**Energiepolitik und Klimaschutz Energy Policy and Climate Protection**

Reinhard Haas · Lutz Mez Amela Ajanovic Editors

# The Technological and Economic Future of Nuclear Power

## **Energiepolitik und Klimaschutz Energy Policy and Climate Protection**

 **Reihe herausgegeben von** 

 Lutz Mez , Berlin , Deutschland Achim Brunnengräber , Berlin , Deutschland **Diese Buchreihe** beschäftigt sich mit den globalen Verteilungskämpfen um knappe Energieressourcen, mit dem Klimawandel und seinen Auswirkungen sowie mit den globalen, nationalen, regionalen und lokalen Herausforderungen der umkämpften Ener giewende. Die Beiträge der Reihe zielen auf eine nachhaltige Energie- und Klimapo litik sowie die wirtschaftlichen Interessen, Machtverhältnisse und Pfadabhängigkeiten, die sich dabei als hohe Hindernisse erweisen. Weitere Themen sind die internationale und europäische Liberalisierung der Energiemärkte, die Klimapolitik der Vereinten Nationen (UN), Anpassungsmaßnahmen an den Klimawandel in den Entwicklungs-, Schwellen- und Industrieländern, Strategien zur Dekarbonisierung sowie der Ausstieg aus der Kernenergie und der Umgang mit den nuklearen Hinterlassenschaften. Die Reihe bietet ein Forum für empirisch angeleitete, quantitative und international vergleichende Arbeiten, für Untersuchungen von grenzüberschreitenden Transformations-, Mehrebenen- und Governance-Prozessen oder von nationalen "best practice"-Beispielen. Ebenso ist sie offen für theoriegeleitete, qualitative Untersuchungen, die sich mit den grundlegenden Fragen des gesellschaftlichen Wandels

 **This book series** focuses on global distribution struggles over scarce energy resources, climate change and its impacts, and the global, national, regional and local challenges associated with contested energy transitions. The contributions to the series explore the opportunities to create sustainable energy and climate policies against the backdrop of the obstacles created by strong economic interests, power relations and path dependencies. The series addresses such matters as the international and European liberalization of energy sectors; sustainability and international climate change policy; climate change adaptation measures in the developing, emerging and industrialized countries; strategies toward decarbonization; the problems of nuclear energy and the nuclear legacy.

in der Energiepolitik, bei der Energiewende und beim Klimaschutz beschäftigen.

 The series includes theory-led, empirically guided, quantitative and qualitative international comparative work, investigations of cross-border transformations, governance and multi-level processes, and national "best practice"-examples. The goal of the series is to better understand societal-ecological transformations for low carbon energy systems, energy transitions and climate protection.

 **Reihe herausgegeben von**  PD Dr. Lutz Mez Freie Universität Berlin

 PD Dr. Achim Brunnengräber Freie Universität Berlin

More information about this series at http://www.springer.com/series/12516

 Reinhard Haas · Lutz Mez · Amela Ajanovic Editors

## The Technological and Economic Future of Nuclear Power

 *Editors* Reinhard Haas Technische Universität Wien Wien, Austria

Lutz Mez Freie Universität Berlin Berlin, Germany

Amela Ajanovic Technische Universität Wien Wien, Austria

 This open access publication was funded by BMNT Austria, BMVIT Austria, City of Vienna, Austria, Province of Upper Austria, Province of Vorarlberg.

 ISSN 2626-2827 ISSN 2626-2835 (electronic) Energiepolitik und Klimaschutz. Energy Policy and Climate Protection ISBN 978-3-658-25986-0 ISBN 978-3-658-25987-7 (eBook) https://doi.org/10.1007/978-3-658-25987-7

Springer VS

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The registered company address is: Abraham-Lincoln-Str. 46, 65189 Wiesbaden, Germany

### **Preface**

In November 1978 the Austrian Electorate, in a nationwide referendum, decided against the commissioning of the frst Austrian Nuclear Power Plant in Zwentendorf. History proved this decision having been rather forward-looking.

Today, 40 years later, having experienced the severe accidents of Chernobyl in 1986 and of Fukushima in 2011, both with far ranging and long lasting severe impacts, quite a number of countries is phasing-out, or has decided to phase-out, nuclear power. Nevertheless, other countries are determined to continue the use of nuclear power, or have decided to embark on a nuclear power programme.

From our point of view, nuclear power cannot be considered compatible with the concept of sustainable development. Consequently, reliance on nuclear power must not be considered a viable option to combat climate change. Sustainable development, if fully applied to the energy sector, would require substantial increases in energy efciency and in energy saving as well as switch to renewable sources of energy.

However, the global debate on the potential role of nuclear power in the decarbonisation of our energy systems is ongoing. Tis debate urgently needs to beneft from sound scientifc evidence. Tis book highlights various important aspects of nuclear power from an up-to-date perspective. Tus, we are convinced that this book will serve as an important input to the debate and that it will have a lasting impact.

*Elisabeth Köstinger* (Minister of Sustainability and Tourism) *Norbert Hofer* (Minister of Transport, Innovation and Technology) *Ulli Sima* (Vice-mayor, City of Vienna) *Rudi Anschober* (Regional Minister, Province of Upper Austria) *Christian Gantner* (Regional Minister, Province of Vorarberg)

#### **Acknowledgements**

Te authors are grateful to Veronika Kiesenhofer, Andreas Molin, Markus Niedermair, David Reinberger and Teo Zillner for their valuable support.

## **Contents**


#### **Legislation**


#### **Technical**


#### **Nuclear Waste, Proliferation**


#### **Major Accidents**


Te Reality afer Fukushima in Japan. Actual Damage to Local People . . 341 *Tadahiro Katsuta* 


#### **Alternatives**


IX

## **Introduction: Why Discuss Nuclear Power Today?**

Reinhard Haas, Lutz Mez, and Amela Ajanovic*<sup>1</sup>*

#### **Introduction**

Commercial nuclear power was once depicted as an infnite source of energy to meet growing energy demand. In spite of costs increases, several reactor accidents and remaining challenges regarding radioactive waste, nuclear reactors still play an important role in the energy policy of several countries. However, the future use of nuclear power is a disputed issue in the policy community. Tere is wide disagreement about the scale of the future use of nuclear power for electricity generation.

While the interest in new nuclear power plants (NPP) in the Western EU-countries and the USA is very modest with few or no plants under construction and planned, there are still talks about new-build in Eastern Europe (Poland, Hungary, Czech Republic, Slovakia, Belorussia, Ukraine), in the Middle East, in Russia, in China and in South-Eastern Asia.

According to the International Atomic Energy Agency (IAEA) 454 NPP are "operational" in 31 countries (as of 11 December 2018). Moreover, 54 reactors were under construction end-2018, with the largest number of new-build in China. Te major arguments brought forward in favor of nuclear power are:

<sup>1</sup> Reinhard Haas, Technische Universität Wien, Austria, haas@eeg.tuwien.ac.at; Lutz Mez, Freie Universität Berlin, Germany, lutz.mez@fu-berlin.de; Amela Ajanovic, Technische Universität Wien, Austria, ajanovic@eeg.tuwien.ac.at

R. Haas et al. (Eds.), *The Technological and Economic Future of Nuclear Power*, Energiepolitik und Klimaschutz. Energy Policy

and Climate Protection, https://doi.org/10.1007/978-3-658-25987-7\_1


However, an unofcial argument in some countries is to retain (or build up) their military nuclear applications, particularly weapons but also nuclear submarines. Other non-outspoken drivers can be geo-political interests and mere status symbols, as belonging to the rather exclusive club of three dozen countries—15% of United Nation member states—and mastering what is still considered supreme science remains a goal for some countries or rather regimes.

To understand current and future role of NPP in diferent countries it is important to learn from the history of nuclear power in electricity generation from a technological and economic point of view. Already in the 1950s, when the economies of many countries (e.g. USA, Europe, Japan, Russia) started to grow fast, and electricity demand grew with the economic development. At that time a desperate need for additional sources for electricity generation beyond limited fossil fuels was seen as essential for continued economic growth. Te promises of the nuclear dream emerging in the 1950s were to have cheap electricity in abundance.

In the USA afer the early military applications, there was the announcement of the nuclear program "Atoms for Peace" by Eisenhower in 1953. As a consequence, the USA exported reactors to a number of key countries at low prices, launching nuclear ordering. Countries included Germany, France, Spain, Japan, India. Te frst nuclear plants started operation in the period 1954–1956 in the UK, the Soviet Union and the USA. In the USA "Atoms for Peace" was accompanied by the slogans "too cheap to meter" and the "all-electric home". Te idea was that most eforts in households, agriculture and other sectors could be managed by electricity and that electricity could be produced at such low marginal cost that metering would not be justifed.

However, as described in this book – given a broad range of subsidies revealed – it is more than doubtful whether such cheap nuclear power has ever existed and prospects of the future competitiveness of nuclear energy appears jeopardized by competition from the surprisingly rapid expansion of renewable energies.

Yet, up to the mid-1970s, nuclear power was booming in many countries and plant by plant was added. Hopes were strong that costs would start coming down with increasing experience.

In the history of nuclear power, there have been three major shocks to the system: Te frst was the accident in Tree Mile Island in the USA in 1979. While reduced economic support slowed construction already before, this accident stopped new nuclear power plants constructions in the USA for a long time. Te catastrophe beyond the maximum credible accident in Chernobyl in 1986 was a major set-back for the nuclear power industry in Europe. However, the list of large orders has ended already before Chernobyl. Te accident in Fukushima in 2011 accelerated Germany's program of phasing-out completely all NPPs by 2022, and profoundly impacted other countries, e.g. Belgium, China, South Korea, Switzerland, Taiwan. Many other accidents with radioactive contamination have happened in the past, however without getting the same attention, e.g. the Kyshtym disaster, and the Windscale fre both in 1957.

Yet the issue of safety is only one amongst a series. Aside from the issue of safety, technical risks, security issues and the unsolved problem of nuclear waste disposal and the economic performance are currently the major barriers for acceptance of NPP. Costs, especially the construction costs of NPP have been increasing since the 1970s and in recent decades they have skyrocketed especially in European countries and North America. Construction time has also become even more subject to overruns. At the same time the costs of renewable energy technologies such as photovoltaics and wind turbines have signifcantly decreased.

In light of these still falling costs the economic performance of nuclear power in comparison to these renewable technologies is also getting worse. It already has become much harder for nuclear investors to recover money in competitive electricity markets Te "base-load" concept has lost its meaning in these markets when low cost renewable sources outperform any thermal power plant. Even the pure operation & maintenance costs are difcult to recover in today's electricity markets leading to more unfavorable prospects for future nuclear competitiveness.

Te increasing construction costs and durations have exacerbated the major problems faced by nuclear power plant vendors. Te French vendor AREVA went bankrupt, was bailed out and broken up by the government in 2017. In the same year, the US-based Westinghouse (then owned by Toshiba) declared bankruptcy and, apart from Russian and Chinese vendors, none of the historic vendors has a healthy order book.

Around the turn of the century there were forecasts of a 'nuclear renaissance' or at least of 'rising expectations' based on reactor designs evolved from existing ones, so-called Generation III+. Tis temporarily revived interest in nuclear power but this new interest has generally not been translated into frm orders. Tis was sometimes supported by vision of new "cheap and safe" radical new technologies of a so-called generation IV reactors that have been discussed since the early 2000s. "Small Modular Reactors" (SMRs) are the most recent favour of the year, but they are still technologically underdeveloped, and fnancially out of reach.

Te core objective of this book is to provide a comprehensive appraisal of the technical and economic aspects of nuclear power in the next decades. It discusses whether the claimed renaissance of nuclear is really on the horizon or whether the eroding economics as well as technical, legal and industry/vendor issues will continue to close the curtain for this technology. It is organized as follows.

In the next chapter a historical review of the Nuclear Dream is conducted by Rosaria di Nucci from military to early civilian applications. In the following a comprehensive analysis of recent developments and the current state of the world nuclear industry is provided by Mycle Schneider. Te collision of atomic and fow renewable power in decarbonization of electricity supply is analyzed by Aviel Verbruggen and Yuliya Yurchenko.

One of the most heavily discussed current issues – costs and economics – are analysed by Reinhard Haas, Steve Tomas and Amela Ajanovic. Te major focus of this chapter is on the question, why the real investment costs of NPPs have increased at such a high rate. Te specifc aspects of one of the most prominent disputed new planned NPP – Hinkley Point C – and its economics compared to renewable energy technologies are investigated by Gustav Resch and Demet Suna in the chapter following.

Another economic issue, which is ofen ignored, is the cost of nuclear decommissioning. It is treated in two chapters – Wolfgang Irrek analyzes the problem of "fnancing nuclear decommissioning", and Christian von Hirschhausen, Jan Paul Seidel, and Ben Wealer investigate the decommissioning of NPP, storage of nuclear waste and provide the experiences from Germany, France, and the UK.

Dörte Fouquet refects on the legacy around the setup and foundation of the EURATOM treaty, the clashing economic nuclear interests of France and the United States on civil use of nuclear power and the respective technologies, the limits and shortcomings of this treaty and its strong support angle at odds with the liberalization of the European energy market.

Tomas Kåberger analyzes the legislation of the economic liability for accidents and back-end costs. David Reinberger, Amela Ajanovic and Reinhard Haas provide a historical overview on nuclear technologies with special focus on the intended new concepts of Generation IV.

Te problem of nuclear waste and its long-term disposal is investigated by Gordon MacKerron. As China is currently the most important country world-wide for the development of nuclear power in this book it is treated by M.V. Ramana.

Regarding the large accidents in Chernobyl and Fukushima, three chapters are dedicated to these negative highlights in nuclear history. Nikolaus Müllner analyses the technical versus the human causes about three decades afer Chernobyl. Te reality afer Fukushima in Japan with focus on actual damage to local people is investigated by Tadahiro Katsuta. Eri Kanamori and Tomas Kåberger analyze Japan's experience the distribution of the costs of nuclear core melts about six years afer Fukushima.

An outlook on the prospects of a future democratic and sustainable electricity generation system is provided in the last chapter by Reinhard Haas and Hans Auer.

**Open Access** This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

The images or other third party material in this chapter are included in the chapter's Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter's Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

## **From Military to Early Civilian Applications An Appraisal of the Initial Success of the Light Water Reactor Technology**

Maria Rosaria Di Nucci1

#### **Abstract**

Te article presents a historical overview of the development path of nuclear technology, from its military application to its civilian start up (Atoms for Peace) and early commercialisation of nuclear power plants. Te chief aim is to demonstrate and analyse the commercial exploitation of nuclear energy and the beginnings of the nuclear industry by means of the link with the military research and development and production and its success based on tight industry-government integration. We describe the gradual growth of national nuclear frameworks and of the industry as a result of a combination of exogenous and endogenous factors originating with the military spill-over efects. Tese factors evolved during the subsequent phases of the technology development following the transfer of technological know-how from military establishments to civilian atomic agencies and the creation of a private industry.

<sup>1</sup> Maria Rosaria Di Nucci, Freie Universität Berlin, Germany, dinucci@zedat.fu-berlin. de

#### **1 Introduction**

Tis chapter presents a historical overview of the development path of nuclear technology, from its military application to its civilian start up, under the aegis of *Atoms for Peace* and early commercialisation of nuclear power plants. Te chief aim is to demonstrate and analyse the commercial exploitation of nuclear energy and the beginnings of the nuclear industry by means of the link with the military research and development and its success based on tight industry-government integration. Military nuclear technology and production issues were decisive not only in the USA, but also in the UK and in France, where fssionable material was indispensable for nuclear weapons.

Te gradual growth of national nuclear frameworks and of the industry are described as a result of a combination of exogenous and endogenous factors originating with the military spill-over efects. Tese factors evolved during the subsequent phases of the technology development, following the transfer of technological know-how from military establishments to civilian atomic agencies (occurring frst in the US in 1946, and later in France and the UK in 1954), and the creation of an independent private industry.

Te key development stages of military and civilian applications will be analysed chronologically. Te primary concern will be the US, British and French experiences, due to their early start and close military ties. In addition to technology development, we briefy describe the agreements, policies and regulations of the US government and the International Atomic Energy Agency (IAEA) which afected the domestic and international marketing of nuclear power plants. Looking at the international framework will allow us to consider the role of the international organisations fostering the development of nuclear power such as the IAEA, the European Atomic Energy Community (Euratom) and the schemes that acted as vehicles for the international sale of nuclear power plants. Aferwards, we look briefy at two national frameworks. Britain receives more attention because initially it was the only country competing with the US in size and government backing in the international market.

Te discussion of early military and civilian deployment of nuclear energy will be roughly subdivided into the following stages:


Atomic Agency. Knowledge accumulated under the military was transferred to the Atomic Agency, but tight military control was maintained in the choice, implementation, and deployment of the technology. During this stage, basic and applied research leading to reactor prototypes was conducted and several diferent technologies were concurrently tested with the primary goal of obtaining plutonium for military purposes;

3. Exclusively civilian applications. Here the focus is on the evolution of a specifc industrial autonomy and the establishment of the market duopoly by Westinghouse and General Electric (GE). Teir marketing policy was articulated through pre-existing and newly established licensing agreements with European countries and Japan.

In analysing the success of Light Water Reactor (LWR) – the American technology par excellence – and its establishment in the world market, we argue that the success of LWR can be explained by examining the interplay of various factors at work in the US market, along with certain exogenous infuences in both domestic and export arenas.

Te early technological and economic success of LWR technology can be attributed to a rather heterogeneous set of interdependent factors. In this analysis, however, we fnd it useful to separate these factors and determine which had the greatest impact at any given time. Some of them, like the military spill-over efect, can be considered exogenous to the industry or as a socialisation of its costs. Others, like the industrialisation nurtured under the US Atomic Energy Commission (AEC), can be viewed as the result of a dynamic interrelation between organisational, industrial and institutional factors. Although at these stages, the industry's role was limited to receiving government contracts and procurements and/or working under strict military control, this period marks the beginning of a close interdependence between the military establishment (and later the atomic agencies) and industry that enhanced growth of internal capabilities and nurtured what can be called the military-industrial complex.

#### **2 Early military and civilian applications in the USA**<sup>2</sup>

#### **Early military applications**

With the US entry into war in 1942, and amid widespread fears that Nazi Germany was progressing in atomic research for military ends, the American authorities stepped up research on the military application of nuclear physics. In September 1942, the US Army formed an organisation known as the "Manhattan Engineering District" under General Grove. Te District's task was to reorganise work formerly undertaken by the National Defence Research Committee, which was established in 1940, and subsequently part of the ofce for Scientifc Research and Development. Te "Manhattan Project" pooled together the best scientists of North America and Western Europe. Te programme of the Manhattan District was initially managed by the Army Corp of Engineers, before responsibility was entrusted entirely to the US Army in 1943.

Te discovery of Plutonium 239 in December 1940 and its devastating explosive potential catalysed great eforts to build nuclear reactors whose main purpose was the production of plutonium. It should be noted that the military-scientifc establishment encountered severe problems in obtaining self-sustaining nuclear chain reactions. In particular, the production of sufcient quantities of uranium and graphite in the state of purity required by laboratory and industrial operations was well beyond that currently available. By 1942, the frst chain reaction took place at Fermi´s Chicago Pile-1 (CP-1) using natural uranium as fuel and graphite as a moderator, with a power of 200 Watts.3 Tis experiment demonstrated the feasibility of using atoms as an energy source, although applications for civilian use were to be a long time in the making.

In fact, a period of strict secrecy was ushered in, during which the atomic project had top military priority which led to a pooling of scientifc and fnancial resources. Te construction of additional, larger reactors quickly followed, such as the reactor at Oak Ridge and a second "Chicago Pile". A third ofspring of Fermi´s pile used enriched uranium and heavy water (in place of graphite as a moderator) to produce 300 kW of power. To put it with Wellersten (2017) "virtually overnight, the University of Chicago had become a major wartime contractor".

Subsequently, several additional plutonium reactors of the so-called "Hanford" type were built under the control of the Manhattan District and under management of the DuPont Company. Natural uranium was deployed in the form of

<sup>2</sup> Tis section draws on my dissertation (Di Nucci 1986), on Sanger and Wollner (1995) and De Wolf Smyth (wd).

<sup>3</sup> http://www.atomicarchive.com/History/frstpile/frstpile\_01.shtml

rods encased in aluminium, with graphite as a moderator and water as a coolant, while uranium concentrate was obtained from a difusion plant at Oak Ridge. Tis work was backed up by scientifc research performed at the University of Chicago (Argonne National Laboratories), Ames Laboratories and other universities. Te chemistry of plutonium was studied at the University of California in Los Angeles (UCLA) while Columbia University handled the experimental nuclear data central to the uranium technology. Reactor construction and the entire nuclear fuel cycle were characterised by a close interaction and cooperation between scientifc and university establishments and supported by industrial groups responsible for the production of key equipment (bound by military secrecy).4

Tis spectacular pooling of resources led to a rapid advance in pure and applied scientifc knowledge and in engineering skills as well as innovative production techniques. Increased confdence in the programme´s potential paved the way for a special group based out of UCLA to take charge of the design, construction and testing of the atomic bomb. Tis project, known as the Los Alamos Laboratory, began operation in 1943. At its disposal were minimal amounts of fssionable materials, before more could become available from the frst working reactor.

By 1944, Los Alamos had its own reactor for use in research on the A-Bomb. Uranium was present as a solution in the form of uranyl sulphate, rather than in metallic form. Te reactor was referred to as the "water boiler". Its explosive properties were rapidly exploited and brought under control, culminating in the successful nuclear test in New Mexico in July 1945. In August 1945, the frst uranium 235 bomb fell on Hiroshima, to be followed by a plutonium bomb on Nagasaki three days later.

#### **The transition period**

With the end of World War II, it became clear that nuclear energy would open a new era. Under President Truman, the US decided to keep the development of nuclear energy under secrecy and control in the name of national and international security. To ensure this, a domestic regulatory framework was required. It was provided by the May-Johnston Atomic Energy bill of 1945, which advocated military control over atomic technology and information. Te bill further underlined the military use of the new technology and confned industrial application within highly restricted boundaries. Against the background of the Soviet hydrogen bomb tests in the 1950s, nuclear weapons remained a highly delicate and divisive political issue. Conservatives feared the loss of US military supremacy while liberals feared nuclear war. Te scientifc community was similarly divided.

<sup>4</sup> See news releases about Argonne's nuclear science and technology legacy, http://www. ne.anl.gov/About/hn/

Meanwhile, the countries that had contributed to the Manhattan Project were denied access to the technology, due to the American fear of espionage. Tis put an end to US-UK nuclear cooperation in 1946, except in the feld of uranium ore procurement. While there was no evidence to suggest that the other countries involved in the Manhattan Project could not independently handle the theoretical aspects of nuclear energy, the predominant view was that the US would retain its leadership through its greater experience and sheer weight of human capital, infrastructure, overall organisation, industrial planning and supply. However, the scientifc community, including many scientists and engineers who collaborated on the project leading to the bomb, saw the military supervision and control as an unjustifable interference. Te critique and subsequent protest against the May-Johnston Bill led to a compromise in the form of a committee composed of scientists, engineers, industrialists and politicians chaired by Senator McMahon. Afer many hearings, the committee concluded that nuclear energy was essential for both national defence and industrial growth. It recommended that this development be entrusted to a civilian commission with access to the knowledge obtained through the A-bomb research. Te resulting bill went through various amendments before being passed in August 1946 as the "Atomic Energy Act".

Te United States Atomic Energy Commission (AEC) was established to nurture and control the development of nuclear science and technology and its civilian applications. Te McMahon Atomic Energy Act, signed on August 1, 1946, transferred the control of nuclear matters from military to civilian hands. Te AEC was entrusted with the control of the plants, equipment and laboratories which were involved in the production of the atomic bomb. Te transfer of the atomic establishment into civilian hands hardly diminished the conficts between the military and working scientists, a considerable number of which resigned from the laboratories and plants.5 Te transfer of knowledge, plants and equipment was to be overseen by fve commissioners who were approved by the military and the president. Yet, disagreements were rife and the commission sometimes refused to approve the requests made by army ofcials for exemptions from transfer. When General Eisenhower became president in 1953, the Joint Chiefs of Staf of the armed forces recommended that the president emphasise the superiority of the US stockpile of nuclear weapons, while science advisors recommended a programme called "Operation Candor" to communicate the dangers of nuclear war (Etzkowitz. 1984: 419). Te concept of a nuclear industry was then proposed.

<sup>5</sup> President Truman signed an executive order to transfer the Manhattan Engineering District on December 31, 1946.

#### **The start of the civilian applications**

A civilian nuclear industry was established in part to legitimatise the development of nuclear weapons. Eisenhower's "Atoms for Peace" speech to the United Nations on December 8, 1953, marked the beginning of large-scale US government funding to develop civilian nuclear power plants (Camilleri 1977).

Most applications were developed through the government's national laboratory system, in which Argonne played a key role. Te AEC launched the "Power Reactor Demonstration Program" (PRDP), and within this framework a number of various demonstration reactors (light water, gas cooled and breeder reactors) were built.

At the time the AEC was born, the US assets in nuclear energy were constituted by:


Ahead of Eisenhower's "Atoms for Peace" speech, the AEC started considering civilian nuclear power in 1952. By 1953, it was making plans to build a power reactor in collaboration with industry. Plans to develop nuclear-powered surface ships were abandoned in order to provide funds for the civilian project (Cowan 1990: 561).

In 1961, the AEC Development Program was upgraded to include the subsidisation of large scale reactors (400 MWe and larger), in an efort to realise economies of scale and reduce capital costs. In 1962, the Joint Committee on Atomic Energy responded to growing pressures from industry and utilities by specifcally allotting

<sup>6</sup> A similar project was undertaken at Oak Ridge under the Air Force, the Manhattan District and the Fairchild Aircraf and Engine Corporation's control. Finally shelved in 1961, the project was known as NEPA: Nuclear Energy Propulsion for Aircraf.

\$20 million in subsidies from the AEC to the design, construction and operation of large scale LWRs (Burness et al. 1980: 189).

#### **3 Military spill-over: LWR as by-product of submarine research**

Te development of LWR technology is intimately connected with military applications. Companies involved in its development are positioned to proft from the economic advantages and scientifc know-how nurtured within the military-industrial establishment (Di Nucci 1986, Cowan 1990). Following World War II, Navy submarine's reactors and their operating procedures became the prototype for the most widespread commercial nuclear power plants.7

Te spill-over efect by the US Navy signifcantly infuenced technological development in the years to come, and military ofcials played a key role in this new development pathway. Admiral Rickover, known as the "Father of the Nuclear Navy", was put in charge of the US naval propulsion programme in 1946. In May 1946, Rickover, who originally had been assigned to work with General Electric (GE) at Schenectady to develop a nuclear propulsion plant for destroyers, started pushing the idea of nuclear marine propulsion. Subsequently, Rickover became chief of a new section in the Bureau of Ships, the Nuclear Power Division, and began work with Weinberg, the Oak Ridge director of research, both to establish the Oak Ridge School of Reactor Technology and to begin the design of the pressurised water reactor for submarine propulsion (Te Economist 2012).

While the earliest studies were performed at Oak Ridge, work was transferred to Argonne in 1948 and development was jointly taken over by Argonne and Westinghouse.8 Tat same year, Argonne's Naval Reactor Division was established. Whereas Argonne scientists and engineers performed much of the early research, design and feasibility studies, Westinghouse improved and implemented the designs, frst in the S1W prototype at NRTS, and then in the Nautilus submarine reactor. Te frst test reactor plant, a prototype referred to as S1W, began operations in 1953 at the

<sup>7</sup> Te diference between a submarine reactor and a PWR for electricity generation is that they have a high power density in a small volume and run either on low-enriched uranium (as do some French and Chinese submarines) or on highly enriched uranium (>20% U-235). U.S. submarines use fuel enriched to at least 93%. (Wiki)

<sup>8</sup> Argonne is a direct successor of the University of Chicago's Metallurgical Laboratory, where Fermi supervised construction and testing of the Chicago Pile 1.

Naval Reactors Facility in Idaho. Bettis Laboratory and the Naval Reactors Facility were in charge of the reactor operation and were managed by Westinghouse.

According to ofcial documents (Argonne, w.d.), researchers faced difculties in designing a high-efciency nuclear reactor small enough to ft in a submarine hull and still produce enough energy to drive the vessel. Tey used high-pressure water to cool the reactor core, a breakthrough in reactor technology. Te frst prototype, Submarine Termal Reactor Mark I, was completed in 1953 by Westinghouse. STR Mark II was installed in 1954 in the USS Nautilus, the world's frst atomic-powered submarine.

A second type of reactor was installed on the submarine USS Seawolf (SSN-575). It was initially powered by a sodium-cooled S2G reactor and supported by the land-based S1G reactor at the Kesselring site, under Knolls Atomic Power Laboratory and operated by GE. An additional S2G was also built, but never used. USS Seawolf was plagued by super-heater problems and thus the higher-performing USS Nautilus was selected as the standard US naval reactor type. Even though GE's technology was not a success, the corporation gained the experience necessary to enter the civilian market with the LWR technology through its participation in the Navy programme. (Di Nucci 1986; Cowan 1990). Te efcient safety and control methods mandated by the Naval Reactor Program were transferred to the civilian market: another notable spill-over from military research.

By 1962, the US Navy had 26 nuclear submarines in operation and 30 under construction. Further development of LWR technology was based on the experience from the naval nuclear programme and on a series of experiments performed using the nine Argonne research reactors (Argonne, w.d.).

Te early choice of LWR for the US Navy Program provided for substantial learning about this technology at a very early stage. Tus, by the time the civilian programmes started in the early 1960s, the LWR technology was "well advanced along its learning curve while the other technologies were late entrants which failed to catch up" (Cowan 1990: 545). LWR submarine technology was shared with the United Kingdom, while technological development in France, China and the Soviet Union proceeded independently.9

<sup>9</sup> Rolls Royce built similar units for Royal Navy submarines and then developed the design further to the PWR-2. Te Soviet Union concentrated also on PWR in submarines and never engaged in the development of Boiling Water Reactors (BWR).

#### **4 The establishment of the international atomic framework**<sup>10</sup>

At the time of the frst Geneva Conference in 1955, there were roughly 100 diferent kinds of reactors under scrutiny (Cowan 1990). Approximately 70% of the development programmes for nuclear reactors were in military hands. However, by the second Geneva Conference, only 12 reactor types were being seriously considered (Mullenbach 1963: 38–39).

At the second conference, negotiations began for the establishment of an International Atomic Energy Agency under the auspices of the UN. Also under way were negotiations for a set of bilateral agreements between the US and other nations for cooperation on the development of civilian use of atomic energy. Te US set aside 200 kg of Uranium 235 to assist in international R&D under the aegis of the "Atoms for Peace" programme.

By the end of 1961, 37 bilateral agreements were in efect between the US and other countries and 24 grants were available for the construction of research and experimental reactors as well as laboratory equipment. Tough the 1955 Geneva conference was hailed as a breakthrough for the peaceful exploitation of the atom, its outcome was rather limited in terms of transfer of technology and international cooperation. What it did achieve was the legitimation of nuclear power, inducing an optimism in many parts of the world that a plentiful supply of cheap energy was around the corner. Difculties with the new technology, especially on the production side, were downplayed or overlooked. As a result of the strict secrecy of the previous military development stage, the industry was not yet in a position to master the technicalities associated with scaling up from the prototype stage to commercial sized plants (Cohn 1997, Di Nucci 1986).

In the years following the Geneva Conferences, numerous international organisations were established with the aim of fostering cooperation between countries. Following the New York Conference on Atomic Energy, the International Atomic Agency (IAEA) was created in 1956. Based in Vienna, its goal was to enhance and increase the contribution of nuclear energy for peaceful purposes. Of the initiatives involving Western Europe, many can be considered as extensions of the Marshal Plan and of the Organisation for European Economic Cooperation (OEEC). OEEC countries gave life to a European Nuclear Energy Agency in 1957, unifying their legal restrictions and nuclear regulations.

<sup>10</sup> Tis section draws heavily on Di Nucci (1986).

Alongside this development, the six countries that formed the Coal and Steel Community set up the European Atomic Energy Community (Euratom) in 1958.11 Tough the IAEA was not to substitute for cooperative agreements between countries, this agency was expected to establish safeguards, foster the growth of nuclear energy and the exchange of information and serve as a supply agent for materials, services and equipment. Despite its ambitious aims, the agency achieved limited results. It drew up regulatory procedures for nuclear reactors, but never had the power to implement them, nor did it achieve concrete results in connection with third party liability. Euratom launched an ambitious nuclear programme envisaging 15 GWe by 1967, but this was revised in 1960 to 10 GWe of installed capacity by 1970. In addition to the establishment of four joint research centres, a number of initiatives were adopted within the Euratom framework; the most important of which was the joint programme with the US.12 Tis established the terms of cooperation between the US and Euratom member states in nuclear R&D and reactor construction. Notably, US manufacturers willing to participate were then obliged to supply design and cost specifcations to Euratom and to set up licensing agreements or subsidiaries within Euratom countries. Te latter took place between 1957 and 1960. Although minor in terms of American penetration in the European market (the programme resulted in the sale of only three nuclear power plants, partly backed by the Export-Import Bank), it was of great signifcance for the transfer of LWR technology to Europe.

Te frst invitation for proposals on nuclear plant construction was jointly made by Euratom and the US AEC in 1959. Tis joint programme was decisive for the US industry because it required that proposals for nuclear plant construction include a reactor type on which R&D had already been carried out to an advanced stage in the US. For projects to qualify and be approved, one or more US manufacturers and one or more Euratom member countries had to pay a determinant role in the construction of the nuclear plants. Te selected and approved projects were eligible for loans from the Export-Import Bank at preferential rates. Te fuel could be purchased by Euratom from the US AEC on a deferred payment basis, while the US AEC provided fuel burn-up guarantees. Te Euratom Supply Agency entered into long term contracts with the reactor operators.

<sup>11</sup> Te signing of the Treaty was preceded by the release of the report "A Target for Euratom" which recommended the cooperation between Euratom and the U.S. nuclear reactor programme. Tis cooperation can be seen as another vehicle for the penetration of LWR technology, ousting the French and British gas-cooled technology (Cowan 1990, Di Nucci 1986)

<sup>12</sup> For details, see Lucas (1977) and the inquiry known as "Te three wise men report" leading to the establishment of Euratom.

Given the availability of technical information, the "joint programme" went further than previous initiatives, for it worked exclusively through licensing agreements and joint ventures which allowed European frms to achieve a gradual buildup of nuclear capabilities and to carry out subsequent autonomous nuclear R&D.

#### **5 Other national frameworks**

In the late 1950s, the United Kingdom and France were independently developing gas graphite reactors – drawing knowledge and experience from the Manhattan Project – and Canada was working on heavy water reactors. In both European countries, the technological option was also infuenced by military concerns. Te US' near monopoly on uranium enrichment technology lef France and the UK no other choice but to develop natural uranium technologies for their civilian power programmes. In the following, we analyse the political and technical contexts in these two countries.

Signifcant emphasis has been laid on certain factors which are the success of the US nuclear framework and technological choice, as compared with other national paths such as the British one. In this context, the work of Burn (1967, 1978) provides a detailed and complete analysis which represented a reference for those advocating the benefts of free market forces for technological development. Burn attributes successes to policies inspired by a mixture of free market criteria and industrial promotion, but hardly considers that the US reactor vendors strongly profted from the R&D and subsidy support within AEC "infant industry" development strategy (Cohn 1997: 75).

In the USA, nuclear fuel and uranium enrichment remained a government preserve and was highly subsidised (Mullenbach 1963), a fact which gave the US industry a kind of artifcial competitiveness vis-à-vis other countries that at that time could not hope to match. A questionable feature of Burn´s analysis is his account of the handing-over of the US AEC´s knowledge to the market and the "industrialisation" of the experience matured under the US AEC. Burn (1967) shares the same criticism as Mullenbach (1963) that the technological choice was functional to the possibilities of the national industry and that the US nuclear policy was in some sense subordinate to the interests prevailing in the industry. Our claim, rather, is that while it is true that the American industry displayed internal economies, it is also the case that this was achieved on the heels of a phase in which military targets received absolute priority. Only later was it possible to pursue the needs for a civilian development of nuclear power. Te high priority assigned to military targets in the USA remains therefore one of the chief factors explaining the development. Britain, France and Canada were countries which – like the USA – had a military nuclear experience, but one that began later, was more limited in the extent of its operations and thus lagged behind the USA in terms of its developments and spill-over efects.

Another factor distinguishing the European from the US development – one which Burn (1978) emphasises – is the incubation period provided for nuclear technology. While the US authorities allowed for the parallel development of the most promising projects before the most feasible technologies – in the economic, military and technical sense – emerged in the market, France and Britain ventured into a sort of technological wager which led to the pursuit of single projects to an advanced stage, beyond the point at which they could be easily be shelved in the case of limited commercial and technical success.

#### **The United Kingdom<sup>13</sup>**

As in the US, nuclear power in the UK began with the military. In 1941, a team of British scientists established the general feasibility of a bomb design and reactor construction. By 1942, it had become clear that research cooperation with the US would signifcantly beneft both nations. Once the Manhattan Project fell under a cloud of strict secrecy, however, Britain had difculties accessing US laboratories and was forced to rely on independent R&D. Te US Atomic Energy Act of 1946, with its tight security restrictions, thus efectively deprived Britain of access to the technology following World War II.

A British Atomic Energy Act became efective in November 1946 and allowed for nuclear development under largely similar conditions to those in the US, though without the same harsh penalties for security violations. Responsibility for production, use and disposal of nuclear material was assigned to the Ministry of Supply (MoS). Government authorities established a strictly centralised control over all the activities connected with the development of nuclear energy. In 1948, the Radioactive Substance Act entrusted to the MoS complete authority over the control and use of all radioactive substances, including the regulation of their import and export.

Nuclear power development was pursued by the Atomic Energy Production Division of the Atomic Energy Department of the MoS at Risley. Te frst scale reactors were built at the Atomic Energy Research Establishment at Harwell in Oxfordshire, which was the established in 1946 under the MoS. Te reactors were planned as prototypes exclusively to produce plutonium for military purposes. Tey used natural uranium and graphite as a moderator; they were frst cooled

<sup>13</sup> Tis section draws on Burn (1978; 1967) and on Williams (1980).

by air, then by gas. Te original plan to have water cooling, as in the US Hanford reactors, was dropped for safety reasons and for the lack of suitable sites (Gowing 1964; Williams 1980). By the end of the 1940s, British eforts had resulted in a plant for the manufacture of uranium, located at Springfeld, and facilities for uranium enrichment and the production and separation of plutonium.

In 1948, Britain's Harwell Group initiated a project to study the steam aspects of dual reactors, with the aim of awarding a construction contract to the most successful frm. However, conficts with the Risley group impeded the project. Te main objections were based on the need for plutonium for military applications and the fact that Lord Hinton – who would a decade later become the frst head of the newly created Central Electricity Generating Board – and the Risley group mistrusted the industry´s reliability (Gowing 1964: 185–190). All the same, data was accumulated at Harwell from feasibility studies that lasted from 1951 to 1953. Tis resulted in the design of a dual-purpose reactor to be used jointly for the production of electricity and plutonium. With the growing demand for plutonium, the government approved a proposal to build the Harwell-designed reactor in February 1953, a decision that led to the frst Calder Hall reactor, known frst as Pippa and later as Magnox. It used natural uranium, graphite as a moderator and carbon-dioxide as a coolant. According to Gowing (1964), while there was plenty of support for the LWR option and for later development of Heavy Water Reactors (HWR) and High Temperature Reactors (HTR), the LWR solution was dropped because its potential for being scaled up was not recognised. Tus, what Burn (1967) calls the "Lord Hinton approach" set in, namely a concentration of eforts on the gas-graphite technology with an eye towards fast breeder reactor technology, and, importantly, fssile material production for the UK's developing a nuclear warhead programme. Te Calder Hall reactor began producing electricity in July 1956. Te work itself was the Harwell and the Risley Groups, since all development of the technology had been fully centralised in government establishments.

In 1954, and in parallel to the change in the US Atomic Act, a new legal framework was established in Britain. Te change was less radical than that in the US since it amounted to amending and extending some points of the existing acts in order to establish a civilian atomic energy authority and assign suitable power and liabilities. Unlike the US, there were no special provisions for declassifcation of information; the 1946 Act had already laid guidelines for an automatic process of declassifcation for matters of no strict signifcance for defence purposes. Te UK Atomic Energy Authority (UKAEA) was created to embrace both civilian and military atomic activities and to act as a consulting agency on all nuclear afairs. Te new agency was entrusted with R&D, including fuel elements, the prototype stage and the phase leading up to the construction of the frst commercial plant. Only at that point was it envisioned that industrial frms would enter in the feld and realise projects based on UKAEA R&D results. With the Calder Hall plant in its early stage of development, it was nevertheless decided that this would constitute the grounds for a large scale nuclear power programme. Te provisional nuclear power programme was announced in a government White Paper in February 1955 and anticipated the construction of 12 plants with a total capacity of 1,500-2,000 MW by the end of 1965. Te frst plant was to be of the Magnox type.

Te Harwell Group´s experience in design, research and preliminary work pointed to the advantages of an integrated system in which the civilian, mechanical and nuclear parts of the plant would be jointly designed. Difculties arose, however, in developing the industry and in establishing a coordinated approach for design and construction. Te industry was handicapped by its virtual ignorance of almost nine years of nuclear growth, and further limited by the lack of a precise framework for collaboration with the UK AEA.14

Te UK AEA retained for itself most of the reactor development and prototype construction; industry was allowed to undertake further design and development in connection with its role in full scale plant construction. Tus, when contracts were awarded to the chosen consortia, the UK AEA acted as a consultant on a turnkey basis and the industrial consortia undertook most of the R&D required to improve the Calder Hall technology. Te UK AEA began R&D on other technologies like the advanced gas cooled reactor (AGR), but it simultaneously encouraged industry to take on its own R&D with the aim of contracting successful technologies in the future. Following the Suez crisis, the atomic energy plan was tripled and the power of projected plants was raised to 5,000-6,000 MW by 1966, with E each plant to be as large as technically feasible with the expectation of reducing costs (Burns 1978). Te fve plants using Calder Hall Magnox technology were built by fve diferent groups and involved design changes such that each could be regarded as a prototype. Te frst "commercially" operated Magnox plant was technically modifed, at the instruction of the Ministry of Supply to optimise plutonium production for future UK military use, and later export to the U.S military nuclear programme run by the U.S AEC (Lowry 1989). At the end of 1957, the introduction of a new AGR technology was announced. It was based on the Magnox design but used enriched uranium. With this, a second nuclear programme began in 1965 with the contracting of the Dungeness B plant. While the choice of AGR received some criticism, it was preferred to LWR for technical and political reasons. However, the

<sup>14</sup> According to Burn (1978: 277–78) some of the consortia were seeking a greater degree of freedom and eventually to take up licensing arrangements with US companies.

emphasis on this technology over all others brought the UK AEA to technological and commercial disaster.

According to Burn (1967, 1978), the commercial failure of the British technology can be attributed to both design and project management. Te AGR refected three fundamental mistakes in decisions made between 1955 and 1957. Tey were:


Te results of the implementation of AGR technology was to concentrate the industry on the production of systems without a secure future. Te public monopoly over R&D was responsible for the excessive rigidity of the structure, which according to the plans, should have been highly dynamic.15

Although the UK AEA assisted potential buyer countries in obtaining credits extended for fve years from the commissioning of the nuclear plant, the only successful bilateral agreements were the two signed contracts with Italy and Japan. Tese resulted in the sale of a 200MW and a 150MW Magnox plant, respectively. Tereafer, Britain failed to capture any orders on the international market. Ofcials ofen justifed this failure by alleging unfair competition from the US government, citing the US' preferential loans for construction, artifcially low fuel prices, exceptionally good terms for reprocessing the fuel and guarantees backed by the federal government.

#### **France<sup>16</sup>**

Like Britain and the US, France had a military start to atomic energy development. Te early French nuclear reactors were designed and built to produce plutonium. Unlike the US, which attempted to separate civil and military uses of nuclear power, France has never separated the organisation of nuclear energy and nuclear weapons. "Tis has remained the underlying rationale until today" (Schneider 2008:8).

Following the end of WW2, the Commissariat à l'énergie atomique (CEA) was established as a highly efcient agency regulating the use of nuclear energy. However, the general orientation of the agency, with its strong military bias in R&D, led to the retirement of Juliot-Curie who had been among the pioneers of

<sup>15</sup> For a detailed analysis of the policy aspects and the role of the government in the development of AGR technology, see Williams (1980).

<sup>16</sup> Tis section draws on Scheinman (1965), Di Nucci (1986) and Schneider (2008).

the nuclear discovery, but whose political convictions were incompatible with the military emphasis of the CEA.

