribution, amounted to 2.7 billion euro (around 45%, 2680 million in 2008 value), corresponding to euro 1 735 million for the components/systems to be provided “in kind”, and 945 million euro to be provided "in cash" to the ITER Organization.  Each Party has committed to provide the agreed contributions in kind independently of  the final cost of procuring and delivering those components.

The F4E current cost estimates for the construction period (cost for Europe only), updated according to the proposed schedule (2007-2020) and presented to the F4E Governing Board in March 2010, amount to 7.2 billion  euro: 6.6 billion euro for the contribution to ITER construction and 650 million euro for the F4E running costs and other activities. These estimates would require a Euratom contribution of 5.9 billion euro and 1.3 billion euro of funding from France (all figures in 2008 value).

Euro 2.1 billion (current value) of commitment appropriations from the FP7 Euratom

Budget are needed for the years 2012-2013 in order to commit the procurements needed early in the construction process. Programmed appropriations available in the current Multiannual Financial Framework (346 million euro for 2012 and 344 million euro for 2013 in current value) mean that Euratom is facing an estimated gap on commitment appropriations of about 1.4 billion euro for the years 2012-2013 (550 million euro in 2012 and 850 million euro in 2013).

Sources: European Commission MEMO/10/165, Brussels, 5 May 2010 / See also Nuclear Monitor 698, 27 November 2009: ‘Fusion illusions’