In 1952, the frst 5-year plan for atomic energy was launched by the Secretary of State. It was based on the production of plutonium for military ends by dual purpose reactors. Around the same time, a Commission for the production of electricity of nuclear origin (PEON) was established to liaise with the CEA, the nationalised electric utility Électricité de France (EdF) and the industry engaged in the production of nuclear components. In response to General de Gaulle´s ambitious pursuit of *grandeur,*  the atomic agency objectives became to further the country as a military power by means of atomic weapons and, given its limited internal resources, to free it from dependence on foreign supply and technology. Due to the excessive cost of uranium enrichment plants and to the US ban on the export of enriched uranium, France faced similar limitations as Britain in its choice of moderator, fuel and coolant.17

Cost considerations ruled out the heavy water option and with it, the need for fssionable material for military purposes. France, like Britain, settled on gas-graphite reactors. Te frst was built at Marcoule and the plutonium it produced charged the frst French atomic bomb, exploded in 1960. And just as in the UK, the frst large scale gas-graphite reactors, as Chinon, were presented publicly as civilian, and named EDF-1 and EDF-2 (Davis 1988). Major challenges for the establishment of a French commercial nuclear system resulted from the weakness of the power generation equipment industry. Tus, it was only with the cooperation between CEA and EdF that the industry could participate in the construction of three GCR s similar to Marcoule (38 MW, completed at the end of 1959). Prior to 1968, all plants were of the gas-cooled reactor (GCR) type, with exception of a 10% participation by EdF in the planned SELNI project in Italy. Tis project was to use the PWR commercial technology from Westinghouse. Framatome entered into licensing agreements with Westinghouse in 1958.18

While France was developing gas-graphite reactors as a long term strategic option, other technologies were being experimented with, including heavy water-moderated reactors (HWR) and the light water technology, pressurised water reactors (PWR). Following President´s de Gaulle death in 1969, the gas-graphite technology was replaced by the LWR, mostly developed under licence agreements with the US duopoly. Akin to the US experience, this development had its origins

<sup>17</sup> Uranium supply was guaranteed through Niger and Gabon, at that time still French colonies.

<sup>18</sup> Framatome (Societe Franco-American de Construction Economique) was established in 1958 by seven companies of the Empain Schneider Group. Framatome terminated its licence in 1981 and negotiated a new agreement.

in research on nuclear submarine reactors. Te establishment of the French civilian nuclear framework was entrusted to two main actors, the CEA and EdF. Tey served as the executive arm of the Ministry of Industry, which was responsible for energy policy. Te CEA was responsible for the entire nuclear fuel cycle as well as research in nuclear physics. Its "Direction des Applications Militaires" (DAM) was responsible for bomb testing at Mouroa. CEA also built the plutonium production plants at Marcoule and La Hague (Schneider 2008).

On the whole, the French civil nuclear programme has largely profted from the military programme and vice-versa; the link with the military has remained strong. For instance, La Hague reprocessing plant was fnanced in equal shares by the civil and military budgets of the CEA. Schneider (2008: 8) describes this as military cross-subsidisation, which he considers a leading benefactor throughout the entire French nuclear programme.

#### **From national technological options to LWR technologies under licensing agreement**

Following the so-called "bandwagon market" of 1966–67 and massive investment in nuclear projects, the US industry compromised the European eforts to develop alternative technologies to LWR and nuclear energy was marketed as "too cheap to be metered" (Cohn 1997).19 Between 1962 and 1976, the installed nuclear capacity approximately doubled every two years, with a growth rate of over 40% per year. Burness et al. (1990) consider this the fastest sustained growth rate for a US industry in the history of the country.

Because of the technical and commercial success of US LWR technology, European policymakers were torn between resisting the American marketing attack and simply taking up licensing agreements with leading US companies. Economic wisdom led the majority of European companies to strengthen their existing ties with Westinghouse and GE, with the aim of refning their internal capabilities by frst gaining access to technical knowledge and then internalising the licence and solving technical problems on their own. Governments similarly made eforts to carve out and direct growth paths using a set of intermediate targets and instruments to foster technological autonomy as a fnal objective.

Naturally, the relative position of each country with regard to licence assimilation varied and was infuenced by economic and political factors. With hindsight, however, one can say that licences brought about advantages when the recipient industries were able to pursue technological improvements on the "product" under

<sup>19</sup> In such fxed price contracts, the reactor vendors had responsibility for design, construction and testing of a reactor, including regulatory guidelines.

licence. Given Euratom's failure to promote a European technology, it had become apparent that any nationalistic grounds for a country´s autonomous technological path would have been inadequate in the face of the intrinsic fragmentation of the European market and the American oligopoly in the international arena.20

Once the LWR option had become the most widely chosen worldwide, both PWR and BWR (boiling water reactor) technology coexisted in national markets for more than a decade. France was the frst country to abandon the BWR technology path and concentrate solely on PWRs in 1975.

#### **6 Determinant factors of success for LWR market penetration**<sup>21</sup>

#### **The role of enriched uranium**

Te availability of enrichment technology and of enriched uranium has ofen been underestimated as a critical factor contributing to the success of the US technological path. Terefore, here we stress the importance of this element and the way in which pricing policy by the American authorities assisted the US industry's expansion throughout the 1970s and its imposition of LWR technology on the world market.

Te availability of enriched uranium can be considered another spill-over from the military activities, and an example of the socialisation of costs as signifcant as that deriving from the knowledge and experience nurtured under the US AEC and Navy programme applications. Te availability of enrichment facilities had a direct infuence on the choice of LWR technology. Its impact was immediate, since the employment of enriched uranium permitted some degree of freedom in the alternative nuclear technologies. It also allowed for a certain latitude in the choice of materials and in reactor design, which prevented the "high construction costs and poor material economy" observed in the British case (Burn 1978).

One reason why little interest has been shown in uranium as a leading success factor may be the difculty of ascertaining the start-up costs of uranium enrichment programmes exclusively for civilian reactor development projects. However, one may reasonably conjecture that whatever the hypothetical cost of such a programme, the expense would have been such that no economic or technical considerations would

<sup>20</sup> Commercial strategies and paths difered in the case of experimental reactors and FBR. Tis feld represents an atypical situation, especially for the high degree of European cooperation in R&D and as these projects were carried out independently of the USA.

<sup>21</sup> Tis section draws heavily on Di Nucci (1986).

have justifed developing a technology like LWR. On these grounds, countries like Canada, Britain and France, which used diferent moderators and coolants had no choice for fuel: it had to be natural uranium.

Te crucial role played by enriched uranium is underlined by the fact that attempts to privatise the industrial phase of enrichment were unsuccessful, despite early promises by the US AEC that it was prepared to do so, until 1963–64. Moreover, the public monopoly over enriched uranium did not constitute a bottle-neck for the American industry abroad, even with the constraints on the international sale and re-purchasing of uranium. On the contrary, it allowed the industry to transfer costs to the taxpayer for a highly expensive operation. Tese incentive prices for uranium ore and plutonium were criticised by contemporary observers, but at the same time this move was justifed with the need to accelerate the development of a civilian nuclear industry in order to support the uranium production industry (Mullenbach 1963:122).

Te US remained the only Western nation where the home industry could beneft from strong military-linked government support. In Europe, the absence of a massive military programme lef little hope for the autonomous and parallel development of European technologies. It might be objected that Britain and France also had this support at a later stage uranium enrichment plants, but the Capenhurst and Pierrelatte facilities were designed for military purposes. Teir production was modest and insufciently infuenced a change in the preferred technology. While a mix of economic and military considerations (such as the costs of fuel moderators like heavy water and the need for plutonium) had motivated European countries to adopt gas-graphite technology, this proved to be a technical and economic fop. Subsequently, European nations entered into licence agreements with the US LWR vendors.

#### **The search for the optimisation of the whole nuclear system**

An additional success factor in the selection of technologies and the industrialisation of military nuclear assets was the active involvement of the US private industry in the fuel cycle. Reactor suppliers could proft from an efcient fuel industry because of their participation in the US AEC promotion programmes; this integration contributed to the optimisation of the system.

Compared to other technologies, nuclear power involved a greater degree of consideration in terms of creating an industry with high organisational and technological standards that were intricately linked to the political and institutional structures. In this respect, the growth of the industry and the progress of LWR technology in the US is an exemplary case of the development of an intimate relationship between industry and the institutional framework, and of the key role that public and private actors played in all aspects of the industry´s development.

As a consequence of the many synergies created, the US nuclear system was able to reach a broad turn-key capacity guaranteeing plant construction, fuel rods, and further supplies of uranium as well as reprocessing. Being able to ofer such a package from the outset meant that the US industry had a clear comparative advantage for its LWR technology. Our claim is that success did not depend – at least not exclusively – on the characteristics of the reactor ofered for sale, but on the system of which the reactor was a part of. Te case of Britain clearly shows that the lack of commercial success was mainly due to a nuclear framework which was self-sufcient and closed around its reactor, which ultimately confned national nuclear technology to a single domestic scene.

Te British failures demonstrate that a pluralistic approach to technological development in which several alternative strategies are simultaneously pursued may be less costly, in terms of research outcomes, than a monistic approach concentrating on a single project. In the case of the US, the decisive factor in success was not the selection of LWR technology, but the compatibility of that option, of the many explored, with the industrial system that has to accommodate it.

Te pragmatic approach by US authorities, what Burn (1978) calls the "selection principle" played an important role. But, unlike Burn, we argue that the choice itself was, in a certain sense, piloted rather than the result of market forces. Te choice mechanism is evident from both the Five Year Programme and the various rounds of the Power Demonstration Reactor Programme. On the other hand, the best experimental results were obtained with prototypes that were later abandoned. In fact, the Joint Committee on Atomic Energy concluded in 1954 that of the fve diferent reactor technologies developed for civilian use, the PWR appeared to be the least promising due to its conservative design (Cowan 1990). How then, was it able to emerge as the dominant technology? To address this question, the frst thing to consider is that the LWRs, though less advanced than other technologies, were chosen for their commercial viability. Unlike other technologies, they presented fewer obstacles to being scaled up from the prototype stage. LWR was thus the only design ready for full-scale construction. Moreover, its deployment was necessary as a demonstration of the potentials of commercial nuclear power and to promote the "Atoms for Peace" Programme. With Cowan (1990: 566), we maintain that the frst-comer technology which can advance along its learning curve will dominate the market.

Tis, of course, is not the whole story. An additional and more fundamental explanation is that unlike many national nuclear programmes, where the failure to export reactors was largely due to the inability to internationalise their productive

structure, the US' technology was the only one to ofer continuity and a greater fexibility. Any strategy can be adopted for the commercialisation of a product, but when an entire technological system is to be exported, the strategy which pays of is that which best fts what has been named the principle of technological-industrial continuity (Di Nucci and Pearce 1989). Solutions and systems that are too far from current technological frontiers are unlikely to succeed, since they would require the greatest amount of technical and industrial adjustment and transformation. Te strength of the US nuclear system was its ability to be exported as a reactor-and-service- package, satisfying the technological-industrial continuity criterion.

#### **The pull of the market**

Te success factors outlined thus far would have been of little avail if steps had not been taken to turn potential demand into orders. Such policies in the US and Europe difered not only in their manner of creating internal demand, but also in the paths pursued to reach this target. European strategies, at least initially, were inspired less by export and commercial criteria than by the urge for technological and energy autonomy. In contrast, the US AEC tried to stimulate demand from electric utilities by ofering advantageous conditions and incentives, such as subsidies and a pricing policy for enriched uranium. With this approach, the size of the US domestic and export market were directly infuenced by government policy until the mid-1960s.

A major turning point occurred in 1964, at the time of the third Geneva Conference. GE had established itself domestically and internationally as a reactor vendor. Te company had moved quickly in improving the original design and scale-up of prototypes and ofered turnkey contracts for large scale reactors at fxed prices. Tirteen reactors were ordered on a turnkey basis by electric utilities (Burness et al. 1980). Tus, when GE published its price list for BWRs in 1964, the price quoted for the Oyster Creek plant had already set new cost targets that neither national nor European competitors could ignore. Tis enabled the company to present themselves as having the most feasible and economic design (Cohn 1997).

GE's price list had an enormous impact. It represented a nuclear power plant as an "autonomous" commercial good and placed potential clients in a position to refer to a defnite product with a defnite price, much lower than those of its competitor, Westinghouse. Of course, the venture resulted in corporate losses; however, it also indicated that GE was not only likely to reap the benefts of cost socialisation of the early development phases, but that it was also prepared to take risks in commercial ventures.

Another important success factor is that in 1964, an amendment of the Atomic Energy Act granted the US AEC permission to lease nuclear fuel directly to market actors. Te timing of the GE price campaign coincided with the readiness of the US utilities to begin adjusting to previous under-capacity. Te combination of demand and of the low, seemingly competitive prices for power generation, plus the kind of contracts for which the vendor guaranteed a fxed turnkey supply, triggered a boom in US plant orders. Seven units were ordered in 1965 and eight in the frst half of 1966, to be followed by 13 in the second half of 1966 and 31 in 1967 (Burness et al. 1980:190). Tough turnkey projects were costly investments for vendors, the completion of the turnkey units stimulated demand for new reactors and subsequent sales. Te time period which followed was characterised by a tremendous fow of new orders, so much so that this era has been referred to as the 'Great Bandwagon Market.' Whereas 78 reactors had been ordered over the 12-year period between 1955 and 1967, 166 reactors were ordered for projects across the USA between 1968 and 1973, with 38 units ordered in 1972 alone (Bernd and Aldrich 2015).

A key observation is that in the decade 1963–1973, the US domestic demand alone ofset the aggregate demand of the world market. Te size of the internal market enabled the industry to pass the minimal threshold in physical and investment terms necessary for an autonomous take of, and to speculate on the promise of possible economies of scale including learning efects, which was hoped to trigger success on the export market. Two aspects of this cumulative efect are illustrated by the widespread network of licence agreements that US companies started in Europe and Japan. Te third Geneva Conference therefore marked the establishment of the US commercial and technological supremacy. It simultaneously dealt a blow to the commercial aspirations of many autonomous national nuclear technologies in Europe. Licences became the major vehicle in US export policy.

Te scale of the reactors increased dramatically and most of the plants within the 'Great Bandwagon Market' were considerably larger than older reactors (400MWe or greater). By the end of 1970, the entire nuclear industry had only accumulated 11 years of operating experience on units of this size. As the demand for electricity in the US decreased dramatically in 1973, the frst signs of the industry's problems emerged. Most reactors faced construction delays and massive cost overruns; orders for nuclear power plants started being cancelled, with 12 projects called of before the end of 1973 (Bernd and Aldrich 2015). In 1975, only four reactors had been ordered, and just nine more were ordered in the three years that followed. Te last order for a new nuclear power plant came in 1978. A year later, in 1979, the Tree Mile Island's accident occurred and the collapse of industry began.

#### **7 Conclusions**

Our analysis has pointed out exogenous and endogenous factors afecting the longterm development and difusion of the LWR technology: the military spill-over efect; the use of enriched uranium and its restrictions; the subsidised price of enriched uranium; the choice of a commercial reactor based on the industry's capacity to accommodate the technology and internationalise the whole system; and, last but not least, the scale of the nuclear programmes. Te causal interactions at work here were unidirectional, but their infuences have been mutual. New nuclear technology was not simply tested and then integrated within a system; its development was embedded in interactions with this system. Although there are similarities between national experiences, very distinct national stories have emerged.

Te US: Te frst-comer in enhancing the leading LWR technology was an innovator that benefted from early government infrastructure and support to commercialise the technology and benefted from military spill-over efects.

Te UK: An example of the failure of a nuclear system based on a domestic autonomous technological pathway. Te centralised framework and the idea that technical progress could occur despite negative signals from the international market, combined with institutional inertia, had a strong adverse efect on the industry. Ultimately, it could not rely on any suitable instruments to compensate for an international market that opted for LWRs.

France: A latecomer in the development of LWR technology. Its experience indicates the timeliness of giving up a national technology without a commercial future and taking on the risk of starting practically from scratch under licence. Te extremely integrated decision-making framework, the nurturing attitude of the French government and the national electric utility bestowed a steadily growing market and learning economies.

Te initial nuclear development in these leading countries was characterised by a plurality of base technologies, following the experience gained through strategic and military activities. National diferences in these experiences led to correspondingly diferent national civilian frameworks and technological choices. In the initial development phase, the US enjoyed a virtual monopoly on uranium enrichment, backed by military fnancial support. It could opt for LWR technology accordingly.

Te availability of enriched uranium is arguably the most crucial factor in the US' comparative technological success and market advantage. Tis can therefore be regarded as the cornerstone of the US export policy and success. In contrast, the absence of enrichment facilities in Europe, along with the need for plutonium for military purposes, guided France and the UK to pursue gas-graphite and Canada to select heavy water as a moderator.

Although the US was not alone in early nuclear development, its emphatic leadership came about through a series of crucial factors. Te US AEC's fnancing of almost all nuclear R&D, along with its direct role in funding and subsidising the majority of the early plants, proved to have a decisive and positive infuence on the industry´s development. Domestic contracts became a key vehicle for eventual export sales, even though government regulations and administrative controls initially limited the scope of power plant export. Te marketing of nuclear reactors occurred within a framework determined by international organisations, treaties, bilateral agreements and national laws, and was also infuenced by economic and political relations with the recipient countries. Te transfer of nuclear technology, mainly to Europe and Japan, was assisted by a certain liberality on the part of the licensors, but also by restricting expertise on the nuclear fuel cycle for military purposes. In this process, Britain was to sufer most and France was also adversely afected. Both countries eventually opted for LWR technology in 1979 in the former case, and a decade earlier, in 1969, in the latter.

Te inherent characteristics of the nuclear plant as a saleable good, and the resulting implications for its development required a special role that only national governments could fll. At the same time, the industry needed specifc government support, whether for selling abroad (as in the case of GE and Westinghouse), or for its engagement in the manufacturing of components imported from technology leaders (in the case of Europe). Either way, backing and promotion by governments was essential for various reasons, military development and spill-over and the nationalist incentive that made the industry desirable even before economic competitiveness had been achieved.

We have tried to separate the progressive attack by the US oligopoly on the national and international market into distinct temporal phases. Te marketing of the US power plants followed two strategies: one amounting to the sale and later export of the nuclear reactor as a product; the other as the export of the entire nuclear productive structure. Te former strategy applies to the period 1963–72, and in particular between 1962 and mid-1966. During this period, GE and Westinghouse sold turnkey plants to US public utilities and the contracts were available under fxed price terms (Burness et al. 1980; Bernd and Aldrich 2015).

GE ended its turnkey contracts sale ofensive to US electric utilities in June 1966. According to Burness et al. (1980), GE and Westinghouse took combined losses on the contracts upwards of \$1 billion. However, the fnancial losses they sufered during the turnkey era can be considered an investment "in obtaining information through "learning by doing" in an efort to capture rents from the second generation of reactors" (Burness et al. 1990: 189). Finally, the US companies ceased ofering turnkey contracts because of the cost risks.

Te second stage occurred through the transfer of knowledge via the sale of patent rights and licences, without direct industrial investment abroad, and by establishing subsidiaries and internationalising industrial capital via direct investment of risk capital in a foreign country.

As we have explored in this chapter, there are good grounds for claiming that the early commercial success of LWR and the establishment of the US oligopoly (frst domestically and then in the global market) is a rich example of the combined efects of a technology push (via the US AEC activities and military spill-over effects), market pull (bandwagon market) and market push (via competition among utilities to improve technical standards through innovation). A civilian nuclear industry was created in part to legitimatise the continued development of atomic weaponry. In the haste to develop nuclear power plants, economic and technical considerations were ofen secondary. A military model was selected for civilian use because it initially provided a dual purpose fssile material production capacity, rather than simply because it was immediately available (Bupp and Derian 1978).

Alleging the importance of a production system which is common all over the world, Cowan (1990: 552) claims that "it is occasionally suggested that network externalities are also important in nuclear power. Te network in this case has to do with information. Information about operating performance, appropriate accident response, and safety regulations can be passed among users of the same technology. Tis was seen (at least in retrospect) as a key factor in the explanation of the Belgian and Swedish decisions to adopt light water". In the US, the choice of technology to be pursued in commercialisation encouraged autonomous technological advances for the options which could be developed while maintaining a certain continuity with the pre-existing industrial structure (Di Nucci 1986). Other, more "innovative" paths were to stay at the experimental level and be undertaken under governmental support, not directly by the industry – and they have remained "experimental" until today.

#### **References**



#### **Websites**

https://www.iaea.org/

http://www.ne.anl.gov/About/reactors/lwr3.shtml

http://www.ne.anl.gov/About/hn/

http://www.atomicarchive.com/Docs/SmythReport/

http://www.ewp.rpi.edu/hartford/~er esto/F2010/EP2/Materials4Students/Misiaszek/ NuclearMarinePropulsion.pdf

**Open Access** This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

The images or other third party material in this chapter are included in the chapter's Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter's Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

## **The Current Status of the World Nuclear Industry**

Mycle Schneider, and Antony Froggatt1

#### **Abstract**

Te following chapter is based on the World Nuclear Industry Status Report 2018 (WNISR2018). Te annual WNISR is a comprehensive assessment of the status and trends of the global nuclear power industry.

#### **1 Introduction**

Heat. Te planetary, record-breaking heatwave in 2017 gave a daunting hint on what the future on earth will almost certainly look like.

Water. Te food system is the most sensitive to lack of water. As of early August 2017, it is already clear that the draught will severely impact harvests in many parts of the world.

<sup>1</sup> Mycle Schneider, International Analyst on Energy and Nuclear Policy, Paris, France, mycle@sfr.fr; Antony Froggatt, Chatham House, London, United Kingdom, afroggatt@ chathamhouse.org.uk

Heat, water and nuclear power. Termal power plants need vast amounts of cooling water. It is estimated that in France 51 percent of freshwater takeout or about 10 percent of precipitation is absorbed in thermal power plants, with roughly three-quarters of its electricity generated by nuclear power over the years. No other electricity generating source needs more water than atomic fssion energy. David Lochbaum, Director of the Nuclear Safety Project at the Union of the Concerned Scientists (UCS), who has produced a fact sheet on "Nuclear Power and Water"2 , stated: "We'll have to solve global warming if we want to keep using nuclear power".3

Te European Pressurized Water Reactor (EPR) under construction at Flamanville on the coast of Normandy will have its own desalination plant to cope with freshwater needs. Four in-land reactor sites along French rivers with no cooling towers—Bugey (2 units), Fessenheim (2 units), St. Alban (2 units), Tricastin (4 units)—take out about 70 percent of all thermal power plant cooling water in the country. Te two oldest French reactors at Fessenheim alone take up about 18 percent of *all* 17 billion cubic meters of France's annual freshwater takeouts.4 While these sites consume a large portion of the nation's surface freshwater, they return about 90 percent back to the environment, but signifcantly heated up.

And that is a problem. In order to make sure reactors can be appropriately cooled, the uptake water temperature is limited for safety reasons, and to avoid excessive heating of the rivers, the operating licenses impose limits to downstream water temperatures. Consequently, as of 1 August 2018, operators in several countries, including Finland, France, Germany, Sweden and Switzerland, had put operational restrictions on some of their nuclear power plants. While in most cases, regulations required to lower the output of the reactors by 10 percent or so, some reactors were shut down, including at least four reactors in France, to deal with the problem.

Te heat symptom occurred just afer the frst EPR (European Pressurized Water Reactor) and the frst AP1000 had started up within 24 hours interval—both in China—end of June 2018. A shif towards better times for the global nuclear industry? By no means. On every piece of positive development follows an avalanche of bad news. For now, the heat wave is only a secondary problem for the industry.

<sup>2</sup> UCS, "Nuclear Power and Water", 2011, see https://www.ucsusa.org/sites/default /fles/l egacy/assets/documents/nuclear\_power/fact-sheet-water-use.pdf accessed 2 August 2018.

<sup>3</sup> Commons, "Amid climate concerns, nuclear plants feel the heat of warming water", Energy News Network, see https://energynews.us/2016/09/09/midwest/nuclear-plantsfeel-the-heat-of-warming-water/ accessed 1 August 2018.

<sup>4</sup> CGDD, "Les prélèvements d'eau par usage et par ressource", 21 June 2017, see http://www. statistiques.developpement-durable.gouv.fr/lessentiel/ar/234/1108/prelevements-deau-usage-ressource.html accessed 1 August 2018.

Te general malaise about the uncertain future of the industry remains deep and disconcerting.

While China proudly presents the prowess of its construction industry with the completion of the frst Generation-III reactors—designed by western companies, the EPR by Framatome-Siemens and the AP1000 by Westinghouse, the now-bankrupt worldwide largest historic builder—the rest of the world wonders at what rhythm the country will continue to expand its nuclear program. No new commercial reactor construction was launched in China since December 2016.

In France, the sub-standard pressure vessel of the Flamanville EPR was declared ft to operate by the safety authority, but the vessel head will have to be replaced afer only six years of operation. Startup was delayed again by several months afer numerous faulty welds were identifed in the main steam supply system. Afer the technical bankruptcy, subsequent government bailout, breakup and name-change of AREVA to Orano, the new company renews with the old pattern and has been losing money again in 2017.

In Japan, the utilities managed to increase the number of operating reactors from zero in 2014 to nine by mid-2018. But this remains a very limited success with the plants contributing just 3.6 percent of the national electricity generation and 26 reactors remaining in Long-Term Outage (LTO, see defnition below). Local populations and the general public remain overwhelmingly opposed to the restart of reactors. Te attempts of the Japanese government to declare certain Fukushima evacuation zones as "decontaminated" and suitable for return did not convince many evacuees and most of them will likely never go back.

In the United Kingdom (U.K.), the Hinkley Point C project is underway but strangely still not ofcially under construction. Afer having spent at least €3 billion and thousands of workers on-site, apparently, the base-mat of the reactor building has still not being concreted—that marks the ofcial construction start. Latest news on new-build in the U.K. is that Toshiba—former owner of Westinghouse—has stripped Korea Electric Power Company (KEPCO) of the preferred bidder status to acquire 100 percent of the company NuGen set up to build a nuclear power plant at the Moorside site in Cumbria.5 KEPCO had been seen as the most promising candidate for the takeover, afer other potent potential investors like the French Engie or Spanish Iberdrola lef the U.K. new-build playing feld. Toshiba got severely burnt in the Westinghouse bankruptcy and will not build any reactors any more. Prof. John Loughhead, Chief Scientist at the Business, Energy and Industrial Strategy

<sup>5</sup> WNN, "Kepco loses preferred bidder status for NuGen", 1 August 2018, see http://www. world-nuclear-news.org/Articles/Kepco-loses-preferred-bidder-status-for-NuGen, 2 August 2018.

Ministry (BEIS), stated at a conference at the UK Royal Society on "Decarbonising UK energy": "Tere are clear issues with nuclear technology at present. Te nuclear industry has created a product so expensive that no one can aford to buy it."6

In the United States (U.S.)., many reactors remain threatened to shut down long before their licenses expire because they cannot compete in the market. Te nuclear industry and its supporters are clearly now focusing on eforts to come up with innovative subsidizing schemes, in particular on state level, to help avoiding "early closures" of uneconomic reactors. *Science Daily* titles a research paper7 : "Te vanishing nuclear industry" and is asking: "Could nuclear power make a signifcant contribution to decarbonizing the US energy system over the next three or four decades?", only to provide the answer: "Probably not." In May 2018, William Von Hoene, Senior Vice President and Chief Strategy Ofcer with Exelon, the largest nuclear operator in the U.S., had this to say: "I don't think we're building any more nuclear plants in the United States. I don't think it's ever going to happen... Tey are too expensive to construct, relative to the world in which we now live."8 Te recent revelation by the *Wall Street Journal* is therefore barely surprising: "A major donor to President Trump agreed to pay US\$10 million to the president's then-personal attorney if he successfully helped obtain funding for a nuclear-power project, including a \$5 billion loan from the U.S. government..."9 Te project in question is the Bellefonte plant in Tennessee, where the construction of two reactors was launched in the 1970s and abandoned in the 1980s—two of 42 nuclear construction sites abandoned in various stages of advancement in the U.S. alone. In 2016, the site was purchased by a private company for US\$111 million with the stated-intention to invest up to US\$13 billion to complete construction. Obviously, the project needed government support, as everywhere else, thus the willingness to pay President Trumps long-time fxer the extraordinary amount of US\$10 million to help obtain a government loan.

Nuclear new-build is simply not competitive under ordinary market economy rules anywhere. Worse, like in the U.S., similar economic constraints continue to

<sup>6</sup> David Lowry, personal communication, 4 October 2017.

<sup>7</sup> Science Daily, "Te vanishing nuclear industry", ScienceDaily, 2 July 2018, see https:// www.sciencedaily.com/releases/2018/07/180702154736.htm, accessed 7 July 2018.

<sup>8</sup> With 23 operational reactors, Exelon is the US' largest nuclear operator. S&P Global Platts, "No new nuclear units will be built in US due to high cost: Exelon ofcial", 18 April 2018, see https://www.platts.com/latest-news/electric-power/washington/no-newnuclear-units-will-be-built-in-us-due-26938511, accessed 22 May 2018.

<sup>9</sup> WSJ, "Top Trump Donor Agreed to Pay Michael Cohen \$10 Million for Nuclear Project Push", 2 August 2018, see https://www.wsj.com/articles/top-trump-donor-agreed-to-paymichael-cohen-10-million-for-nuclear-project-push-sources-say-1533245330, accessed 3 August 2018.

press owners of currently operating, amortized reactors around the world, leading to an increasing number of units being closed permanently earlier than anticipated.

Finally, maybe the largest barrier to nuclear power development or its mere survival is still the time factor. Te German electrical and electronics giant Siemens has just raised the stakes to an unprecedented level. In June 2018, Siemens connected 14.4 GW of turnkey natural gas combined cycle power capacity to the grid in Egypt 27.5 months af construction start, three years afer contract signature, boosting the national electricity generating capacity by 45 percent. An intermediate step of 4.8 GW, the frst of the three giant plants, started up afer only 18 months. With over 60 percent efciency, these combined-cycle gas plants are almost twice as efcient as nuclear reactors. Te next step is the implementation of up to 600 wind turbines with a total capacity of up to 2 GW, part of the goal of 7.2 GW wind power capacity spinning by 2020.10

#### **2 General overview worldwide**

#### **The role of nuclear power**

As of mid-2018, 31 countries were operating nuclear power reactors. Tat number has remained stable since Iran started up its frst reactor in 2011.

Te world nuclear feet generated 2,503 net terawatt-hours (TWh or billion kilowatt-hours) of electricity in 201711, a one percent increase, but still less than in 2001 and four percent below the historic peak nuclear generation in 2006 (see Figure 1). Without China—which increased nuclear output by 35 TWh (+18 percent), more than the worldwide increase of 26 TWh—global nuclear power generation would have slightly decreased again in 2017. Tis is the third year in a row that China alone made up for the global decrease outside the country. In fact, in the past decade, only three years would have seen a global increase without China, 2010, 2013 and 2014, the year before 3/11 triggered the Fukushima disaster, and the two years afer the 284 TWh (11 percent) production slump in 2011–2012.

<sup>10</sup> Siemens, "Completion of world's largest combined cycle power plants in record time", 24 July 2018, see https://www.siemens.com/press/en/feature/2015/corporate/2015-06-egypt. php accessed 2 August 2018.

<sup>11</sup> If not otherwise noted, all nuclear capacity and electricity generation fgures based on International Atomic Energy Agency (IAEA), Power Reactor Information System (PRIS) online database, see http://www.iaea.org/programmes/a2/index.html. Production fgures are net of the plant's own consumption unless otherwise noted.

**Fig. 1** Nuclear Electricity Generation in the World... and China Sources: WNISR, with IAEA-PRIS, 2018, p. 28

Close to half of the world's nuclear power countries are located in the European Union (EU), and, in 2017, they accounted for 31.5 percent of the world's gross nuclear production, with half of the EU generation in France.

Nuclear energy's share of global commercial gross electricity generation remained almost stable over the past fve years (–0.5 percent over the period), afer dropping below 11 percent in 2012, for the frst time in over three decades. Te nuclear share declined slowly but steadily from a peak of about 17.5 percent in 1996 to 10.3 percent in 2017. Nuclear's primary energy remained rather stable afer hitting a 30-year low at 4.4 percent in 2014.12

In 2017, nuclear generation increased in 13 countries, declined in 11, and remained stable in seven.13 Five countries (China, Hungary, Iran, Pakistan, Russia) achieved their greatest lifetime nuclear production in 2017. Of these, China and Pakistan connected new reactors to the grid. China started up three units, and Chinese companies built the one that was commissioned in Pakistan.

As in previous years, in 2017, the "big fve" nuclear generating countries—by rank, the United States, France, China, Russia and South Korea—generated 70 percent

<sup>12</sup> BP, "Statistical Review of World Energy 2017", June 2018, see https://www.bp.com/ content/dam/bp/en/corporate/pdf/energy-economics/statistical-review/bp-stats-review-2018-full-report.pdf accessed 28 July 2018.

<sup>13</sup> Less than 1 percentage point variation from the previous year.

of all nuclear electricity in the world (see Figure 2, lef side). In 2002, China held position 15, in 2007 it was tenth, before reaching third place in 2016. Two countries, the U.S. and France, accounted for 47.5 percent of global nuclear production in 2017.

Seven countries' nuclear power generation peaked in the 1990s, among them Belgium, Canada, Japan, and the U.K. A further eleven countries' nuclear generation peaked between 2001 and 2010 including France, Germany, Spain, and Sweden. Fourteen countries generated their maximum amount of nuclear power in the past seven years, fve of which peaked in 2017.

**Fig. 2** Nuclear Electricity Generation and Share in Global Power Generation Sources: WNISR, with IAEA-PRIS, 2018, p. 29

In many cases, even where nuclear power generation augmented, the development is not keeping pace with overall increases in electricity production, leading to a nuclear share below the respective historic maximum (see Figure 2, right side). It is therefore remarkable that in 2017, there were 19 countries that maintained their nuclear share at a constant level (change of less than 1 percentage-point), six countries increased and six decreased the relative share of their nuclear portion.

Tere were three exceptions in 2017, where countries peaked their respective nuclear share in power generation:


#### **3 Operation, power generation, age distribution**

Since the frst nuclear power reactor was connected to the Soviet power grid at Obninsk on 27 June 1954, there have been two major waves of startups. Te frst peaked in 1974, with 26 grid connections in that year. Te second reached a historic maximum in 1984 and 1985, just before the Chernobyl accident, reaching 33 grid connections in each year. By the end of the 1980s, the uninterrupted net increase of operating units had ceased, and in 1990 for the frst time the number of reactor shutdowns outweighed the number of startups. Te 1991–2000 decade showed far more startups than shutdowns (52/30), while in the decade 2001–2010, startups did not match shutdowns (32/35). Furthermore, afer 2000, it took a whole decade to connect as many units as in a single year in the middle of the 1980s. Between 2011 and mid-2018, the startup of 48 reactors—of which 29 (60 percent) in China alone—outpaced by six the closure of 42 units over the same period (see Figure 3).

Afer the startup of 10 reactors in the world in each of the years 2015 and 2016, only four units started up in 2017, of which three in China and one in Pakistan.

Tree reactors were closed in 2017, respectively the oldest unit in Germany (Gundremmingen-B, 33.5 years), South Korea (Kori-1, 40 years) and Sweden (Oskarshamn-1, 46 years).14

**Fig. 3** Nuclear Power Reactor Grid Connections and Shutdowns Sources: WNISR, with IAEA-PRIS, 2018, p. 30

In the frst half of 2018, fve reactors started up in the world, more than in the entire year of 2017, while none has been closed. Tree units were connected to the grid in China, including the frst EPR (Taishan-1) and the frst AP1000 (Sanmen-1) to start up in the world (see Figure 4). And two reactors started up in Russia, Leningrad 2-1, and Rostov-4 that began construction 35 years ago.15

<sup>14</sup> WNISR considers shutdowns from the moment of grid disconnection—and not from the moment of the industrial, political or economic decision—and as the units have not generated power for several years, in WNISR statistics, they are closed in the year of the latest power generation.

<sup>15</sup> see https://www.worldnuclearreport.org/35-Years-Afer-Construction-Start-Rostov-4- Reactor-Connected-to-Russian.html.

**Fig. 4** Nuclear Power Reactor Grid Connections and Shutdowns – Te China Efect Sources: WNISR, with IAEA-PRIS, 2018, p. 31

Te IAEA continues to count 42 units in Japan in its total number of 453 reactors "in operation" in the world16; yet no nuclear electricity was generated in Japan between September 2013 and August 2015, and as of 1 July 2018, only nine reactors were operating. Nuclear plants provided only 3.6 percent of the electricity in Japan in 2017.

Te WNISR keeps calling for an appropriate refection in world nuclear statistics of the unique situation in Japan. Te attitude taken by the IAEA, the Japanese government, utilities, industry and many research bodies as well as other governments and organizations to continue considering the entire stranded reactor feet in the country as "in operation" or "operational" remains a misleading distortion of facts. Steve Kidd, long-time industry strategist, agreed in a WNISR2016 review in Nuclear Engineering International:

<sup>16</sup> IAEA, "Power Reactor Information System", see https://www.iaea.org /pris/ CountryStatistics/CountryDetails.aspx?current=JP, accessed 28 July 2018.

Including reactors as "operable" along with those defnitely in service, when they have not generated power for many years (and don't even have a licence to do so) is clearly ridiculous.17

Maybe as a result of such criticism, the World Nuclear Association (WNA), in its second "World Nuclear Performance Report", has distinguished between "generating" and "not generating" nuclear generating capacity.18. Te IAEA actually does have a reactor-status category called "Long-term Shutdown" or LTS.19 Under the IAEA's defnition, a reactor is considered in LTS, if it has been shut down for an "extended period (usually more than one year)", and in early period of shutdown either restart is not being "aggressively pursued" or "no frm restart date or recovery schedule has been established". Te IAEA lists zero reactors in Japan in the LTS category.

Te IAEA criteria are vague and hence subject to arbitrary interpretation. What exactly are *extended* periods? What is *aggressively* pursuing? What is a *frm* restart date or recovery schedule? Faced with this dilemma, the WNISR team in 2014 decided to create a new category with a simple defnition, based on empirical fact, without room for speculation: "Long-term Outage" or LTO. Its defnition:

A nuclear reactor is considered in Long-term Outage or LTO if it has not generated any electricity in the previous calendar year and in the frst half of the current calendar year. It is withdrawn from operational status retroactively from the day it has been disconnected from the grid.

When subsequently the decision is taken to permanently close a reactor, the shutdown status starts with the day of the last electricity generation, and the WNISR statistics are modifed retroactively accordingly.

Applying this defnition to the world nuclear reactor feet, as of 1 July 2018, leads to considering 26 Japanese units in LTO. Over the past year, four additional reactors were restarted and three more were ofcially closed. WNISR considers all ten Fukushima reactors shut down permanently—while the operator Tokyo Electric

<sup>17</sup> *NEI,* "Nuclear power in the world – pessimism or optimism?", 13 October 2016, see http:// www.neimagazine.com/opinion/opinionnuclear-power-in-the-world-pessimism-or-optimism-5031270/, /, accessed 13 August 2017.

<sup>18</sup> Te World Nuclear Performance Report was launched by WNA in 2016, "perhaps as a reaction to the success of successive WNISRs". In fact, in its September 2015 "Update for Members", WNA reported that its Fuel Report Working Group "discussed the merits of producing an annual nuclear capacity scenario update. Such an update would be a useful communications tool and a counter to the industry-critical World Nuclear Industry Status Report".

<sup>19</sup> See IAEA Glossary, at www.iaea.org/pris/Glossary.aspx, accessed 1 July 2016.

Power Company (TEPCO) has written of the six Daiichi units, it keeps the four Daini reactors in the list of operational facilities. However, it is expected that the Daini plant will shortly be of cially released for decommissioning.

As of 1 July 2018, besides the 26 Japanese reactors, two reactors in India (Kakrapar-1 and -2), and one each in China (CEFR), France (Paluel-2)20 and Taiwan (Chinshan-1) met the LTO criterion. Besides the restarts in Japan, one reactor each in France (Bugey-5) and Switzerland (Beznau-1), that were categorized as being in LTO status in WNISR2017, were reconnected to the grid, and thus moved back to operational status. T e total number of nuclear reactors in LTO as of 1 July 2018 is therefore 32; yet all are considered by the IAEA as "in operation".

**Fig. 5** World Nuclear Reactor Fleet, 1954–2018 Sources: WNISR, with IAEA-PRIS, 2018, p. 33

As of 1 July 2018, a total of 413 nuclear reactors are operating in the world. T e current f eet has a total nominal electric net capacity of 363.4 gigawatts (GW or thousand megawatts), see Figure 5.

For many years, the net installed capacity has continued to increase more than the net increase of numbers of operating reactors. T is is a result of the combined

<sup>20</sup> Af er many delays, Paluel-2 was reconnected to the grid on 23 July 2018.

efects of larger units replacing smaller ones and, mainly, technical alterations at existing plants, a process known as uprating.21 In the United States alone, the Nuclear Regulatory Commission (NRC) has approved 164 uprates since 1977. Te cumulative approved uprates in the United States total 7.9 GW, the equivalent of eight large reactors.22

A similar trend of uprates and major overhauls in view of lifetime extensions of existing reactors has been seen in Europe. Te main incentive for lifetime extensions is economic but this argument is being increasingly challenged as alternatives become cheaper.

#### **4 Overview of current new-build**

As of 1 July 2018, 50 reactors are considered here as under construction, the lowest number in a decade, three fewer than a year earlier, and 18 less than in 2013 (fve of these projects have already been abandoned since). Four in fve reactors are built in Asia and Eastern Europe, and China alone has nearly a third of all reactors under construction (16 out of 50). In total, 15 countries are building nuclear plants (see Table 1).

Five building projects were launched in 2017, two of which in India, and one each in Bangladesh, China (a non-commercial, demonstration fast breeder) and South Korea. As of 1 July 2018, there were two construction starts in the world so far in 2018, one in Russia, (Kursk-2-1) and Turkey (by a Russian company). Just prior to the ofcial construction start in Turkey, the Turkish investors pulled out. It is remarkable that China has not launched a single new construction site for a commercial nuclear plant since December 2016.

Fify is a relatively small number compared to a peak of 234 units listed as under construction—totalling more than 200 GW—in 1979. However, many of those projects (48) were never fnished (see Figure 6). Te year 2005, with 26 units under construction, marked a record low since the early nuclear age in the 1950s.

<sup>21</sup> Increasing the capacity of nuclear reactors by equipment upgrades e.g. more powerful steam generators or turbines.

<sup>22</sup> U.S. Nuclear Regulatory Commission (NRC), "Approved Applications for Power Uprates", Updated 4 May 2018, see http://www.nrc.gov/reactors/operating/licensing/ power-uprates/status-power-apps/approved-applications.html, accessed 28 July 2018.

**Fig. 6** Nuclear Reactors Under Construction Sources: WNISR, with IAEA-PRIS, 2018, p. 34


**Tab. 1** Nuclear Reactors "Under Construction" (as of 1 July 2018)

Note: T is table does not contain suspended or abandoned constructions. Sources: Compiled by WNISR, 2018, p. 35

#### **5 Construction times**

#### **Construction times of reactors currently under construction**

A closer look at projects listed as "under construction" illustrates the level of uncertainty and problems associated with many of these projects, especially given that most constructors initially assume a fve-year construction period:


It should be stressed that the actual lead time for nuclear plant projects includes not only the construction itself but also lengthy licensing procedures in most countries, complex fnancing negotiations, site preparation and other infrastructure development. As the U.K.'s Hinkley Point C illustrates, a signifcant share of investment and work can be carried out before even entering the ofcial construction phase.

#### **Construction times of past and currently operating reactors**

Tere has been a clear global trend towards increasing construction times. National building programs were faster in the early years of nuclear power. As Figure 7 illustrates, construction times of reactors completed in the 1970s and 1980s were quite homogenous, while in the past three decades they have varied widely. Te four units completed in 2017 by the Chinese nuclear industry in the homeland (3 units) and in Pakistan (1 unit) average an excellent 4.9 years construction time. Tis is only the second time since 2005 that world average construction time dropped below 5-year average. However, the fve units that started up in the frst half of 2018 show a much lower performance with an average of 13.4 years construction.

Te longer-term perspective illustrates that short construction times remain the exceptions. Nine countries completed 55 reactors over the past decade afer an average construction time of just over ten years (see Table 2). While the average has hardly moved since 2014, the range increased from 3.8–36.3 years to 4.1–43.5 years (the Watts Bar-2 in the U.S. record, which will remain the upper limit for some time to come).


#### **Tab. 2** Reactor Construction Times 2008–2018

Sources: WNISR, with IAEA-PRIS, 2018, p. 37

**Fig. 7** Average Annual Construction Times in the World Sources: WNISR, with IAEA-PRIS, 2018, p. 37

#### **6 Construction starts and cancellations**

T e number of annual construction-starts23 in the world peaked in 1976 at 44, of which 12 projects were later abandoned. In 2010, there were 15 construction starts—including 10 in China alone—the highest level since 1985 (see Figure 8). T at number dropped to 10 in 2013, eight in 2015, f ve in 2017 and two in 2018 as of mid-year.

Seriously af ected by the Fukushima events, China did not start any new building site in 2011 and 2014. While Chinese utilities began constructing six more units in 2015, the number shrank to two in 2016, only a demonstration fast reactor in 2017 and none in 2018 as of mid-year (see Figure 9). In other words, since December 2016, China has not started building a new commercial reactor.

<sup>23</sup> Generally, a reactor is considered under construction, when the base slab of the reactor building is being concreted. Site preparation work, excavation and other infrastructure developments are not included.

**Fig. 8** Construction Starts in the World Sources: WNISR, with IAEA-PRIS, 2018, p. 38

Over the decade 2008–2017, construction began on 76 reactors in the world (of which f ve have been later cancelled), that is twice the rate of the decade 1998–2007, when work started on 38 units (of which three have been abandoned). However, close to half (51) of these 114 building starts over the past two decades were in China alone (see Figure 9).

In addition, past experience shows that simply having an order for a reactor, or even having a nuclear plant at an advanced stage of construction, is no guarantee of ultimate grid connection and power production. T e abandonment of the two V.C. Summer units at the end of July 2017 af er four years of construction and a multi-billion-dollar investment is only the latest example in a long list of failed nuclear power plant projects.

French Atomic Energy Commission (CEA) statistics through 2002 indicate 253 "cancelled orders" in 31 countries, many of them at an advanced construction stage (see also Figure 10). T e United States alone accounted for 138 of these order cancellations.24

<sup>24</sup> French Atomic Energy Commission (CEA), "Elecnuc—Nuclear Power Plants in the World", 2002. T e section "cancelled orders" has disappeared af er the 2002 edition.

**Fig. 9** Construction Starts in the World/China Sources: WNISR, with IAEA-PRIS, 2018, p. 39

Sources: WNISR, with IAEA-PRIS, 2018, p. 39

Of the 762 reactor constructions launched since 1951, at least 94 units (12 percent) in 20 countries had been abandoned as of 1 July 2018. Te past decade shows about half of the historic abandoning rate of one in eight constructions, as fve in 76 building sites ofcially started during that period were later given up at various stages of advancement.

Close to three quarters (66 units) of all cancelled projects were in four countries alone—the U.S. (42), Russia (12), Germany and Ukraine (six each). Some units were actually 100 percent completed—including Kalkar in Germany and Zwentendorf in Austria—before the decision was taken not to operate them.

Tere is no thorough analysis of the cumulated economic loss of these failed investments.

#### **7 Operating age**

In the absence of any signifcant new-build *and* grid connection over many years, the average age (from grid connection) of operating nuclear power plants has been increasing steadily and at mid-2017 stands at 29.9 years (see Figure 11).25 A total of 254 reactors (61.5 percent) have operated for 31 and more years, including 77 (18.5 percent) reaching 41 years and more.

Some nuclear utilities envisage average reactor lifetimes of beyond 40 years up to 60 and even 80 years. In the United States, reactors are initially licensed to operate for 40 years, but nuclear operators can request a license renewal for an additional 20 years from the Nuclear Regulatory Commission (NRC). As of 4 May 2018, 87 of the 99 operating U.S. units have received an extension, with another four applications for fve reactors under NRC review.26

<sup>25</sup> WNISR calculates reactor age from grid connection to fnal disconnection from the grid and "startup" is synonymous with grid connection and "shutdown" with withdrawal from the grid..

<sup>26</sup> NRC, "Status of License Renewal Applications and Industry Activities", Updated 4 May 2018, see http://www.nrc.gov/reactors/operating/licensing/renewal/applications. html, accessed 29 July 2018.

**Fig. 11** Age Distribution of Operating Reactors in the World Sources: WNISR, with IAEA-PRIS, 2018, p. 41

In the U.S., only two of the 34 units that have been shut down had reached 40 years on the grid—Vermont Yankee, closed in December 2014, at the age of 42, and Fort Calhoun, shut down in October 2016, afer 43 years of operation. Both had obtained licenses to operate up to 60 years but were closed only two and three years into lifetime extension respectively, mainly for economic reasons. In other words, at least a quarter of the reactors connected to the grid in the U.S. never reached their initial design lifetime of 40 years. On the other hand, of the 99 currently operating plants, 44 units have operated for 41 years and more; thus, half of the units with license renewals have already entered the life extension period, and that share is growing rapidly with the mid-2018 average age of the U.S. operational feet at 38.1 years.

Many other countries have no specifc time limits on operating licenses. In France, where the country's frst operating Pressurized Water Reactor (PWR) started up in 1977, reactors must undergo in-depth inspection and testing every decade against reinforced safety requirements. Te French reactors have operated for 33.4 years on average, and the oldest have completed the process with the French Nuclear Safety Authority (ASN) evaluating each reactor before allowing a unit to operate for more than 30 years. Tey could then operate until they reach 40 years, which is the limit of their initial design age. However, the assessments are years behind schedule. Te French utility Électricité de France (EDF) clearly prioritizes lifetime extension to 50 years over large-scale new-build. In a recent presentation, EDF states: "Continuing operation beyond 40 years means allowing for the progressive increase

of renewable energies while guaranteeing a lasting, quasi entirely decarbonized and continuous electricity supply thanks to the fexibility of the nuclear feet."27

EDF's general approach to lifetime extension is currently under review by ASN's Technical Support Organization, the Institute for Radiation Protection and Nuclear Safety (IRSN) and is now scheduled to be examined by its expert committees (Groupes Permanents) in 2018 and 2019. ASN plans to provide its opinion on the general assessment outline by 2020. In addition, lifetime extension beyond 40 years requires site-specifc, time-consuming public enquiries.

Current French energy legislation requires planning to limit the nuclear share in power production to 50 percent by 2025. Te implementation of this legislation even if the 2025 target was to be delayed as is currently discussed—in a context of stagnating electricity consumption, would mean the closure of about one third of the French reactor feet. In other words, many of the lifetime extensions would become obsolete. No point in investing large amounts of money into upgrading if the plant is shut down shortly afer. A particularly difcult aspect of the lifetime management in France is that the units licensed to use plutonium-uranium mixed oxide fuel (MOX) are also amongst the oldest reactors. Te criteria for selection of reactors to be closed remain under discussion.

In assessing the likelihood of reactors being able to operate for 50 or 60 years, it is useful to compare the age distribution of reactors that are currently operating with those that have already shut down (see Figure 11 and Figure 12). As of mid-2018, 77 of the world's reactors have operated for 41 years and more, and a total of 81 that have already passed their 40-year lifetime are considered in lifetime extension.28 As the age pyramid illustrates, that number could rapidly increase over the next few years. A total of 254 units have already reached or exceeded age 31.

Te age structure of the 173 units already shut down completes the picture. In total, 60 of these units operated for 31 years and more, and of those, 20 reactors operated for 41 years and more (see Figure 12). Many units of the frst-generation designs only operated for a few years. Considering that the average age of the 173 units that have already shut down is about 25 years, plans to extend the operational lifetime of large numbers of units to 40 years and far beyond seemed rather optimistic. However, the operating time prior to shutdown has clearly increased continuously. But while the *average* annual age at shutdown got close to 40 years, it only passed that age in two years so far: in 2014, when the only such unit shut

<sup>27</sup> EDF, "Le parc nucléaire en exploitation en France : Exploitation, maintenance et Grand Carénage", 11 January 2018.

<sup>28</sup> WNISR considers the age starting with grid connection, and while fgures used to be rounded by half-years, as of WNISR2016 they are rounded by the tenth of the year.

down that year (Vermont Yankee in the U.S.) afer 42 years of operation; and in 2016, with two reactors shutting down at age 43 (Fort Calhoun, U.S.) and 45 (Novovoronezh, Russia) respectively.

**Fig. 12** Age Distribution of Shut Down Nuclear Power Reactors Sources: WNISR, with IAEA-PRIS, 2018, p. 43

As a result of the Fukushima nuclear disaster, more pressing questions have been raised about the wisdom of operating older reactors. Te Fukushima Daiichi units (1 to 4) were connected to the grid between 1971 and 1974. Te license for unit 1 had been extended for another 10 years in February 2011, one month before the catastrophe began. Four days afer the initial events in Japan began, the German government ordered the shutdown of seven reactors that had started up before 1981 (plus one commissioned in 1983). Te sole, decisive selection criterion was operational age. Other countries did not adopt the same approach, but it is clear that the 3/11 events had an impact on previously assumed extended lifetimes in other countries as well, including in Belgium, Switzerland, and Taiwan. And more recently, in the frst half of 2017, South Korea's incoming President Moon shut down the country's oldest reactor (Kori-1), explicitly at the age of forty, ruling out lifetime extensions in the future. Sweden also closed its oldest unit, Oskarshamn-1 at age 46. And Germany shut down its then oldest reactor, Gundremmingen-B, at yearend 2017, at age 33. Te average age of these three units remains with 39.9 years again just below 40.

#### **8 Potential newcomer countries**

Te International Atomic Energy Agency (IAEA) assumes that to meet their prediction of more than doubling of current capacity in the higher nuclear scenario, considerable new construction will occur in existing nuclear countries, such as China, South Korea and India, but also envisages signifcant capacity build-up in newcomer countries.

Te industry's lobby organisation WNA suggests that there are 20 countries in which nuclear power is being planned for the frst time, with an additional 20, where the nuclear option is under consideration. Notwithstanding any reality check of these assumptions, this is small compared to renewable energy, as at end of 2015, targets had been established in 173 countries at the national or state/provincial level.29 Te WNA further categorizes those countries in which nuclear power is being planned into fve separate groups30:


Te following section will look at the countries, in which WNA considers nuclear power plants are at least 'committed plans'.

#### **Under construction**

#### **Bangladesh**

On 30 November 2017, Bangladesh ofcially began construction of the frst unit of the Rooppur nuclear plant.31 Unit 1 is now scheduled to begin operation in 2023

<sup>29</sup> REN21, "Renewables 2016—Global Status Report", Renewable Energy Policy Network for the 21st Century, 2016.

<sup>30</sup> WNA, "Emerging Nuclear Energy Countries", January 2018, see http://www.world-nuclear. org/information-library/country-profles/others/emerging-nuclear-energy-countries. aspx.

<sup>31</sup> WNISR, "Construction Start at First Nuclear Power Plant in Bangladesh", 5 April 2018, see https://www.worldnuclearreport.org/Construction-Start-at-First-Nuclear-Power-

followed by unit 2 in 2024.32 Te idea of building nuclear reactors at Rooppur goes back to even before Bangladesh became an independent country, to a 1963 plan by the Pakistan Atomic Energy Commission to build one reactor in West Pakistan and one in East Pakistan.33

Te current reactor deal dates back to November 2011 when the Bangladeshi Government announced that it was prepared to sign a deal with the Russian Government for two 1000 MW units—the frst of which was to start up between 2017 and 2018—at a total cost of US\$1.5-2 billion.34 Since then, although negotiations have reportedly been ongoing, the startup date has been continually postponed and the expected construction cost has risen sharply.

By 2015, the Bangladeshi Finance Minister was quoted as saying the project was then expected to cost US\$12.65 billion.35 A December 2015 agreement was said to be signed between the Bangladesh Atomic Energy Commission and Rosatom for 2.4 GW of capacity, with work then expected to begin in 2016 and operation to start in 2022 and 2023.36 According to the deal, Russia would provide 90 percent of the funds on credit at an interest rate of Libor plus 1.75 percent. In late May 2016, negotiations were concluded over the US\$12.65 billion project, with Russia making available US\$11.385 billion.37 In April 2017, Tass, the Russian news agency, reported that permission to start construction had been granted and that work would commence in the second half of 2017.38

Plant-in-Bangladesh.html, accessed 29 June 2018.


<sup>32</sup> *NEI*, "Work begins on foundation for unit 1 of Bangladesh NPP", see http://www. neimagazine.com/news/newswork-begins-on-foundation-for-unit-1-of-bangladeshnpp-6107152/, accessed 22 April 2018.

Te project's economics have been widely questioned. Earlier in 2017, a retired nuclear engineer who had been involved in advising the Bangladesh Atomic Energy Commission (BAEC), argued in one of the leading English-language newspapers in Bangladesh that the country was "paying a heavy price" for BAEC not having "undertaken a large-scale programme of recruitment, and training of engineers"; he also charged that Bangladesh was buying reactors at the "unreasonable and unacceptable" price of US\$5,500/kW because its "negotiators didn't have the expertise to properly scrutinise the quoted price".39

#### **Belarus**

Construction started in November 2013 at Belarus's frst nuclear reactor at the Ostrovets power plant, also called Belarusian-1. Construction of a second 1200 MWe AES-2006 reactor started in June 2014. In November 2011, the Russian and Belarusian governments agreed that Russia would lend up to US\$10 billion for 25 years to fnance 90 percent of the contract between Atomstroyexport and the Belarus Directorate for Nuclear Power Plant Construction. In July 2012, the contract was signed for the construction of the two reactors for an estimated cost of US\$10 billion.40 Te project assumes liability for the supply of all fuel and repatriation of spent fuel for the life of the plant. Te fuel is to be reprocessed in Russia and the separated wastes returned to Belarus. When construction started, it was stated that the reactors will be completed until 2018 and 2020 respectively.41 In August 2016, the reactor pressure vessel of unit one slipped and fell two meters before hitting the ground, during installation. Tis lead to an eight-month delay, while it was replaced.42 In March 2018, the head of the reactor division at the power plant said that it was then expected that electricity would be supplied to the grid in the 4th Quarter of 2019 with the second one online in July 2020.43

<sup>39</sup> Abdul Martin, "Te economics of the Rooppur Nuclear Power Plant", *Te Daily Star*, 2 March 2017, see https://www.thedailystar.net/op-ed/economics/the-economics-the-rooppur-nuclear-power-plant-1369345, accessed 22 April 2018.

<sup>40</sup> NIW, "Belarus, Aided by Russia and Broke, Europe's Last Dictatorship Proceeds With NPP", 28 September 2012.

<sup>41</sup> WNN, "Ostrovets plant meets construction safety rules", 7 November 2014, see http://www. world-nuclear-news.org/NN-Ostrovets-plant-meets-construction-safety-rules-07111401. html, accessed 21 April 2018.

<sup>42</sup> NIW, "Briefs-Belarus", 7 April 2017.

<sup>43</sup> Belarus News, "Belarusian nuclear power plant to give electricity to national power grid in Q4 2019", *Belarus News*, 28 March 2018, see http://eng.belta.by/economics/ view/belarusian-nuclear-power-plant-to-give-electricity-to-national-power-grid-in -q1-2019-110418-2018/.

Te ofcial cost of the project has increased by 26 percent, to 56 billion Russian roubles, in 2001 prices (US\$20011.8 billion).44 However, the falling exchange rate of the rouble against the dollar signifcantly afects the dollar price of the project.

Te project is the focus of international opposition and criticism, with formal complaints from the Lithuanian government, that has published a list of fundamental problems of the project.45 Te Belarussian government, in order to allay European concerns about Ostrovets submitted the project to a post-Fukushima nuclear stress test and it produced in 2017 a national report, which is currently submitted to peer-review by a commission from the European nuclear regulators group ENSREG and the European Commission. In July 2018, the European Commission announced that the report had been presented to the Belarussian authorities and the executive summary was made public, which concludes that "although the report is overall positive, it includes important recommendations that necessitate an appropriate follow up".46 Te next step is these recommendations need to be incorporated into the next draf of the National Action Plan.47

Belarus has historically been an importer of electricity from Russia and Ukraine. But in May 2018, Vice-Premier Vladimir Semashko stated: "In 2018 we stopped electric energy import, because we had upgraded our own power grid. We are self-reliant and can provide ourselves with our own electric energy."48 In fact, Semashko claims that in the frst four months of 2018, Belarus exported 0.4 TWh. Te startup of the Ostrovets nuclear plant would signifcantly increase excess capacity. Lithuania has said it will not accept any electricity from Belarus and is trying to get is neighbours to follow the ban. Currently this has not been successful,

47 European Commission, "Comprehensive risk and safety assessments of the Belarus nuclear power plant completed" (Press Release), 3 July 2018, see http://europa.eu/rapid/ press-release\_IP-18-4347\_en.htm, accessed 4 July 2018.

<sup>44</sup> Charter 97, "Astravets NPP Becomes 12 Billion More Expensive In One Day", see https:// charter97.org/en/news/2016/12/30/236059/, accessed 21 April 2018.

<sup>45</sup> Bryan Bradley, "Lithuania Urges Belarus to Halt Nuclear Project on Safety Issues", *Bloomberg*, 20 August 2013, see https://www.bloomberg.com/news/articles/2013-08-20/ lithuania-urges-belarus-to-halt-nuclear-project-on-safety-issues, accessed 22 April 2018.

<sup>46</sup> ENSREG, "Belarus Stress Tests Peer Review – Executive summary", European Nuclear Safety Regulators Group, July 2018, see http://www.ensreg.eu/sites/default/fles/attachments/hlg\_p2018-36\_156\_belarus\_stress\_test\_prt\_report\_-\_executive\_summary\_0. pdf accessed 5 July 2018.

<sup>48</sup> Belarus News, "Belarus ramps up electricity export in 2018", 14 May 2018, see http:// eng.belta.by/economics/view/belarus-ramps-up-electricity-export-in-2018-111638-2018/, accessed 3 July 2018.

although there has been an agreement to introducing an electricity import tax.49 Russia is currently upgrading its grid connection between the Leningradskaya and Smolensk nuclear power stations, thus potentially also enabling a better connection of Ostrovets to the West-Russian electricity grid, circumventing the Baltic States. Vice-Premier Semashko is confdent: "Our energy is cheaper, and it will be on demand on this market."50

#### **Turkey**

In Turkey**,** three separate projects are being developed with three diferent reactor designs and three diferent sets of fnancial sources. Despite this, in early 2018, construction formally began on the frst of these projects.

Some four decades afer the frst ideas came up for a nuclear power plant at Akkuyu, in the province of Mersin on Turkey's Mediterranean coast, construction started in April 2018, a day before President Putin of Russia visited Turkey for the ofcial launch of the project.51 Te power plant is to be implemented by Rosatom of Russia under a Build-Own-Operate- (BOO) model. In February 2018, only two months prior to the ofcial construction start, Rosatom's Turkish partners pulled out. Te consortium of private companies Cengiz Holding, Kolin Insaat Turizm Sanayi ve Ticaret et Kalyon Insaat Sanayi ve Ticaret, which was to hold 49 percent of the shares, quit the project because they expected too little benefts from the project.52

A company, JSC Akkuyu Nuclear has been established to ensure construction of the project and has been designated as the Strategic Investor. According to the establishing agreement, at least 51 percent of shares in the fnished project should belong to Russian companies and up to 49 percent of shares can be available for sale to outside investors. Negotiations with potential Turkish investors continue

<sup>49</sup> Reuters, "Baltics to cooperate on Belarus nuclear power tax", 14 December 2017, see https://www.reuters.com/article/baltics-energy/baltics-to-cooperate-on-belarus-nuclear-power-tax-idUSL8N1OC3QD, accessed 22 April 2018.

<sup>50</sup> Belarus News, "Belarus ramps up electricity export in 2018", op.cit.

<sup>51</sup> Tuvan Gumrukeu and Orhan Coskun, "Turkey grants Rosatom construction license for frst unit of Akkuyu...", *Reuters*, 2 April 2018, see https://www.reuters.com/article/ us-turkey-russia-nuclearpower/turkey-grants-rosatom-construction-license-for-frstunit-of-akkuyu-nuclear-plant-idUSKCN1H91OY, accessed 22 May 2018.

<sup>52</sup> AFP, "Un consortium turc se retire du projet de la centrale nucléaire d'Akkuyu", see https://www.romandie.com/news/887776.rom, accessed 4 July 2018.

afer the three prospective partners withdrew.53 However, Rosatom has stated that it would be able to complete the project even if it is unable to attract local investors.54

An agreement was signed in May 2010 for four VVER1200 reactors (Generation III+), with construction originally expected to start in 2015. At the heart of the project is a 15-year Power Purchase Agreement (PPA), which includes 70 percent of the electricity produced from units 1 and 2 and 30 percent of units 3 and 4. Terefore 50 percent of the total power from the station is to be sold at a guaranteed price for the frst 15 years, with the rest to be sold on the market.

Afer a fresh series of delays, on 3 March 2017, Akkuyu JSC applied for a construction license.55 Rosatom stated: "According to the Intergovernmental Agreement, the commissioning of the frst power unit must take place no later than 7 years afer the issuance of all permits for construction by the Republic of Turkey."56

In July 2017 the European Parliament adopted a resolution which called on the Turkish Government to halt the plans for the construction of the Akkuyu project due to its location in a region prone to severe earthquakes and called on "the Turkish Government to involve, or at least consult, the governments of its neighbouring countries, such as Greece and Cyprus."57

In April 2018, a construction license was awarded, and the frst concrete was poured, with frst electricity expected to be in 2023 (the 100th anniversary of the founding of the modern state of Turkey), with all four units to be operational by 2025.58 (See "Contract Signed" section hereunder for information on further projects in Turkey.)

56 Coskun, "Turkey's First Nuclear Plant Facing Further Delays – Sources" (ref. 32).

<sup>53</sup> Rosatom, "JSC Akkuyu Nuclear designated strategic investor in Turkey", 2 April 2018, see http://www.rosatom.ru/en/press-centre/news/jsc-akkuyu-nuclear-designated-strategic-investor-in-turkey/, accessed 20 April 2018.

<sup>54</sup> Reuters, "Russia is able to complete Akkuyu nuclear power plant construction: Russian minister", 6 April 2018, see http://www.hurriyetdailynews.com/russia-is-able-to-complete-akkuyu-nuclear-power-plant-construction-russian-minister-129886, accessed 6 April 2018.

<sup>55</sup> WNN, "Akkuyu project receives production licence"," see http://www.world-nuclear-news. org/NN-Akkuyu-project-receives-production-licence-16061701.html, accessed 22 April 2018.

<sup>57</sup> European Parliament, "P8\_TA(2017)0306, 2016 Report on Turkey European Parliament resolution of 6 July 2017 on the 2016 Commission Report on Turkey (2016/2308(INI))", 6 July 2017, see http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONS-GML+TA+P8-TA-2017-0306+0+DOC+PDF+V0//EN, accessed 22 April 2018.

<sup>58</sup> NEI, "Construction of Turkey's Akkuyu NPP begins", 4 April 2018, see http://www. neimagazine.com/news/newsconstruction-of-turkeys-akkuyu-npp-begins-6102914/, accessed 22 April 2018.

#### **United Arab Emirates**

In the United Arab Emirates (UAE), construction is ongoing at the Barakah nuclear project, 300 km west of Abu Dhabi, where there are four reactors under construction. At the time of the contract signing in December 2009 with Korean Electric Power Corp., the Emirates Nuclear Energy Corp (ENEC), said that "the contract for the construction, commissioning and fuel loads for four units equalled approximately US\$20 billion, with a high percentage of the contract being ofered under a fxed-price arrangement". 59

Te total cost of the project is at least €24.4 billion (US\$28.2 billion). Te fnancing for this was US\$16.2 billion Abu Dhabi's Department of Finance, equity fnancing US\$4.7 billion, US\$2.5 billion through a loan from the Export-Import Bank of Korea, with loan agreements from the National Bank of Abu Dhabi, First Gulf Bank, HSBC and Standards Charter making up the remainder.60 In October 2016, Korea Electric Power Corporation (KEPCO) took an 18 percent equity stake in Nawah Energy Company that owns the four reactors, with ENEC, holding the remaining 82 percent.61

In July 2010, a site-preparation license and a limited construction license were granted for four reactors at Barakah, 53 kilometres from Ruwais62 A tentative schedule published in late December 2010, and not publicly altered since, suggested that Barakah-1 would start commercial operation in May 2017 with unit 2 operating from 2018, unit 3 in 2019, and unit 4 in 2020. Construction of Barakah-1 ofcially started on 19 July 2012, of Barakah-2 on 28 May 2013, on Barakah-3 on 24 September 2014 and unit 4 on 30 July 2015.63 As late as October 2016, Korean press was reporting unit 1 to be still scheduled for completion by May 2017.64 In May 2017,

<sup>59</sup> ENEC, "UAE Selects Korea Electric Power Corp, as Prime Team as Prime Contractor for Peaceful Nuclear Power", Emirates Nuclear Energy Corporation, 27 December 2009, see https://www.enec.gov.ae/news/uae-selects-korea-electric-power-corp-as-prime-teamas-prime-contractor-fo/, accessed 22 April 2018.

<sup>60</sup> NIW, "Kepco takes 18% of Barakah", 21 October 2016.

<sup>61</sup> NEI, "Kepco and Enec set up joint venture for Barakah NPP", 25 October 2016, see http:// www.neimagazine.com/news/newskepco-and-enec-set-up-joint-venture-for-barakahnpp-5647366/, accessed 22 April 2018.

<sup>62</sup> Arabian Business, "ENEC Welcomes Regulator's License Approval", 11 July 2010, see http://www.arabianbusiness.com/enec-welcomes-regulator-s-licence-approvals-306150. html, accessed 22 April 2018.

<sup>63</sup> Ibid.

<sup>64</sup> Lee Hyo-sik, "KEPCO to operate UAE nuclear plant for 60 years", *Te Korean Times*, 20 October 2016, see http://www.koreatimes.co.kr/www/news/biz/2016/10/123\_216466. html, accessed 22 April 2018.

ENEC announced it had "completed initial construction activities for Unit 1" and the "handover of all systems for commissioning"; the plant as a whole would be 81 percent complete, with Barakah-1 at 95 percent fnished. At the same time, ENEC stated: "Te timeline includes an extension for the start-up of nuclear operations for Unit 1, from 2017 to 2018, to ensure sufcient time for international assessments and adherence to nuclear industry safety standards, as well as a reinforcement of operational profciency for plant personnel."65 In March 2018, the extent of the delay was confrmed with *Nawah* reporting that the startup of Unit 1 would only be in 2019.66 But only a few months later, in July 2018, a new delay was announced, so that startup would be in late 2019 or early 202067, so that commercial operation would not be undertaken until 2020, three years behind schedule.

Te UAE released a long-term energy plan in February 2017, which proposes that by 2050 renewable energy will provide 44 percent of the country's electricity, with natural gas 38 percent, "clean fossil fuels" 12 percent and nuclear six percent.68 Te nuclear share is in line with expected output from the Barakah nuclear power plant, so it seems that no further nuclear power plants are envisaged at this point. In September 2017, Government ofcials confrmed that there were no plans to build a second plant.69

<sup>65</sup> ENEC, "ENEC Announces Completion of Initial Construction Work for Unit 1 of Barakah Nuclear Energy Plant & Progress Update Towards Safety-led Operations", Emirates Nuclear Energy Corporation, 5 May 2017, see https://www.enec.gov.ae/enecannounces-completion-of-initial-construction-work-barakah-unit-1-progress-update/, accessed 22 April 2018.

<sup>66</sup> Nawah, "Next phase of preparations for Barakah Unit 1 Nuclear Operations starts" (Press Release), 28 May 2018, see http://www.nawah.ae/en/news/NextphaseofpreparationsforBarakah.html, accessed 29 May 2018.

<sup>67</sup> Arabian Business, "UAE further delays launch of frst nuclear reactor", 4 July 2018, see https://www.arabianbusiness.com/energy/400041-uae-further-delays-launch-of-frst-nuclear-reactor, accessed 8 July 2018.

<sup>68</sup> LeAnne Graves, "UAE Energy Plan aims to cut CO2 emissions 70% by 2050", *Te National*, 10 January 2017, see https://www.thenational.ae/uae/uae-energy-plan-aimsto-cut-co2-emissions-70-by-2050-1.51582, accessed 22 April 2018.

<sup>69</sup> Amena Bahr, "UAE Abu Dhabi Unlikely to Build a Second Nuclear plant", *Nuclear Intelligence Weekly*, 29 September 2017.

#### **Contracts signed**

#### **Egypt**

In Egypt, the government's Nuclear Power Plants Authority was established in the mid-1970s, and plans were developed for 10 reactors by the end of the century. Little development occurred for several decades. Ten, in February 2015, Russia's Rosatom and Egypt's Nuclear Power Plant Authority eventually did sign an agreement that was expected to lead to the construction and fnancing of two reactors and possibly two additional ones. In November 2015, an intergovernmental agreement was signed for the construction of four VVER-1200 reactors at Dabaa, 130 km northwest of Cairo. In May 2016, it was announced that Egypt concluded a US\$25 billion loan with Russia for nuclear construction.70 According to the Egyptian ofcial journal, the loan is to cover 85 percent of the project cost, with the total investment thus estimated at around US\$29.4 billion.

In December 2017, Rosatom Director General Alexey Likhachov and Mohamed Shaker, Egypt's Energy Minister signed a notice to proceed with construction as well as an agreement that "spans the power plant's entire life cycle, i.e. 70 to 80 years".71 Te total cost of the project was now reported to be US\$60 billion, of which US\$30 billion for the reactor construction. Tree other deals were signed to cover the supply of nuclear fuel for 60 years, operation and maintenance for the frst 10 years of operation and operating and training of personnel.72 Russia would supply a loan of US\$25 billion, at three percent interest for 85 percent of the construction cost. Te Egyptian government agreed to pay back over 22 years starting in 2029. Te next two and half years will focus on site preparation and licensing. With construction expected to take fve years, the completion of the project is now expected in 2026/27.73

<sup>70</sup> Asma Alsharif, "Russia to lend Egypt \$25 billion to build nuclear power plant", Reuters, 1 May 2016, see http://www.reuters.com/article/us-egypt-russia-nuclearidUSKCN0YA1G5, accessed 23 May 2016.

<sup>71</sup> WNN, "'Notice to proceed' contracts signed for El Dabaa", 11 December 2017, see http://www.world-nuclear-news.org/NN-Notice-to-proceed-contracts-signed-for-El-Dabaa-1112178.html, accessed 24 April 2018.

<sup>72</sup> Phil Chafee, "Rosatom Locks in \$30 Billion Nuclear Deal in Egypt", *NIW*, 15 December 2017.

<sup>73</sup> Dan Yurman, "Egypt's \$60 Billion Bet on Nuclear Energy", Te Energy Collective, 23 April 2018, see https://theenergycollective.com/dan-yurman/2431718/egypts-60-billionbet-on-nuclear-energy, accessed 24 April 2018.

#### **Turkey**

Besides Akkuyu (see above), Turkey has two other nuclear projects under development – Sinop and İğneada.

Sinop is on Turkey's northern coast and is planned to host a 4.4 GW power plant of four units of the ATMEA reactor-design. If completed this would be the frst reactors of this design, jointly developed by Japanese Mitsubishi and French AREVA.74 In April 2015, Turkish President Erdogan approved parliament's ratifcation of the intergovernmental agreement with Japan.75

Te estimated cost of the project was initially US\$22 billion and involved a consortium of Mitsubishi, AREVA NP (now known again as Framatome), GDF-Suez (now known as Engie), and Itochu, who between them would own 51 percent of the project, with the remaining 49 percent owned by Turkish companies including the State-owned electricity generating company EÜAS.76

Te division between the international partners remains in fact undecided. Te ongoing fnancial problems of new-old Framatome afer the absorption by EDF are afecting its ability to invest in the project, as does the review by Engie of its involvement in nuclear projects across its portfolio. Furthermore, concerns remain about site suitability given its seismic conditions.77

In March 2018, reports from Japan suggest that the expected cost of the project has doubled and is now expected to be US\$37.5 billion and that it would be difcult to see completion by 2023.78 Ten in April 2018, press reports from Japan suggested that Itochu would no longer be willing to participate due to the exploding cost estimates, which have risen to more than JPY5,000 billion (US\$46.2 billion) from JPY2,000 billion (US\$19 billion) in 2013.79


<sup>74</sup> WNN, "Turkish utility eyes large stake in Sinop project", 12 May 2015, see http://www. world-nuclear-news.org/C-Turkish-utility-eyes-large-stake-in-Sinop-project-12051501. html, accessed 22 April 2018.

<sup>75</sup> WNN, "Ground broken for Turkey's frst nuclear power plant", 15 April 2015, see http:// www.world-nuclear-news.org/NN-Ground-broken-for-Turkeys-frst-nuclear-powerplant-1541501.html, accessed 22 April 2018.

In October 2015, the Turkish government suggested it was aiming to build a third nuclear power plant, at the İğneada site. Te most likely constructors would be Westinghouse and the Chinese State Nuclear Power Technology Corporation (SNPTC). Chinese companies are said to be "aggressively" pursuing the contract, reportedly worth US\$22-25 billion.80 In September 2016, China and Turkey signed a nuclear co-operation agreement, a similar mechanism used to develop the other nuclear projects in the country.81 However, the fnancial collapse of Westinghouse, makes their current involvement in the project unlikely.

#### **Vietnam**

A decision by the Prime Minster of Vietnam of July 2011 stated that by 2020 the frst nuclear power plant will be in operation, with a further 7 GW of capacity to be in operation by 2025 and total of 10.7 GW in operation by 2030. In October 2010, Vietnam had signed an intergovernmental agreement with Russia's Atomstroyexport to build the Ninh Tuan-1 nuclear power plant, using 1200 MW VVER reactors. Construction was slated to begin in 2014. However, numerous delays have occurred and the national electricity development plan, approved by the government in March 2016, envisioned the "frst nuclear power plant put into operation in 2028".82 Vietnam's nuclear power ambitions were severely curtailed in November 2016, when 92 percent of the members of the National Assembly approved a government motion to cancel the proposed nuclear projects with both Russia and Japan, due to slowing electricity demand increases, concerns of safety and rising construction costs.83

<sup>80</sup> NEI, "Turkey fnalizes site for third NPP", 18 March 2016, see http://www.neimagazine. com/news/newsturkey-fnalizes-site-for-third-npp-4843161/, accessed 26 April 2017.

<sup>81</sup> Herguner Ozeke, "Turkey Looks to China for Tird Nuclear Power Plant", Lexology, 3 January 2018, see https://www.lexology.com/library/detail.aspx?g=d0b6672d-14e1- 43d0-a5b3-c9750552f521, accessed 22 April 2018.

<sup>82</sup> VietNamNet, "Vietnam needs US\$148 billion to develop national electricity until 2030", 20 March 2016, see http://english.vietnamnet.vn/fms/society/152739/vietnam-needs-us-148-billion-to-develop-national-electricity-until-2030.html, accessed 22 April 2018.

<sup>83</sup> NIW, "Briefs – Vietnam", 28 November 2016.

#### **"Committed plans"**

#### **Lithuania**

Lithuania had two large RBMK (Chernobyl-type) reactors at Ignalina, which were shut down in 2004 and 2009, a requirement for joining the European Union. Since then there have been ongoing attempts to build a replacement, either unilaterally or with neighbouring countries. However, in October 2012, a consultative national referendum on the future of nuclear power was held and 63 percent voted against new nuclear construction, with sufcient turnout to validate the result.84 Prior to his appointment as Prime Minister, Algirdas Butkevicius stated that legislation prohibiting the project would be submitted once the new parliament convenes and that "the people expressed their wish in the referendum, and I will follow the people's will".85 In early 2016, the Energy Minister of Lithuania, Rokas Masiulis, said that the project had been shelved indefnitely, due to unfavorable market conditions.86

#### **Jordan**

Infuential policy makers in Jordan have long desired the acquisition of a nuclear power plant. In 2007, the government established the Jordan Atomic Energy Commission (JAEC) and the Jordan Nuclear Regulatory Commission. JAEC started conducting a feasibility study on nuclear power, including a comparative cost/beneft analysis.87 And in September 2014, JAEC and Rosatom signed a two-year development framework for a project, which was estimated to cost under US\$10 billion and generate electricity costing US\$0.10/kWh.88 Afer lengthy unfruitful negotiations, in May 2018, an unnamed government ofcial revealed to *Te Jordan Times* that the plan to build two 1000 MW "is now over", and that "Jordan is now focusing on small modular reactors".89 Tis was confrmed the following month by the Jordan

<sup>84</sup> Christian Lowe, "Lithuanians send nuclear plant back to drawing board", *Reuters*, 15 October 2012, see http://www.reuters.com/article/us-lithuania-nuclear-idUSBRE89E-0BW20121015, accessed 22 April 2018.

<sup>85</sup> NIW, "Lithuania—Prospective PM Wants to Scrape Visaginas", 9 November 2012.

<sup>86</sup> Te Baltic Course, "Masiulis: Visaginas NPP project has been shelved for now", 20 January 2016, see http://www.baltic-course.com/eng/energy/?doc=115564, accessed 22 April 2018.

<sup>87</sup> Mark Hibbs, "Jordan reactor siting study to be done in 2009, JAEC says", *Nucleonics Week*, 27 September 2007.

<sup>88</sup> NIW, "Briefs – Jordan", 18 April 2014.

<sup>89</sup> Mohammad Ghazal, "Jordan to replace planned nuclear plant with smaller, cheaper facility", *Jordan Times*, 26 May 2018, see http://www.jordantimes.com/news/local/ jordan-replace-planned-nuclear-plant-smaller-cheaper-facility, accessed 1 June 2018.

Atomic Energy Commission. Te development suggests not only that Jordan was unable to secure fnancing for the two 1000 MW proposal, but also that Russia was unable to provide low-interest fnancing.

In the last couple of years, JAEC has signed a series of MOUs and agreements on SMRs.90 Te most recent announcement to come from JAEC Chairman Toukan, in April 2018, is that the organization is in "serious and advanced" talks with China National Nuclear Corporation (CNNC) to build a 220 MW High Temperature Gas-Cooled Reactor (HTR) in Jordan.91 Although SMRs could be cheaper in terms of total cost, they are expected to be more expensive on a per-MW basis and would pose a range of problems such as siting.92

#### **Poland**

Poland planned the development of a series of nuclear power stations in the 1980s and started construction of two VVER1000/320 reactors in Żarnowiec on the Baltic coast, but both construction and further plans were halted following the Chernobyl accident. However, on 28 January 2014, the Polish Government adopted a document with the title "Polish Nuclear Power Programme" outlining the framework of the strategy. Te plan includes proposals to build 6 GW of nuclear power capacity with the frst reactor starting up by 2024.93

In January 2013, the Polish utility PGE (Polska Grupa Energetyczna) had selected WorleyParsons to conduct a fve-year, US\$81.5 million study, on the siting and development of a nuclear power plant with a capacity of up to 3 GW.94 At that time, the project was estimated at US\$13–19 billion, site selection was to have been

<sup>90</sup> WNN, "Jordan to consider deployment of X-energy SMR", 29 November 2017, see http://www.world-nuclear-news.org/NN-Jordan-to-consider-deployment-of-X-energy-SMR-2911175.html, accessed 24 April 2018; "Russian Sweep in the Middle East", *NIW*, 15 December 2017.

<sup>91</sup> Mohammad Ghazal, "Jordan, China in 'serious talks' to build gas-cooled \$1b reactor", *Jordan Times*, 28 April 2018, see http://fp.jordantimes.com/news/local/jordan-chinaserious-talks%E2%80%99-build-gas-cooled-1b-reactor, accessed 8 May 2018.

<sup>92</sup> M.V. Ramana and Ali Ahmad, "Wishful Tinking and Real Problems: Small Modular Reactors, Planning Constraints, and Nuclear Power in Jordan", *Energy Policy*, 26 March 2016.

<sup>93</sup> Lukasz Kuzniarski, "Polish Nuclear Power Programme", Ministry of Economy, 17 March 2014, see https://www.iaea.org/NuclearPower/Downloadable/Meetings/2014/2014- 03-17-03-21-WS-INIG/DAY2/COUNTRY/L\_Kuzniarski\_POLAND\_IAEA\_workshop\_Seoul\_2014.pdf, accessed 24 April 2018.

<sup>94</sup> NIW, "Briefs-Poland", 8 February 2013.

completed by 2016, and construction was to begin in 2019.95 However, fnancing remained a key barrier. And in December 2017, the rating agency Fitch, warned that "if the utilities decide to get involved in building the nuclear power plant and put it on their balance sheets then certainly we will have a close look as this may be negative for the ratings." Tis is because Polish utilities are already "substantially leveraged" and the massive cost of nuclear investment would be problematic. Furthermore, the agency suggested that ofshore wind, with falling technology costs would be more economic.96

In late 2017, the Energy Minister, Krzysztof Tchorzewski, said that he would like to see Poland build three nuclear reactors, at fve-yearly intervals, the frst to operate in 2029, with each unit costing US\$7 billion.97 Te Government, in January 2018, announced that it would decide during the year, if it did proceed with nuclear power, with a decision "defnitely, in the frst half".98 Tat did not happen.

#### **Conclusion on potential newcomer countries**

Te history of potential nuclear newcomer countries is a history of delays, cost estimate increases and abandoned projects before they even get started on the ground. While construction is under way in Bangladesh, Belarus, Turkey and the UAE, projects have been suspended or cancelled in most of the other candidate countries. Two countries, Egypt and Saudi Arabia, both in the Middle East, appear to have made some progress in the deployment of nuclear power but the next few years will determine whether this will result in the actual commencement of construction.

<sup>95</sup> Economist, "Polish Energy, Going nuclear", 31 January 2014, see http://www.economist. com/blogs/easternapproaches/2014/01/polish-energy, accessed 24 April 2018.

<sup>96</sup> Reuters, "Funding nuclear project could hit Polish utilities' ratings: Fitch", 8 December 2017, see https://www.reuters.com/article/us-poland-nuclear/funding-nuclear-project-could-hit-polish-utilities-ratings-ftch-idUSKBN1E21YM accessed 30 June 2018.

<sup>97</sup> Reuters, "Poland may have frst nuclear power plant by 2029", 6 September 2017, see https://www.reuters.com/article/poland-nuclear/poland-may-have-frst-nuclear-powerplant-by-2029-idUSL8N1LN222, accessed 24 April 2018.

<sup>98</sup> Reuters, "Poland to decide later this year on building nuclear plant | Reuters", 29 January 2018, see https://www.reuters.com/article/us-poland-nuclear/poland-to-decide-laterthis-year-on-building-nuclear-plant-idUSKBN1FI1Q8, accessed 30 June 2018.


#### **Tab. 3** Summary of Potential Nuclear Newcomer Countries

Sources: Various, compiled by WNISR, 2018

#### **9 General conclusions**

Te global nuclear industry is struggling with a combination of factors that severely impact its competitiveness. Te continuous ageing of the reactor feet induces longer maintenance outages and costlier upgrades. In many wholesale markets, the price-level is lower than the operating and maintenance costs of amortized reactors. Te incumbent nuclear utilities are facing ferocious competition from new players that enter the market following sector liberalization measures. For example, the largest nuclear operator in the world, the French EDF, is losing 100,000 clients *per month.* In the U.S., many uneconomic reactors are only surviving on the grid with massive direct subsidies on state level. While nuclear generating costs are increasing, costs of competing technologies, in particular solar, wind and natural gas, have been falling dramatically over the past decade. It has turned out impossible to build a new nuclear power plant under market economy conditions and massive government support is indispensable. But even then, the nuclear industry is sufering from excessively long lead times compared to its competitors. So the renewal rate of the feet is below the minimum necessary for survival. Nuclear power is turning into an endangered species that, in addition, is increasingly threatened by an invasive species, cheap and abundant renewables.

**Open Access** This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

The images or other third party material in this chapter are included in the chapter's Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter's Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

**Economics**

## **The Collision of Atomic and Flow Renewable Power in Decarbonization of Electricity Supply**

Aviel Verbruggen, and Yuliya Yurchenko1

**The Collision of Atomic and Flow Renewable Power …**

#### **Abstract**

Transitions to sustainable, renewable energy supply are the major components of serious climate policy framed by the aims and constraints of sustainable development. Te Paris Agreement does not provide the strategy, actions, instruments, or means to boost the transition processes in global North and South. Te world's rich countries and people continue to exert rights to pollute the atmosphere with greenhouse gases. A spearhead climate policy can trigger fast elimination of energy-related carbon dioxide emissions, with full de-carbonization of the electricity supply as priority. Atomic power and fow renewable power (wind, solar, running water) are simply juxtaposed as the two major low-carbon supply options. In reality they are mutually exclusive in fully decarbonized power generation systems. Tey are hard to match technically while their major mutual impact is that they undermine the economic case for each other.

<sup>1</sup> Aviel Verbruggen, University of Antwerp, Belgium, aviel.verbruggen@uantwerpen.be; Yuliya Yurchenko, University of Greenwich, United Kingdom, y.yurchenko@greenwich. ac.uk

#### **1 Introduction**

COP21 was widely celebrated as a global achievement in tackling climate change certainly is a milestone in climate talks but does not bear enough thrust to spearhead enough action of enough urgency. It carries many endemic problems of previous international climate change agreements i.e., ambiguity of wording, lack of binding obligations, room for interpretation, etc. Too many concessions were made to turn it into text that all parties were ready to sign (Verbruggen, 2015). It came at a sacrifce of drafing the foundations of urgently needed frameworks for governing the global climate commons. Te problem of diferentiated responsibility for the current state and contamination of those very commons is not addressed in a meaningful way. By putting a price on GHG emissions, environmental destruction is traded, normalized and not addressed; inviting those who can aford i.e., rich countries whose industrialization destroyed the planet in the frst place, to continue polluting.

A lot of energy intensive and contaminating production of industrialized countries has been allowed to move to newly industrialized and industrializing ones who are not economically strong to control and mitigate polluting or make polluters pay – something that too will not be solved without coordinated global action and a binding framework. Fast elimination of energy-related CO2 emission is needed. Two main low-carbon options are seen as a solution here: renewable power (solar, water, wind) and atomic. In this chapter we start from a brief comment on the COP21 Paris Agreement (section 2). In section 3 we focus on the question of rights to emit greenhouse gases and 'the polluter pays principle'. Section 4 presents the headlines of spearhead action in climate policy by fast elimination of energy-related CO2 emissions. It is followed by section 5 where we show that there are but few low-carbon energy supply options, with nuclear and fow renewable energy supply as the main contenders for providing electricity. Moreover, low-carbon is only one of energy supply options, which too need to be assessed for their overall sustainability performance as we discuss in section 6. Nuclear power fails on crucial sustainability aspects and collides with the full expansion of fow renewable energy supply (wind, solar, running water) since, as we show in Section 7, the two low-carbon contenders undermine economic proftability of the other. Te Conclusion summarizes our main arguments and recommendations.

#### **2 Paris Agreement: winners and losers**

On December 12, 2015, French minister L. Fabius forged the general approval of the Paris Agreement afer days and nights of tedious negotiations. Evaluations of the agreement range from 'historical success' to 'epic failure'. Te 31 pages text of the Paris Decision & Agreement is grey, vague, and silent about how UNFCCC will govern the global climate commons. It holds boundless opportunities for diferentiated interpretation. PwC director J. Grant talked of "*constructive ambiguity, or even woolly wording in some areas*", and L. Fabius stated: "*this allows all countries the ability to take the deal home and declare success".* Ambiguity and woolly wording means that every party can read the text as their success and this speaks of a shaky contract. Without mastering COP's 24-year history and its jargon language, the Paris text is difcult to understand. For satisfying all COP delegations, the text is stripped of content, leaving voluntary eforts, voluntary contributions, and voluntary transfers as fllings for patchwork of voluntary projects. It is not clear who undertakes which projects, how and with whom, as the fnal decisions are under the discretion of "*all Parties and non-Party stakeholders, including civil society, the private sector, fnancial institutions, cities and other subnational authorities, local communities and indigenous peoples*". Does an agreement, allowing willing people to set up voluntary initiatives, generate sufcient thrust for drastic and urgent change? In our view it does not.

Te unanimous adoption of the Paris text prompted praise, high expectations, and certainly relief for the club of veteran COP participants. Te process was widely applauded by most media and societal groups: the many people and organizations concerned about derailing climate change, involved scientists, active governments, social organizations, banks, industrial companies, up to corporates with signifcant activities and assets related to fossil fuels and to atomic power.

Popular enthusiasm over marginal accord in the light of previous COP failures obscures the danger of agreements where interests of participants are too diverging, even opposite, and not reconcilable in the practical realization of the agreement. One tends to forget that the day-to-day economic priorities and limitation as well as ecological plans – or absence of such – in the participant countries will inevitably sour the optimism of the agreement. Industrialized countries' actions and intentions since the COP21 ovation do not appear assuring of their changing course. And these are the parties who should be global leaders of positive change due to their economic capacity and because of their role in destroying the environment in the frst place. Instead, Norway, for example, plans exploitation of all its fossil fuel resources. Te EU ETS permit prices per ton CO2 emitted hovered back to the €5 waiting dock, afer a ripple beyond €8 during 2015. France's investment in renewable

energy fell from €6.2 billion in 2014 to €2.9 billion in 2015. Afer post-Chernobyl stalling, atomic power was brought back in as a solution to the inability to efectively reduce CO2 emissions (Mez, Schneider, and Tomas 2009) and is still on the table. Te French nuclear conglomerates see the COP21 outcome as a window of opportunity for more atomic power projects. France is an important exporter of atomic power production with the state's heavy involvement in atomic producer ownership – AREVA and EDF are some 90% and 85% state owned and are world leaders in atomic exports (World Nuclear Association 2016). It is then not surprising that the French government promotes atomic energy as a "green option" at home and abroad (Ibid.). Te option is, however, neither green, nor cheap in the short and long run alike as some £18 billion budgeted – with a very realistic prospect of adding £2.7 billion (EDF 2016) – Hinkley Point C project in the UK confrms (see also Schneider, Froggatt, and Tomas (2011) on high costs of atomic power). What the atomic option may do is pull urgently needed resources from being invested into truly sustainable, green projects.

COP21 did not establish the elementary conditions and instruments for starting an efective UNFCCC governance of the global commons atmosphere and climate (Verbruggen, 2015). Overall, major industrial, fnancial, and political interests have swindled good-meaning activists, environmental NGOs, and developing countries. Mass outsourcing of production to low-income countries and internationalization of production chains makes it harder to trace which country and whose companies pollute while it is the governments and end consumers who are being made to pay. IPCC, among other, document that 'a growing share of CO2 emissions from fossil fuel combustion in developing countries is released in the production of goods and services exported, notably from upper-middle-income countries to high-income countries' (IPCC 2014)

Te economic and political ideologies and interests that created the energy and climate problems afer World War II, continue to occupy the pole positions, now controlling the sort, price, and pace of the low-carbon energy transitions further jeopardizing possibilities for a progressive change.

#### **3 Rights to CO2 pollution or applying 'the Polluter Pays Principle'**

Addressing the annual 50Gt ton GHG emissions must be prioritised because climate change causes or aggravates the other daunting global problems (UNDP 2007). Governments and companies tend to convert the +2°C limit into a spendable carbon emissions budget, considered and handled as '*rights to emit'*. Tis practice rises the likelihood of transgressing the +2°C limit to near certainty and is geared towards appropriation by present rich countries and by carbon-intensive lifestyles, and is uncritically propagated by mainstream economists and media as a message that reads: '*by mitigating emissions, present generations deliver eforts and make expenses for the beneft of future generations*'. Tis unwarranted rights position conficts with a civilized status of environmental policy. Emitting CO2 in the atmosphere is an activity of dumping without hindsight or '*gaseous littering'*. Industrialized societies acknowledge the 'Polluter Pays Principle' and polluters face two obligations: pollution must immediately stop and polluters must bear responsibility for the mess caused. Due to the atmosphere being the global commons, it is difcult to impose and enforce the actual implementation of the polluter pays principle. Te way in which responsibilities are allocated in terms of 'right to pollute' and 'price of pollution' is ridden with problems. It is undisputable that 'both international and national decision making must aim to take account of income and wealth diferentials and regional disparities within as well as between nations' (Newell et al 2015: 239). However, there is also the issue of difculty to trace who pollutes what in internationalized production chains where countries, not companies, are held responsible for pollution that afects their geographic territory or the global atmospheric commons, while the profts from production more ofen than not escape those countries' controls.

#### **4 Spearheading climate policy by fast elimination of energy-related CO2-emissions**

Since the UN Framework Convention (1992), over the Kyoto Protocol (1997) and the Copenhagen Accord (2009), yearly global GHG emissions continued to grow, as did the annual use of commercial energy (IEA's yearly Outlook). About 4/5th of GHG emissions are the result of present energy supply and use practices. In 2015 CO2 emissions growth stalled due to a global expansion of renewable energy supply. Presumably more than 4/5th of the climate policy studies focus on energy-related CO2 emissions and their mitigation. Climate policy goes beyond the issue of energy (e.g., other GHG than fossil fuel related CO2, land-use, adaptation) but is also infuenced by fossil fuels use (for example methane emissions, changing land-uses afected by low-priced supply of fossil fuels).

Ongoing climate policy is little efective partly because there are many goals on several aspects that are prioritized at the same time. Contrary to the widespread

opinion that UNFCCC must mainstream and simultaneously solve multiple major problems of the world2 , rational climate policy should detect spearhead issues functioning as locomotive in accelerating mitigation or adaptation. Strategic advance requires forcing change via a selected issue for breaking the locks on needed technological, industrial and societal transitions. Torough transformation of energy supply and use is widely recognized as the predominant change to perform (IPCC 2012).

When COP Parties are serious about not crossing the +2°C as a dangerous, they design and agree on *Individual Parties' Emissions Contraction Scenarios* (IPECS). For this, the focus is on Cpp = the average energy-related CO2 annual emissions per person in a nation. Te Cpp indicator is a well-known Sustainable Development Indicator. Cpp is yearly assessed for all UN members and ranges from less than 100 kg in least developed countries to more than 20,000 kg in a few wealthy, oil intensive economies (IEA 2015).

Decomposing Cpp in three, still highly aggregated, factors provides insight and opens the entry to more detailed, hands-on information. Te three indicators can be devolved further to reach detailed groups of actors emitting CO2 in specifc conditions, ofering neat hands-on policy targets3 . Respective Cpp calculation is a multiplication of respectively wealth intensity, energy intensity of wealth, and CO2 intensity of energy use:

Figure 1 presents a stylized view of Cpp 'contraction & convergence' scenarios for a few typical Parties with the agreed upon upper limit of Cpp, which contracts to a low point in 2050, e.g., a maximum of 500 kg Cpp. Every Party's scenario starts at its recently verifed Cpp value. Every Party designs its Cpp path, respecting the constraint of staying below the commonly agreed upper limit. Te actual Cpp contraction scenarios for sixteen, major CO2 emitting nations are documented in the *Deep Decarbonization Pathways Project*<sup>4</sup> 2015 report.

<sup>2</sup> Paris Agreement p.1: *"Parties should, when taking action to address climate change, respect, promote and consider their respective obligations on human rights, the right to health, the rights of indigenous peoples, local communities, migrants, children, persons with disabilities and people in vulnerable situations and the right to development, as well as gender equality, empowerment of women and intergenerational equity."*

<sup>3</sup> Te decomposition can go on by splitting GDP in its major composing activities, by identifying actors related to the various activities, by specifying the types of energy used, etc. At UN level the higher aggregate sufces and further detailing is the task of the Parties to design the policies for controlling the values of the aggregate indicators. Agnolucci et al. (2009) and Verbruggen (2011) provide examples and suggestions of deeper decompositions.

<sup>4</sup> An international consortium of research centers investigates 'deep decarbonization pathways' for a set of countries, together emitting three quarters of the global energy-related CO2 tonnage (http://deepdecarbonization.org).

**Fig. 1** Individual Parties' Emissions Contraction Scenarios materialize respect for the maximum +2°C average temperature increase; stylized examples of representative cases, selected by the authors.

Decomposing energy-related CO2 emissions in constituent factors is a widespread practice (IEA 2015). IPCC reports take advantage of this decomposition for explaining the evolution of energy-related CO2 emissions (e.g. 2014 Assessment report, working group 3, chapter 6). T e SE4All initiative of the General Assembly (UN 2011) wants to half the energy intensity (factor 2 of the equation) and double the use of renewable energy (factor 3) in developing countries. T erefore, it is amazing that of cial COP policy-making neglects the opportunities of decomposition for addressing the 'complex' and 'wicked' policy matters. Also MRV (Monitoring-Reporting-Verif cation) becomes really practical because numerical indicators are every year available for every factor:

1. T e *Budget Reform Index (BRI) for wealth intensity (GDP/person)*. T e BRI should irrevocably increase year af er year. Budget reform is f nancially promoting sustainable low-carbon activities and charging non-sustainable activities, leading to restructuration of the GDP. T e monetary total of the GDP may increase or decrease by the restructuring. T e discretionary power of how to practically organize the restructuring remains fully with the Parties. T e

BRI only gauges the overall net monetary pressure or thrust of policies for the promotion of sustainable low-carbon technologies and practices.


Te spearhead approach respects UNFCCC's '*common but diferentiated responsibilities and respective capabilities*' in emission reductions. '*Common responsibility*' here is: all countries' Cpp stays below the upper limit scenario. '*Diferentiated*' here means: high value Cpp countries must contract frst and at a fast rate ('deep cuts'); low value Cpp countries (mostly developing and least developed countries) can grow in Cpp value with the obligation to continue to respect the contracting upper limit values in future years.

#### **5 Few low-carbon energy supply options**

For performing activities, the right type and quantity of energy must be supplied at the right place and time. All energy supply are a combination of some energy *source* with particular *technologies* for exploration, generation, conversion, and transmission of energy to the end-users. In sequence of importance, available sources are: renewable fows and stocks in the natural environment, fossil fuel deposits in mines, wells, and shales, and uranium deposits (Figure 2)5 . Te environment supplies for free many energy end-use services with little technology required for extraction or conversion, e.g., phenomena and processes such as

<sup>5</sup> Te overview does not include the manufacturing of synfuels.

daylight, ambient heat, natural ventilation and drying. Natural processes concentrate dif use renewable f ows (photosynthesis, the water cycle). Over the last decade, the costs of man-made technologies harvesting renewable f ows dropped signif cantly (IPCC 2012). Photovoltaics demonstrate strong performance on cost reduction in comparison with atomic (Haas 2012). Globally speaking, atomic has been showing a slowdown on new installations and decrease of capacity as an industry since 1988 (Schneider, M., Froggatt, A. and S. T omas 2011). Technological capability announces further cost cuts, for example levelized kWh prices of conventional PV conversion to €ct. 4 to 6 by 2025 and €ct. 2 to 4 by 2050, although dependent on f nancial and regulatory conditions (Fraunhofer 2015). More innovative technologies can further reduce the costs. Costs distribution however needs to be further examined and ref ected in any future policies as EU cross-country research suggests that it is still the households who bear most of the burden 'due to higher costs of direct energy ef ciency expenditures in appliances, vehicles and insulation' (Haas et al. 2014).

**Fig. 2** Overview of energy supply categories, with energy sources in [.] Source: authors' graph.

Nuclear fuel is produced from ref ned and enriched uranium, dense deposits of which are limited (American Nuclear Society, 2001). Uranium shortage may be overcome

by breakthroughs in breeder or fusion technology. Commercial new breeder and fusion plants are not expected before 2050, the year wherein carbon free electricity systems should be operational. Most essential is the high evidence that atomic fssion power is not a sustainable power supply option (Verbruggen et al. 2014).

Fossil fuels cover a market share of above 85% of commercially traded energy supply (BP 2015). Teir success is due to their versatility, density, (for all scales) divisibility, abundance, storability, and ability to perform on command. However, fossil fuel combustions cause various environmental damages and inevitably fetch CO2. In a low carbon future their use will be stifed(IEA 2014) but 'carbon lock-in' and related interests are exceptionally strong. A smooth phasing-out of fossil fuels is rather unlikely to happen (Verbruggen and Van de Graaf, 2013). Hydrogen is a carbon free fuel but is not naturally available on earth and difcult to manage safely. New industrial infrastructure may manufacture hydrogen from low carbon electricity but its deployment would be a costly, long-range undertaking. Other non-fossil solutions and options on storage and supply systems integration, some already available, need more investment for the successful and sustainable green energy transition. Electricity plays a central role in that transition as major renewable energy supply (PV, wind, water) and atomic energy is generating heat, mostly medium-pressure steam that is converted to electricity and delivers only power. Te electricity sector transformation is the inevitable vanguard of the low-carbon energy transition.

#### **6 Climate change urges sustainable energy transitions**

Te nuclear renaissance strategy is mostly argued in terms of necessity of atomic power in future low-carbon scenarios. Without public money continuing to subsidize new nuclear power projects, few projects will be started. Also with high subsidies, private investors in industrialised countries remain highly reluctant to invest in risk-prone nuclear projects. In order to obtain public support, the atomic hubris of the past century is shelved by a popular new slogan "*Nuclear power is not the only solution, but there is no solution without*". However, a majority of EU population prefer energy efciency and renewable power (Eurobarometer 2015). Published statistics prove the fast difusion of fow renewable power supply by technological innovation resulting in continuously declining generation costs. It has become the survival strategy of the atomic conglomerates to publicly propose co-habitance with renewable power while actually undermining its development because there is no compatibility for lots of renewable fow power and lots of atomic power in the same power system (Verbruggen, 2008). Te exclusivity is technically due to physical attributes of electric currents and to the infexibility of both atomic and fow renewable supply. Te options perform diferently on sustainable development criteria at the global societal level too.

Notwithstanding many regards towards sustainable development, IAEA skips the true sustainability assessment of atomic power (Verbruggen and Laes, 2015). Te UK conservative government substituted the single low-carbon attribute for the spectrum of sustainability criteria covering Planet, People, Prosperity, Politics, and Risks as specifc concerns. Tis reductionist interpretation equals the circumvention and obscuration of sustainable development also observable in the 2014–15 energy and climate policies of the EU (EC 2014a, EC 2015). Sustainability is, however, the primary attribute that future energy supply and use systems should have.

One aspect is the readiness of energy transition pathways for emulation by developing countries that is essential for global CO2 emissions reductions in the coming decades. Low-carbon energy systems composed of non-sustainable nuclear power and of centralized large-scale, capital-intensive renewable plants are not ready for emulation by the majority of developing countries. For the elimination of energy-related CO2 emissions, richer countries should develop and deploy renewable energy supply of the kind and size also applicable and afordable by developing countries. Indeed, there has already been progress made on the level of low-carbon energy transition assistance by World Bank and USAid. Power Africa (PA) is an initiative launched by the Obama administration in 2013 that 'works with African governments and private sector partners to remove barriers that impede sustainable energy development in sub-Saharan Africa and unlock the substantial wind, solar, hydropower, natural gas, biomass, and geothermal resources on the continent' (USAID 2013). Te program's goal is stipulated as to 'increase electricity access by adding more than 30,000 megawatts of cleaner, more efcient electricity generation capacity and 60 million new home and business connections across sub-Saharan Africa' (USAid 2014). Te Beyond the Grid sub-initiative aimed at expansion of rural electrifcation and providing 'access to small scale and of-grid technology' is also included in PA. One main recent project is the 'Lighting Africa' program – a 'joint initiative of IFC [International Finance Corporation] and the World Bank, [aimed to] help increase access to afordable, clean and safer lighting for more than 30 percent of Nigeria's population who live in rural areas, and have low incomes and no access to grid electricity' (IFC/WB 2015). Te program focuses purely on private sector participation in electrifcation reform and expansion of the sector however the renewably sourced energy focus makes it more hopeful than the Power Africa initiatives.

Tere are two big problems with the above initiatives. First is the involvement of private sector in delivery – usually associated with less reliability and higher costs (Yurchenko and Tomas 2015). Te second is the inclusion of the fossil fuel natural gas as an energy source option, which is not a sustainable option. Te two leave us skeptical of the potential fnal economic costs and efects of the program which seems to mimic typical issues of climate change politics governance discussed by Newell et al (2015) i.e., more of the same conventional approach.

A comprehensive sustainability assessment of nuclear fssion power (Verbruggen et al., 2014) reveals that nuclear power fails on most sustainability criteria. Te needs of countries with poor grid development and dispersed unsatisfed household electricity demand emphasize the shortfall of nuclear power as sustainability option.

#### **7 Flow renewable power and atomic power supplies are incompatible**

Tere is a growing literature on how integrated power generation systems may embed both fow renewable power (solar, wind, running water) and atomic power. At the outset, this literature adopts the present non-sustainable systems as the default position, with wind and solar power as disturbing newcomers. Te incumbent position is: *intermittent and stochastic renewable energy supplies disturb the reliable delivery of power; power on command is the reference*. For a more efective and efcient transition the opposite viewpoint is needed: i.e., the future sustainability goal situation must be treated as a benchmark for assessing present states and required evolutions. Ten the overarching guidance in the transition of the electricity sectors must be as follows: *Intermittent and stochastic renewable energy deliver the most sustainable supply and merit priority over the non-sustainable supply; with respect for this sort of lexicographic priority, the supply of reliable power is organized, requiring extended load management capabilities, energy storage facilities, adapted transmission links to convey and match renewable power supply.*

Te atomic power and fow renewable supplies are mutually exclusive on fve major directions of future power systems. First: atomic power is part and parcel of the expansive "business-as-usual" energy economy since the 1950s. Second, nuclear and renewable power need very diferent add-ons provided by fossil-fueled or bio-energy power plants, or by dam hydro power; for nuclear the add-on is large and expansive, for renewable power it is distributed, fexible and contracting over time. Tird, power grids for spreading bulky nuclear outputs are of another constellation than the interconnection between millions of distributed power sources requires. Fourth, the risks and externalities of atomic power make this technology non-sustainable and therefore without a future. Tere is no safe or permanent way of disposing of nuclear waste – a problem that requires an international solution (Di Nucci and Losada 2015), efects of potential accidents are insurmountable, climate efects of ore mining are underestimated, emission of radioactive isotopes 'such as tritium or carbon 14 and the radioactive noble gas krypton 85' are not discussed, etc. (Brunnengräber, et al., 2015; Smith, 2006; Mez, 2016); while efciency/renewable power are still in their infancy particularly in terms of market shares. Fifh, the antagonistic competition for R&D resources and for production capacities and capabilities (e.g., trained experts) will intensify. Nuclear power and renewable power have no common future in safeguarding "Our Common Future" (Verbruggen, 2008).

Fully sustainable renewable energy systems are not just technologically and economically feasible but also the cheapest and only sustainable option for the world's population. Like every successful transition, sustainable energy transitions need profound change in the minds, thinking, beliefs, preferences, etc. to adopt the novel paradigm, perspectives, technologies, and practices. Progressive thinking and actions are unlikely to be delivered by those with vested interests as we mentioned in the case of France, AREVA, and EDF. Although detailed technical analysis of dynamic power systems reveals the incompatibility of fow renewable and atomic

**Fig. 3** Atomic versus fow renewable supply as separately serving electric loads Source: Verbruggen (2008)

power supplies, the prevailing discourse repeats the mantra of a simple juxtaposition of both kinds of supplies (IPCC, 2014; UNFCCC, 2015; Verbruggen and Yurchenko, 2017).

Tis discourse can be continued when the contenders are embedded in separate power systems with ancillary supplies from fossil fuel based, bio-energy or hydropower dam electricity. However, when 100% carbon-free power in a particular power system is due, fow renewables and atomic power will collide. Both supplies are characterized by infexibility, although of a diferent kind and for diferent reasons. Tere is a need for add-on current to fll the power loads from the supplied base onwards. Stapling supplies is the principle in merit order loading, not juxtaposing supplies, because electric power is an ephemeral phenomenon switching ffy times per second. Figure 3 shows the juxtaposition of atomic and fow renewable supplies in separately serving electric loads. Figure 4 illustrates that the two contenders will claim the same base-load area when operating in the same system.

**Fig. 4** Atomic and fow renewable supplies mutual impact when operational in the same power system.

Source: Compiled by the authors on the basis of Verbruggen (2008, 2016).

As is shown in Figure 3, atomic power and fow renewable supplies serve separate power loads. Tey request add-on services from fexible power supply (fossil fuel or bio-energy based power or dam hydropower). Now more fexibility options are added like load management and storage in batteries (IEA, 2014). Supply from other areas in interconnected power systems is considered as a solution, although when the exchange becomes intense and frequent, the power systems become deeper interpenetrated. Figure 4 highlights how atomic and renewable supplies within one electric system ruin the business case for each other as their load factors are eroded when they cannot deliver the base loads. Researchers are looking into possibilities to enhance the load following capability of nuclear power plants, or to cut of sharp peak supply by wind or solar plants, or curtail their outputs for other reasons. Most studies focus on cases of limited annual supply by fow renewables (e.g., 20%, or max.45% of total annual power generated in the system) with a signifcant share coming from company owned larger scale plants (ofshore wins parks; MW-scale PV felds; concentrated solar power). Our evaluation is that prosumers and cooperatives will become the predominant generators of fow renewable supply. Te incompatibility between atomic and fow renewable power is stronger in terms of sustainability, economics, and involved agents than in technical operability.

#### **8 Conclusion**

Te global climate policy process as deployed by the UNFCCC at the yearly COPs is slow and vague. Te participants and most media acclaim COP21, but empirical and theoretical literature on the commons (Hardin, 1968; Ostrom, 1990) and problems of governance (Newell et al., 2015) predicts little positive results (Verbruggen 2015) without a comprehensive reconstruction of the governance regime altogether.

'Energy transition' is a term covering a spectrum of realities, from thorough and sustainable to superfcial, deferring and non-sustainable lock-in. One slips in the latter without a clear defnition, vision, mission or strategy of sustainable and thorough change. Te incurred delays by the slips make the thorough path steeper, and the irreversibility of climate change more probable.

Te sustainable renewable energy alternative as such is not costly when fully developed and deployed. Atomic power is and will be more expensive especially in the long run. Evidently, the transition process itself is challenging. Depending on the scores by progressive, viz. reactive strategies, forces, and public support, the transition difculties and costs will be modest or high. In order to overcome

the impasse, urgent transitions bring earlier depreciation of sunk investments. Te latter are more signifcant when incumbent energy companies reacted little or very late to the 1992 Rio summit and ensuing conventions. For example, afer 2000, incumbent electricity companies have still built coal power plants in the Netherlands and in Germany (two countries of high exposure in energy transition literature and practice). Tis happened under the cover of the low CO2 emission permit prices of the failing EU ETS.

An assessment on nineteen sustainability criteria concluded that atomic fssion power is not a sustainable option (Verbruggen et al., 2014). A full expansion of fow renewable and atomic power supplies too are mutually undermining in terms of reliability of supply and economic cost alike. A conclusion thus can be made that sustainable transition and sustainable power supply must focus and rely exclusively on renewable energy and renewable fow energy in particular as the main option to tackle climate change. Te shif towards that option must happen quickly and will require coordinated eforts of countries globally. For this to be efective and making all parties responsible, a new, more binding, and clearly formulated framework of governance for the global environmental commons will need to replace the Paris Agreement and the business-as-usual functioning of the COPs.

*Acronyms and Glossary***:** COP=Conference of Parties at the UNFCCC (yearly since 1995); Cpp = a Party's average energy-related CO2 annual emissions per person; EPR= European Pressurized reactor; IAEA=International Atomic Energy Agency; INDC=Intended Nationally Decided Contributions (by Parties); IPCC=Intergovernmental Panel on Climate Change; PV=Photo-Voltaic; RE=Renewable Energy/Electricity; SD=Sustainable Development; UN-FCCC=United Nations Framework Convention on Climate Change (1992).

Tis text uses mostly 'atomic' rather than 'nuclear' because splitting (or fusion) of atoms generates other atoms, as recognized in the 1950–60s.

#### **References**


Haas, R., 2012. 'On the dynamics of Photovoltaics vs Nuclear power'. 2012 IEEE Tird International Conference on Sustainable Energy Technologies (ICSET).



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## **The Historical Development of the Costs of Nuclear Power**

Reinhard Haas, Stephen Thomas, and Amela Ajanovic1

#### **Abstract**

One of the major historical arguments of the promoters of the use of nuclear power was its low cost compared to other electricity generation technologies. For a long time, it was argued that a strong nuclear power contribution to electricity supplies was the best way to achieve a reliable and afordable electricity supply. However, from the frst wave of nuclear reactors deployed, construction costs have been on an escalation course.

Te core objective of this paper is to analyze the historical development of the costs – especially the investment costs – of nuclear power plants. With respect to these in recent years in Western countries there is a strong perception: Realized costs has always been higher than forecast costs and construction times promised have almost never been met. Given the reasons identifed for these cost increases – and their irreversibility – we conclude that the time of "cheap" electricity from nuclear power is undoubtedly over if it has ever existed and for the next years there are no signs of a reversal of the current upward cost trend.

<sup>1</sup> Reinhard Haas, Technische Universität Wien, Austria, haas@eeg.tuwien.ac.at; Stephen Tomas, University of Greenwich, United Kingdom, stephen.thomas@greenwich. ac.uk; Amela Ajanovic, Technische Universität Wien, Austria, ajanovic@eeg.tuwien.ac.at

#### **1 Introduction**

One of the major historical arguments of the promoters of the use of nuclear power was its low costs compared to other electricity generation technologies. For a long time, it was argued that it is impossible to retain a secure and afordable and lowcost electricity supply without nuclear power. However, it has to be debated whether that argument was ever valid and from the frst wave of nuclear reactors deployed, construction costs have been on an escalation course.

Looking back to the economic promises of the "nuclear dream" of the 1950s and 1960s, these focused on very cheap electricity to be provided by nuclear power plants (NPP), electricity even "too cheap to meter" (Lewis Strauss2 , Cohn, 2007). Tis idea was based on the rather low investment costs and short construction times (4-6 years) in the early days of the civilian use of nuclear power. Indeed, at this time NPP generated electricity at costs as low as 2–3 cents2010 3 per kWh (Cohn, 2007).4

Yet, over time the costs of nuclear, especially the investment costs, have increased continuously. In recent decades the high and still increasing costs of nuclear power have become a key barrier to the construction of new reactors around the world. It is clear that in the long run nuclear power will only succeed if its generation costs are lower than those of competing technologies (MIT 2003). Tis is especially true as electricity systems become increasingly exposed to competitive markets in many parts of the world.

Te core objective of this paper is to analyze the historical development of the costs – especially the construction costs – of nuclear power plants. Specifc derived objectives are to analyze (i) why the investment costs have increased, (ii) why the construction times have increased, (iii) why the construction costs as well as the construction times have been underestimated systematically, and (iv) whether the reasons for construction cost and time increases are irreversible.

In this context it is important to note that there is a diference between actual investment costs and so-called overnight costs (ONC). Te major diference is that the investment costs include also the costs for interest and represent the whole capital costs while the ONC represent the expenses for the technology and construction work only (incl. labor and material cost). Overnight costs are useful for analytical

<sup>2</sup> Reference to the full text of what Lewis Strauss said: https://public-blog.nrc-gateway. gov/2016/06/03/too-cheap-to-meter-a-history-of-the-phrase/

<sup>3</sup> Tis means value in terms of money of 2010

<sup>4</sup> One could argue strongly whether there was ever an era of cheap nuclear power. Te perception of cheapness was based either on cost forecasts that were not fulflled or on a perception that costs would come down over time and make nuclear power cheap.

purposes especially for international comparisons because the interest rate is project and country specifc but consumers pay the cost including the interest. Te European Commission estimated that Hinkley would cost in total £24.5bn when the overnight cost was estimated at £16bn5 .

Of absolutely core interest is why the investment costs increased by such high rates. So far, there is no sound and comprehensive analytical evidence that explains the skyrocketing of the real costs that have occurred since the beginning of nuclear power. An obvious component referred to above but in little clarity is the longer construction times, leading to ever higher interest accrued and to "natural" cost escalation" of labor and equipment Te automatic intuitive assumption is that these extra costs arise from the additional safety requirements resulting from accidents at Browns Ferry, Tree Miles Island and Chernobyl. Tere might also be a need for better quality materials, for example Westinghouse steam generators of the 1970s used a material that corroded too quickly. Te reason why the vendors used cheaper material was because costs were too high. Tis proved a false economy. If raw materials like steel and concrete have gone up faster in real terms than infation, that would also have increased real costs. Another factor is that reactors seem to have become more prone to cost escalation from the pre-construction forecast, again no analysis to back this up. Tis raises the issue whether construction costs have gone up because real costs have gone up or because things have gone wrong without the intrinsic cost going up, e.g. how far is the higher than estimated cost of OLK-3 due to the forecast being an underestimate and how far because things have gone wrong, including increases in construction duration.

Another issue is initial price dumping by construction companies. Te question would be whether the pre-construction costs have become more realistic again appearing to raise the real cost. Certainly the prices quoted in the 1960s were horrible underestimates (e.g. the 12 US turnkey plants). One problem with pre-construction cost estimates is that unless the vendor gives a fxed price contract (turnkey) and no vendor in its right mind would give a genuinely fxed price contract, the vendors know they can't be held to the pre-construction estimate so they have an incentive to underestimate to get the business.

Other possible reasons for the construction cost increases could be:

• increase in interest rates for fnancing and an increase in construction duration (which infuences the interest costs but not the ONC);

• changes in design generation6 , and changes in the engineering design see Grubler (2014), other than extra safety costs covered above.

In addition, in the past it could be suspected that high subsidies such as public subsidies, fnancial subsidies (low interest rates that did not refect the economic risk) and government subsidies to industry could have led to much lower costs than have actually been true (Cohn (1997)). Another reason for present day construction cost increases would be that the pre-construction costs have become more realistic thereby appearing to raise the real cost. Certainly, the prices quoted in the 1960s were dramatic underestimates. Afer the experience of vendors facing heavy losses with the 12 US 'turnkey' projects of the mid-60s, vendors were only willing to sign 'cost-plus' contracts so there were no direct fnancial consequences to them when costs overran. Utilities, in turn, were generally able to pass on whatever costs were incurred to consumers. So neither the vendor nor the buyer generally had to bear the additional costs, they fell on consumers.

So far, studies conducted on the costs and economics of nuclear have focused mainly on the analysis of single plants and cohorts of NPP. In this work we take the results of other studies, add own analyses, e.g. on OLK3, FLA3 and the UK's Hinkley Point C project (HPC) and derive major fndings. To the best of our knowledge so far, no such a systematic analysis of cost developments has yet been conducted.

Regarding the literature on costs and economics the following work is most relevant. Te very frst studies on cost analyses were already conducted at the end of the 1970s by Tybout (1975), Mooz (1978), Mooz (1979), Mooz (1982) and Komanof (1981). Tey already provide very early, sound analyses on the reasons for cost increases and an early outlook on what is looming today, which is that nuclear power will not become a cheap power source at any time.

Cohn (1997) provides a comprehensive corresponding analysis including cost analyses. He explains from a philosophical and economic point-of-view why the nuclear dream has failed to come true. Cohn is the frst to describe, why nuclear costs were systematically underestimated, what were the economic problems already in the early years of nuclear and how the word "market" was systematically misused by the major utilities and vendor companies. Tis work also provides an interesting summary on nuclear spending and costs of NPP in the early days 1955 to 1969 in the US. He showed that these were fnanced almost completely by the utilities with the incentive to gain know-how. He also documents that even at that time it was generally expected to have higher generating costs than available fossil fuel alternatives and was undertaken as a technology-promoting investment.

<sup>6</sup> See Reinberger et al. in this book explaining the change in generations of nuclear

Another major contribution of Cohn's work is that he was the frst to provide a critical discussion on the issue of subsidies and cost deferments. He documents in detail for the time-period from 1950 to 1979 direct expenditure (incl. R&D outlays, uranium supply and enrichment subsidies, and regulatory subsidies) and implicit subsidies (e.g. tax exemptions and tax benefts) as well as the cost deferments due to e.g. neglecting nuclear waste disposal charges (see Cohn 1997, p.79 for more details).

MIT (2003) conducted a sensitivity analysis and showed under which conditions NPP could become competitive again.

Te issue of pre-announced construction costs and actual ones was already discussed by Koomey/Hultman (2007). Tey present a reactor-by reactor analysis of historical busbar costs for 99 nuclear reactors in the US and compare those costs with recent (2007) projections for next-generation US reactors. Teir analysis suggests that projections of capital costs, construction duration, and total operation and maintenance costs are quite low – far away from the historical medians and that additional scrutiny may be required to justify using such estimates in current policy discussions and planning.

Grubler (2010) provides a seminal contribution and a very comprehensive analysis on the developments in France. Grubler's major point of criticism is that lack of standardization and new engineering approaches have avoided the learning and standardization efect. He points out that it is worth saying that France is widely, but wrongly seen as having a fully standardised programme. Actually its 58 reactors are spread over at least 3 main designs (900MW, 1300MW, 1450MW) and 7 variants. Hence, many of the plants used a new untested design.. Te scope for learning was restricted because the new variants were ordered before there was any operating experience with their predecessors. Tere was no conscious decision by France not to standardize, design changes were required because of experience elsewhere, e.g. the need to learn lessons from the Tree Mile Island disaster and the need to improve the economics, e.g. by scaling up.

Harris et al. (2012) provide cost estimates for nuclear power in the UK. Teir motivation is to analyze the actual cost developments in Europe and derive major conclusions for the future of investment costs in the UK: Te primary fnding of this paper is that the capital cost for an NPP may be higher than recent UK government reports have indicated and may therefore require greater levels of fnancial support than policymakers might have originally envisaged. As Harris et al. (2012) state further, due to the signifcant uncertainties that surround cost estimates for NPP in general it is very difcult to give a high level of confdence to levelised cost estimates.

Rothwell (2015) discusses the basics of economics of nuclear power. Lovering et al. (2016) present an overview on overnight costs (ONC) of 58% of the nuclear reactors

world-wide. Koomey et al. (2017) heavily criticize the work by Lovering et al. (2016) claiming that they cherry pick data and include misleading data on early reactors.

Tis work is organized as follows. In the next chapter we look at the basic cost structure of NPP. Ten we analyze the development of investment costs. A specifc focus is dedicated to the development of Technological Learning (TL). We discuss why it took place for diferent technologies for electricity generation but apparently not for NPP. Finally, we argue why the argument that nuclear electricity is cheap is not valid. We explain and show the wrong predictions regarding investment costs and how construction times look like for some recent projects. A summary of the major reasons for investment costs increases of NPP and conclusions complete this chapter.

#### **2 The cost structure of nuclear power plants**

In principle the cost structure of every power plant consists of investment costs, fuel costs and O&M costs. In addition, for nuclear plants, signifcant costs for decommission and backend activities have to be considered, see Irrek (2018) and Wealer et al. (2018) in this book. Te specifc cost structure of nuclear plants is shown in Fig. 1. Specifc features are:


Figure 1 shows that the largest amount of the costs – about 80%– are capital costs resulting from initial investments. In 2004 the IAEA estimated 60% construction costs, today the share is likely to be even higher because constructions have escalated faster than the other elements. Harris (2012) estimate 80% share of capital costs and also according to Rangel et al. (2013) NPP competitiveness depends on its capital costs representing on average 80% of the levelized cost of electricity. However, from the frst wave of nuclear reactors construction costs have been on an escalation course and the share of capital costs in total cost increased.

One might ask whether the cost components in Figure 1 are complete and whether all important components are included. Schneider (2006) suggests it is not, stating "Te total costs of a nuclear kWh most likely will never be known. Costs for waste management, decommissioning and clean-up are constantly on the rise and are generally expected to be paid by the taxpayer."

**Fig. 1** Typical nuclear electricity generation cost breakdown (based on IAEA (2004) and other sources)

#### **3 The historical development of investment costs**

As seen from Fig. 1 investment costs contribute the largest share to the electricity generation costs of NPP. In this chapter we put special focus on the analysis of the historical development of investment costs. We provide a dynamic comparison of the investment costs extracted from diferent studies, with an emphasis on the explanations for reasons for their increase.

Te rising investment cost of building nuclear reactors is a well-established fact. It has been studied in detail for installed capacity in the USA and France. However, sound explanations for these cost increases are difcult to fnd.

Te key literature on investment costs is presented below. Te frst comprehensive analysis of these was conducted by Koomey (2007). Cohn (1997) describes the development of utilities nuclear investments in the U.S. from the 1950s to the 1970s. He states that utilities nuclear spendings/investments can be divided into four clusters (1) the frst investor-owned utilities fnanced and owned projects (1955-1963); (2) the three rounds of the AEC's Power reactor demonstration program (1955-1963); (3) the turnkey years (12/63-1966); and (4) the bandwagon market (1966-1969). An-

other important work was done by Harding (2007), who analyzed about 60 plants in the U.S. with respect to their investment costs. His fndings show that a rapid growth in investment costs took place already over the period from 1955 to 1995.

For the USA the overnight construction costs (ONC) of the frst reactors built in the early 1970s was about \$10002008 per kW. It has increased steadily ever since reaching \$50002008 per kW for the recent reactors built in the early 1990s (Rangel et al. 2013). In other words, a one-to-fve ratio in constant USD. Te increase in the overall construction costs is even more striking. Te average construction duration has increased with time, so interest during construction has increased too. Te time taken to build an NPP has risen from between four and six years for the frst plants to more than twice as long for the most recent units.

With respect to investment costs an important aspect is the diference between so-called ONC and actual investment costs. It is important to note, that there is a fundamental diference between ONC and the net present value (NPV) of the investment costs, the major diference being that the overnight costs do not include the interest costs of fnancing depending on the plant construction time. As already said the plant construction time does not in itself increase costs other than the interest costs, although if delays refect difculties in construction, these might also increase costs.

Of specifc relevance in this context is interest during construction (IDC). During the 80s, there were big battles in the USA between regulators and utilities with utilities trying to get consumers to pay IDC before the plant was on line. Mostly the regulators (rightly) did not give in. US regulation should require utilities to build facilities and only when the facility is complete and the regulator has applied the test of 'used, useful and costs prudently incurred' should the utility be allowed to start to recover its costs from consumers. If a utility fails the test, some or all of the money spent by the utility should not be included in the regulatory asset base and these costs must come out of profts. It was regulators applying this test and threatening to disallow costs that stopped nuclear ordering in its tracks in the USA in 1979 (and led to the cancellation of 100+ orders placed afer 1974). So, from an economics point of view this was very important. Without the guarantee of cost pass-through, the banks, credit rating agencies etc made it clear to utilities that building a nuclear plant would be potentially ruinous.

For the fnancial institutions, delays in construction times and corresponding increases in interest payments play a major role. In addition, almost all modern reactor programs analyzed in detail to date have experienced signifcantly lengthened construction times particularly in the USA and Europe. Use only of overnight construction costs e.g. by Lovering et al., 2016 means that some of the fnancial consequences of construction delays is ignored.

ONC has been used in the utility industry for decades (Koomey et al., 2017, EPRI, 1993; Rothwell, 2015), and they attempt to show a cost that is "meant to isolate the cost invariant to construction duration (Koomey et al., 2017) and interest rate, in order to capture the cost intrinsic to the reactor technology", as Lovering et al., 2016 put it. Despite the use of the term "overnight costs" having a long history, there is simply no economic basis for comparing the costs of reactors without including the cost of capital and the construction duration. However, it is not invalid to look at overnight costs. Te argument is that adding in interest costs muddies the picture because you don't know if costs have gone up because interest has increased or because the underlying construction cost has gone up.

A key aspect of nuclear reactors that makes them such high-risk investments are that they are large scale, complex, and pre- dominantly site-built. Hence construction takes years (even in the best case) and can extend over a decade or more (Koomey et al., 2017).

Given that fnancing constitutes a signifcant part of the electricity generation costs of an NPP, and that the very nature of nuclear power as a large scale, capital-intensive technology makes it particularly sensitive to fnancial risks, a study that does not take account of interest during construction cannot give a true picture of the costs of nuclear power.

Another major historical analysis on the development of investment costs of NPP has been conducted by Grübler (2010). He investigated all 58 of the French plants in service in 2018 based on an analysis of costs presented in annual reports by the French government. Of specifc interest is Civaux in France a N4 type reactor with extremely high costs. However, regarding the four N4 plants (two each at Civaux and Chooz in France) there were clearly design issues that delayed them. Tey might have been part of the trend but without these plants the trend is still there. Tere was a trend of cost escalation amongst the other 54 that did not have these design issue problems. For the French case the cost assessment done by Grubler (2010) pointed out that the units completed afer 1990 were 3.5 times more costly than the reactors installed in the 1970s. Tis fnding led to the conclusion that cost escalation was inherent to reactors, given that even under the best conditions, as prevailing in France the construction costs have also risen signifcantly. Tese favourable factors included more standardization than was achieved elsewhere, predictable series production allowing efcient production line methods to be used to manufacture parts and learning was concentrated in only one reactor vendor and one utility, which also managed the construction process.

Grubler's analysis was a seminal contribution because it led to the publication of the actual costs of the French nuclear power plants by plant. Te so-called negative learning found by Grubler for the French case was shocking and led to discussion

of this concept. However, the term "negative learning" may lead the reader to think too narrowly. We are skeptical that lost skills account for much of the increased cost and rather think that it is much more about increased scope of the plants, greater complexity which makes the power plants more difcult to build.

Rangel et al. (2013) revisited the French nuclear experience using the actual construction costs of the French nuclear feet that had been published in a report by *Cour de Comptes* and they found positive learning efects when building the same type of reactors as a result of Grubler's work. With this information they have tried to identify investment costs' main drivers and found some lessons to explain the cost escalation phenomena. Regarding 'same type of reactors' it is important to state that there were 4 diferent 'tranches' of 900MW reactors, Programme 1970 (6 reactors), CP900-1 (16), CP900-2 (8), Tranches 900 (4). And there was CP-1300-1 (20) and N4 (4), Tomas (1987).

Tey stated the importance of recognizing that the centralized nature of the French NPP programme not only allowed a fast deployment of this technology but also shielded its costs from private eyes and public scrutiny. As argued by Rangel et al. (2013) the cost escalation with the Cour de Comptes (CdC) data was less severe. On the basis of the analysis of the Cour de Comptes report there would be reason to believe that the construction cost escalation in France is mainly due to the increase in the labor costs but also due to the scaling-up strategy. No economies-of-scale were observed, rather diseconomies of scale. However, Grubler (2014) argues that the CdC data are heavily biased and omit arbitrily important construction costs components. He compares his estimates with CdC (corrected for omissions) criticizes that Rangel and Leveque (2013) have compared the lowest CdC numbers (73 billion) to the best-guess model estimates 89 billion reported in Grubler (2010), and that Rangel et al. (2013) reached the pre-mature conclusion of a signifcant overestimation of costs and resulting cost escalation of the Grubler costing model. Te low end of the range uses the CdC's original estimate excluding construction engineering and labour costs, and considers the Tricastin 3,4 versus the Chooz 1,2 reactor costs as reported in CdC 2012: 22–23; the high end of the range uses the CdC costs adjusted to include construction engineering and labour, plus the 13 to 23 billion Euro2010 accrued interest during construction

Another specifc phenomenon is the issue of economies-of-scale. It has generally been assumed that nuclear power plants would be amenable to scale economies. Te bigger the cheaper was a basic approach. However, there has not appeared any empirical evidence to prove this assumption. On the contrary, studies from the 1970s showed no evidence of scale economies. E.g Cantor/Hewlett (1988) calculated that a 1% increase in the size of a reactor resulted in a 0.13% rise in the ONC per kW. Following Leveque (2015), for France the increase in the reactor size was accompanied by greater complexity and lead-times which in turn led to higher investment costs per MW. How far this greater complexity was the result of increased scale and how far it was due to the larger reactors being more recent and therefore requiring additional safety systems, for example to take account of Tree Mile Island, is diffcult to determine. In addition, a key potential infuence is so-called economies of number, ie the more per year you make of a particular item, e.g. a unit of a power plant (same size) the cheaper the production is because the fxed costs of production lines is spread more thinly and more efcient production methods can be used.

In 2016 Lovering et al. conducted an analysis on the ONC of 58% of the nuclear reactors world-wide. In that article the authors purport to show that using this larger dataset yields more representative results than analyses that focus on individual countries explicitly citing Koomey et al. (2007) for the United States and Grübler (2010) for France as examples of country-level treatments. Tis work was heavily critiziced by Koomey et al. (2017). Koomey et al. argue that construction duration and interest payments are integral parts of the overall construction costs. Another issue with the work by Lovering (2016) raised by Koomey et al. was the reliability of the data they added. Tey included reactors of several designs, eg heavy water reactors (HWRs) going back a long way to prototype and demo plants and from countries like India, Korea, China where there must be doubts about the reliability of the data.

Te big picture with respect to a comparison of major studies on the historical development of investment costs of nuclear power plants is provided in Fig. 2. It provides a descriptive analysis of data of diferent studies and single plants. As seen over time a considerable uptake took place. An important aspect is that for OLK3 and FLA3 initially much lower costs were expected than reported before e.g. by Grubler (2010) for France in 2000. Te latest data suggest that the ONC for Olkiluoto 3 will be about €8bn, the latest estimate for Flamanville is €10.9bn.7 Tese are plants where almost everything possible to go wrong has gone wrong yet they are cheaper than Hinkley Point C (HPC) which is only expected to start construction between 2019–21 and whose latest cost estimate is £9.8-10.15bn per reactor or about €12bn. Is that because HPC is really more expensive than FLA3 or OLK3 or because the HPC estimate is so padded to prevent cost escalation falling on the owner?

<sup>7</sup> https://uk.reuters.com/article/us-edf-famanville/edfs-famanville-reactor-start-againdelayed-to-2020-idUKKBN1KF0VN (Accessed August 22, 2018)

**Fig. 2** Te big picture: A comparison of major studies on the historical development of investment costs of nuclear power plants

It is important to state that Hinkley Point is unusual amongst nuclear projects because the investment costs and total cost are in advance set relatively high. It is the frst time, that the investment costs of a NPP are in advance estimated to be on a higher level than all NPP constructed so far (or under construction).

#### **4 Technological Learning**

Te next issue we discuss is Technological Learning. It goes in principle along with the dynamic development of investment costs of any technology. Te idea is that it is well known that the cost of a technology is expected to drop as it is deployed more widely. Tat is to say, it is of interest to identify whether with increasing capacities deployed a decrease in investment costs took place. Some major references is in this context are Wene (2000), McDonald/Schrattenholzer (2001), Kobos (2006), Wiesenthal et al. (2010). On learning, one has to be careful. Te original Arrow defnition (Arrow 1962) was very narrow and encompassed better performance using the same capital stock. In short the workers simply got better at using the equipment. Tis may be too narrow but it is probably useful to distinguish between design changes that arose because technical change/progress allowed new options to be pursued and design changes that resulted from experience with existing designs.

Nuclear technology displays the opposite trend to reductions in cost. We think that there are four factors that would lead to lower costs for a normal successful technology: economies of scale, economies of number, learning by doing and technical progress. Actually, we are convinced that learning has taken place, but it either hasn't reduced costs or other factors have swamped learning cost reductions. For example, the experience at Tree Mile Island was certainly learning but it increased costs. We think it is important to really distinguish and accurately separate these efects which are quite distinct. Of course, this is not easy. A key phrase may be 'a successful technology'. It might be that technologies that do not have scope for these efects fail for that reason. Te problem with nuclear is that it was not allowed to fail. In addition, as Leveque states, all other things being equal, the more powerful the reactor, the smaller the number of identical units built.

With respect to Technological Learning for NPP the following is important: Even in the times of booming plant construction in the 1970s and the 1980s nuclear was one of the few exceptions in the sense that additional capacities constructed did not lead to resulting cost reductions. Tey are mainly that for the early plants no real costs were revealed. Costs were distorted by public subsidies, subsidies from industry (from the constructors of plant to get into the market) and of fnancing subsides due to very favourable interest rates. Over the course of time these subsidies were gradually removed and costs increased instead of following the classical learning theory. In addition, it is worth mentioning that learning could increase costs, e.g. if a cheap material is not good enough, or existing designs are not safe enough.

#### **5 Historical developments of construction times**

One major reason for the increases in nuclear generation costs is the increase of construction times. As an example Grubler (2010) analyzed the historical development of construction times of nuclear power plants in France between 1965 and 2005. His results show that up to 1985 the majority of construction times were between 60 and 84 months. Afer 1985 the average duration increased in a virtually linear way. In this view for France also the frst announcement for the construction time of FLA-3 was included. It is by no means clear what was the intention beyond this cost announcement and the corresponding construction time of fve years (see

later) because the construction times for the plants built in the years before were already signifcantly higher, twice as high and more. Obviously, the intention was to convince decision makers that FLA-3 would be economic. Te forecast cost (€3.2bn) and construction time (fve years) for Flamanville were signifcantly lower than the most recent experience but more realistic fgures would have made the project hard to justify. Fig. 3 shows the increase in estimated construction times for fve typical cases world-wide. Te graph should be read as follows: On the vertical axis are the construction times indicated in months. Te lines show how they increased or remained stable over time. E.g. for OLK-3 in 2004 the estimate for the construction time was 60 months in 2018 it is 200 months (Source: Platts, Power in Europe, various issues).

**Fig. 3** Increase in the delays of construction times for fve typical cases world-wide

#### **6 Lessons learned from the developments of Flamanville and Olkiluoto**

Another major question is what caused the increase in construction duration of the NPPs in Finland, France and the US still under the construction. In addition, there was an increase in construction times in China and Russia for China from 2011 onwards and for Russia with the latest design. For instance, the construction of the frst European pressurized reactor (EPR) in FLA3 in France revealed that even when this reactor was initially thought as no more costly than its predecessor (the N4) this would not be the case.

At the beginning of 2005 the estimated cost of this project were €3.2 billion. However this fgure was revised in 2011, when the state-owned French company Electricite-de–France (EdF) announced that the costs had reached €6 billion. Tis situation even worsened with the latest press releases stating €8.5 billion in 2012 and 9.5 billion in 2016. Te latest estimate is €10.9bn (Platts, 2018).

For the Westinghouse latest design (AP1000) the situation for the two pairs of reactors (Summer and Vogtle) that started construction in the US is very similar. Te frst cost estimates done both in 2003 were around USD 2400/kW. Tese costs were later revised stating ONC in USD 2010 of 5100/kW. Te pattern is that all three Gen III+ designs that have started construction – EPR, AP1000 and AES2006 – have overruns of time much longer than their predecessors. In Russia and China, contemporary projects using earlier designs were much less delayed. Because Gen III+ has higher design safety, if this leads to greater complexity and makes them more difcult to build, contrary to the claims made for Gen III+, this will increase their costs and increase lead times which, if it refects construction problems will also increase interest costs.

#### **7 Summarizing the major reasons for investment costs increases of NPP**

In the following we summarize the major reasons for investment costs increases of NPP. As stated, so far there is no precise and comprehensive analytical evidence that explains the skyrocketing of the real costs of NPP that have occurred since the beginning of nuclear power use. Our explanations for the major reasons for the cost increases are:


Other possible reasons for the cost increases are:


#### **8 Conclusions**

Looking back to the years of the nuclear dream in the 1950s and 1960s one of the major historical arguments by the promoters for generating electricity from nuclear power was its low costs compared to other electricity generation technologies. However, from the frst wave of nuclear reactors construction costs have been on an escalation course. To date no systematic analysis on the reasons why the costs – especially the investment costs – of NPP have skyrocketed, has been conducted. Tis work is the frst that presents the major reasons for investment costs increases in a systematic structured way.

Te major conclusions of this analysis are: Tere is one core perception regarding the costs of nuclear power plants in recent years: actual costs have always been higher than stated prior to construction and construction times have always exceeded those promised, in most cases considerably. In addition, Western companies have lost skills, and are even less able to construct plants on time, with huge delays leading to construction times two or even three times longer than planned. For nuclear power plants in Western Europe and the U.S. in the last 40 years it can be stated that (i) forecasts of construction times have never been reliable; (ii) forecasts of investment costs have seldom if ever been fulflled, actual investment costs were always higher than costs announced; (iii) currently there are no signs anywhere of a cost decrease.

What can be stated today is that the economic performance of new nuclear power plants, particularly in the Western countries, has declined substantially compared to their predecessors and to competing power generation technologies. Te costs of nuclear power have increased dramatically while on the other hand the costs of wind and photovoltaics – now the major competitors – have fallen the economic performance of nuclear in comparison to these renewable technologies is getting worse.

It will be become much harder for nuclear to recover money in renewable-based electricity markets – much less base load needed – even the pure operation & maintenance costs are difcult to recover in today's electricity markets leading to more and more unfavourable future prospects of nuclear from an economic pointof-view (MIT 2003). In addition, the introduction of competition to electricity markets means the fnancial risks that were previously borne by the customer must now increasingly be borne by the investors. Because of these risks faced in competitive electricity markets, interest rates have risen and "investors tend to favour less capital intensive and more fexible technologies". Or as an infuential interdisciplinary study conducted at the MIT as long ago as 2003 stated "Today, nuclear power is not an economically competitive choice". In addition, as Leveque

(2015) states: "unless nuclear industry moves away from the present model of large, non-modular plants and gigantic construction projects, the investment costs of NPP are likely continue to rise."

Given the identifed reasons for the cost increases – and their irreversibility – we state that the time of "cheap" electricity from nuclear power is undoubtedly over – regardless, whether it has ever existed – and for the next years there are no signs of a reversal of current upward going cost trends.

#### **References**


EPRI Electric Power Research Institute, 1993. TAG-Technical Assessment Guide:Vol. 1: Electricity Supply-1993. EPRITR-102276-V1R7.


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## **Renewable Energies versus Nuclear Power Comparison of Financial Support Exemplifed at the Case of Hinkley Point C**

Gustav Resch, and Demet Suna1

#### **Abstract**

Te energy policy debate in Europe has set (industrial) competitiveness high on the agenda. Support for renewable energies (RE) was in debate and partly suspended. Te recent discussion on supporting nuclear power in the UK has, however, demonstrated that renewables are not the only low-carbon option that requires fnancial incentives under the current framework conditions. Te aim of this paper is to compare the costs of state aids necessary for constructing new nuclear power plants for the example of the planned plant at Hinkley Point C in the UK with support incentives for RE.

For doing so, a static and a dynamic approach are followed: Te static approach compares today's support incentives for renewable energy with the state aid for Hinkley Point C, whereas for the dynamic approach a model-based assessment of future RE deployment up to 2050 in the EU is undertaken. Tis is done by use of the Green-X-model (www.green-x.at) and incorporates the impact of technological learning (future cost reductions) as well as aspects of market integration of variable renewables like solar and wind.

<sup>1</sup> Gustav Resch, Technische Universität Wien, Austria, resch@eeg.tuwien.ac.at; Demet Suna, AIT Austrian Institute of Technology, Vienna, Austria, demet.suna@ait.ac.at

Te assessment is conducted at EU level and for selected EU countries where nuclear power plays a role at present or is considered as a viable future option. From an analytical point of view we undertake an evaluation of efectiveness (i.e. amount of electricity generation stipulated) and economic efciency of RE and nuclear power support for today and for the future.

#### **1 Introduction**

Te European Union is divided on the issue of electricity production. While there is consensus that generation technologies need to be low on greenhouse gas- emissions, the question of whether to use renewables or nuclear to meet this power demand is highly controversial. Both options still require fnancial support and this is not going to change in the near future. Tis raises the question of where our money should be invested in order to achieve greater economic efciency: into support for renewable energies (RE) or support for nuclear power plants?

Tis paper sets out to answer this question. Te recent state aid case for the construction of the nuclear power plant Hinkley Point in United Kingdom serves as the model for the nuclear option. Afer discussing the costs for the nuclear model, we undertake an overview on existing support schemes for renewables in the European Union. Next to that, we conduct the prospective comparative assessment. Here a detailed model-based scenario assessment serves as basis for estimating future cost developments concerning renewable energies. Tis is then again contrasted with the nuclear model derived from the Hinkley Point case. Finally, conclusions end up this paper.

#### **2 Background – existing and planned support for nuclear power and renewable energies**

Tis section is dedicated to shed light on support schemes for low-carbon energy technologies, specifcally nuclear power and renewable energies in the electricity sector. Here the planned support scheme for the new nuclear power plant at Hinkley Point in United Kingdom serves as the model for the nuclear option. Afer a brief recap on the planned support scheme, classifed as state aid, we lay down the resulting costs for the nuclear model case. Next to that we take a closer look at renewable energies, undertaking an overview on existing support schemes for renewables in the European Union.

#### **2.1 New milestone in nuclear state aid: Hinkley Point**

Te launch of a state aid scheme for a new nuclear power plant at Hinkley Point C in the United Kingdom has been heavily debated across Europe since it has represented a change in paradigm concerning nuclear power. While in the early years of the nuclear built-up there have been arguments for very cheap nuclear electricity in future, new cost fgures and specifcally the requested support for Hinkley Point C have set an end to that myth. Below we recap some key fgures and facts that could be extracted from ofcial documents and public statements on that subject.

Te NNB Generation Company Limited (NNBG), part of EDF Energy, plans to construct and operate a new NPP, consisting of two units with an electrical cumulative capacity of 3,260 MW, and an estimated electricity production of 26 TWh per year at the Hinkley Point NPP site (Hinkley Point C 1&2). If constructed, Hinkley Point C would be the UK's frst new reactor since 1988.

Te construction costs of Hinkley Point C were frst estimated to be ca. € 19 billion (EDF, 2013), but were corrected by the EC to € 31.2 billion, and overall capital costs are assumed to be € 43 billion (EC, 2014a). To cover such enormous investments, EDF has undergone lengthy negotiations with the UK government. Te start of the operation is supposed to be in 20232 with expected operational lifetime of 60 years. Te key terms of the fnal agreement between EDF and the UK government contain the following provisions:

#### **Financial support based on "contract for diference" model**

Te agreement took the form of a so-called "Contract for Diference" (CfD): if the wholesale prices for electricity fall below an agreed strike price, then the Secretary of State will pay the diference between the strike price and the wholesale price, ensuring that NNBG will ultimately receive a fxed level of revenues. When the wholesale price is higher than the strike price, NNBG will be obliged to pay the diference to the Secretary of State. Te duration of the contract is 35 years for each of the two reactors.

<sup>2</sup> Our analyses are based on the initial operation start time of 2023, and any update on this issue could not be taken into consideration. Nevertheless, the readers should keep in mind that as of September 2013, a delay of start date is expected (Gosden 2015).

Te strike price is set at € 108 per MWh (expressed in real terms, as of 2012). If EDF constructs a second nuclear power plant at another site (i.e. Sizewell C) using the same design, the strike price would become €104 per MWh. Te strike price will be fully indexed to the Consumer Price Index, meaning that based on current assumptions concerning infation, this would translate into a nominal strike price of € 329 per MWh in 2058 (as the last year in which the CfD scheme applies).

Afer the modifcations urged by the European Commission, a gain-share-mechanism for the overall profts will be in place for the entire project's lifetime, namely 60 years. If the construction costs are lower than expected, these gains will also be shared (EC, 2014a).

#### **Credit guarantee**

Te NNBG will also beneft from a credit guarantee issued by the UK Treasury. Tis guarantee would signifcantly reduce EDF's risk exposure and therefore the cost of capital. Afer the modifcation in 2013, the guaranteed fee that the operator must pay the UK Treasury was signifcantly raised, resulting in an efective reduction of the subsidy by more than € 1.3 billion. (EC, 2014a). Table 1 summarises the main characteristics of the planned NPP at Hinkley Point C.


**Tab. 1** Main characteristics of Hinkley Point C

European regulations allow Member States to determine their energy mix within their national competence. However, when public money is spent to support companies, the European Commission must verify that this is done in accordance EU rules on state aid. Terefore the UK's support scheme was investigated in 2013. During this investigation, the UK was required to modify the terms of the project fnancing. In October 2014, the European Commission concluded that "the modifed UK measures for Hinkley Point nuclear power plant are compatible with EU rules" (EC, 2014a).

Te October 2014 decision of the European Commission has led to massive protests. Te protesters include the Republic of Austria. Based on a legal study, Austria regards subsidies for nuclear power reactors as inacceptable according to EU legislation (BMWFW, 2014).

#### **2.2 EU support for renewable energies**

As outlined in detail in the RE-Shaping study (see Ragwitz et al., 2012), the frst decade of the new millennium was characterized by the successful deployment of RE across EU Member States – total RE deployment increased by more than 40%. More precisely:


Tese impressive structural changes in Europe's energy supply are the result of a combination of strong national policies and the general focus on RES created by the EU Renewable Energy Directives in the electricity and transport sectors towards 2010 (2001/77/EC and 2003/30/EC).

Despite the challenges posed by the fnancial and economic crisis, RE investments were generally less afected than other energy technologies and partly increased even further over the last couple of years. Te European Energy and Climate Package is one of the key factors that contributed to this development. Te EU ETS (Emissions Trading System) Directive has introduced full auctioning post 2012, thus exposing fossil power generation to the full cost of carbon allowances, at least in theory. In practice, an oversupply of allowances has however led to a deterioration of prices on the carbon market.

Te pathway for renewables towards 2020 was set and accepted by the European Council, the European Commission and the European Parliament in April 2009. Te related policy package, in particular the EU Directive on the support of energy from renewable sources (2009/28/EC), subsequently named RE Directive, comprises

the establishment of binding 2020 RE targets for each Member State – in line with overall EU target of increasing the RE share to 20% by 2030.

Later on, the EU Energy Roadmap 2050 gave frst signals of renewable energy development pathways beyond the year 2020 and identifed renewables as a "no-regrets" option. In a next step, Europe's way forward towards 2030 has been discussed intensively. Tus, at the Council meeting of this October (2014) the next step was taken: A binding EU-wide RES target of achieving at least 27% as RES share in gross fnal energy demand was adopted. Tis has to be seen as an important frst step in defning the framework for RES post 2020. Other steps, like a clear concept for, and an agreement on the efort sharing across Member States have to follow.

Concerning fnancial support for RE, various policy instruments have been implemented across EU Member States to promote the use of RE (cf. Box 1). Although there are already substantial experiences with the use of support schemes, the dynamic framework conditions have led to a continuous need for reforming the applied policies. Also policy priorities have changed in most Member States. Whilst the policy efectiveness or the ability of support instruments to trigger new investments was a main policy target while the RE-share was still negligible, economic efciency has become increasingly important in the light of higher shares of RE, rising support costs and the fnancial crisis. In particular the strong growth of photovoltaics in some Member States has enhanced this change of policy priorities. Te stronger focus on cost control mechanisms has led to a revival of tender or auction mechanisms to control the additional RE-capacity eligible for support and to determine support levels in a competitive bidding procedure. Another highly relevant issue regarding renewables support is related to the increasing share of intermittent RE leading to evolving requirements for efective electricity market design. While initially fair remuneration of RE power in the market should be a priority for market design, a more systemic focus on system fexibility should be adopted with a rising share of RE. Tis is refected in several market design parameters, e.g. how the system matches temporal profles of diferent generation and load types and how it accommodates the spatial profle of intermittent RE generation.

#### **Box 1** Support schemes for electricity from renewable sources

Globally as well as within the European Union, a feed-in tarif (FIT) system is the most common policy instrument for promoting electricity generation from renewable energy sources (RES-E).A quota obligation with tradable green certifcates (TGCs) is another widely implemented support scheme. Tese main instruments for RES-E are ofen accompanied by complementary instruments like grants

ofering investment support, fscal incentives (e.g. tax reductions) or (cheap) loans. Te two main support instruments can be characterised as follows:


#### **3 Method of approach**

Renewable energies were compared with the nuclear option by looking at the quantities of power they can both generate and the level of fnancial support this requires. Tis mirrors the extra costs which must be borne by the end consumer or society. Five diferent renewable technologies were analysed: biomass, onshore and ofshore wind, small-scale hydropower plants and photovoltaics.

In brief, the static approach compares the current (as of 2013) level of incentives for renewables with the state support mechanism for Hinkley Point. Te dynamic approach, in contrast, also considers additional factors including future cost reductions achieved through increasing technological experience and aspects of market integration of variable renewables like solar and wind power. Te dynamic approach has been calculated up to 2050; the nuclear option is added from 2023 onwards (planned start-up for Hinkley Point C). Te dynamic calculation applies a detailed model-based analysis using the Green-X-model (www.green-x.at). Tis model takes into account a multitude of factors including costs, potentials, regulatory frameworks, difusion constraints like non-cost barriers, electricity prices and energy demand,

all of which have a strong impact on the economics of power generation. Below we provide for the interested reader further insights on both approaches taken.

#### **3.1 Static approach: comparison of planned support for nuclear with existing RE support**

Te level of fnancial support paid to the supplier of nuclear as well as of electricity from the renewable energy sources (RES-E) is a core characteristic of a support policy. Actual support levels are, however, ofen not directly comparable, and details of the support policy applied, including main instrument like Feed-in-Tarifs (FIT) or quotas as well as complementary incentives, need to be taken into account.

For a comparative assessment of support incentives, the available remuneration level during the whole lifetime of a (RE) power plant has to be taken into account. Tis is also stated in a detailed assessment report of the performance of RE support policies in EU Member States (Steinhilber et al. 2011). To make the remuneration levels comparable, following the methodology applied in (Steinhilber et al. 2011), time series of the expected support payments per unit of electricity generated are created for each of the assessed options (i.e. biomass, small hydro, photovoltaic (PV) and wind (on- and ofshore) as well as nuclear power by country) and the net present value (NPV), representing the current value of overall support payments, is calculated. Afer that the annualised remuneration level is calculated from the NPV using a discount rate of 6.5% and following under each type of instrument a normalisation to a common duration of 20 years. Below Formula (1) and (2) show further details on the underlying calculation approach.

$$NPV = \sum\_{\kappa}^{N} \frac{SL\_{\kappa}}{(1+z)^{\kappa}} \tag{1}$$

$$A = \frac{z}{\left(1 - \left(1 + z\right)^{-N}\right)} \triangleq NPV \tag{2}$$

where:

NPV: Net present value;

SLt: Support level available in year t;


In addition, expected future wholesale electricity prices are normalised over the same time period. In the case of a quota scheme with tradable green certifcates (TGCs), it is assumed that the total remuneration level is composed of the conventional electricity price (wholesale electricity prices) and the average value of TGCs. Te results on remuneration levels, wholesale electricity prices or net support expenditures are expressed subsequently in real terms, using €2013.

#### **3.2 Dynamic approach: a prospective model-based assessment of planned support for nuclear with expected future RE support**

Te dynamic assessment follows the principles sketched above, assessing efectiveness and economic efciency (i.e. cost efectiveness) of RE and nuclear power support from a future perspective. Te approach taken builds on a model-based assessment of future RE deployment in the European Union and at country level for the UK up to 2050.

A scenario of dedicated RE support is assessed that follows the policy decisions taken, i.e. the binding 2020 RE target (of reaching a share of 20% RE in gross fnal energy demand), and that refects the European policy agenda for tomorrow where mitigation of climate change and the built-up of a sustainable energy system are expected to remain as top priorities in the period post 2020. Te scenario proclaims the prolongation of establishing enhancing framework conditions at EU level while national (or in future European) RE support instruments aim for setting the corresponding incentives to assure the achievement of European RE targets by 2030 and beyond. Complementary to fne-tuned fnancial incentives for RE this requires enabling framework conditions and a mitigation of currently prevailing non-economic barriers (i.e. administrative barriers and grid constraints that hinder the upscaling of RE deployment across Europe at present).

To derive the scenario, the Green-X model is used. Green-X is a dynamic simulation model for assessing the impact of energy policy instruments on future RE deployment and related costs, expenditures and benefts at technology-, sector- and country-level, that has been widely used in various studies at a national and European level, e.g. for the European Commission to assess the feasibility and impacts of "20% RE by 2020", and to explore policy options post 2020 – for a detailed description of this model we refer to (Green-X, 2015).

#### **Future requirements concerning support schemes for RE**

Generally, the need to incentivise the deployment decreases for RE technologies thanks to technological learning. Technological progress and related cost reductions go hand in hand with the ongoing market deployment of a certain technology. Tis has been impressively demonstrated for example by the uptake of PV in Germany and other countries and the achieved signifcant decline of capital cost. But what has been observed for PV is by far not an exceptional case, it is rather an afrmation of a general empirical observation – i.e. the technological learning theory.

On the contrary, with ongoing market deployment of variable renewables like solar and wind we see however also an opposing tendency that ultimately may cause an increase in the need for fnancial support. Tis concerns the market value of the produced electricity that is fed into the grid. For these technologies it is becoming apparent that in future years (with ongoing deployment) a unit of electricity produced is less valuable than of a dispatchable RE technology like biomass where the plant may interrupt operation during periods of oversupply (because of massive wind and solar power infow) and correspondingly may low the wholesale power prices. Accordingly this may increase the required net support, determined by diference between total remuneration and market value.

Whether the cost decrease due to technological learning or the increase in support requirements due to a decreasing market value will be of dominance depends on the country- and technology-specifc circumstances. Tis will be analysed in further detail for all assessed energy technologies for the UK and EU 28 within the dynamic assessment.

#### **Overview on key parameters**

In order to ensure maximum consistency with existing EU scenarios and projections the key input parameters of the scenarios presented in this work are derived from PRIMES modelling (EC, 2013) and from the Green-X database with respect to the potentials and cost of RE technologies. Table 2 shows which parameters are based on PRIMES, on the Green-X database and which have been defned for this assessment.

More precisely, the PRIMES scenario used is the reference scenario as of 2013 (EC, 2013). However for this assessment, demand projections have been contrasted with recent statistics (from Eurostat) and corrected where adequate (in order to assure an appropriate incorporation of impacts related to the recent fnancial and economic crisis). Moreover, mid- to long-term trends have been further modifed to refect an adequate representation of energy efciency, assuming a proactive implementation of energy efciency measures in order to reduce overall demand growth. Here we base our demand trends on a detailed study led by Fraunhofer ISI, done on behalf of the European Commission (Braungardt et al. 2014).


**Tab. 2** Main input sources for scenario parameters

#### **4 Results**

Te **static approach** undertaken at country level provides a comparison of planned support for nuclear power at Hinkley Point C in the UK with existing RE support, that is, as implemented in 2013. Key outcomes of that are summarised in Fig. 1, indicating by RE technology the possible annual electricity generation that could be supported with currently implemented RE policies in analysed countries. For doing so, average remuneration and net support levels are taken as given. Note that generally a range of feasible generation volumes is depicted for the assessed RE technologies by country:


In accordance with Fig. 1, key results of the static assessment can be summarised as follows:

Under similar budgetary constraints, a higher amount of electricity generation appears feasible with wind onshore and small-scale hydropower plants compared to nuclear in all analysed


**Fig. 1** Comparison of expected annual electricity generation of Hinkley Point C with feasible volumes from assessed RE technologies by assessed country (Source: Own calculations)

Te static assessment as discussed above compares today's incentives for RE with a planned aid scheme for nuclear power that may become efective ten years ahead. Since partly signifcant cost reductions have been achieved throughout the last decade for several RE technologies it can be expected that ongoing technological learning will trigger additional cost decreases and, consequently, reduce the need for RES-E support in forthcoming years. Tus, complementary to the above, a **dynamic approach** is followed within this study: Building on the Green-X scenario of dedicated RE support and the therein sketched deployment of renewables in the EU28, a comparative assessment of future RE support with the planned subsidy for Hinkley Point C is undertaken for all assessed countries. More precisely, the years from 2023 to 2050 form the assessment period whereby 2023 is chosen since this is the year when Hinkley Point C is expected to start full operation. Within that assessment support expenditures for RES-E and nuclear power are contrasted and, fnally, the cost-efectiveness of the two distinct pathways is derived.

**Fig. 2** Future development of remuneration levels and corresponding market values of the assessed RE technologies (as aggregate) and of nuclear power across assessed countries and at EU28 level according to the Green-X scenario of dedicated RE support (Source: Own assessment (Green-X))

Fig. 2 shows the development over time of remuneration levels and the corresponding reference price for the assessed technology options, using weighted average fgures to determine market value and the remuneration level for the aggregated RE technology cluster that comprises the basket of assessed individual RE technologies. Tis graph shows these developments at EU 28 level (i.e. via dotted or solid lines)

while shaded areas indicate the ranges of expressed items occurring across assessed countries. Generally, the need for net support for a new installation in a given year can then be derived by subtracting the market value from overall remuneration. Tus, this allows for a frst interpretation of cost efciency:


Comparing cumulative electricity generation and corresponding support expenditures that would arise throughout the assessment period (2023 to 2050) an overall conclusion related to the cost efectiveness of the two distinct pathways (i.e. nuclear versus RE) can be drawn next. Results on specifc net support as derived by dividing cumulative support expenditures by cumulative electricity generation are shown in Fig. 3. Complementary to that, resulting cost savings at country as well as at EU28 level that would arise if the preferred option is followed are shown in Fig. 4.

**Fig. 3** Comparison of overall cost-efectiveness: Specifc net support for assessed RE technologies and nuclear power by assessed countries and at EU28 level according to the Green-X scenario of dedicated RE support (Source: Own assessment (Green-X))

**Fig. 4** Comparison of overall cost-efectiveness: Cost savings due to RE compared to nuclear power by assessed country and at EU28 level according to the Green-X scenario of dedicated RE support (Source: Own assessment (Green-X))

We would like to highlight the following As discussed above, net support is generally defned as the diference between total remuneration and the market value of the fed in electricity. If a new nuclear power plant like the one planned for Hinkley Point C is built in another country under similar support conditions as planned for the UK (i.e. same FIT level as set in the UK), the net support level would difer because of diferent electricity wholesale prices that in the case of nuclear power serve as determinant for its market value. In future years lower electricity prices than in the UK are expected for countries like France, Poland, the Czech Republic and the whole EU28 on average. Tus, a new nuclear power would consequently require signifcantly higher net support in these countries than in the UK. Tis would strongly increase the burden for consumer and/or the society, respectively.

Results on specifc net support as shown in Fig. 4 point out that supporting a basket of RE technologies as analyzed in this assessment leads to a higher cost-effectiveness than the planned support for the nuclear power plant at Hinkley Point C that served as nuclear comparator throughout this exercise. Tis statement is valid for all assessed countries as well as for the EU28:


#### **5 Conclusions**

Te level of fnancial support paid to a nuclear or a RE power plant is a core characteristic of the related policy intervention. Support instruments need to be *efective* in order to increase the penetration of energy sources (in this case RE and/or nuclear) and *efcient* with respect to minimising the resulting public cost, i.e. the transfer cost for consumers (society) over time.

Tis study assesses the efectiveness and efciency of support schemes in selected European countries for nuclear and specifc renewables (wind, hydro, PV and biomass) using two distinct approaches; a static and a dynamic comparative assessment.

Te **static comparative assessment** of the envisaged state aid scheme for the UK's planned nuclear power plant at Hinkley Point C contrasted with today's support incentives for renewables leads to the following conclusions:

Onshore wind and small hydropower plants (with the exception of the Czech Republic) represent the "least cost" option from today's perspective in all the countries analyzed. Consequently, if the planned annual support expenditures for Hinkley Point C were channeled into these RE options, then more carbon-free electricity could be generated. In contrast to above, PV and ofshore wind can be classifed as the most costly options from today's perspective (with the exception of Poland).

If Hinkley Point C were to be built in the assessed countries and under similar support conditions as those planned for the UK (i.e. same feed-in tarif level), then the net level of support would difer from country to country because of varying electricity wholesale prices. Wholesale electricity prices in the UK are currently among the highest in Europe. Prices in the Czech Republic and Poland are lower. Consequently, under the same feed-in tarif level as set in the UK, a new nuclear power plant would require signifcantly more net support (i.e. defned as the diference between remuneration and wholesale electricity prices for nuclear) in Poland or the Czech Republic than in the UK. In turn, this would strongly increase the burden for consumer and/or society.

Te static assessment, as discussed above, compares today's incentives for RE with a planned aid scheme for nuclear power that may become efective in ten years. As some signifcant cost reductions in RE technologies have been achieved over the past decade, we can expect that growing technological experience in this feld will trigger more cost reductions and, consequently, will reduce the need for RES-E support in coming years. Terefore this study also takes a **dynamic approach**: building on the Green-X scenario of dedicated RE support and its outline for the deployment of renewables in the EU28, future RE support has been compared with the planned subsidy for Hinkley Point C for all the assessed countries.

Tis analysis leads us to the following conclusions:

*• A constant level of remuneration, as guaranteed for nuclear power at Hinkley Point C in the UK, may lead to a high consumer burden in the early years, but thanks to expected increases in fossil fuel and carbon prices, net support will decrease over time.*

During the early years of operation at Hinkley Point there will be a signifcant gap between remuneration level and market value, in this case determined by the yearly average wholesale electricity price. However, this gap will reduce with time thanks to the expected increase in wholesale electricity prices (which goes hand in hand with an increase in fossil fuel and carbon prices over time).


In contrast, the ongoing market deployment of various renewables including solar and wind demonstrates an opposing tendency that may ultimately cause an increase in the need for fnancial support: the market value of the generated electricity that is fed into the grid. For these technologies it is becoming apparent that in future years (with ongoing deployment) a unit of electricity will be less valuable than that produced by a dispatchable renewable energy technology such as biomass where the plant may interrupt operation during periods of oversupply and wholesale power prices are correspondingly low.

Tus the net level of required support is determined by the diference between remuneration and market value. Whether the cost decreases resulting from technological learning outweigh the need for increased support as a result of the decreasing market value, or vice versa, depends on the country and technology-specifc circumstances.

*• Te assessment at country and at EU levels confrms that remuneration for renewables is expected to decline over time. Tis decrease is strong in the early years, followed by a slowdown and stagnation in later years. Contrarily, market*  *values for variable renewables are expected to more strongly decouple from average wholesale electricity prices.*

Te analysis, which considers selected EU Member States as well as the EU28 as a whole, indicates a strong decline in remuneration levels for renewables in the early years as a result of expected technological progress across all the RE technologies considered. Tanks to their dominance, this positive trend is driven by cost trends for onshore and ofshore wind and photovoltaics. With increasing deployment in later years, the merit order efect and the related decrease in market value of variable renewables applies. Ofshore wind is then mainly responsible for the small remaining gap, where average RE remuneration is higher than the market value, both at EU-28 level as well as in some of the assessed countries.

*• If we compare cumulative electricity generation and corresponding support expenditures we can draw an overall conclusion regarding the cost efectiveness of the two distinct pathways (i.e. nuclear vs. RE). Results for specifc net support clearly indicate that supporting a basket of RE technologies is more cost-efective than the planned support for the nuclear power plant at Hinkley Point C that has served as the nuclear comparator throughout this exercise. Tis statement is valid for all the assessed countries as well as for the EU28.* 

Te highest cost savings achieved through RE can be observed in Poland where following a RE pathway instead of nuclear would lead to savings in support expenditures of 74.5% whereas average savings in support expenditures for the EU28 as a whole are in the range of 37.1%. Finally, the UK comes last in the potential savings ranking, yet even in the UK it is economically benefcial to follow a RE pathway rather than the nuclear option, with cost savings of 8.4%.

*Acknowledgment.* Tis paper builds on an analysis conducted by e-think in cooperation with Austrian Institute of Ecology within the project "Renewable Energies versus Nuclear Power", cf. (Mraz et al. 2014). We gratefully acknowledge fnancial support from Vienna Ombuds Ofce for Environmental Protection (Wiener Umweltanwaltschaf).

#### **References**


renewable energy market. Report compiled within the European project RE-Shaping, supported by Intelligent Energy – Europe, ALTENER, Grant Agreement no. EIE/08/517/ SI2.529243. Fraunhofer ISI, Karlsruhe, Germany.


**Open Access** This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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## **Financing Nuclear Decommissioning**

Wolfgang Irrek1

#### **Abstract**

While more and more nuclear installations facing the end of their lifetime, decommissioning fnancing issues gain importance in political discussions. Te fnancing needs are huge along the Uranium value chain. Following the polluter pays principle the operator of a nuclear installation is expected to accumulate all the necessary decommissioning funds during the operating life of its facility. However, since decommissioning experience is still limited, since the decommissioning process can take several decades and since the time period between the shutdown of a nuclear installation and the fnal disposal of radioactive waste can be very long, there are substantial risks that costs will be underestimated and that the liable party and the funds accumulated might not be available anymore when decommissioning activities have to be paid. Nevertheless, these fnancing risks can be reduced by the implementation of transparent, restricted, well-governed decommissioning fnancing schemes, with a system of checks and balances that aims at avoiding negative efects stemming from conficts of interests.

<sup>1</sup> Wolfgang Irrek, Hochschule Ruhr West University of Applied Science, Bottrop, Germany, Wolfgang.Irrek@hs-ruhrwest.de

#### **1 Introduction**

By the end of 2017, 166 nuclear power reactors had been permanently shut down, of which 144 were in the process of dismantling or had already been fully demolished (IAEA 2018). Moreover, 64% of the operational nuclear power reactors in the world at this time were 30 years old or older, and are thus candidates for being shut down in the near future (cf. Fig. 1).

**Fig. 1** Number of operational nuclear power reactors by age (as of 31 Dec. 2017) (Based on IAEA, 2018, 78)

Tis will result into the need to dismantle, decontaminate and demolish these nuclear facilities as well as to undertake processing, conditioning and disposal of nuclear waste and spent fuel ('decommissioning')(Irrek et al., 2007). It is of paramount importance that the funding of these decommissioning activities will be adequate and available when needed in order to avoid negatively afecting the safety of citizens and natural environment. Although this has been principally known since early days of NPP operation (cf., e. g., Lukes et al., 1978), the political pressure to identify and implement respective solutions has only increased within recent years due to changes in the electricity markets in the course of liberalisation and transformation towards a sustainable energy system and the respective impacts on the economic situation of NPP operators and their mother companies, and due to more and more NPPs facing their end of operation.

In general, decommissioning fnancing needs are huge along the Uranium value chain. Underground uranium mines and mills, open pits, uranium and thorium processing, conversion, enrichment and fuel fabrication facilities, nuclear reactors, nuclear fuel reprocessing plants, interim storages and further nuclear installations have to be decommissioned in a way that human beings, fora and fauna, air, soil, open and ground water sources will be protected against radiation exposure and radioactive contamination. Decommissioning and rehabilitation of the nuclear sites represents a challenge in ecological and economic terms for the former operators. Te amount of radioactive waste from all steps of the Uranium value chain adds to the complexity of task (Hagen et al., 2005).

Operators of nuclear installations are expected to accumulate all the necessary decommissioning funds during the operating life of facilities. However:


Terefore, this chapter will analyse


Based on this analysis, conclusions will be drawn and recommendations given for the design of safe decommissioning fnancing concepts. Te chapter will thereby focus on decommissioning fnancing of commercial nuclear power plants (NPP). However, the general fndings can also be transferred to other private or publicly-owned nuclear installations.

#### **2 Basic liability principles**

Nuclear liabilities of a NPP operator include liabilities for the dismantling, decontamination, demolition and site clearance of the nuclear facilities at the end of their lifetime as well as for the storage, processing, conditioning and disposal of nuclear waste and spent fuel. Tey arise with the start of operation of a nuclear facility, i. e. as the frst activation or contamination takes place, and usually increase with operation.

A main principle with regard to the distribution of liabilities is the 'Polluter Pays Principle'. In general, the Polluter Pays Principle is broadly accepted in environmental and economic policy. In theory, in a world of perfect information, perfect competition and full rationality of market actors, allocative efciency will be gained if all external costs are internalised into the market. In order to maximise the net beneft to the society, in principle, the NPP operators should be fully responsible for covering the full costs of decommissioning a NPP. Tis requires a clearly defned obligation to plan, implement and fnance all decommissioning activities including nuclear waste management and fnal disposal operations. Since the NPP operator does not earn money with the NPP afer its shutdown, all necessary fnancial means have to be collected during operation of the plant via the electricity prices to cover associated decommissioning costs. If decommissioning is not paid by those who have benefted from its operation inter- and intra-generational justice will not be ensured.

However, in contrast to theory, the Polluter Pays Principle is not fully implemented in every country. In some countries like Finland and Sweden, the 'Polluter Pays Principle' is a legal requirement, and there has been made substantial progress during the last ten years in several European countries with respect to better ensuring its implementation (Irrek et al., 2007; European Commission 2013; European Commission 2013a). But still in several countries, the liability of NPP operators ends with transfer of radioactive waste to a state-governed organisation. According to international law, the state has the responsibility for fnal disposal of radioactive waste. Terefore, fnancial liabilities for fnal disposal (and partly waste management, too) are not always fully with the 'polluters' but in some cases at least partly transferred to the state. For example (Irrek et al., 2007; European Commission 2013; European Commission 2013a):


Even in those countries, in which the Polluter Pays Principle is a legal requirement, a NPP operator will not be made fnancially liable for


However, the example of the German Asse II mine shows that unforeseen problems can arise afer closure of such a fnal disposal. From 1967 to 1978, 125,787 drums and waste packages containing low-level and intermediate-level radioactive waste were emplaced in this test repository. Te legal basis for this was mining law, not nuclear law, and there was no proof of long-term safety before the waste was disposed. Today, the large total volume of open drifs and chambers and the closeness of the chambers to the adjoining rock cause severe problems in the Asse mine. Te salt rock and adjoining rock loosen, and clefs have formed through which groundwater fows into the mine. Te severeness of this disposal problem has been increased by the fact that the inventory of radioactive waste in this mine is not exactly known, particularly with regard to the amount of plutonium disposed. It is now planned to retrieve the radioactive waste and to dispose it elsewhere (www.asse.bund.de; status: 08 May 2016). Te fees collected for the fnal disposal of radioactive waste during operation of the mine summed up to about Euro 8.25m, while current estimates for retrieval costs are between Euro 4–6bn (Kirbach 2009; N.N. 2013; www.atommuellreport.de; status: 08 May 2016). Tere has been some discussion in Germany on who should be made fnancially liable for these extra costs. In 2010, some German politicians (e.g., Kelber et al., 2010) argued that the introduction of the nuclear fuel tax could be justifed, among others, by the fact that the NPP operators have benefted from disposal sites like Asse II and thus should contribute to the additional costs that will occur.

Anyway, if such problems arise decades or hundreds of years afer the closure of the fnal disposal facility, the NPP operators might not exist anymore. Tis could also happen if problems arise during the fnal disposal activities decades afer the NPP shutdown. Terefore, full implementation of the Polluter Pays Principle cannot be 100% secured in any decommissioning fnancing scheme. Nevertheless, it should become a legal requirement and should be implemented as far as possible in every country with nuclear facilities in order to increase allocative efciency. Nevertheless, the implementation of the Polluter Pays Principle will only function well if there is a sufcient amount of transparency to the public in the interest of current and future generations of electricity customers and taxpayers. Terefore a requirement to ensure transparency should be added, which should include transparency of the following steps of decommissioning fnancing (Irrek et al., 2007):


Tese steps are analysed in more detail in the following chapters.

#### **3 Technical decommissioning strategies and time schedules**

In principle, there are three technical decommissioning (decontamination and dismantling) strategies for NPPs (Irrek et al., 2007; OECD/NEA, 2012; OECD/ NEA, 2016):

*• Immediate dismantling:*

Decontamination and dismantling immediately afer operation period. All contaminated material is removed or decontaminated to a level at which no more regulatory control is required. In this case, dismantling starts shortly afer the permanent shutdown of the NPP and might take between 15–20 years, with no unforeseen incidents happening. In case of unavailability of routes for the spent nuclear fuel, this is kept in an interim storage on-site, which might be decommissioned decades afer the demolition of the NPP has been completed.

*• Deferred dismantling (safe enclosure / safe storage):* First, spent fuel is removed from the facility. Te plant is then kept intact and in a safe and stable state to enable the radionuclides activity to decay until it reaches levels that reduce difculties of handling. Decontamination and dismantling

then starts several decades afer the permanent shutdown of the NPP. Deferral periods range between 20 and around 100 years, e. g. 25 years in Spain, 60 years in the United States, and a century or more in the United Kingdom.

*• Entombment*

Tis option involves encasing radioactive structures, systems and components in a long-lived substance, such as concrete. Te encased plant would be appropriately maintained, and surveillance would continue until the radioactivity decays to a level that permits termination of the plant's license and end any regulatory control. Most nuclear plants will have radionuclide concentrations exceeding the limits for unrestricted use even afer 100 years. Terefore, special provisions would be needed for the extended monitoring period this option requires. To date, no facility owners have proposed the entombment option for any nuclear power plants undergoing decommissioning. In fact, this is more an emergency option than a strategy option, so far used only in the case of Chernobyl.

Te choice of strategy depends on several parameters and framework conditions, the decontamination, dismantling and demolition stage aimed at, and the planning for the future use of the site. Operators of nuclear facilities usually take into account the following criteria when deciding on a dismantling strategy (Irrek et al., 2007; OECD/NEA 2016, 46):

*• Radiation protection*

Tere is one major argument for deferred dismantling which is radioactivity decay, as it will ensure the reduction of radiation hazard during dismantling and a reduction of volume of radioactive waste. Moreover, new techniques (e. g., robotics) might be invented that could further reduce radiation harzards. Finally, deferred dismantling might ease disposal routes for radioactive waste if a fnal disposal site is available by this time. On the other hand, with immediate dismantling, radiological characterisation is much easier and less costly. Moreover, there will be reduced efects of deterioration and ageing like corrosion.

*• Know-how of employees*

Immediate dismantling ensures the availability of qualifed and experienced workforce with internal knowledge on the design and history of the facility from its operation. On the one hand, immediate dismantling might ease a socially acceptable reduction in employed and contracted staf at the site of the nuclear facility afer the installation has been shut down (cf. Irrek, 2005). On the other hand, workers might not be motivated to demolish a plant where they had been working. Moreover, deferred decontamination and dismantling might make it easier to outsource dismantling activities at cheap labour costs because of existing wage diferentials between employees in the nuclear sector and employees of contractors.

*• Reuse of site*

Immediate dismantling allows an earlier reuse of the site, with respective economic efects for the region.

*• Costs*

A thorough evaluation and comparison of diferent strategies is needed in order to assess which strategy will be the least-cost while fulflling all the nuclear safety obligations. For example, for the deferred decontamination and dismantling strategy, it has to be taken into account in how far existing ancillary equipment can be used for decommissioning activities decades afer the end of operation as well as the costs for maintenance and surveillance. Moreover, economies of scale could be achieved if several similar plants are dismantled in co-ordinated manner. A general question is how much cheaper is it to outsource decontamination and dismantling activities or to carry them out in-house with existing know-how. Furthermore, total costs also depend on the availability of waste management, storage and disposal options, and on the decision about the use of the site for other purposes afer its release from radiological restrictions. However, such cost estimation is not an easy task. Diferent assumptions on the underlying decontamination and dismantling processes, on the technical feasibility of possible technical solutions and technical developments, on person-years needed, on labour, material/equipment and capital costs, on time horizons, and on developments of the labour market and the general economic environment can lead to diferent strategic choices.

*• Financial risks*

Risks and uncertainties of changes in benefts and costs have to be adequately taken into account because of all these possible infuences, time horizons of several decades are considered. For example, a long period of deferment not only gives the chance to yield interest over a longer period of time, but includes also a higher risk that the funds will be lost or will signifcantly lose value.

Te preferred decommissioning strategy can difer from case to case, even within the same country. In most cases, economic arguments with respect to expected fnancial benefts and costs as well as perceived fnancial risks are the decisive arguments for the operators to choose a specifc decommissioning strategy, particularly for privately owned facilities. However, there are also strategic or tactical arguments for particular decommissioning strategies of the NPP operators in the course of political discussions on the distribution of liabilities (cf., e. g., discussion in Germany on the possible fnal repository site). Nuclear safety authorities are mostly in favour

of immediate dismantling, particularly in recent years in the European Union. Te reasons given for this include the consideration that the risk of the loss of memory on the conception and operation of a facility will be signifcant.

#### **4 Identifcation and estimation of decommissioning costs**

Based on the decommissioning strategy and time schedule determined, cost planning starts with an identifcation and estimation of costs. Te direct comparison of decommissioning cost estimates generated for diferent plants by diferent cost estimate providers is limited due to diferent cost structures, diferent combinations of individual cost items, diferent methodologies applied and diferent ways of dealing with uncertainties. Tis holds true, even if the results are presented in a similar manner, e. g., by using the International Structure for Decommissioning Costing (ISDC). Following the ISDC, costs can be split up for principal activities as follows (OECD/NEA, 2012):


For each of these principal activities, on a second level, several activity groups can be distinguished. For example, according to ISDC (OECD/NEA 2012), pre-decommissioning actions consist of decommissioning planning, facility characterisation, waste management planning and further activity groups, each diferentiated on a third level into single activities (e. g., strategic planning, preliminary planning and fnal decommissioning planning). For each activity, labour costs, investment costs (capital, equipment, material costs), expenses (consumables, taxes, etc.) and contingencies (a specifc provision for unforeseeable elements of costs within the defned projects scope) should be identifed.

In many cases, cost estimates are bottom-up ones taken into account the specifc decommissioning activities required. However, there are also cost estimates by specifc analogy to similar past projects, by parametric estimating based on historical databases on similar systems and subsystems, by cost reviews that just look at those cost items to be updated or by rough expert opinion when other techniques or data are not available (OECD/NEA, 2015). As with other complex construction or deconstruction or other engineering projects, cost estimates are based on a number of technical and economic assumptions, and on assumptions infuenced by the political-administrative framework conditions. Terefore, there are fnancial risks to be taken into account in any ex ante-evaluation of decommissioning project costs. In practice, there are diferent methodologies how to take into account uncertainties and risks, for example (Irrek et al., 2007; Däuper et al., 2014; OECD/NEA, 2016):

*• Risks and uncertainties ignored*


Monte Carlo analysis and other quantitative modeling approaches can be used to simulate possible deviations from assumptions taken, if there are many independent variables with signifcant uncertainties. In the United Kingdom a combination of computational modeling with Monte Carlo simulation and

management judgement based on experience of previous projects leads to contingencies in the range between 1–24%.

In general, optimism bias can cause a NPP operator to believe that the respective NPP is less at risk of experiencing a future cost increase compared to others. Terefore, regulation has to ensure that adequate cost estimation methodologies are applied that properly take into account possible risks of cost increases. Moreover, international organisations and national authorities should ensure that information on costs of past decommissioning activities are widely spread and could be used for calculation of future costs. Information on past decommissioning activities and improved methodologies have led to substantial increases in cost estimates in various countries during the past 15 years (cf. OECD/NEA, 2016).

#### **5 Collection of decommissioning funds**

Afer the costs have been properly estimated, it has to be determined, if, when and how funds should be set aside at the beginning of and/or during plant operation. In general, any fnancing scheme should ensure and be managed and periodically reviewed in a way that sufcient funds will be collected during the lifetime of a nuclear facility and will be available at the time decommissioning and waste management expenses occur. Basically, the funding schemes can be diferentiated into (cf. also Irrek et al., 2007; OECD/NEA, 2016):


Accruals to an internal fund or contributions to an external fund are usually set up in regular installments or according to the electrical energy produced. For this, costs are usually infated up to the year they will incur, and then discounted to its current value to determine the size of the accrual. Since discounting rates are usually higher than infation rates, this leads to the sum of accruals or contributions being lower than the cost estimates. Tis, in turn, demands to yearly provide funds not only for the regular installment, but also for the diference between the present values of the actual year and the past year. Te determination of the infation and discounting rates is of central importance in any of these funding regimes. Only in few countries, provisions are based on undiscounted costs.

However, there are also funding regimes, where the full amount of costs has to be provided for from start of operation (Irrek et al., 2007; Däuper et al., 2014; OECD/NEA, 2016): For example, in France, since 2006, with a transition period until 2010, provisions for dismantling and decontamination of a NPP have to be fully collected already with start of operation. In Finland, a special requirement exists which, in principle, demands to cover the full nuclear liability already at the start of operation by special fnancial securities. In Sweden and in the Netherlands, with start of operation, NPP operators have to provide a guarantee for early shutdown.

**Fig. 2** Guarantees covering f nancial risks related to decommissioning costs occurring in case of early shutdown (Guarantee I) or af er f nal shutdown of the plant (Guarantee II) (Irrek et al., 2007, 152)

Such schemes substantially reduce the risk that the state will have to pay for early shutdown of plants and contribute to implementing the Polluter Pays Principle. In addition to such guarantees for early shut down (Guarantee I in Fig. 2), in some f nancing schemes, NPP operators have to provide additional guarantees for additional costs exceeding the cost estimates that might occur af er f nal shutdown (Guarantee II in Fig. 2). For example, in Finland, the state has the possibility to demand such guarantees up to 10% of the sum of liabilities. In Sweden, such guarantees amount to 16–17% of estimated costs. And in Switzerland, there partly is a joint liability of all operators in case one of the NPP operators cannot pay its contributions.

#### **6 Management and investment of funds**

A well-designed governance regime of the fund and a high level of quality of fund management is crucial for maintaining or even increasing the value of the funds so that sufcient funds will be available at the time decommissioning activities have to be paid. Funds can be managed by public or private fund managers. Specifc restrictions beyond general accounting principles and general accounting law can be imposed on managers of internal or external funds, e. g., with regard to (Irrek et al., 2007):


Typical examples of investment restrictions and guarantees required for internal or external funds in practice are (Irrek et al., 2007; Däuper et al., 2014; OECD/ NEA, 2016):


Actual performance of the funds difers depending on the investment restrictions imposed, i. e. on the degree of risk taken, and on the general economic situation.


#### **Tab. 1** Yield on investment of the Swiss decommissioning and waste management funds (quarterly reports)

\* Since 1 April 2017, there is a separated investment strategy for the NPP Mühleberg (KKM) compared to the investment strategy for the NPPs Beznau (KKB), Gösgen (KKG), Leibstadt (KKL) and for the interim storage Würenlingen AG (Zwilag); therefore the first number is relevant for KKM, the second fo KKB, KKG, KKL, Zwilag.

\*\* not including KKM

While the European Commission (2013a) recommends that a secure risk profle should be sought in the investment of the assets, ensuring that a positive return is achieved, a 100% security of a positive return over any given period of time cannot be guaranteed over the many decades of lifetime of such a fund. Moreover, there is a general tradeof between security and the yield on investment.

Te Swiss example in Table 1 shows that an investment strategy with up to 50% of funds invested into shares at the stock market can lead to comparatively high returns in some quarters of a year, but also to a decrease in funds value in others. If the liable company feeds the fund with discounted contributions, the fund will have to yield positive returns to make up for the diference between the cost estimate and the discounted value, or additional contributions by the liable company will be needed. Tis will be also required with a secure investment strategy, if there are negative real interest rates on safe investment into bonds of solvent states as it could be observed in some states recently.

Te internal unrestricted fund difers from the restricted solutions in one important aspect: Te provisions accumulated on the liabilities side of the balance sheet do not guarantee that there will be fnancial means available when decommissioning activities have to be paid. Te cash fow from the fnancial equivalent of the set-aside provisions can be freely used by the companies as a portion of corporate revenue.

In Europe, Germany is the only country where such an internal, completely unrestricted fund still exists for the dismantling and demolition of reactors and for the conditioning of radioactive waste. Here, no information is available on how nuclear power plant operators or their parent groups have invested the unrestricted funds from the nuclear provisions. A direct link cannot be drawn between individual liability items and individual asset items on a group's balance sheet. Just because provisions are set up does not necessarily mean that the funds are being invested to fnance dismantling and disposal. Groups can employ any type of fnancing whatsoever to provide future funding for dismantling and disposal activities (cf., e. g., Perridon et al., 2012, for the general fnancing options). Using the German groups E.ON and RWE as examples, the fnancing options can be investigated as follows:

• With regard to fnancing from current cash fow, one needs to consider that operating margins have fallen sharply in recent years and have been negative at times, while revenue and EBITDA have also fallen year-over-year in most of E.ON's and RWE's business divisions. Tere is no guarantee that the cash fow generated during the next years will be adequate to fnance higher provisions or pay for activities related to nuclear dismantling and the long-term storage of radioactive material.


While observing the availability of the groups' current fnancial resources to cover their obligations in the nuclear sector, one must also bear in mind that the groups must use their assets and cash fow not only for their nuclear provisions, but also to cover other obligations. Terefore, it is necessary to compare the groups' total fnancial resources with all of their assumed obligations. For example, for RWE, based on annual reports it can be calculated that the long-term fnancial resources at RWE's disposal at the end of 2016 were hardly sufcient to cover all of RWE's long-term obligations (own calculation based on annual company reports and Irrek / Vorfeld 2015).

#### **7 Use of nuclear decommissioning funds**

In general, decommissioning funds should be used only for the purpose for which they have been established and managed, i. e. to pay for decommissioning and radioactive waste management activities. Terefore, the degree of independence between the operator of a nuclear installation as the liable polluter and contributor to the funds, the company carrying out decommissioning activities and thus using decommissioning funds, the funds management and the position disposing of the power of authorising payments is a key issue in any decommissioning fnancing system.

In general, market actors in nuclear decommissioning business making use of nuclear decommissioning funds are the following:

• Operators of nuclear facilities, who beneft already during operation as well as afer shut-down, depending on the degree they are involved in the decommissioning activities. During dismantling it is important to make use of existing know-how of the personnel of the NPP operator;


**Fig. 3** Past and expected future yearly payment for decommissioning activities in Germany, following groups' balanced sheets and cost estimates by the NPP operators of 31 December 2014 including cost estimates for f nal disposal of HAW although there is no technical concept or site available yet (balanced sheets of E.on, RWE, EnBW and Vattenfall, 2003–2015; own calculation based on Warth & Klein Grant T ornton, 2015)


**Tab. 2** Profts and losses of selected companies active in the German decommissioning market (companies' income statements of 2014, 2015 and 2016 as far as available)

In Germany, following the shutdown of NPPs afer the Fukushima accident, decommissioning activities have increased during recent years (Fig. 3). It can be expected that the level of expenses will continue in the coming years when further NPPs will be shut down. With regard to the age of NPPs in the world (Fig. 1), a growth in international decommissioning expenses can be expected, too. In 2013, Nukem Technologies GmbH estimated, that the international market volume until 2030 could sum up to more than Euro 250bn. However, in general, as stated in AREVA's fnancial report of 2014, the international decommissioning market is only slowly developing yet. Te available income statements of selected companies active in the German decommissioning market show that several of them are still facing losses (Table 2).

Nevertheless, there are several attempts to reduce costs and thus losses. For example, Nukem Technologies expects that a 15–20% decrease in costs of decontamination and dismantling might be possible (Kutscher 2015). Possible optimisation includes the following:


It can be expected that international companies specialising in back-end activities like companies of the Russian Rosatom group like Nukem Technologies GmbH will be the frst benefting from such developments. Tis might lead to market concentration processes, which will be a challenge for governments aiming at getting insight and control of activities with respect to nuclear safety.

#### **8 Comparison of selected decommissioning fnancing concepts**

Existing European and international analyses of decommissioning fnancing schemes (Irrek et al., 2007; European Commission 2013; European Commission 2013a; OECD/NEA, 2016) show that fnancing schemes in practice substantially difer with regard to



Table 3 compares the fnancing schemes in Switzerland, Sweden and Finland from which can be particularly learned for future design of decommissioning fnancing concepts. In order to implement the polluter pays principle as far as possible and to ensure that governments will be able to control decommissioning activities with regard to nuclear safety, the following central questions have to be addressed when designing the governance scheme for nuclear decommissioning fnancing (Irrek et al., 2007):






defning the acceptable risk levels. A kind of oversight board or decommissioning fnancing committee could provide such guidance.

• Who manages the fund?

A sufcient degree of independence between the operators of nuclear installations (as polluters and thus contributors to the funds) and the investment managers is a key issue.


#### **9 Conclusions and recommendations**

In conclusion, with regard to the fnancial consequences and risks involved in the diferent nuclear decommissioning fnancing schemes, existing schemes could be improved by (Irrek et al., 2007; OECD/NEA, 2016):

• Measures that establish a system of checks and balances in the governance chain in order to avoid negative efects stemming from conficts of interests;


#### **References**


Wuppertal Paper No. 53, Wuppertal: Wuppertal Institute for Climate, Environment and Energy.



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**Legislation**

## **Nuclear Policy in the EU from a Legal and Institutional Point-of-View**

Dörte Fouquet1

#### **Abstract**

Te regulation of nuclear issues dates back as far as the foundation of the European Community. Te Treaty establishing the European Atomic Energy Community (EURATOM) was one of the founding treaties of the European Communities next to the Treaty establishing the European Coal and Steel Community (ECSC) and entered into force on January 1, 1958. Since then and unlike the other founding treaties, the EURATOM Treaty has never been signifcantly amended or reformed. Why?

To be able to answer this question, one must look at the legal conditions and political key messages for the setting up of the EURATOM Community. Te latter not only from within Europe but also from abroad. Due to the Members States' original compromise and the limits between what is controlled and regulated under the treaty and what remains in the discretion of the Member States, the EURATOM Treaty is clearly limited in its scope.

Te EU has no competences in regulatory felds such as operational safety of nuclear power plants, management and safe disposal of radioactive waste, storage or disposal facilities and decommissioning of installations. All these

*of Nuclear Power*, Energiepolitik und Klimaschutz. Energy Policy and Climate Protection, https://doi.org/10.1007/978-3-658-25987-7\_8

<sup>1</sup> Dörte Fouquet, BBH, Brussels, Belgium, doerte.fouquet@bbh-online.be

R. Haas et al. (Eds.), *The Technological and Economic Future* 

crucial objectives remain the sole responsibility of national authorities and are co-guided by standards adopted at the international level, especially under the framework of the International Atomic Energy Agency (IAEA). Te EURATOM Treaty then remains as the only sectoral energy policy impeding the integration of policy towards a democratic energy Union. Tis is refected by the European Parliament's role being rather that of an opinion-giving onlooker than a co-decision maker in matters related to nuclear regulation.

#### **1 Introduction: EURATOM – a treaty without harmony**

Te EURATOM Community and its Treaty establishing the European Atomic Energy Community (EURATOM) are marked by their inherent failure to achieve a joint common nuclear policy and establish a common interest of the European Communities, and later the European Union, in the development of nuclear energy. Instead, the EURATOM treaty has set the European energy landscape on a distortive pathway, which was foreshadowed by its limitations and conficts back in 1945.

In October 1945, the provisional French government under President Charles de Gaulle issued *ordinance* N° 45–2563 establishing the French "*Commissariat à l'énergie atomique*" in order for France to keep its place in the feld of nuclear research.2 Te Commissariat and its Committee were, at that time, directly attached to the Government and under direct tutelage of the French President.3 De Gaulle established this Committee weeks afer the nuclear bombing of Hiroshima and Nagasaki in August 1945. France was the only founding member of EURATOM that, alongside the civil use of nuclear energy, sought hegemony in military nuclear power and competed against the dominant position of the United States of America.

Article 1 of the *ordinance* clarifes : "*Le Commissariat à l'Energie Atomique poursuit les recherches scientifques et techniques en vue de l'utilisation de l'Energie Atomique dans les divers domaines de la science, de l'industrie et de la défense nationale*".

<sup>2</sup> See « Ordonnance N° 45–2563du 18 Octobre 1 945 (J.O. du 31 .10.45) et rectifcatif du J.0. du 3.11 .45) modifée par la loi n° 47–1497 du 13 Août 1947(J.O. du 14.8. 47) et par le décret n° 51 -7. du 3 Janvier 1951 (J.O. du 4. 1 . 51) ; copy online in

<sup>3</sup> See exposé des motifs : « …L'autorité de l'Etat sur la marche du Commissariat est d'ailleurs la contrepartie nécessaire de la liberté, tout à fait exceptionnelle dans notre droit public, qui' lui est donnée dans sa gestion. Pour assurer une consécration indiscutable à cette autorité, il est prévu que le Comité est présidé par le Président du Gouvernement Provisoire…. ».

France's continued research in the military use of nuclear energy resulted in its first bomb tests in 1960, eight years after the United Kingdom's test in 1952. The peaceful use of nuclear energy in France was as important as its wish to remain and grow as an independent nuclear military force in the World. Today, France, together with the United Kingdom, the United States of America, Russia and China, is one of the fve nuclear weapon states (NWS) under the Nuclear Non-Proliferation Treaty (NPT).<sup>4</sup> , with four undeclared or unrecognized states, with possibly more on their way.

When it came to purchase and choice of nuclear energy technology, none of the other founding states even showed strong interest in purchasing French civil nuclear technology. From the beginning of EURATOM, and even ahead of its ratifcation, these other founding Member States- Belgium, the Federal Republic of Germany, Italy, Luxemburg and the Netherlands- were more interested in ordering US technology for new nuclear power plants. A specifc agreement with the United States – the EURATOM Cooperation Act followed in 19585 , immediately afer the establishment of EURATOM.

Jean Monnet and others in Europe together with eminent non-EU politicians such as US President Eisenhower "*hoped that EURATOM would foster European integration*".6 As was outlined by the European Parliament's research unit in 2002: "*Sectoral integration of nuclear energy was chosen by Spaak and Monnet because it was viewed as less ambitious than a general common market or customs union, and therefore less likely to fail. Nuclear energy was an appealing prestige technology, especially afer the liberalisation of US nuclear policy. Te Euratom proposal was* 

<sup>4</sup> Te Principle of the NPT is that other states which were signatories eschewed the nuclear weapons option and in return were promised assistance in civil nuclear power development by the weapons states.

<sup>5</sup> EURATOM Cooperation Act of 1958 is a United States statute enabling a cooperative program between the European Atomic Energy Community and the United States. Following the US Atomic Energy Act of 1954, the cooperative program was designed to be an international agreement cleared the way for the United States to build nuclear power plants within the European Atomic Energy Community territory.

<sup>6</sup> In fact, Monnet afer the frst failures for more European institutions tried to push for a EURATOM treaty as integrating force and peace enforcing similar to the ECSC approach. Only, especially countries such as Germany did not want any EURATOM treaty without a Common market: "To Monnet's great surprise the German government was not interested in the new (EURATOM) Community, while Erhard, already credited with the German Wirtschafswunder, was openly opposed to it. A meeting with German ofcials established the basic fact of the coming negotiations, namely that Germany would not swallow EURATOM without a general common market…" Werner Kamppeter: Lessons of European Integration, April 2000, http://www.fes.de/analysen/kamppeter1\_1.html

*expected to appeal to the French, since France had a strong interest in the development of […] nuclear energy*"7

On the other hand, the United States was a keen competitor of France in view of the supply of nuclear power plants, having a competitive advantage at the time of the EURATOM negotiations.8 In addition, relations between France and the US were quite frail afer the Suez crisis in 1956.

Tis made France turn to its European neighbors rather than towards the United States9 for cooperation in nuclear issues but without wanting to give up dominion on its own nuclear policy.

France wanted to close the widening gap between itself and the United States' prolifc construction and sale of nuclear power plants. For France, EURATOM was the vehicle to stop American dominance in the supply of nuclear energy in Europe.

As was distinctly pointed out by Louis Armand, President of the French CEA (Comité de l´équipement industriel au Commissariat à l'énergie atomique (CEA)), during the EURATOM debate in the French National Assembly on 5 July 1956: "*Il est inutile d'attendre pour se demander si telle solution (EURATOM, d.Verf.) serait la meilleure. Je ne sais comment vous faire partager mon angoisse quant à l'urgence. Le temps presse et, si nous voulions faire de l'efet, je vous dirais que, pendant que* 

<sup>7</sup> O' Driscoll, Mervyn, European Parliament, Directorate-General for Research, Working paper, Te European Parliament and the Euratom Treaty: past, present and future, 2002,( ENER 114 EN), p. 36.

<sup>8</sup> Sebastian Wolf; EURATOM, the European Court of Justice, and the Limits of Nuclear Integration in Europe, German Law Journal; 12 (2011), 8. – S. 1637–1657, p. 1653; Dwight D. Eisenhower: " I am especially pleased to approve the EURATOM Cooperation Act of 1958, which enables the United States Government to begin active preparation for the Joint United States-EURATOM Program to develop nuclear power in Europe. EURATOM (Te European Atomic Energy Community), which came into being on January 1, 1958, was formed by six of our European friends--Belgium, Germany, France, Luxembourg, Italy and the Netherlands--in order to combine their eforts in developing the peaceful uses of atomic energy. It holds great promise, not only as a means to this end, but also as a means of furthering European unity. Our Joint Program, which is EURATOM's frst major program, is designed to achieve the construction in Europe of about six nuclear power reactors with a total installed capacity of about one million kilowatts of electricity and to improve power reactor technology through a research program of great scope. Tis Joint Program should prove highly benefcial both to Europe and to the United States."-Te EURATOM Cooperation Act of 1958 is Public Law 85–846 (72 Stat. 1084). Dwight D. Eisenhower: "Statement by the President upon Signing the EURATOM Cooperation Act." August 29, 1958. Online by Gerhard Peters and John T. Woolley, Te American Presidency Project http://www.presidency.ucsb.edu/ws/?pid=11203 .

<sup>9</sup> Grégoire Mallard, Crafing the Nuclear Regime Complex (1950-1957): Dynamics of harmonization of opaque treaty rules; EJIL (2014) , Vol. 25 No. 2, 445–472, p. 455.

*nous parlons, un ensemble d'alternateurs équivalent à ceux, réunis, de Génissiat, de Donzère, d'Eguzon, de Gennevilliers, soit tout l'ensemble des alternateurs français, travaillent en Amérique à alimenter les usines de séparation isotopiques, donc à augmenter la distance qui nous sépare de l'industrie américaine. Tout cela va tellement vite que, si nous ne nous dépêchons pas, nous ne rattraperons plus. Sans EURATOM, c'est bien simple, tous les pays européens iront s'adresser aux colosses. L'Italie, nous le savons, achète dès maintenant une installation américaine de 75.000 kilowatts, du même type que celle que les Belges ont acquise et qu'on inaugurera l'année prochaine à Bruxelles. Et voilà le commencement de ces accords bilatéraux, le commencement de cet achat de matériel. ...Aussi, ce que je puis vous dire, c'est que le travail des experts à Bruxelles a été un travail fonctionnel. On l'a dit et c'est vrai. Ce n'est pas institutionnellement que le problème a été étudié. Il a été défni en fonction des besoins, et comme M. Perrin l'a dit, en faisant juste le nécessaire, mais en le faisant bien, car on n'a pas besoin de tout associer. Mais ce qu'on associe, il faut l'associer avec des règles telles que l'ensemble travaille mieux que ne le feraient les mêmes éléments, mais séparés. C'est ainsi que nous n'avons pas pensé à la création d'un commissariat européen de l'énergie atomique.… Nous avons respecté tous les programmes nationaux, comme le demandait M. Perrin, et limité l'association à un minimum, mais au minimum vital, c'est le cas de le dire, au minimum nécessaire pour une large irradiation. Les experts de Bruxelles ont envisagé que l'association ne porterait que sur 20 p. 100 des équipements. C'est ainsi que les recherches resteront indépendantes*".10

And, on the other hand, France insisted during the negotiations for the EUR-ATOM Treaty that "*equality of rights of the Members*", as was claimed by the other founding Member States to EURATOM, was not in any way pursued in order to hinder its own nuclear weapon programme.

During the months before fnal consent on the EURATOM treaty text was reached, confict and discussion continued. Disagreement was rife over Article 77 on the balance to be drawn when it came to defning the single jurisdiction that would have control over fssile material on the EURATOM territory.

At the London Conference of nine powers on 28th of September to 3rd of October 1954, German Chancellor Konrad Adenauer declared that his country would not produce nuclear weapons in Germany and thus enabling his country for

<sup>10</sup> ARMAND, Louis; PERRIN, Francis. L'EURATOM : Exposés faits à la tribune de l'Assemblée nationale le 5 juillet 1956 par Francis Perrin et Louis Armand. Paris: 1956. 31 p. p. 19-31. http://www.cvce.eu/obj/expose\_de\_louis\_armand\_sur\_la\_politique\_ nucleaire\_de\_la\_france\_et\_sur\_l\_EURATOM\_5\_juillet\_1956-fr-9ee0da8e-928a-4e5eaf43 -a3abfeef683e.html

re-armament.11 Nonetheless, in January 1957 in Algeria, France and Germany, the latter being a deliberate opponent so that France would not alone have a military use for nuclear fssile material12, signed a secret military cooperation agreement in a meeting between their defense ministers (Maurice Bourgès-Maunoury and Franz Josef Strauss). Tis agreement was later extended to Italy in 1957. Tese secret agreements laid the ground for a biased application of the control articles of EURATOM. In consequence of these agreements, EURATOM never clearly governed material destined for military use. Only in that way did France accept that the EURATOM inspectors would "*control the conformity between the 'real' and 'declared' uses of nuclear fuels (be they civil or military uses*)"13

Terefore, the inspectors could only verify that the material in France was for military use but could not prevent this use. Tis weakened EURATOM's role as a backbone of the international Non Proliferation Treaty (NPT) and its objectives and immediately hamstrung its status as the governing supranational body. Moreover, it created a situation from the beginning where there was a split vision between France and the other EURATOM founding members. Tis in efect weakened any hope for unity under EURATOM. One can thus conclude that divergence was an integral part of EURATOM from its beginning. Also, to the outside world and especially to the United States, this biased approach prevailed. Monnet briefed his assistant Max Kohnstamm14 before they went to negotiate details for the EURATOM-US

13 Grégoire Mallard, a.a.o.

<sup>11</sup> For the extent of this policy in order to ensure France's acceptance of Germany having an own army (die Bundeswehr) again, see Soutou Georges-Henri. Les accords de 1957 et 1958 : vers une communauté stratégique nucléaire entre la France, l'Allemagne et l'Italie? In: Matériaux pour l'histoire de notre temps, n°31, 1993. Penser et repenser les défenses (suite). pp. 1-12;doi : 10.3406/mat.1993.404096 http://www.persee.fr/doc/ mat\_0769-3206\_1993\_num\_31\_1\_404096

<sup>12</sup> See for background of a quite lively s dispute between the ministers of foreign afairs of France and Germany, Grégoire Mallards, a.a.O.

<sup>14</sup> Max Kohnstamm: From 1948 to 1952 Max Kohnstamm was appointed to the Dutch Ministry of Foreign Afairs, as Diplomat under the direction of Minister Hirschfeld, where he was responsible for German afairs and in particular the Ruhr Authority and later under Minister Stikker, he was responsible for European concerns. He helped negotiating for the Schuman Plan where he met Monnet. Afer this, he participated in the negotiations for EURATOM and in the negotiations for the US-EURATOM Agreement of 1958, where he was Secretary to the three "Wise Men". He later became Vice-President of the Action Committee for the United States of Europe, 1956–1975. He was a close supporter of Monnet in his endeavor for creating an integrated Europe. A fascinating wealth of information are his archives at the European University Institute (http://archives.eui.eu/en/fonds/155415?item=JMDS.A-09.06 ).

treaties on Nuclear to "*avoid explaining how the system of EURATOM control would work*" and to maintain "*the appearance*" of equivalence between the American and the EURATOM control and thus of strictly non-military civic use of fssionable material belonging to and controlled under EURATOM.15

#### **2 EURATOM ltd.**

Te problematic start thus led to a future where no real Atomic Energy Union was ever established in Europe. Instead, EURATOM has served as a basis for gigantic and continuing benefts for nuclear research over the last decades in comparison to other energy research. Additionally, there never was a unifed movement to promote a European policy framework for nuclear.

Te EURATOM treaty remains a treaty with limited liability.

Tere seems to have been a recent move to attach an aspect of exclusive supremacy to EURATOM over the European Union treaties, at least when it applies to the internal energy market and to the observance of procurement and competition rules. Under the current Commission and its predecessor, EURATOM was re-invented as a way of underlining a common European interest to support the creation of new nuclear power plants with public money and guarantees, as will further be shown.

National preferences or antipathies concerning a powerful EURATOM Community prevail until today.

Te above, almost fascinating, national obstinacy of Member States to not create a true Atomic Energy Union when agreeing to the EURATOM Treaty in the past is well documented by numerous examples, the frst of which being the unwillingness of France in the years afer EURATOM entered into force to sign the NPT. Te NPT, as joint initiative of the Soviet Union, the United States of America and the United Kingdom has been open for signature since 1968.

Te signature of the Community did not lead to an automatic assent of France to the NPT since the EURATOM treaty is only binding internally, with its own safe guard clause under Art. 77, on the regional Member State level.

In 1973, the seven non-nuclear weapon States within EURATOM formally signed, together with the European Community, an agreement with IAEA for the implementation of NPT safeguards.

Concerning non-military nuclear installations, a similar agreement was concluded in 1976 among the IAEA, the Community and the United Kingdom. Te

<sup>15</sup> Grégoire Mallard, a.a.O.

United Kingdom deliberately had ofered to accept the IAEA safeguards for the UK non-military nuclear plants.16

France only acceded to the NPT in 1992, in the same year as China did. Before that and afer the NPT entered into force, France not being a party to the NPT, signed a similar three party agreement with the EURATOM Community and the IAEA which foresaw the application of IAEA safeguards in a manner similar to the above agreements but, "*limited, however, to those materials which France wants to put under such safeguards.* (…)*Tus we now fnd in Western Europe a unique situation in the feld of safeguards due to the fact that there exists a regional safeguards authority invested with supranational rights which at the same time not only fulfls, within the framework of the IAEA system, the tasks normally assigned to a national system of accounting and control, but also collaborates with the IAEA in inspections in a way which permits the latter to draw its own independent conclusions.*"17

#### **3 Activities and sectors governed by EURATOM**

When screening EURATOM following modern, scientifc and established rules on circular economy legislation, EURATOM again fails to deliver further underlining its status as a "*failed community*".18 An example is its limited provisions on planning and permitting procedures which fail to include operation, safe operation, ore supply, dismantling and safe fnal storage of radioactive waste.

Existing secondary legislation under EURATOM, which covers issues such as waste, were in some cases helped by a progressive interpretation of the European Court rather than by the EURATOM treaty itself with the limited scope of its concerned Chapter (Chapter 3 on Health and safety), as will be refected on below.

In consequence, EURATOM, following its beginnings and its undercurrent of opposing interests, particularly those of the one Nuclear Weapon State (NWS) (France) and the other EURATOM founding members, emerges as a 'skeleton treaty' unable of consequently regulating the diverse elements of nuclear power including

<sup>16</sup> Schleicher, H.W. (1980), (former Director of the EURATOM Safeguards Directorate, Commission of the European Communities). Nuclear Safeguards in the European Community – a Regional Approach, IAEA Bulletin 22 (3/\$) p 45.

<sup>17</sup> Schleicher, H.W., ibid. page 45.

<sup>18</sup> See Wolf, Sebastian, EURATOM, the European Court of Justice, and the limits of Nuclear integration in Europe, German Law Journal 12 (2011), 8, p. 1638 and referring to Weilemann, Peter, die Anfänge der Europäischen Atomgemeinschaf, p. 157.

uranium mining, supply, shipment, use and processing and fnal dismantling of nuclear installations.

EURATOM's objective is prominently established in the EURATOM treaty:

#### "Article 1

By this Treaty the HIGH CONTRACTING PARTIES establish among themselves a EUROPEAN ATOMIC ENERGY COMMUNITY (EURATOM). It shall be the task of the Community to contribute to the raising of the standard of living in the Member States and to the development of relations with the other countries by creating the conditions necessary for the speedy establishment and growth of nuclear industries."

Art. 2 lists the responsibilities and tasks for the EURATOM Community:

Major objectives are to promote research and ensure the dissemination of technical information and to establish uniform safety standards to protect the health of workers and of the general public and ensure that they are applied; facilitate and ensure investment, particularly by encouraging ventures on the part of undertakings; Chapter 3 EURATOM, entitled, 'Health and Safety', outlines content and limitation of the power of the Community with its Art. 30:

According to EURATOM, basic standards shall be laid down within the Community for the protection of the health of workers and the general public against the dangers arising from ionizing radiations. However, this provision does not give any right to the Community to directly safeguard Nuclear Power stations: "*It essentially provides for the Community to establish a series of dose limits for exposure of human beings to radiation. (Tis has been done, usually following the line established by the International Commission for Radiological Protection (ICRP)). But it does not provide any competence to EURATOM either with respect to possible damage to the natural environment caused by radiation, and perhaps even more remarkably, it provides no EURATOM Community competence with respect to the safety of nuclear reactors*".19

Te main European objectives under EURATOM outlined in Art. 2 and detailed for safety and health aspects in Chapter 2, are:


<sup>19</sup> O' Driscoll, Mervyn, Te European Parliament and the EURATOM Treaty: past, present and future, p. 17.

• to exercise the right of ownership conferred upon it with respect to special fssile materials; details of the property ownership in this sense are further laid down in Chapter VII of the EURATOM treaty. However, while the Community has the property rights, Art. 87 makes it clear that Member States, persons and undertakings shall have the unlimited right of use and consumption of fssile materials in lawful possession.

In reality, these fssile material property rights of the Community have proved of little practical consequence within the European Community, as will again be outlined below.

EURATOM should, under Art. 2, ensure wide commercial outlets and access to the best technical facilities through the creation of a common market in specialised materials and equipment, through the free movement of capital for investment in the feld of nuclear energy and through freedom of employment for specialists within the Community.

Another point which was to be a future point of contention as to its scope was the provision under Art. 2 that EURATOM should establish with other countries and international organizations similar relations as it will further progress on the peaceful uses of nuclear energy.

#### **4 The EURATOM Supply Agency**

Chapter 6 of Title II EURATOM establishes the EURATOM Supply Agency (ESA) and confers upon it an exclusive right to conclude contracts relating to the supply of ores, source materials and special fssile materials coming from inside or from outside of the Community. Chapter 8 established the property ownership rules where -as laid down in Art. 86 Para 1 EURATOM- the special fssile materials shall be the property of the Community.

Te ESA conceived would own and control the supply of all fssile materials in the Community. Art. 86 and 87 EURATOM are perfect examples of a bizarre and redundant legal position of the Community: the provisions under Art. 86 EUR-ATOM declare the Community as being holder of the property right on special fssile materials, and defnes a "*right of ownership*" to "*all special fssile materials which are produced or imported by a Member State, a person or an undertaking*" and which are subject to the safeguard clauses under Chapter 7 EURATOM. Despite this principle, the Community has no **real** right of ownership since use is clearly curtailed via the provisions under Art. 87 EURATOM, according to which Member States, persons or undertakings have unlimited rights over use and consumption of this material. Te European Supply agency refects the ambiguous and incomplete community framework of EURATOM.

It is the EURATOM Community / the Commission that controls the distribution of patent rights and production licenses for a series of reactor designs and fuel cycle technologies to be developed by the Joint Nuclear Research Centre (JNRC). Important conditions are set for research (Art. 7) and international agreements (Art. 101), e.g. on ensuring access to fssile materials.

Tese tasks and responsibilities by the Community are, to a large extent, kept away from serious control by the European Parliament in the sense of modern legislative power and supervision over the executive or, as was put pointedly: "*Control by democratically elected Parliaments was not exactly a signifcant feature of the nuclear sector in the 1950s*".20 And this democracy-excluding oversight was never reformed by a modernisation of EURATOM as has been the case in other areas via the various reform treaties leading to the Lisbon treaty.

When it comes to uranium supply, the reality of nuclear supply substantially mirrors the existing situation on gas import dependence in Europe. All sourcing is done outside the EU and mostly from former Soviet Union countries, e.g. from Russia. One might question the sustainability of this supply route, a worrying fact also outlined by the European Commission itself.21 Another point of unease is the fact that Russia is nowadays pushing to supply new nuclear power stations to Europe, such as the one just recently constructed in Hungary named Paks II – a new installation with procurement and state aid authorised by the European Commission.

<sup>20</sup> O' Driscoll, Mervyn, Te European Parliament and the EURATOM Treaty: past, present and future, p. 6.

<sup>21</sup> Te EU Commission outlined in its Communication COM (2014) 330 fnal "European Energy Security Strategy" of 28th of May 2014, p. 16: " Te worldwide uranium supply market is stable and well diversifed but the EU is nonetheless completely dependent on external supplies. Tere are only a few entities in the world that are able to transform of uranium into fuel for the nuclear reactors, but EU industry has technological leadership on the whole chain, including enrichment and reprocessing. "…However, Russia is a key competitor in nuclear fuel production, and ofers integrated packages for investments in the whole nuclear chain. Terefore, particular attention should be paid to investments in new nuclear power plants to be built in the EU using non-EU technology, to ensure that these plants are not dependent only on Russia for the supply of the nuclear fuel: the possibility of fuel supply diversifcation needs to be a condition for any new investment, to be ensured by the EURATOM Supply Agency. Furthermore, an overall diversifed portfolio of fuel supply is needed for all plant operators."

#### **4.1 The reality of supply channels and long term supply contracts**

Chapter 6 of Title II EURATOM opens with mention to, and a request for, a common supply policy concerning the sourcing of source and special fssile materials and conveys to the supply agency an exclusive right to conclude contracts relating to the supply of ores, source materials and special fssile materials coming from inside or outside the Community. Strangely enough, Chapter 6 seems to be respected or applied very little and "*many articles have apparently either not been implemented at all, or only partially implemented or applied*."22

Te same is valid for the Special Fissile Materials Financial Account as a transaction balancing and auditing tool: Art. 89, para. 4 under Chapter 8 of EURATOM foresees that the Agency could undertake transactions for its own account and shall in this context "be deemed to be an undertaking". Tis provision for a European nuclear undertaking has never been implemented.

Te Supplies Agency exists, but rather worked as an observer than as an active buyer and supplier of fssile material. Until at least 2005 the Agency never itself used its purchase power and there is no publicly documented evidence for direct activities in purchasing, supplying and stockpiling of material.

In 2005, a report on Security of supply, published by an advisory task force to the EURATOM Supply Agency, parted from this past experience, that security of supply concerns in the nuclear fuel cycle result from the fact that primary production of natural uranium covers only some 60% of world demand while the remaining part comes from historical production (inventories and weapons dismantling) and from the re-enrichment of tails of depleted uranium resulting from the enrichment process.23 Tis task force of the major Western nuclear operators at that time and the nuclear energy and fuels company, British Nuclear Fuels plc (BNFL), several times outlined the question of stocks but always clearly and self-evidently defned and described the stocks as those kept by the nuclear operators. Te report mentioned the possibility that the Agency could act under Art. 72 EURATOM and establish a stockpile, but in no way referred to this as an option near to reality. Tis is clearly illustrated in the following analysis in the report, underlining that there "*is a decrease of stocks in many countries as part of this reduction of operational costs for utilities.* 

<sup>22</sup> O' Driscoll, Mervyn, Te European Parliament and the EURATOM Treaty: past, present and future, p. 13

<sup>23</sup> See Analysis of the Nuclear Fuel Availability at EU Level from a Security of Supply Perspective, EURATOM Supply Agency – Advisory Committee Task Force on Security of Supply Final Report of the Task Force, June 2005, page 5.

*Te appropriate level of stocks and the entire fuel procurement policy depends on the size and electricity generation pattern of each utility*".24 Also, the recommendation in case of shortages does not mention in any way a role for the Agency to execute its right and even objective under EURATOM in stockpiling capability.25

Te European Court of Auditors has apparently regularly asked what the Supplies Agency could actually be doing. France, over many years, has displayed an attitude of not caring at all about the Agency.26

When it comes to national policies and contracts with third countries, an international organisation or a national of a third State (e.g. an energy company or supplier), the line between competencies of the State and of EURATOM remained unclear and was several times subject to European Court decisions. Te Member States clearly remain sovereign to bilaterally conclude those international agreements. EURATOM steps in when "*matters within the purview*" of EURATOM are concerned, as laid down under Art. 103 EURATOM.27 Tis wording creates ground for uncertainty and thus underlines the reality that there is no unique EURAT-OM competence, even in matters where the ownership of the fssile material is explicitly given to the EURATOM community under the treaty but where use and

<sup>24</sup> See, Analysis, ibid. page 5.

<sup>25</sup> See, Analysis, ibid, page 16: "Against long term risks (not susceptible to happen in less than a year or two) remedies are more mixed, e.g. exploration and investments in new production facilities, diversifcation, long term contracting, and partnerships. In any case, an efective monitoring of the supply and demand situation at EU and world levels and its likely evolution would be a very important tool for the Commission's analysis in view of the EURATOM Community's responsibilities in the EU energy security of supply, as well as for the nuclear industry. Te ESA which already has a unique insight into the market through its concurrence privilege, could be this monitoring tool, but would beneft from accurate information from all nuclear industries operating in the EU, on their sources and commitments as well as their stocks of nuclear material (including their quantity, form and location)."

<sup>26</sup> O' Driscoll, Mervyn, Te European Parliament and the EURATOM Treaty: past, present and future, European Parliament, Directorate-General for Research, Working paper, 2002,( ENER 114 EN), page 17: "Te Court of Auditors has regularly asked what the Supplies Agency actually does. France appears in the past to have sometimes largely ignored the very existence of the Agency, considering that France is exempt from most of the provisions of Chapter 6 (which it has also challenged the legitimacy of in the European Court of Justice – so far unsuccessfully)."

<sup>27</sup> See for example: European Court, Ruling 1/78 of 14. 11. 1978 following an application of the Kingdom of Belgium pursuant to Art. 103 EURATOM, asking as to whether in the absence of the concurrent participation of the Community, Belgium may adhere to the Convention on the Physical Protection of Nuclear Materials, Facilities and Transport under the IAEA regime.

management is kept with the Member States. Tis limitation is also important in questions around who can sign which kinds of agreements at international level.

In 2016, a recommendation by the Commission was needed on the interpretation of Art. 103 EURATOM. Te recommendation tries to establish more clarity around fuel supply contracts but outlines a dilemma: "*In the event that a draf agreement or contract concerned by the present Recommendation includes also provisions on supply matters, its assessment by the Commission pursuant to Article 103 should be without prejudice to the exclusive right of the Agency to conclude supply contracts; co-signature of supply contracts by the Agency on the other hand is without prejudice to the assessment by the Commission of the compatibility of Member States' draf agreements or contracts with the provisions of the Treaty and its secondary legislation*."28

Te EURATOM Supply Agency is hesitant, when it comes to agreeing to longterm supply contracts with nuclear fuel.

In a recent decision, the Commission acting as the EURATOM Supply Agency refused to co-sign a Nuclear Fuel Supply (NFS) Contract on nuclear fuel supply and spent fuel storage and treatment for future Units 5 and 6 to be built at the site of the existing Paks nuclear power plant in Hungary. Te Hungarian company Paks II and the Russian company Nizhny Novgorod Engineering Company «Atomenergoproekt» had signed the NFS Contract on 9 December 2014. Following its signature, the NFS Contract was submitted to the "Agency" on 23 December 2014 pursuant to Art. 52 of the EURATOM Treaty and screened under the procedure of Art. 103. By letter of 13 January 2015, afer extensive discussions with the Paks II consortium and Hungary, the "Agency" notifed its refusal to co-sign the NFS Contract, reasoning that the clauses of the contract "*de facto prevent diversifcation of fuel supply*".29 Under this contract, Rosatom, the Russian State Atomic Energy Corporation, is mandated to provide the technology and the supply of nuclear fuel (and assemblies) and ofered the option of managing the spent nuclear fuel for at least 20 years through its subsidiary "NIAEP". Te fnancing of the project is aimed to be ensured mainly via a loan granted by the Russian Federation to the Hungarian State for which the state gives various guarantees. Te state aid part of the deal was recently authorised by the European Commission in view of Art. 2 (c) EURATOM30

<sup>28</sup> See C(2016) 1168 fnal COMMISSION RECOMMENDATION of 4.4.2016 on the application of Article 103 of the EURATOM Treaty, para 13.

<sup>29</sup> See (declassifed part of) COMMISSION DECISION of 2.3.2015 (CÇ2015) 1398 fnal ) relating to a procedure in application of the second paragraph of Art. 53 of the EURA-TOM Treaty, Para 4.

<sup>30</sup> Art. 2 c) EURATOM: (In order to perform its tasks, the Community shall, as provided in this Treaty:..) "( c) facilitate investment and ensure, particularly by encouraging ventures

and its view that there is a common European interest in promoting the creation of new nuclear power stations.31 On the fuel supply and waste management contract, the Agency was more wary. A problematic reality has appeared: Hungary is to complete a new state aid-supported construction of the Paks II nuclear power plant, with supply and management provided by Rosatom where the Commission itself has acknowledged an almost full import of fssile material from Russia.

Concluding, it is obvious that major executive provisions for the Agency under Chapter 6 and 8 of EURATOM are not mirrored in reality even though they were designed to represent its pillars. Tey seem to never have really been destined to have a dominant role enshrined to the EURATOM Community and its control agencies: France and Western Germany at the time of the Spaak Committee32 and the preparation of a Treaty gave a green light for a somewhat inventive defnition, concerning "property" and "control" .

To recall: In view of France's insistence as sovereign NWS, the Spaak Committee explained that "*control*" for the Community when it comes to fssile material means a "*control of conformity*". "*Te EURATOM Community would be granted "property" of all nuclear fuels used for peaceful ends within the EURATOM territory (therefore leaving the property of fuels used for French military ends to the French government); but this notion of property was defned "as a "property sui generis," an old notion which difered from the common notion in Roman Law, since the property of fuels by the EURATOM Community granted no rights to its owner during normal times*".33

And in line with the above task force's report, not only France but none of the nuclear operators in any Member State attributed any real power of property and supreme control to the Community.

Tis mismatch once again underlines the already drawn conclusion from the late 1990s that "*EURATOM never got of the ground*".34

on the part of undertakings, the establishment of the basic installations necessary for the development of nuclear energy in the Community; ".


<sup>31</sup> SA.38454 – 2015/C (ex 2015/N) Commission decision of 6.3.2017 on state aid which Hungary is planning to implement for supporting the development of two new nuclear reactors at Paks II nuclear power station.

#### **5 The relationship of the European treaties towards each other**

Te Merger Treaty, or "Brussels Treaty", which entered into force on 1 July, 1967 created a Single Commission and a Single Council of and for the three European Communities, meaning the executive bodies of the European Coal and Steel Community (ECSC), the European Atomic Energy Community (EURATOM) and the European Economic Community (EEC). Te institutions of the EEC would manage all institutional responsibilities under EEC, ECSC and EURATOM. All three were, afer the Brussels treaty, denominated as the European Communities but from a legal point of view all three continued to exist separately under their respective treaties. As a consequence, since 1967, the Council and the Commission of the EEC replaced the Commission and Council of EURATOM and the High Authority and Council of the ECSC. Although each Community remained legally independent, they shared common institutions.

In 1993, the Maastricht Treaty created the European Union, which absorbed the three Communities, yet EURATOM and the ECSC kept their legal personality.

Te Maastricht treaty was repealed by the Amsterdam Treaty, which was signed in 1997. With the Lisbon Treaty of 2009, the European Union replaced the original European Communities but the structures and legal conditions at the communities' bases as specifc treaties remained unchanged. Tis was due to lack of support in many EU Member States to create a European Constitution as had previously been conceived by the Maastricht treaty. Terefore, the European law is still established by the two international Treaties, minus the ECSC, which had a deadline and expired afer 50 years in 2002. Te Treaty establishing the European Community was renamed the "Treaty on the Functioning of the EU" (TFEU).

During the fnalised 1995 enlargement of the European Union, Austria, Finland and Sweden acceded to the European Union (EU). All these States had already established links to the Union with the European Free Trade Association (EFTA).

#### **6 The role of the European Parliament and of the European Court of Justice**

A major headache for the European Parliament and the democratic community in the EU in general is its very limited role in all EURATOM based legal projects since its position is restricted to that of an advisory institution under Art. 31 EUR-ATOM rather than as a legislator. Back in 1988, and two years afer the Chernobyl disaster, the European Parliament contested in an annulment procedure before the European Court that Council Regulation (EURATOM) No. 3954/87 of 22 December 1987 laying down maximum permitted levels of radioactive contamination of foodstufs and of feeding stufs following a nuclear accident or any other case of a radiological emergency was wrongly based on Art. 31 EURATOM, which provides that the Parliament is to only be consulted, whereas it should have been based on Art. 100a of the EEC Treaty which requires cooperation with the Parliament implementation of the procedure.35

Te European Court of Justice (ECJ) declared the case as admissible despite an opinion of the Council asserting that the European parliament did not have the legal personality under (former) Art. 173 EEC treaty or Art. 146 EURATOM since it is not included among the institutions which, like the Member States, bring an action for annulment against any measure of another institution before the Court.36

Te Court accepted the fact that the Parliament is not mentioned in both articles and thus the Court could not include the Parliament among the institutions, which may bring an action per se as institution but "*being required to demonstrate an interest in bringing an action*".37

But the Court saw its "*duty to ensure that the provisions of the Treaties concerning the institutional balance are fully applied and to see to it that the Parliament's prerogatives, like those of the other institutions, cannot be breached without it having available a legal remedy, among those laid down in the Treaties, which may be exercised in a certain and efective manner*".38

According to the Court, such a procedural gap cannot prevail over the fundamental interest in the maintenance and observance of the institutional balance laid down in the Treaties establishing the European Communities, thus referring to all Treaties. Terefore and insofar as the Parliament disagrees with the Council's choice of legal basis for the contested Council regulation, this led to a breach of Parliament's prerogatives by denying it the possibility of participating in the drafing more actively than it could under the EURATOM consultation procedure.

In consequence, the Court dismissed the Council's objection of inadmissibility and allowed the proceedings to be continued with regard to the substance of the case.

On the substance, though, the Parliament lost the case. Te Court did not follow the arguments of the European Parliament that the regulation was also a harmonisation measure within the meaning of Art. 100a of the EEC Treaty. For the Court

<sup>35</sup> ECJ Case C-70/88, (interlocutory judgment of 22.05.1990), Para 39.

<sup>36</sup> Case C-70/88,( Interlocutory judgment) Para 13.

<sup>37</sup> Case C-70/88, (Interlocutory judgment) Para 24.

<sup>38</sup> Case C- 70/88, (Interlocutory judgment) Para 25.

the prohibition of marketing provided for in Art. 6(1) of that Regulation was "*only one condition for the efectiveness of the application of the maximum permitted levels. Te regulation therefore has only the incidental efect of harmonising the conditions for the free movement of goods within the Community inasmuch as, by means of the adoption of uniform protective measures, it avoids the need for trade in foodstufs and feedingstufs which have undergone radioactive contamination to be made the subject of unilateral national measures.*"39

Over the ensuing years, the European Parliament has had some success nonetheless in this respect, but it is restricted to very few decisions.40

An interesting case in this context may also be the ECJ judgment in C-490/10 of 06.02.2012 concerning an Action for annulment in view of Regulation (EU, EUR-ATOM) No. 617/2010, especially concerning the notifcation to the Commission of investment projects in energy infrastructure within the European Union and the choice of the legal basis of this Regulation, meaning Article 187 EURATOM versus Article 337 TFEU, in view of Article 194 TFEU.

Te case concerned an action introduced in October 2010 by the European Parliament against the Council, where France and the Commission intervened on the side of the Council. Te Parliament demanded the ECJ to annul Council Regulation (EU, EURATOM) No 617/2010 of 24 June 2010 concerning the notifcation to the Commission of investment projects in energy infrastructure within the European Union and repealing Regulation (EC) No 736/96.41 In 2009, the Commission had

<sup>39</sup> CASE C-70/88, JUDGMENT OF 4. 10. 1991 Para 17.

<sup>40</sup> Recently, the European Parliament voted a resolution of 13 September 2017 on the draf Commission Implementing Regulation amending Commission Implementing Regulation (EU) 2016/6 as regards feed and food subjected to special conditions governing the import of feed and food originating in or consigned from Japan following the accident at the Fukushima nuclear power station (D051561/01 – 2017/2837(RSP)) urging the Commission not to loosen restrictions on imports. Te Parliament argues that it is very difcult to verify whether the measures proposed are sufcient to protect the health of Union citizen, especially in view that the responsible Japanese utility Tokyo Electric Power Company (TEPCO) has ofcially requested permission from the Japanese Government to dump into the Pacifc Ocean almost one million tonnes of highly radioactive water related to the clean-up of the nuclear accident. Te Parliament sees the draf Commission implementing regulation inconsistent with Union law in that it is not compatible with the aim and general principles laid down in Regulation (EC) No 178/2002 of providing the basis for ensuring a high level of protection of human life and health, animal health and welfare, the environment and consumer interests; the Parliament calls on the Commission to go back to the drawing board and present together with a new proposal.

<sup>41</sup> Council Regulation (EU, EURATOM) No 617/2010 of 24 June 2010 concerning the notifcation to the Commission of investment projects in energy infrastructure within

submitted a proposal for this Regulation to the Council. Te proposal was based on Art. 284 EC and Art. 187 EURATOM.42 Tese provisions did not provide for any involvement by the Parliament in the decision–making process, but the Council decided to consult it as it had done when adopting previous Regulation No 736/96. Since the entering into force of the Lisbon treaty in December 2009, the European Parliament asked for a review of the legal basis for the draf Council Regulation so that it would henceforward be based on Art. 194 TFEU43, instead of Art. 284 EC (which became Art. 337 TFEU) and Art. 187 EURATOM.

Te Parliament argued that Art. 337 TFEU and Art. 187 EURATOM were now substituted with Art. 194 (1) and (2) TFEU as legal basis to be observed for this draf Regulation. Te Regulation focused on data collection in the energy market and the newly introduced shared responsibility for energy under the Lisbon treaty would make Art. 194 TFEU the relevant bases thus ensuring the Parliament's legislative role as defned in the new co-decision procedure. Te Court's judgment not only agreed with the view of the European Parliament, that Art. 187 EURATOM would in this case not take precedence over Art. 194, but that the latter remained the sole basis for the envisaged Regulation, underlining that the contested Regulation con-

43 Art. 194 TFEU:


(c) promote energy efciency and energy saving and the development of new and renewable forms of energy; and (d) promote the interconnection of energy networks.

2. Without prejudice to the application of other provisions of the Treaties, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall establish the measures necessary to achieve the objectives in paragraph 1. Such measures shall be adopted afer consultation of the Economic and Social Committee and the Committee of the Regions.

Such measures shall not afect a Member State's right to determine the conditions for exploiting its energy resources, its choice between diferent energy sources and the general structure of its energy supply, without prejudice to Art. 192(2)(c).

3. By way of derogation from paragraph 2, the Council, acting in accordance with a special legislative procedure, shall unanimously and afer consulting the European Parliament, establish the measures referred to therein when they are primarily of a fscal nature."

the European Union and repealing Regulation (EC) No 736/96 (OJ L 180, 15.7.2010, p. 7).

<sup>42</sup> Art. 187 EURATOM: "Te Commission may, within the limits and under the conditions laid down by the Council in accordance with the provision of this Treaty, collect any information and carry out any checks required for the performance of the tasks entrusted to it."

<sup>&</sup>quot;1. In the context of the establishment and functioning of the internal market and with regard for the need to preserve and improve the environment, Union policy on energy shall aim, in a spirit of solidarity between Member States, to:

cerns the notifcation by all Member States of the aggregated data and information relating to all investment projects in energy infrastructure.44

Te Court came to the conclusion, that it is "*appropriate to fnd that the contested [R]egulation, in so far as it was based on Art. 187 EURATOM, was adopted on an incorrect legal basis and it should have been based solely on Art. 194(2) TFEU*".45 Te Court annulled the contested Regulation on this ground.

Tis leads to the conclusion that EURATOM is "lex specialis" only for those objectives which are explicitly and specially regulated by it and only if clear restrictions respectively excluding nuclear matters from general energy policy or other policy felds in the Union with consequence to the energy sector are outlined.

Te European Parliament has the right for co-decision in areas that touch upon EURATOM issues when the legal basis is predominately the general TFEU. But the confict ofen arises about the legal bases for energy legislation which afects nuclear matters in the energy market. In a recent decision by the ECJ it did not follow a similar annulment request by the European Parliament concerning the legal basis in view of Council Directive 2013/51/EURATOM46 on the protection of the health of the general public with regard to radioactive substances in water intended for human consumption, underlining EURATOM's specifc sphere of application.47 Te choice of legal basis in this case excluded application of the co-decision procedure and thus any substantial involvement of the Parliament.

As has been outlined, the main provisions of the EURATOM Treaty have never been amended since it entered into force on 1 January 1958, which is a sign of a monolithic or static situation, strangely detached from national energy reality and the European objective of a single European Energy market, which was defned in the mid-eighties of last century.

Clear sign of this stagnation is the limited number of judgments of the European Court of Justice on cases with respect to the EURATOM Treaty, most concerning violation of the safeguard provisions under Art. 77. EURATOM. Based on specifc research by Wolf, there seem to be no more than 31 cases until 2009 before the European Court of Justice which have secondary legislation based on EURATOM as its object.48 Most of these cases refer to infringement problems in view of the

<sup>44</sup> ECJ, C-490/10, European Parliament v. Council, para 84.

<sup>45</sup> Ibid, Para 86.

<sup>46</sup> O.J. L296/12/2013.

<sup>47</sup> Case C 48/14, action for annulment under Art. 263 TFEU and Art. 106a(1) EA brought on 30 January 2014, European Parliament v. Council.

<sup>48</sup> See Wolf, Sebastian (2011): EURATOM Before the Court: A Political Teory of Legal Non-Integration, European Integration online Papers (EIoP), Vol. 15, Art. 10 http://

possibilities for sanctions foreseen under Art. 83 EURATOM. Nonetheless, in contrast to the above, the European Court of Justice has intervened several times to deny a broad range of applications of EURATOM's basic articles.

#### **7 Secondary legislation as timid opening towards a broader scope**

Te inability of the European Member States to produce a common European approach rather than individual national mandates can also be seen in the difculties of the European Commission when proposing legislation under the EURATOM Treaty, especially concerning nuclear safety. Countries with a plan to phase out nuclear, such as Germany, are reluctant to cede too much control to the Community because they fear a dilution of their safety standards following a European compromise and therefore remain adamant that the key authority in respect to nuclear power is the nation and not the Community. On the other side are Member States seeming reluctant to any interference when calling a diferent security standard than their own. Jointly, this situation creates a very hesitant European policy approach to EURATOM-based secondary legislation.

Major secondary legislative work is carried out on the basis of Art. 30 EUR-ATOM. Art. 30 and Art. 31 provide for the establishment in the Community of basic standards for the protection of the health of workers and the general public against the dangers arising from ionising radiations. Art. 30 provides a defnition of the basic standards and Art. 31 describes the procedure for the adoption and enforcement of those standards.

Art. 33 EURATOM particularly states:

"Each Member State shall lay down the appropriate provisions, whether by legislation, regulation or administrative action, to ensure compliance with the basic standards which have been established and shall take the necessary measures with regard to teaching, education and vocational training.

Te Commission shall make appropriate recommendations for harmonising the provisions applicable in this feld in the Member States.

eiop.or.at/eiop/texte/2011-010a.htm, page 9: "Te result of this research for data is a compilation of only 30 cases which mainly concern EAEC primary and/or secondary law (see Table 2 for the full list). Given the sheer mass of ECJ cases, this small number already can be interpreted as another indicator of the rather meagre legal development of the EAEC."

To this end, the Member States shall communicate to the Commission the provisions applicable at the date of entry into force of this Treaty and any subsequent draf provisions of the same kind."

Te following examples suggest a move towards a more European approach to regulation under EURATOM:

#### **7.1 Directive 2009/71/EURATOM establishing a Community framework for the nuclear safety of nuclear installations and its amendment, Directive 2014/87/EURATOM**

It should be underlined that the European Commission over the years has worked intensively to reach a high safety standard within EURATOM to improve safety in the respective Member States. Tis initiative is once again limited by the EURATOM provisions which state that the responsibility for the safety of nuclear installations is solely attributed to the Member States and the nuclear utilities and other respective license holders on their territory.

Subparagraph (b) of Art. 2 EURATOM provides for the establishment of uniform safety standards to protect the health of workers and of the general public. Art. 30 EURATOM defnes "*basic standards*" for the protection of the health of workers and the general public against the dangers arising from ionising radiations.

Pursuant to Art. 30, Art. 31 and Art. 218 EURATOM, the Community initially, in 1959, issued basic safety standards with Council Directive of 2 February 1959 laying down rules and standards for the protection of the health of workers and the general public against the dangers arising from ionising radiations.49

Tese standard rules were revised fairly regularly: in 1962 by Directive of 5 March 1962, in 1966 by Council Directive 66/45/EURATOM, in 1976 by Council Directive 76/579/EURATOM, in 1979 by Council Directive 79/343/EURATOM, in 1980 by Council Directive 80/836/EURATOM and in 1984 by Council Directive 84/467/EURATOM.

In 1996 the basic standards Directives as revised were replaced by Council Directive 96/29/EURATOM of 13 May 1996 laying down basic safety standards for the protection of the health of workers and the general public against the dangers arising from ionising radiation ('the Basic Standards Directive')50 which repealed the previously applicable rules as of 1 of May 2000.

<sup>49</sup> OJ, English Special Edition, 1959–1962, (I), p. 7.

<sup>50</sup> OJ 1996, L 158, p. 1.

Nuclear Safety Directive 2009/71/EC regulates that the Member States are required to submit certain practices involving a hazard from ionising radiation to a system of reporting and prior authorisation and to ensure protection from radiation for the population in normal circumstances.

Te Directive comprises provisions for the establishment of a national legislative and regulatory framework for nuclear safety of nuclear installations, for the organisation, duties and responsibilities of the competent regulatory authorities, for the obligations of the licence-holders, for the education and training of all parties' staf and for the provision of information to the public. In terms of the organisation of the competent regulatory authorities, it constitutes the separation principle, which indicates that the competent regulatory authorities must be functionally separate from any other body or organisation concerned with the promotion or utilisation of nuclear energy. In addition, Member States shall arrange at least every ten years for periodic self-assessments of their national framework and competent regulatory authorities and invite an international peer review of relevant segments of their national framework and/or authorities. Outcomes of any peer review shall be reported to the Member States and the Commission.

Recital 9 of the Directive underlined that each Member State may decide on its energy mix in strict accordance with its relevant national policies and Recital 8 again put forward the principle of national responsibility as well as the principle of the prime responsibility of the respective license holder under national supervision.

#### **7.2 A long and winding road towards the 2009/71/EURATOM Directive of the Council**

Again, the road towards Council Directive 2009/71/EURATOM was littered with conficts between the Commission and the Council, with Member States not wishing to lose any sovereignty over their nuclear energy and their power of oversight there over beyond what could not be denied under EURATOM.

Te Commission started to work on a proposal for a joint Nuclear Safety regime in 200351 which it fnally withdrew in 2010, having given up on fnding a compromise with the Council.52

Council Directive 2009/71/EURATOM transfers major provisions from the International Convention on Nuclear Safety (CNS) of July 1994 and further safety

<sup>51</sup> COM (2003) 32 – 1: Proposal for a Council (EURATOM) Directive Setting out basic obligations and general principles on the safety of nuclear installations.

<sup>52</sup> Withdrawal of obsolete Commission Proposals (2010/C 252/04), O.J. C 252/7, 18.9.2010.

principles into European EURATOM legislation. Its basic structur mirrors the Convention's.53Te CNS entered into force the year of and as result of the Chernobyl nuclear disaster and is designed to protect individuals, society and the environment from harm by establishing and maintaining efective defences against radiological hazards in nuclear installations. As sharply outlined by Dehousse, the CNS, despite the catastrophe in the middle of the European continent, does not contain any mandatory provisions for safety control.54

Directive 2009/71/EC could not have seen the light of day, especially as unanimous as it was actually voted in the Council, without a preceding permissive decision by the European Court of Justice in 2002. It was the ECJ that laid the ground for the Commission's legal initiatives in this feld.

In the background of the specifc confict between the Commission and the Council before the ECJ was Council action of December 1998 that declared the accession of EURATOM to the CNS but also a reservation of the applicability of some provisions of the CNS for EURATOM. Te Commission had proposed the original text of such restricting declaration but with far fewer reservations.

Te possibility for the Community to derogate from certain provisions of the CNS follows from Art. 30,para. 4 CNS. Para. 4 regulates accession to the treaty for *inter alia* regional organisations. Tese organisations, refecting their mandate, shall under Art. 30, para. 4 (iii) CNS *"communicate to the Depositary (…) a declaration indicating which States are members thereof, which articles of this Convention apply to it, and the extent of its competence in the feld covered by those articles*".

Te Commission requested annulment of that specifc part of the Council declaration detailing the reservation to the IAEA "*on the ground that, by limiting the scope of that paragraph, the Council sought to establish that the Community's competence in the felds covered by the Convention is limited to Articles 15 and 16(2) thereof and does not extend to the felds covered by Articles 1 to 5, 7, 14, 16(1) and (3) and 17 to 19 of the Convention.*"55

Te Commission argued that the third paragraph of the declaration infringes Community law in that it does not refer to all the competences of the EURATOM Community in the felds covered by the Convention and that that provision, and not

<sup>53</sup> Dehousse Franklin, Te Nuclear Safety Framework in the European Union afer Fukushima, Egmont Paper 73 (2014), p. 17; Dehousse saw the following reason for the similarity of structure: "Tis was meant to distinguish clearly between the objectives and the obligations of the Member States. Tis, however, has not been fully achieved since there is an 'essential overlap between the scope of application, the defnitions and the operational articles."

<sup>54</sup> Dehousse, Franklin, ibid. p. 15.

<sup>55</sup> ECJ Case C-29/99, para 2 ( I-11283).

the whole decision of accession to the CNS, should therefore be annulled based on Art. 146 EURATOM. Te European Commission accepted the limited competence of EURATOM but maintained that even if EURATOM would not have a specifc right for regulation on the opening and operation of nuclear installations, it is competent concerning the risk resulting from the operation of such installations. Te Council kept its positions of national sovereignty as principle where no specifc rules were established in the EURATOM treaty and underlined its view that "*no article of the EURATOM Treaty bestows on the Community the competence to regulate the opening and operation of nuclear facilities. Tat competence was retained by the Member States. Te Community would have competence only when it concerns the protection of the general public, and in consequence all the articles of the Convention which concern that protection were explicitly referred to in the above declaration*".56

Council and Commission were in agreement that the Community possesses shared competences to take, subject to Art. 15 CNS, the appropriate steps to ensure that in all operational states that the exposure of the workers and the public to radiation caused by a nuclear installation be kept as low as reasonably achievable and that no individual be exposed to radiation doses which exceeds prescribed national dose limits. Te same agreement concerned Art. 16(2) of the Convention and its details on the appropriate steps to ensure that in an emergency where radiation could endanger the population, the competent authorities of the States in the vicinity of the nuclear installation are provided with appropriate information for emergency planning and response.

In essence, the Court had to judge whether the Community possesses other competences in the felds covered by the Convention on Nuclear Safety.

Te Court underlined that "*the EURATOM Treaty does not contain a title relating to installations for the production of nuclear energy*", and needed to review if an interpretation of the provisions in Title II, Chapter 3 (Health and Safety) EURAT-OM could lead to a broader competence for the Community then authorised by the Council in its limiting decision.57

Interestingly, the Court upheld this defnition and exercised of a broad interpretation of EURATOM.58 Te Court referred to its previous judgements under EURATOM. According to the Court, such interpretation had to be carried out in the light of the objective set out in the preamble to the EURATOM Treaty to "*create the conditions of safety necessary to eliminate hazards to the life and health of the public*". Te Court took into account the fact that Title II, Chapter 3 of the EUR-

<sup>56</sup> Case C 29/99, para 65 ( I-11305).

<sup>57</sup> Case C 29/99, para 74 (I-11221).

<sup>58</sup> Case C 29/99, para 78 (I-11308).

ATOM Treaty implements Art. 2(b), which instructs the Community to establish uniform safety standards to protect the health of workers and of the general public and ensure that they are applied. Te Court deduced from this that the objective for protection cannot be achieved without controlling the sources of harmful radiation. But it also outlined that on "*the other hand, the Community's activities in the feld of health protection must observe the competences of the Member States defned, inter alia, in Title II, Chapter 3, of the EURATOM Treaty itself* ".59

In the end, the Council correctly introduced a new reservation to the IAEA, refecting the Court's judgment.60

In the end of 2008, the Commission started to rekindle a legislative process for a nuclear safety Directive.61 For the Commission, this revised proposal aimed to build on: "*a) the technical work of the Western European Nuclear Regulators Association (WENRA) completed in 2006 for existing nuclear installations, with the participation of all European nuclear safety regulators; b) the principle that only strong and independent regulators can ensure the continued safe operation of the nuclear power plants in the EU; c) enshrining in the Community legislation the principles of the main international instruments available, namely the Convention on Nuclear Safety (CNS), concluded under the auspices of the International Atomic Energy Agency (IAEA), and the safety work carried out by the IAEA*".62

<sup>59</sup> Case C-29/99, para 75 (I-11307).

<sup>60</sup> See IAEA, "Declaration by the European Atomic Energy Community according to the provisions of Art. 30 (4)(iii) of the Convention on Nuclear Safety:

<sup>&</sup>quot;Te Community declares that Articles 15 and 16 (2) of the Convention apply to it. Articles 1 to 5,

Art. 7 (1), Art. 14 (ii) and Articles 20 to 35 also apply to it only in so far as the felds covered by

Articles 15 and 16 (2) are concerned. Te Community possesses competence, shared with the above-mentioned Member States, in the felds covered by Articles 15 and 16 (2) of the Convention as provided for by the Treaty establishing the European Atomic Energy Community in Art. 2 (b) and the relevant Articles of Title II, Chapter 3 entitled "Health and Safety"."

<sup>61</sup> COM(2008) 790 fnal Proposal for a COUNCIL DIRECTIVE (EURATOM) setting up a Community framework for nuclear safety: "Te present draf Directive setting up a Community framework on Nuclear Safety aims at restarting the process of establishing a common EU framework on nuclear safety, by updatingand replacing the Commission proposal for a Council (EURATOM) Directive setting out basicobligations and general principles on the safety of nuclear installations, included in the initialNuclear Safety Package."(of 2003).

<sup>62</sup> See EU Commission, Proposal for a Council Directive (Euratom) setting up a Community framework for nuclear safety, Brussels, 26.11.2008, COM(2008) 790 fnal, Explanatory memorandum, page 2

Te fnal text of Directive 2009/71/EC ultimately adopted by the Council echoed the fact that Europe, with this Directive and despite following the structure of the CNS, remained below the rules on nuclear safety under the IAEA's Nuclear Safety Convention. Te ball remained strictly in national courts.

Te Directive entered into force on 22 July 2009 and all EU Member States had till 22 July 2011 to implement its contents in to their national laws. Member States' frst reports on the implementation of the Directive were to be submitted to the Commission by 22 July 2014.

Te Fukushima nuclear accident in March 2011 strengthened the initiatives of the European Commission to increase security and safety standards in the Union, but, again there was no change towards a unifed European stance or interest on nuclear. Te amending of Directive 2014/87/EURATOM reviewed the EU framework on nuclear safety in the light of the Fukushima accident in 2011 and the fndings of the Commission triggered EU stress test exercises.

Te amended Directive, which came into force in August 2014 and which had to be transposed into Member States' legislation by 2017, reinforces the provisions of the existing Directive.63

Five years afer the Fukushima disaster, during a scientifc workshop at Cambridge, Ludo Veuchelen, who had worked during his career at the Belgian Nuclear Research Centre and was Chairman of the Working Group on Safety and Regulation of the International Nuclear Law Association, criticised the entanglement of EURATOM with industry and underlined that the organisation had too much power for a single body. He added that a self-fulflling interest of the civil servants working under EURATOM was propping up the system. He deplored e.g. a lack of democracy (control) and a lack of decisive power and control by the EU Parliament.64

<sup>63</sup> Te main objectives envisaged were :a stronger role and clearer independence of the national regulatory authority; the introduction of an EU-wide nuclear safety objective, focusing on accident prevention and risks of signifcant radioactive releases; a European system of regular topical peer reviews and regular safety reassessments of nuclear installations; more transparency on nuclear safety matters (information and cooperation obligations and involvement of the public) enhancing accident management and on-site emergency preparedness and response arrangements and procedures; promoting nuclear safety culture in the workplace.

<sup>64</sup> Report (J. WEITZDÖRFER, Fukushima Five Years On – Legal Fallout in Japan, Lessons for the EU Workshop at the University of Cambridge on 4 and 5 March 2016, p 303, https://www.law.cam.ac.uk/press/events/2015/11/expert-workshop-fukushima-fveyears-legal-fallout-japan-lessons-eu .

#### **8 Accessing to the Union without access to EURATOM-Leaving EURATOM without leaving the EU Treaty-BREXIT as game changer?**

On 1 January 1973 the United Kingdom (UK) became member of the EURATOM, and of the European Community.

As has been outlined above, EURATOM and the Communities shared some institutions since 1958. In 1967, the so-called Merger Treaty65 brought together the separate Councils' and Commissions' institutions which the three Communities (the EEC, EURATOM and the European Coal and Steel Community) had kept separated until then.

Since that point, the provisions on the institutions in the EURATOM Treaty have been updated every time the corresponding rules in the EEC Treaty were amended. Tose institutional rules are now split between the TFEU and the TEU. Te constitutional link is now established in Art. 106a of the EURATOM Treaty, which was inserted by the Treaty of Lisbon.

Subparagraph 1 of this Article reads as follows:

"1. Article 7, Articles 13 to 19, Article 48(2) to (5), and Articles 49 and 50 of the Treaty on European Union, and Article 15, Articles 223 to 236, Articles 237 to 244, Article 245, Articles 246 to 270, Article 272, 273 and 274, Articles 277 to 281, Articles 285 to 304, Articles 310 to 320, Articles 322 to 325 and Articles 336, 342 and 344 of the Treaty on the Functioning of the European Union, and the Protocol on Transitional Provisions, shall apply to this Treaty."

#### **8.1 Exit à la carte- the process before Lisbon**

Over the last decades, the European Commission clearly denied the possibility that any nation in Europe could access full membership of the Union if they do not also accede to the EURATOM Treaty.

In a request for a written answer, MEP Franz Obermayr (NI) in 2010 had asked the EU Commission inter alia as follows:

"1. According to an Austrian report commissioned by the Austrian Greens before the 1994 referendum on membership of the EU, it would not be necessary for Austria to

<sup>65</sup> Treaty establishing a Single Council and a Single Commission of the European Communities (8 April 1965), signed in Brussels on 8 April 1965 entered into force on 1 July 1967.

join EURATOM if it acceded to the European Union. Can the Commission endorse this report from the point of view of European law?(...)

3. Since the Lisbon Treaty entered into force, a new legal situation has arisen as regards the possibility of withdrawing from EURATOM: as Article 49a of the Lisbon Treaty66 also applies to the EURATOM Treaty, it must be possible de jure for an EU Member State to withdraw unilaterally from it. Does the Commission anticipate that one or more Member States will withdraw de facto? What are the practical arrangements for implementing this clause?"67

In his answer, Commissioner Oettinger outlined on behalf of the Commission that no path would have been open for Austria e.g. to access the EU without acceding EURATOM in answering just with "*No.*" to the above question of the MEP. On selective withdrawal from EURATOM the Commission was a bit more detailed in its answer. Overall, the EU Commission is of the opinion that a Member State cannot withdraw just from the EURATOM Treaty under the new provisions of Art. 50 Lisbon Treaty.68

66 He seems to refer to Art. 50 Lisbon Treaty:

<sup>&</sup>quot;1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.

<sup>2.</sup> A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. Tat agreement shall be negotiated in accordance with Art. 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualifed majority, afer obtaining the consent of the European Parliament.

<sup>3.</sup> Te Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years afer the notifcation referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.

<sup>4.</sup> For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it.

A qualifed majority shall be defned in accordance with Art. 238(3)(b) of the Treaty on the Functioning of the European Union.

<sup>5.</sup> If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Art. 49."

<sup>67</sup> E-8740/2010, Parliamentary questions 26 October 2010 – Question for written answer to the Commission/Rule 117,Franz Obermayr (NI)

<sup>68</sup> E-8740/2010 6 December 201; Answer given by Mr Oettinger on behalf of the Commission: "1. No…. 3. According to Article 50 of the Treaty on European Union, any Member State may decide to withdraw from the European Union in accordance with its own

It seems safe to say that the Union is of the opinion that one can only accede to all treaties, meaning that a departure from the Union membership invokes a dissolution from all treaties including the EURATOM treaty. A 'half divorce' does not appear to be an option.

In September 2002, the Secretariat of the Convention sent a discussion paper to its Praesidium (under former French President Giscard d'Estaing) for information concerning the beginning of the "*simplifcation procedure*". Some Member States did not want to see the occasion used to reopen discussion on matters that were frmly established: EURATOM was in this respect a particularly sensitive point.

In March 2003, the Praesidium published a paper '*Suggested approach for the EURATOM Treaty*'. Tis approach explicitly did not think it "*appropriate*" to become involved in an operation "*to amend the EURATOM Treaty substantially*".69Te Praesidium instead favored amendment of the EURATOM Treaty allowing it to continue to exist independently.

#### **8.2 The European Parliament calling for sunset**

In 2002, the European Parliament passed a resolution that included a call for the EURATOM Treaty to be abandoned by 2007. If this proposal were adopted, it would have enabled the Convention and its subsequent Intergovernmental Conference to acknowledge that a fundamental reform of EURATOM was necessary but allowing more time for the process of assessing which parts of the Treaty should remain and in what framework.70

In 2003, several Convention Members called for more reform:

constitutional requirements. Tis Article also applies to the European Atomic Energy Community (Article 106a EURATOM Treaty). Te EU and EURATOM share the same institutions, the same budget and staf, and are designed to function together with the same number of Member States. Hence, there appears to be no 'à la carte' withdrawal only from the EURATOM Treaty…".

<sup>69</sup> See: Fouquet, Doerte, Froggatt, Antony" Options for the EURATOM Treaty in the framework of a New European Constitution" May 2003.

<sup>70</sup> See: Barnes, Pamela, Going forward into the past: the resurrection of the EURATOM Treaty, EUSA 0507 EURATOM Treaty, Tenth Biennial International Conference, Montreal, Canada, May 17th-19th 2007

"We wish to make the following recommendations to the Convention in relation to the EURATOM Treaty:

Te Convention has already achieved consensus on the following points: Tere should be a single constitution treaty. Te Union should have a single legal personality and a single institutional structure.

Terefore it is necessary to repeal the EURATOM Treaty. We argue here that it is now appropriate -to abolish the 'special economic zone' that the EURATOM created, and to respect the principles of fair competition and the creation of a level playing feld for diferent energy sources, thereby ceasing to give nuclear energy undue advantages over its rivals. We ofer an analysis of the present functions of EURATOM and make proposals concerning their transposition into the Part Two of the Constitution (see Praesidium preliminary draf Constitutional Treaty (CONV 369/02)), while proposing that others be simply repealed."71

#### **8.3 The declaration of reform-minded Member States**

Te Treaty establishing a Constitution for Europe as signed in Rome on 29 October 2004 and published in the Ofcial Journal of the European Union on 16 December 2004 contained an important formal declaration which unfortunately subsequently fell into oblivion, until today. Declaration No. 54 made by the Federal Republic of Germany, Ireland, the Republic of Hungary, the Republic of Austria and the Kingdom of Sweden and annexed to the Final Act of the Intergovernmental Conference which adopted the Treaty of Lisbon, signed on 13 December 2007; reads as follows:

"Germany, Ireland, Hungary, Austria and Sweden note that the core provisions of the Treaty establishing the European Atomic Energy Community have not been substantially amended since its entry into force and need to be brought up to date. Tey therefore support the idea of a Conference of the Representatives of the Governments of the Member States, which should be convened as soon as possible".72

Brexit may be the right moment to rekindle this initiative.

<sup>71</sup> Ofcial statement by Convention Members: Marie Nagy, Renee Wagner, Neil Mac-Cormick Contribution to the Convention; THE EUROPEAN CONVENTION –THE SECRETARIAT -Brussels, 18 February 2003-, CONV 563/03 – Contribution 250.

<sup>72</sup> Consolidated Version of the Treaty on the Functioning of the European Union, 26.10.2012, Ofcial Journal of the European Union, C 326/47.

#### **8.4 The Reform of EURATOM debate- to be rekindled in the light of BREXIT**

Art. 208 EURATOM stipulates that the treaty is concluded for an unlimited period.

Te questions of whether EURATOM is an "eternal treaty" or if it can be phased out in view of a changed energy system, or if it should at least be adapted to the current reality of the energy market and be stripped of a certain allegiance to and promotion of nuclear technology may be rekindled by the current BREXIT debate. For such a move, Member States would fnally need to commit to a new, specifc EURATOM reform convention process.

As the Nuclear Monitor described in 2007: "*Obviously, EURATOM was meant to be for eternity. And its fathers were not even aware of nuclear's eternity problem since there are no explicit provisions for nuclear waste in the EURATOM Treaty!*"73

#### **8.5 The Withdrawal option since Lisbon**

Art. 50 of the Treaty on European Union sets out the procedure for a Member State to withdraw from the European Union should it wish to do so. It was frst introduced by the Lisbon Treaty in 2007.

Te corresponding Article, integrating e.g. Art. 50 TEU as also applicable for EURATOM, is Art. 106a EURATOM, introduced under Title III (Institutional and fnancial provisions)

In general, a Member State must notify the European Council of its intention to leave. Te withdrawal agreement must be negotiated in accordance with Art. 218 (3) TFEU.

Te UK government in its White Paper on BREXIT in February 2017 outlined very briefy that for the government, invoking Art. 50 TEU would also mean invoking the exit from EURATOM:

"When we invoke Article 50, we will be leaving EURATOM as well as the EU. Although EURATOM was established in a treaty separate to EU agreements and treaties, it uses the same institutions as the EU including the Commission, Council of Ministers and the Court of Justice. Te European Union (Amendment) Act 2008 makes clear that, in UK law, references to the EU include EURATOM. Te EURATOM Treaty imports Article 50 into its provisions….As the Prime Minister has said, we want to collaborate with our EU partners on matters relating to science and research, and nuclear energy is a key part of this. So our precise relationship with EURATOM, and the means by

<sup>73</sup> See EURATOM: Countries free to step out, Nuclear Monitor Issue: #658, 13/07/2007.

which we cooperate on nuclear matters, will be a matter for the negotiations – but it is an important priority for us – the nuclear industry remains of key strategic importance to the UK and leaving EURATOM does not afect our clear aim of seeking to maintain close and efective arrangements for civil nuclear cooperation, safeguards, safety and trade with Europe and our international partners. Furthermore, the UK is a world leader in nuclear research and development and there is no intention to reduce our ambition in this important area. Te UK fully recognises the importance of international collaboration in nuclear research and development and we will ensure this continues by seeking alternative arrangements."74

Te United Kingdom's White Paper on the exit from and new partnership with the EU says that the European Union (Amendment) Act 2008 "*makes clear*" that, in UK law, references to the EU include EURATOM. Te EURATOM Treaty "*imports Article 50 into its provisions*".

Te tasks for the UK when leaving the Union and EURATOM are enormous: Falling out of all European funded or co-funded research is one issue. UK needs to set up a new national regulatory system and re-negotiate contracts to ensure supply of nuclear fuel, ores and fssile materials, not only for nuclear energy and indirectly military use,75 but also for disrupting time-sensitive supply chains, which transit radioisotopes used in the diagnosis and treatment of cancer. Around 500,000 scans are performed in the UK every year using imported radioisotopes.

Te UK does not have any reactors capable of producing these isotopes and at present must rely on a continuous supply from reactors in France, Belgium and the Netherlands.

Tis situation may force Member States to decide to use the task of separation from the UK in order to straighten out issues in EURATOM by e.g. increased democratisation of EURATOM, the need of a level playing feld in the internal energy market, clarity on responsibility over the entire life cycle of an installation, full responsibility of the nuclear industry in case of accidents, phase out of old nuclear power plants in a coordinated and secure fashion, waste management and overall the urgent recognition that there is no common interest in promoting new nuclear energy in the Union.

<sup>74</sup> HM Government, Te United Kingdom's exit from and new partnership with the European Union, February 2017, page 44

<sup>75</sup> At present, UK maintains a feet of four nuclear-armed submarines in Scotland, each carrying 16 Trident missiles. Te UK parliament voted in 2016 to overhaul its nuclear forces and for building four new nuclear-powered submarines to carry US Trident missiles armed with modernized nuclear warheads for the next decades. At present UK has approx. 215 warheads; see

#### **9 The subsidy question – or how to shelter any public nuclear investment in a liberalised market?**

#### **9.1 The Hinkley Point C State Aid case**

At present, Austria, supported by Luxemburg, pleaded to the European Court76 to annul a positive state aid decision of the European Commission authorising substantial state aid for a new nuclear power plant at Hinkley Point in Somerset.77 Te case is now in appeal before the European Court of Justice (ECJ). Tere are several grounds on which Austria is fghting the decision of the European Commission. I will concentrate on Austria's argument on the notion that the promotion of nuclear power is an objective of Common Interest under EURATOM.

Afer the preliminary examination of the state aid package, the Commission had doubts as to the legality of the aid and opened a formal investigation.78 But in October 2014, almost a year later, afer intense back and forth between many stakeholders and the Commission (e.g. from EU independent power producers many using renewable energy as well as traders79) the, exiting, Commission under President Barroso gave a positive decision.80

Te most pertinent argument of the European Commission to allow the UK subsidy regime, its Feed-in Tarif option via the so-called Contract for Diference for Nuclear, combined with state guarantees, was in its view due to the fact that, EURATOM with its technology promotion approach in Article 2, describes a common European interest in the promotion of building new nuclear power stations.

.

<sup>76</sup> Austria v Commission Case T-356/15

<sup>77</sup> State Aid procedure SA. 34947 (2013/C) (ex 2013/N) – United Kingdom- Investment Contract (early Contract for Diference) for the Hinkley Point C New Nuclear Power Station

<sup>78</sup> Commission Decisions State aid SA. 34947 to initiate the formal investigation procedure, Brussels, 18.12.2013 C(2013) 9073 fnal

<sup>79</sup> In view of EURATOM, their main arguments are summarised by the Commission as follows: "Several parties commented that the aid measures are incompatible with the Altmark criteria, whereby electricity generation would be a standard economic activity and thus nuclear energy should compete with other electricity sources in a liberalised internal electricity market; the measure lacks an objective of common interest; there appears to be no objective criterion for justifying the duration of 35 years; it treats diferently nuclear power and renewable energy sources; it is based on unknown parameters and there is a lack of a cost-beneft analysis." See Decision Brussels, 08.10.2014C(2014) 7142 fnal cor

<sup>80</sup> Press Release IP/14/1093, full text of decision published in 2015:O.J. L 109/44 of 28.04.2015

In view of the above analysis and in view of the arguments put forward by Austria and supported by Luxembourg before the Court, this Commission's view does not refect the reality of the development under the EURATOM treaty and its limitations versus the development of an internal energy market. Te European Commission takes the position that the EURATOM Treaty establishes in Art. 2(c) that the Community shall "*facilitate investment and ensure, particularly by encouraging ventures on the part of undertakings, the establishment of the basic installations necessary for the development of nuclear energy in the Community*" and points out to Art. 40 EURATOM which envisages the Community publishing of illustrative programs "*to stimulate investment, indicating production targets*".

Te Commission correctly describes its obligation under Art.107 TFEU to investigate aid granted by Member States that distorts competition or threatens to do so. In addition, especially "*in the context of liberalised and increasingly competitive markets, the role of State aid control is increasingly important in EU electricity markets. Te commitment of the European Union to promote investment into nuclear must be carried out in ways which do not distort competition.*"

In the case of the UK aid mechanisms for Hinkley Point C, the Commission concluded that no distortion exists.81 Te Commission seems to see itself bound by the objectives of EURATOM: "*Te Commission however accepted that the measure was in line with the EURATOM Treaty. As recognised in past Commission decisions, the EURATOM Treaty aims at creating the "conditions necessary for the development of a powerful nuclear industry, which will provide extensive energy sources." Tis objective is further reiterated in Art 1 of the EURATOM Treaty, which establishes that "it shall be the task of the Community to contribute to the raising of the standard of living in the Member States (…) by creating the conditions necessary for the speedy establishment and growth of nuclear industries." On this basis, the EURATOM Treaty establishes the EURATOM Community, foreseeing the necessary instruments and attribution of responsibilities to achieve these objectives. Te Commission must ensure that the provisions of this Treaty are applied*".82

Te European General Court recently decided on the annulment plea by Austria. and with its judgment in efect underlying that there exists a compelling case to reform the EURATOM treaty and to clarify that there is no common interest to promote further nuclear power projects in the Union.

It was not only Austria and Luxembourg that addressed the Court over a decision by the EU Commission. Several German communal energy utilities as well as an Austrian and a German Green electricity producer and trader introduced an

<sup>81</sup> See Decision Brussels, 08.10.2014C(2014) 7142 fnal cor

<sup>82</sup> See Decision, Brussels, 08.10.2014C(2014) 7142 fnal cor, Rn 394 cons.

annulment procedure before the European General Court.83 Te Court declared their case as inadmissible, in line with its (in the majority of cases) restrictive view on access to justice for applicants concerning Commission decisions on state aid directed to a Member State granting aid to a competitor in the internal energy market. Tis adds to the efect of nuclear being a sheltered species within an internal EU energy market.

Te General Court in its judgment gave full support to the Commission for its decision), especially on its points concerning EURATOM Treaty provisions as legal bases for the justifcation of a common European interest under Art. 107 (3) (c) TFEU. Te General Court supported the assessment of the Commission that the state aid measure contributes to the long-term security of supply in particular "based on capacity forecasts and the role which Hinkley Point C's supply of electricity will play when it is expected to start operating".

Te General Court decided that the Euratom Treaty would underline the promotion of building and operating new nuclear power plants in the general interest, and that the authorisation of State aid within this argumentation would also be applicable by a Member State even if that public interest of one Member State is not shared by all the Member States.84

Te General Court followed and supported the views of the Commission and the United Kingdom that the Euratom Treaty gives the legal basis for state support for the construction and operation of nuclear power stations and this specifc UK aid package considering that a specifc nuclear market failure would allow for aid mechanisms in the common interest.

It remains unclear whether the General Court is trying to enlarge the current established defnition of "common" or European Union interest under Art. 107 (3) (c) TFEU in suggesting that the Euratom Treaty, via a quite lenient interpretation of Art. 2 (c) in Recital 97, equates the building of nuclear power plants as in the common interest. Tis view of the General Court following the Commission seems a quite novel interpretation of Art. 2 (c) which from its wording does not at all tackle the promotion of investment into nuclear power plants but rather seeks to defne the performance of the Euratom community as to "facilitate investment and ensure, particularly by encouraging ventures on the part of undertakings, the

<sup>83</sup> See Ordinance/Beschluss, Rechtssache T-382/15 Greenpeace Energy eG mit Sitz in Hamburg (Deutschland) und die weiteren im Anhang namentlich aufgeführten Klägerinnen Prozessbevollmächtigte: Rechtsanwältinnen D. Fouquet und J. Nysten

<sup>84</sup> For the following and an analysis in detail see: D. Fouquet, Te Hinkley Point C Judgment of the General Court in view of a changing internal electricity market RELP Volume 9 Issue 1 2018, p. 35 cons..

establishment of the basic installations necessary for the development of nuclear energy in the Community". Te Euratom Treaty itself then clarifes what is meant with the concrete execution of this investment policy under Art. 40. Specifc instruments such as the illustrative programmes under Article 40 and the publication of projects under Article 44 are examples but there is no mention to the promotion of investment of nuclear power plants. Te building of nuclear power plants remained, from the frst day of the Euratom Treaty, solely in the competence of a sovereign national State. Te Euratom Treaty, one might say, facilitates the groundwork for nuclear research and safety policies but certainly does not establish a Community project of investment facilitation into nuclear power plant builds.

#### **9.2 The European Commission and the Hungarian Nuclear Build Case**

In the same line as the Hinkley Point case, the Commission has also given a green light and recently accepted a state aid package by Hungary for a new Russian-built nuclear power reactor in Paks, Hungary. Tis is all the more astonishing as Russian involvement in a large part of European electricity could see, in principle, the same security concern arise that the Union has in the feld of gas supply from Russia. A situation which has led to the adoption of serious safety regulations in the gas feld in the Union. Moreover, the situation around Rosatom and waste export issues from Hungary to a country which seems set to not allow open and access to its waste processing and storage facilities adds signifcantly to security considerations. Concerns on security of supply lead the European Union to introduce a specifc energy security strategy and one of the major reasons for such was its on Russia.85

Te Russian Federation and Hungary signed in January 2014 a specifc intergovernmental agreement (IGA) on a nuclear programme.86 Based on the IGA,

<sup>85</sup> Te Commission underlines the security issues and needs for a strategy in view of " geopolitical events, i.e. the crisis in Ukraine. Temporary disruptions of gas supplies in the winters of 2006 and 2009 already provided a wake-up call for the EU, underlining the need of infrastructure development, increased cooperation and of a common European energy policy. Since then, the EU has done a lot to strengthen its energy security in terms of gas supply. However, the work is not completed yet and further steps are needed. ", see European Commission, Memo, Questions and answers on security of energy supply in the EU, 28 May 2014

<sup>86</sup> Agreement between the Government of the Russian Federation and the Government of Hungary on cooperation on peaceful use of nuclear energy, concluded on 14 January 2014 and ratifed in Hungary by Act II of 2014 of the Hungarian Parliament (2014. évi

both countries shall cooperate in the maintenance and further development of the current Paks nuclear power plant (Paks NPP). Tis includes the design, construction, commissioning and decommissioning of two new power units 5 and 6 with VVER (water-cooled water moderated) type reactors with a combined capacity of at least 1 000 MW in addition to the existing power units 1–4. Te operation of units 5 and 6 is intended to compensate for the loss in capacity when units 1–4 (2 000 MW altogether) retire. Hungary submitted that units 1–4 will be in operation until the end of 2032, 2034, 2036 and 2037 respectively, without envisaged prospect of further lifetime extension.

However, the Commission seems doomed to repeat the Hinkley Point reasoning for the Paks State aid package:

Te Commission again underlined that under the EU Treaties, Member States are free to determine their energy mix and have the choice to invest in nuclear technology. Te Commission's role would only be to ensure that when public funds are used to support companies, this is done in line with EU state aid rules which aim to preserve competition in the Single Market.

Te Commission's state aid investigation defned and concluded that in view of a waver by the Hungarian state to ask for a higher return of its investment than a private investor would ask for, the mechanisms constitutes State aid within the meaning of Article 107(1) TFEU. Tese rules require state aid to be limited and proportionate to the objectives pursued in order to be approved.

According to the Commission, Hungary had proven that the measure avoids undue distortions of the Hungarian energy market. In particular, it has made a number of substantial commitments to limit potential distortions of competition87:

87 Te main observations and arguments for the decision of the Commission when it comes to proportionality were as follows:

To avoid overcompensation of the operator of Paks II, any potential profts earned by Paks II will either be used to pay back Hungary for its investment or to cover normal costs for the operation of Paks II. Profts cannot be used to reinvest in the construction or acquisition of additional generation capacity. To avoid market concentration, Paks II will be functionally and legally separated from the operator of the Paks nuclear power plant (the incumbent MVM Group) and any of its successors or other state-owned energy companies. To ensure market liquidity, Paks II will sell at least 30% of its total electricity

II. törvény a Magyarország Kormánya és az Oroszországi Föderáció Kormánya közötti nukleáris energia békés célú felhasználása terén folytatandó együttműködésről szóló Egyezmény kihirdetéséről), quoted in EU Commission decision COMMISSION DE-CISION (EU) 2017/2112 of 6 March 2017, published in Ofcial Journal L 317/45 on 1st of December 2017 on the measure/aid scheme/State aid SA.38454 — 2015/C (ex 2015/N) which Hungary is planning to implement for supporting the development of two new nuclear reactors at Paks II nuclear power station

In its argumentation during the investigation procedure, Hungary even compared the EURATOM Treaty with the former European Coal and Steel (ECSC) Treaty on the basis that they both are of a sectoral nature and that the ECSC Treaty contains a far-reaching prohibition against State aid which was, in practice, aligned with Art. 107 TFEU by virtue of Art. 67 and Art.95 of the ECSC Treaty. Hungary stated that in applying the rules on State aid laid down in the TFEU the Commission would misconstrue the regulatory goal pursued by the drafers of the EURATOM Treaty, which lacks any specifc State aid provisions.88

Many who gave comments during the full investigation procedure (Austria, IG Windkraf, Oekostrom AG, Greenpeace Energy and others) outlined once again, in this spectacular state aid case for nuclear power, that subsidising the construction and operation of new nuclear power plants is not provided for under the principles laid down in Article 107(3) TFEU as being compatible with the internal market. Nuclear power was clearly defned as not being a new, innovative or sustainable technology for electricity generation capable of contributing to achieving the EU goal: increasing the proportion of energy generated by renewable technologies. Moreover and once again, as especially underlined by Austria, neither Article 2(c) nor Article 40 EURATOM would allow for the promotion of new nuclear investments to be considered as an objective of common interest due to the fact that no common interest within the meaning of Article 107(3) TFEU could be derived or integrated from the EURATOM Treaty. In addition, it was stressed by Austria and others, also once again, that such an objective would be in confict with other principles of the Union under TFEU, namely the precautionary principle under Article 191 TFEU and the sustainability principle of the Union.

Again, the Commission upheld the applicability of State aid rules in support of nuclear power; but remained somewhat true to its view that "*in fact, whilst Article 2(c) of the EURATOM Treaty creates an obligation on the Union to facilitate investments in the feld of nuclear energy and Article 40 of the EURATOM Treaty obliges the Union to publish illustrative programmes in order to facilitate the development of nuclear investments, the EURATOM Treaty does not foresee any specifc rules to control the fnancing, by a Member State, of such investments. According to Article 106a (3) of the EURATOM Treaty, the provisions of the TFEU shall not derogate from the provisions of the EURATOM Treaty*".89

output on the open power exchange. Te rest of Paks II's total electricity output will be sold by Paks II on objective, transparent and non-discriminatory terms by way of auctions, see. European Commission, press release of 6 March 2017- IP/17/464

<sup>88</sup> See published EU Commission decision, in Ofcial Journal L 317/45, para 122.

<sup>89</sup> See published EU Commission decision, in Ofcial Journal L 317/45 para 277.

It seems that (and in case the European Court does not accept Austria's plea) the need to reform EURATOM remains a pressing necessity. Without a reform of EURATOM, there cannot be a level playing feld in the Union for other energy technologies and modern energy services with renewable energy producers being especially concerned.

#### **10 Conclusion**

From the above, it is clear that EURATOM never was a harmonising treaty for a joint common approach and objective. It was, from the beginning hampered, by interferences from the nuclear weapon state France and later the UK, when joining EURATOM, in order not to hinder their own national interests in nuclear weapon planning and development.

Te EURATOM Treaty and its original objective of promoting and guaranteeing nuclear energy development no longer corresponds to modern reality and is now completely outdated.

Te EURATOM Treaty does not ft in the actual internal energy market driven by consumers' interests. Te technology it was established to support is no longer economically competitive in electricity generation. Tere is now a multitude of players to guarantee security of supply without the risks and internalised burdens associated with nuclear energy production, storage and radioactive waste.

Without heavy state aid and guarantees, new nuclear power has no leg to stand on.

Afer more than 60 years of industrial production of nuclear power plants, now is the time to say goodbye and to ensure the safe dismantling of all obsolete nuclear power stations as well as safe fnal storage of all waste in and within the European Union.

European Nuclear policy will, in the coming years, have to manage nuclear risks, decommissioning of reactors and nuclear waste management. Tis is not covered by the treaty.

As it does not appear legally feasible for EU Member States to exit EURATOM without leaving the EU, there is an urgent need to revise the treaty in accordance with the modern environmental, social and economic objectives of the European Union.

A paramount task for Europe!

In an EU with a nuclear legacy of hundreds of old nuclear power plants, an understanding between those Member States that still want nuclear energy as part of their energy mix and those who are phasing out or never had nuclear energy as a source may be appropriate. Tis agreement, in light of a reform of the EURATOM treaty, should see the creation of a European dismantling and safe storage support mechanism which integrates the whole life cycle approach and full responsibility of the nuclear power producers. It should establish a progressive European liability regime and the reform needs to remove any mention from the archaic preamble of the EURATOM treaty of a promotional objective while fully opening the treaty to democratic scrutiny and a legislative process that are totally commonplace in a parliamentary democracy. Afer such reform of EURATOM, any new nuclear power will need to face the full market conditions and would not be able to hide behind its ancient subterfuge. Afer more than 60 years, there is no time better than the present.

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## **Economic Management of Future Nuclear Accidents**

Tomas Kåberger1

#### **Abstract**

Nuclear core melts with large emissions of radioactive substances are not paid for by nuclear power companies but by the victims and by taxpayers. Tis subsidy is ofen the result of legislation with that purpose.

Experience shows that the relative frequency of such accidents is several orders of magnitude larger that the risk estimates publicised by the nuclear industry and nuclear proponents.

Tis chapter describes the how the problem was created in order to make the nuclear development economically possible. In the end, it is described how a market may be created based on compulsory paying capacity, possibly provided via catastrophe bonds that would internalise many costs of accidents. At the same time, such regulations would provide a market evaluation, by responsible actors, of the nuclear risk costs.

<sup>1</sup> Tomas Kåberger, Chalmers University of Technology, Göteborg, Sweden, tomas.kaberger@ chalmers.se

#### **1 Creating the problem**

As private cars were introduced and became more powerful during the 20th century they created a social problem: People who could readily aford to buy a car, were sometimes unable to pay the costs of the damages they caused when crashing into other cars, people or houses.

Te frequency and cost of car accidents, however, were small enough for car drivers to manage the costs by sharing them. Legislation was introduced making trafc insurance compulsory, ensuring that compensation could and would be paid even for very unlikely large accidents. Today, this compulsory payment capacity may be in the order of 1 000–100 000 times the price of a car in many countries.

Regarding nuclear reactors, accidents pose a similar problem: Companies may well aford to pay for the construction of a nuclear reactor. Still, they are not able to pay for the damages afer a nuclear core has melted and radioactive materials escaped from a broken containment.

Tis was understood already in the mid 20th century, afer the US report on consequences of a major reactor accident was published in 1957. [Beck et al 1957]

In retrospect, this report appears naive as the understanding of the risks of ionising radiation was not well developed. Still, the economic impact of an accident was understood as a so large liability that no private investor would be interested in investing in a nuclear power plant. At the same time there was a common notion that nuclear power was desirable. Terefore, according to dominant actors, economic market conditions should be created to make nuclear investments appear proftable.

Jasper [1989] describes how the nuclear industry asked a group of legal experts to provide a proposal for a legislation that would make nuclear power proftable by socialising the costs of potential accidents.

For car accidents a solution was to share the costs among all car users via mandated insurance. In the nuclear case, a tiny part of the liabilities were shared, but it was necessary to relocate most of the costs outside the nuclear industry.

Te report by Murphy et. al [1957] and the resulting Price-Anderson Act have served as blueprints for nuclear accident legislation in most countries with privately owned nuclear power reactors, as well as for international conventions2 . Te key elements are:

1. In case of a nuclear reactor accident the operator of the plant is the only one actor that can be held liable.

<sup>2</sup> Most notably the Paris convention on third party liability in the feld of nuclear energy. See IEA 1989.

Tis reduces the cost of building a reactor, as all suppliers are relieved of the risk that faulty equipment or mistakes during construction may imply economic costs to them, were they to cause a reactor accident. Without this component in the legislation, large companies would refuse to deliver because they either would have to accept high insurance costs, or they would run the risk of bankruptcy if they had delivered something that later was declared the cause of an accident.

2. Te economic liability of the operator is strictly limited to an amount far below the potential costs of a major accident.

Tis component in the legislation has two important aspects. Without a limited accident liability the operator would face bankruptcy in case of a major accident. To banks and others, considering lending money to an operating company, that risk for bankruptcy would be a reason to increase interest rates to compensate for their risk of losing their money in case of an accident. Increased interest rates would lead to higher costs of nuclear power.

An important consequence of this legislation is that the victims of large accidents are without the right to compensation. It is sometimes assumed that the governments, i.e. all people paying taxes in the country where the reactor is operating, take over the full liability. However, this is rarely explicitly stated, as the size of potential accidents is large also in relation to government budgets. It follows that the actual victims of nuclear accidents will carry a large part of the burdens, for example as loss of their habitat.

Deliberately externalising environmental costs is an extraordinary measure in economic policy. Arguments in support of this kind of legislation sometimes illustrate why. In Sweden, the law was based on a government commission that justifed this subsidy by arguing "As seen from the statements above, it is necessary to utilise nuclear power – at any cost – if we do not want to accept a lowered standard of living". [SOU 1959:34 p.25]. (In Swedish: *"Såsom framgår av det ovan sagda blir vi nödgade att ta atomkrafen i anspråk – kosta vad det kosta vill – om vi inte vill acceptera en standardsänkning."*)

We may speculate if this blunt expression of illogical economics is a result of the commission secretary intentionally leaving a clear signal to coming generations, or an expression of enthusiastic nuclear zeitgeist beyond rational economic thinking.

Many would claim that this was a decision driven by nuclear weapon ambitions and therefore outside the realm of economic logic.

Regardless of the motives, legislation limiting the liabilities of nuclear actors appears as decisive energy policy. Te law had immediate and signifcant economic implications for the competitiveness of this particular energy technology. It was designed to, and served as, a substantial subsidy.

In the half century since this legislation was spreading over the world, evidence has accumulated regarding both the frequency of large accidents and the health impact of ionising radiation.

#### **2 Experience**

Te frequency of core melts and of accidents with emissions far exceeds earlier expectations. We now count around3 10 nuclear power reactors whose operations were closed afer full or partial core melts4 . Out of these core melt events, Chernobyl and three Fukushima reactors have resulted in signifcant emissions of radioactive materials.

Tis experience has come during a period where IAEA estimate the accumulated number of reactor operation years is around 17 000. [IAEA 2017]. So far, the relative frequency of core melts has been one in a couple of thousand reactor-years, while core melts with signifcant radioactive contamination has been in the order of one in 5 000 reactor-years.

Regarding ionising radiation, the series summary reports provided by the International Commission on Radiation Protection, ICRP, now expects roughly 10 times as many cancer cases from a certain collective dose of ionising radiation compared to the estimate in the 1950s.

Te scientifc issue of health efects of ionising radiation is one of the most intensive scientifc controversies as the economic stakes involved are high. One reason is the industrial interests to defend the privilege of legally limited liability. Another, the potential liabilities and political implications of the exposure of people to radiation from nuclear weapons testing5 . Te latter became an issue in

<sup>3</sup> Te words "around" is used as there are other reactors closed afer core damages, while not immediately afer, and there are reactors whose status as commercial power reactors are unclear.

<sup>4</sup> While defnition of core melts as well as which reactors to include among power reactors may be challenged, a rough list may include St Lucens GHHWR in 1966, Bohunice A1 in 1977, TMI 2 in 1979, Chernobyl 4 in 1986, Greifswald 5, and fnally three reactors at Fukushima Dai-ichi in 2011. [World Nuclear Association, 2016]. Cochran [2011] also include Te Sodium Reactor Experiment, Sankt Laurent A-1 and A-2 as well as Chapelcross-2, but not the Bohunice A1, and ends up with 11 power reactor core melts. Tere are also non-power producing reactors where core melting has occurred.

<sup>5</sup> Tis is the same kind of scientifc controversy as those previously experienced with tobacco smoking and asbestosis.

1981 when a UN committee estimated nuclear weapon testing being responsible for 150 000 premature deaths6 .

Te costs of severe reactor accidents may be in the order of several hundred or even several thousand billions EUR or USD. Costs resulting from such accidents include evacuation of people, health efects among people despite evacuations, costs of limiting emissions of radioactivity, decontamination as well as some sort of decommissioning of the remains of reactors and waste management.

Chernobyl and Fukushima experiences show these costs are not within the capacity of even the largest nuclear operators in the world.

In the Chernobyl case, most of the consequences occurred in Belarus and the Ukraine. As the costs were initially paid out of the Soviet Union budget, most of the resources came from the Soviet republic of Russia. When Russia withdraw from the Soviet Union, they could stop paying, which provided an economic incentive for Russia to dissolve the union. A compilation of incomplete cost assessments are provided by Samets & Seo 2016. Health efect due to low-level exposure is not included in the cited studies.

Ukraine had difculties managing the costs of safeguarding the Chernobyl site. Hence, taxpayers in other European countries have been forced to assist in fnancing the construction of a shelter over the damaged reactor, which would reduce the distribution of radioactivity over the coming 100 years. In order to protect their own interests, the potential victims have been made to pay for prevention.

Fukushima is still in a state where it is impossible to estimate a limit to the costs as the long term strategies to control the radioactivity are not yet fxed. Suzuki et al (2016) estimate costs excluding health efects at almost 100 trillion yen, or 1 trillion US dollar.

Using experience to get a possible order of magnitude of the real risk cost of nuclear reactors, we may combine 100 billion -1 trillion US dollar per accident with a relative frequency of one in 5 000 reactor-years which would give an average risk cost of 20–200 million dollar per reactor-year. With reactors producing 5–10 TWh/year this would provide a range from 0.2-4 cent/kWh. Despite enormous uncertainties the accumulated experience sufces to dismiss the idea that the risk costs are "clearly negligible".

Te argument that externalising the costs of accident risks is acceptable because the risk costs are negligible is not consistent with experience.

Te question is instead how to manage this risk costs in a rational way.

<sup>6</sup> United Nations Comprehensive Study on Nuclear Weapons 1981, p 86, § 260

#### **3 Managing nuclear risk**

Ofen, a risk of lost property that is large for the actor exposed, is managed by an insurance system. When there is a large economic risk for third parties, such as with car accidents, the insurance system is made compulsory7 .

In an insurance market, voluntary actors use experience and other relevant information to reach a price for the risk, and the actors ofering to share the risk, normally insurance companies, become economically liable for the outcome.

For nuclear accident risks, the analogy with the compulsory car insurance system is, however, not immediately applicable. Te reason is that insurance companies are not able to cover damages of the magnitude of nuclear accidents. With less than 500 nuclear power reactors in the world, the owners of reactors cannot fnance an insurance system by themselves. Tis argument has been used to claim that a compulsory insurance is not possible.

However, it is possible to fnd insurance systems that do not rely on traditional insurance companies. Such systems have been developed to manage natural disasters and other rare catastrophes. Radetzki & Radetzki [2000] describe how catastrophe bonds8 could be used for nuclear accident liabilities.

Operators could be forced to pay for catastrophe bonds to collect capital enough to compensate victims of large accidents. Such bonds would be normal interest bearing bonds, were those who provide capital are ofered an extra premium on the condition that the bond value is used to cover the cost of the catastrophe in question if realised. Using the catastrophe bond market opens access to relevant magnitude of capital to cover also large nuclear accidents, and the premium paid by the reactor operators would provide a measure of the accident risk.

Creating the market would include specifying the kind of costs to be covered caused by an accident. Property costs, compensations for evacuations are directly payable to the victims. What may be signifcant costs for health efects will not be individually identifable but may occur as large economic burdens on health, or medicare, insurance systems. Tis liability may then be payable to the health insurance systems rather than to individuals, even when individual sufering may be a signifcant part of the economic impact.

<sup>7</sup> Te reason for a compulsory insurance is that the responsible actor may lack paying capacity. Electric Power Companies may be very large, but no EPC is large enough to manage a large reactor accident. Even more important is that EPCs ofen organise nuclear power plants in separate limited liability companies to avoid liability for other risks including future waste and decommissioning costs.

<sup>8</sup> For a defnition of catastrophe bond, see Investopedia 2017.

Another relevant issue in the regulation is how large the required paying capacity shall be. Tis may prove an important issue if the paying afects every provider of capital for any accident. As described by Radetzki & Radetzki I have also earlier suggested that a solution that reduces the importance of this capacity decision I have presented is to make the catastrophe bonds consecutive rather than exchangeable. Consecutive bonds would be specifed so that one bond may be used to cover cost between 1 000 M USD and 1 001 M USD, while another bond would only be used if the accident cost more than 1 001 M USD to cover the next million. Te former may be expected to cost more than the latter, as the probability of the larger accident is lower than the probability of the smaller.

Under such a regime of consecutive bonds the importance of the level of required capacity may be reduced as the cost of marginal bonds would be small when reaching trillions of USD.

By introducing compulsory arrangements of this kind, a market value would be created for nuclear accident risks. Political debates on probabilities and efects would be replaced by professional assessments made by parties who would have to assume economic responsibility for their assessments. Tis is likely to result in more scientifc assessments of risks and their economic value.

#### **4 Possible consequences, and imperfections**

Te obvious consequence of a compulsory insured paying capacity for third party liabilities, is that the operators would pay a market price of the risk costs. Tis would reduce their competitiveness in relation to other energy technologies.

Still, this proposal is embraced by many pro-nuclear spokespersons as they expect the assessment in the market will be that most nuclear reactors are so safe that the risk costs are small. Paying a small amount to cover the full accident liability would be a low price to do away with the political arguments of accident risks.

At the same time nuclear critics fnd the proposed market solution palatable as they are convinced the price for nuclear catastrophe bonds would be so high reactors would be out-competed by modern renewable energy alternatives.

Tere have been some critical arguments. Swedish nuclear opponent Eija Liljegren-Palmær has argued that the nuclear industry has such an advantage regarding access to information that they would be able to mislead representatives of fnancial institutions, such as pension funds, to accept theoretical calculations with too small premiums. Instead of misleading politicians representing tax payers, they would mislead those managing the same tax-payers pension funds.

Such a risk cannot be disregarded. When Compulsory, government controlled pension funds are involved the risk is similar.

However, ofen pension funds are managed without pro-nuclear policy objectives. Further, markets would allow individuals or groups to withdraw their money from funds they see exposing them to risks. Tus there would at least be more of voluntary risk taking then afer parliamentary majority decisions.

However, there are proponents who would say that the hysteria around radiation is making the assessments biased so as to over-estimate risk costs. Here, the response is that the nuclear industry only has to fnd a sufcient number of fnancial actors who see the realistic risks to buy the required paying capacity via the bond market. Te required capacity is likely to be small compared to potential global capital markets.

Tere is a risk in both directions that lack of information or ignorance may result in decisions resulting in misleading pricing of the accident risks. However, some may lose a small potential income as they over estimate risks. To others entering the marked via misinformed decisions may lose their assets. Still, the victims and taxpayers are not afected, as those who voluntarily took on the risks will carry both the economic liability and guarantied paying capacity.

For electricity consumers a demand on full paying capacity would not have a signifcant efect on electricity prices. In the short term this is true as nuclear power rarely provide the marginal, price setting generation. In the longer term, the set of diferent generation technologies now available at similar costs is providing many alternatives, and in most parts of the world nuclear is clearly not an option when considering new capacity.

If the market evaluation of the risk turns out low enough, reactors would continue to operate and the insurance would not afect short term marginal cost and therefore not the electricity price.

If, however, the risk cost was high and reactors forced out of the market, the cost of renewable energy has lately proven so low that the price efect would also be small.

As described elsewhere, [Kåberger 2001], this reform may come together with the internalisation of fossil fuel externalities. Making fossil fuelled generators pay for local air-pollution and greenhouse gas emissions would initially have a greater efect on electricity prices as fossil fuelled power ofen constitute price-setting marginal generation. An important reason to do both is that nuclear power under a carbon pricing regime may be ably to continue operating with higher risk costs than in a situation without pricing emissions from fossil fuelled generators in the short term.

#### **5 Conclusion**

Experience shows that currently prevailing regulation of nuclear accident liabilities is a signifcant subsidy to nuclear power. As new, renewable energy supply is economically competing with existing nuclear power, re-regulating accident liability will have importance for the rate of decommissioning nuclear reactors and therefore also for the number of reactor accidents in the future.

Experience of large reactor accidents with signifcant emission of radioactivity has shown that even the most endowed reactor owners are unable to compensate the victims. Governments concerned also have had great difculties in meeting the need for compensation. In the Chernobyl case tax payers of other countries have even stepped in to subsidise the mitigation of the consequences.

Te experience of reactor owners creating signifcant costs they are unable to compensate, has proved to be a problem similar to when the owners of cars caused damages beyond their paying capacity.

In the current era of competitive electricity markets this opportunity appears all the more urgent for markets to fnd the efcient rate of change of power supply.

As the catastrophe bond concept and market was developed by the end of the 21st century it has become possible to address the problem of large nuclear accidents by making it compulsory for anyone operating a nuclear reactor to be able to pay for the consequences of large accidents. As with cars, the required paying capacity may be orders of magnitude higher then the cost of building a reactor, but the societal problem of rolling-of external costs on citizens and communities around nuclear accident sites can be addressed to some degree.

#### **References**



**Open Access** This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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## **Corporate Policies of the Nuclear Vendors**

Stephen D. Thomas1

#### **Abstract**

Te nuclear reactor supply industry, once seen as an essential component of diversifed companies with an electrical engineering capability, is now seen in Europe, USA and Japan as a risky niche business for specialist companies. Vendors from Russia and China now appear likely to win the vast majority of new reactor orders although in both cases, their technologies have not been reviewed by experienced Western regulators. Russia may not have the fnancial strength to back up its large order book while China has yet to win orders in open export markets.

<sup>1</sup> Stephen Tomas, University of Greenwich, United Kingdom, stephen.thomas@greenwich. ac.uk

#### **1 Introduction**

When nuclear power began to be commercially exploited in the 1950s, it was seen by the major 'national champion' diversifed engineering companies as the technology of the future and therefore a key capability to acquire. In the USA, such companies included Westinghouse and GE, in Germany Siemens and AEG, in Japan Hitachi, Mitsubishi and Toshiba and in France Compagnie General d'Electricité (CGE) and Empain Schneider. Russia also developed its own technologies but it had little impact outside the Soviet Republics and the Comecon countries until the collapse of the Soviet Union in 1990. China has only become a force in nuclear markets since 2008, while, for various reasons, India, despite pursuing nuclear power since the 1960s has not built a competitive nuclear reactor supply industry.

By 2018, the picture was very diferent to that of the 1950s. Nuclear power had consistently failed to meet expectations and was increasingly seen as a technology that was not central to corporate ambitions. Westinghouse had sold its nuclear division to the British government in 1999 who sold it on to Toshiba in 2006; GE efectively exited the business in 2006 leaving it largely in the hands of its Japanese collaborator, Hitachi; Siemens exited the sector in 2009; AEG collapsed in the mid-70s; Mitsubishi had made little impact outside Japan; the French companies had been reorganised several times. Te sector has generally not been proftable and by 2016, Areva, the latest incarnation of the French nuclear industry was efectively bankrupt afer six consecutive years of losses and was split up with a majority stake in its reactor division being bought by the French utility, EDF, reverting to its previous name, Framatome. Westinghouse declared bankruptcy in March 2017 and was sold by Toshiba to a Canadian company, Brookfeld Business Partners. However, there were major players both integrally connected to their national government. Russia's champion was the massive Rosatom group which, through a huge number of subsidiaries, contained the whole range of nuclear activities including fuel cycle, reactor sales, and reactor ownership and operation. China had three vendors all with a wide range of nuclear activities, attempting to make an impression on the international market: China General Nuclear (CGN), China National Nuclear Power Corporation (CNNC) and the SNPTC division of State Power Investment Corporation (SPI). Korea emerged as a potential reactor exporter in 2010 through Korea Hydro Nuclear Power Co (KHNPC) winning an order for four reactors to the United Arab Emirates. By 2018, it had not won further export orders and it remains to be seen whether it can compete with the stronger, better established vendors.

Other vendors include, Atomic Energy of Canada Limited (AECL), Mitsubishi and Te Nuclear Power Corporation of India Ltd (NPCIL). However, their prospects for exports appear limited and they are not examined further

In this chapter, we examine the strategies of the seven established reactor vendors: Framatome, Rosatom, Hitachi-GE, Toshiba/Westinghouse, CGN, CNNC and SPI. We look at their strengths and weaknesses including:


#### **2 The historical structure**

Te main pioneers of the technology were two US companies, Westinghouse and GE ofering light water cooled and moderated reactors developed from submarine propulsion reactors. Westinghouse developed the Pressurised Water Reactor (PWR) while GE developed the Boiling Water Reactor (BWR). Japan and Germany tried to develop their own technologies but with limited success and their main efort went into licensing and indigenising these US technologies. Te companies took licenses with their long-term partners in the heavy electrical industry, Mitsubishi and Siemens with Westinghouse and Hitachi, Toshiba and AEG with GE. France followed its own technological route until 1969 when it too adopted US technology, Empain Schneider licensing the PWR from Westinghouse and CGE, the BWR from GE.

Te exceptions to this pattern of licensing US were the UK and Canada. Te UK tried to develop its own technologies (gas-cooled, graphite moderated reactors) until 1977 when it adopted the Westinghouse PWR. Unlike the other countries, the major companies in the UK, like GEC never put their weight behind the nuclear programme preferring to take stakes in weak consortia that frequently failed. By the time the PWR was adopted, it was too late for UK companies to develop a distinctive capability. Canada developed heavy water cooled and moderated reactors, Candu, for its home market and it has exported these to Argentina, China, Korea, Romania, India and Pakistan. A particular attraction for some buyers was that unlike PWRs and BWRs, this design did not need enriched Uranium. Enrichment is a technology with military sensitivity and is controlled mainly by USA, Russia, UK and France and using PWRs or BWRs inevitably involves some degree of dependence on these countries. However, the technology AECL is ofering is old and appears to have very few prospects of new orders.

#### **3 The vendors**

#### **Toshiba**

Toshiba's roots in the nuclear business go back to the 1960s and its participation in Japan's Boiling Water Reactor (BWR) programme. Japan's electricity system is split into two parts with all equipment for the northern half, including Tokyo Electric, supplied by Toshiba and Hitachi using designs licensed from GE. Tis pattern continued with nuclear power. Japan's frst BWRs were imported, then orders were split reasonably evenly between Hitachi and Toshiba with, typically, one of the companies the primary contractor for the nuclear steam supply system (NSSS) and the other supplying the other high value item, the turbine generator. Te US market collapsed in the mid-70s and Hitachi and Toshiba took a more central role in new reactor design development, notably with the Advance Boiling Water Reactor (ABWR) announced in 1980 and with its frst order in 1986. An important exception was the development of the Economic Simplifed Boiling Water Reactor (ESBWR) announced in 2000, which was very much a product for the US market and has not been seriously considered for Japan.

Toshiba and Hitachi never played a lead role in exports of the BWR with, for example, the most recent BWR export, for Taiwan, going to GE. Whether this was a conscious decision by the Japanese companies not to pursue exports or due to restrictions imposed by their licensor, GE, is not easy to determine. However, other technology licensees such as Siemens and Framatome chose to end their license agreements, in 1975 and 1982 respectively, when they felt they did not need the support of their licensor.

Tis arrangement between Hitachi, Toshiba and GE ended in 2006 when Toshiba chose to buy the Westinghouse reactor division, outbidding its rivals Mitsubishi and Hitachi. Te Westinghouse nuclear division had been bought by the UK government in 1999 via its fuel cycle company, British Nuclear Fuels Limited (BNFL) for \$1.1bn. BNFL subsequently bought ABB's and Combustion Engineering's nuclear business for \$485m2 . Te government planned to privatise BNFL and presumably create a reactor vendor business. Tese plans were destroyed by the efective fnancial collapse of BNFL in 2002 and the subsequent break-up of BNFL's assets including the sale of a 77 per cent stake in the Westinghouse/ABB/Combustion Engineering group to Toshiba in 2006 for \$4.16bn3 . Inevitably, this led to the breaking of the

<sup>2</sup> Te Times 'BNFL makes Pounds 300m US acquisition' December 30, 1999

<sup>3</sup> Te Shaw Group took a 20 per cent stake and Ishikawajima-Harima Heavy Industries Co. purchased the remaining 3 per cent stake. Associated Press 'Toshiba completes acquisition of Westinghouse, U.S. atomic power plant company' October 17, 2006

relationship between Toshiba and GE and Hitachi. Toshiba chose to continue to ofer the ABWR design independently. Tis design had received generic regulatory approval from the US safety regulator, the Nuclear Regulatory Commission (NRC) for 15 years from 19974 . Toshiba applied to renew this approval in 2010, but in July 2016, the application was withdrawn because of the lack of potential US customers5 . One utility, NRG, had said it would buy two ABWRs in 2009 for its South Texas prospect, but this project made little progress and is unlikely to go ahead.

Toshiba's main option is the Westinghouse AP1000 PWR, which in 2006 appeared close to completing regulatory review by the NRC, although this was only fnally achieved in 2011. Four AP1000s were ordered for the US market, two each for the Summer and Vogtle sites and construction started on these in 2013/14 but a combination of serious cost overruns and delays, and the bankruptcy of Westinghouse led to the abandonment of the Summer project in 2017 with the Vogtle project also at risk of abandonment

Te AP1000 was submitted to the UK safety regulator, Ofce of Nuclear Regulation (ONR), in 2007 in the Generic Design Assessment (GDA) process but the process was suspended in December 2011 due to the lack of UK customers. At that time, there were still 51 design issues to be resolved6 . Subsequently, Toshiba bought a 60 per cent stake in a UK-based consortium, NuGen, which plans to build three AP1000s. Te GDA process was re-opened in 2014 and was completed in 20177 . Toshiba sold its bankrupt Westinghouse nuclear division in 2018 and it is not clear whether it expects to continue to try to sell reactors. Te NuGen project seems unlikely to proceed, at least using AP1000 technology. Te Combustion Engineering capability gave Toshiba System 80+ PWR technology, which had received regulatory approval from the NRC in 1997, while the ABB stake gave them a 50 per cent stake in a company, HTR, ofering high temperature gas-cooled reactor technology, HTR-Modul. Te System 80+ and HTR-Modul capabilities were not directly marketed but these technologies had already been licensed, the System 80+ to Korea and HTR-Modul to South Africa and China.

<sup>4</sup> For details of NRC reactor design reviews, see http://www.nrc.gov/reactors/new-reactors/ design-cert.html (Accessed March 1, 2016)

<sup>5</sup> https://www.mynewsdesk.com/toshiba-global/pressreleases/toshiba-withdraws-application-to-u-s-nuclear-regulatory-commission-to-renew-abwr-design-certifcation-1462359 (Accessed July 15, 2016)

<sup>6</sup> http://www.onr.org.uk/new-reactors/ap1000/index.htm (Accessed July 15, 2016)

<sup>7</sup> http://www.onr.org.uk/new-reactors/ap1000/index.htm (Accessed September 2, 2018)

#### **Hitachi**

Te history of Hitachi in the nuclear business was intimately connected with that of GE and Toshiba until 2006. Under the reorganisation resulting from Toshiba's acquisition of the Westinghouse nuclear division, two new joint ventures were set up: GE-Hitachi, 80 per cent owned by GE which was to operate primarily in the USA and Hitachi-GE, 80 per cent owned by Hitachi, which was to operate in all other markets8 . GE-Hitachi applied to renew the license for their version of the ABWR in 2010 despite it having no immediate US customer, but by February 2016, little progress appeared to have been made on this. Te ESBWR did receive US regulatory approval in 2015. However, the prospects for sales of reactors in the USA, either of the ABWR or ESBWR designs, appear poor and GE-Hitachi is not considered further. Hitachi-GE purchased a UK-based consortium set up to build and operate nuclear power plants in Britain, Horizon, in 2012 for \$1.2bn9 . Horizon owns two sites at each of which it plans to build two ABWRs. Te ABWR design was submitted to the UK safety regulator, ONR, for Generic Design Assessment in 2014 with expected completion of the review in 201810. Te Horizon projects can only proceed if Hitachi-GE fnds a strong investor, either a utility or the UK government.

#### **Framatome**

Framatome achieved a dominant position in reactor supply for France in 1975 when its version of the PWR, licensed from Westinghouse, was chosen for the large programme of reactors that followed. By 1990, 58 PWRs had been sold to the French market. Framatome was initially privately owned but in 1975, the Commisariat Energie Atomique, the French national nuclear R&D organisation took a 30 per cent stake, expanding to 34 per cent in 1982 and in 1984, when the parent of the other shareholder, Creusot Loire went bankrupt, the government re-organised the shareholding with CEA taking 35 per cent, the large diversifed French engineering company, CGE, taking 40 per cent and EDF with 10 per cent taking most of the rest.

Framatome had progressively moved away from the Westinghouse licensed design terminating its technology license with them in 1981 and the last four of the 58 reactors ordered were for a design designated N4, the frst design that was claimed to be wholly French. However, the Chernobyl disaster led to a perceived need for greater safety and in 1992, a new design, the European Pressurised Water Reactor

<sup>8</sup> An exception to this is GE-Hitachi's PRISM fast reactor design which is being marketed in export markets, for example, the UK. See http://gehitachiprism.com/ (Accessed July 22, 2016)

<sup>9</sup> Associated Press 'Japan's Hitachi to buy Horizon Nuclear' October 30, 2012

<sup>10</sup> http://www.onr.org.uk/new-reactors/uk-abwr/index.htm (Accessed March 1, 2016)

(EPR) was announced developed by a joint venture of Framatome and Siemens, Nuclear Power International11. Te aim was that the design would be licensable in both France and Germany. In 2000, Framatome (66 per cent) and Siemens (34 per cent) merged their nuclear businesses as the Areva NP part of the Areva group12. In January 2009, Siemens announced it would exercise its right to withdraw from the joint venture and this was completed in 2011.

Te EPR was submitted to the UK's GDA process in 2007 and was given a design acceptance certifcate, valid for 10 years in December 201213. In 2008, Areva NP also submitted its EPR design to the US NRC for generic appraisal. However, in 2015, with no US orders likely, it froze the process14.

Te fnancial collapse of Areva led to it being split into its component parts, a reactor vendor division and a fuel cycle company. A majority stake in the reactor divisions was bought by the French utility, EDF, in 2018 and the company was renamed Framatome. By mid-2018, it was not clear what plans EDF had for Framatome.

#### **Rosatom**

Rosatom, the Russian national nuclear company, is a vast diversifed company involved in every aspect of nuclear technology including fuel cycle activities, ownership and operation of reactors as well as reactor sales.

Russia was the frst country in the world to operate a power reactor with the 6MW Obninsk reactor opened in 1954. Russia commercialised two types of reactor, the VVER, the Russian version of the PWR, and the RBMK, the design used at the Chernobyl site. Te VVER has been built in two sizes, 440MW and 1000MW. For this analysis, we focus on the period afer the 1986 Chernobyl disaster and we do not look at the RBMK which ceased to be an option for new orders afer 1986. We focus particularly on the period from 2007 onwards when Russia began again for the frst time since 1986 to market reactors in large numbers for Russia and for export. For an overview of Russia's nuclear history up to the Chernobyl disaster, see Schmid (2015) and IAEA (1997).

At the time of the Chernobyl disaster, Russia was building reactors in Russia, Ukraine, Lithuania Czechoslovakia, the German Democratic Republic (GDR), Poland, Bulgaria, Cuba and Hungary. Some of these were completed without interruption, such as Hungary and Lithuania, for some construction was halted for

<sup>11</sup> Nuclear News 'Joint Franco-German design partly unveiled' August 1992

<sup>12</sup> Nuclear Engineering International 'Framatome and Siemens to merge' February 2000

<sup>13</sup> http://www.onr.org.uk/new-reactors/uk-epr/design-acceptance.htm (Accessed July 15 2016)

<sup>14</sup> Nuclear News 'Areva suspends work on U.S. EPR certifcation' April 2015

a signifcant period but later restarted, such as Russia, Ukraine, Czech Republic, Slovak Republic while other programmes were abandoned, such as the GDR, Cuba and Poland. By that time, for the VVERs, Russia was concentrating on the 1000MW design, the V-320.

Te frst new activity of the Russian nuclear industry afer Chernobyl was with the order in 1997 of two reactors using the AES-91 design for the Tianwan site in China15. Tis was followed by the order in 2002, afer several years of negotiation, of two reactors using the AES-92 design for the Kudankulam site in India16. Tese reactors were essentially the V-320 design with additional safety systems, greater 'passive' safety and a core-catcher for the AES-91. Te AES-91 was developed by the St Petersburg design studio of Rosatom, Saint-Petersburg Atomenergoproekt, while the AES-92 was developed by the Moscow Ofce, Moscow Atomenergoproekt17.

However, it was the announcement of a new design, AES-2006, in 2006 along with ambitious targets for new reactor orders for the Russian home market that saw a sudden change of gear for the Russian nuclear industry (Mukhatzhanova, 2007). Although this time there was a single designation, AES-2006, as with AES-91 and AES-92, there was a Moscow (V-392M) and a Saint-Petersburg (V-491) version with the frst four orders, all for Russia, split between the two versions18. Forecasts of a steady fow of three orders a year for the home market were quickly proved wrong. Only one further order beyond the frst four, on which construction started in 2008–10, was placed (in Kaliningrad in 2012) and this was efectively abandoned within a year of construction start. Te focus switched to exports with an order for four reactors won with Turkey in 2010 and by 2017, Rosatom was claiming an export order book of about 30 reactors, although construction had started on only one project, in Belarus.

Some of these markets are for countries with no experience of commercial nuclear power plants, including Vietnam, Jordan, Bangladesh and Egypt and, historically, attempts to build nuclear plants in such countries ofen come to nothing. Te potential orders for Finland and Hungary are most strategically important. Te perception will be that safety regulation in EU countries is rigorous and if Russia

<sup>15</sup> Xinhua News Agency 'Work on nuclear power station begins' October 20, 1999

<sup>16</sup> Nuclear Engineering International 'Koodankulam deal signed' January 2002

<sup>17</sup> For details of the history of the VVER design, see http://www.rosatom.ru/en/resources/ b6724a80447c36958cface920d36ab1/brochure\_the\_vver\_today.pdf (Accessed March 2, 2016)

<sup>18</sup> For a detailed specifcation of the diferences, see http://www.rosatom.ru/en/resources/ b6724a80447c36958cface920d36ab1/brochure\_the\_vver\_today.pdf (Accessed March 2, 2016).

can satisfy the safety regulators in these countries, this will be seen as a strong endorsement of the design. In 2018, construction on the frst reactors for orders to Turkey and Bangladesh belatedly started

In 2010, a new design, VVER-TOI (V-510), developed by the Moscow ofce was announced. It was claimed it would have lower design, construction, operation, maintenance and decommissioning costs, would be up to 38 per cent more efcient than the AES-2006 VVER design and would have a slightly higher rated capacity of 1300MW19. When it was announced, it was expected to be available for ordering in 2012, but it was not till 2018 that construction on the frst unit began.

#### **China**

China has three nuclear reactor vendors but with very diferent backgrounds. China National Nuclear Corporation (CNNC) was the original company set up in the 1960s, China General Nuclear (CGN)20 set up in 1994 and State Power Investment Corporation (SPI) set up in 200721.

#### **CNNC and CGN**

Because of their common technology roots with technology licensed from Framatome, it is logical to deal with CNNC and CGN together. CNNC has its roots in the Second Ministry of Machine Building, from which the China Ministry of Nuclear Industry was created and was renamed CNNC in 1988. It makes no secret of its military roots and its continued military connections and its web-site states22: 'Historically, CNNC successfully developed the atomic bomb, hydrogen bomb and nuclear submarines and built the frst nuclear plant in the main land of China. CNNC is the main body of the national nuclear technology industry, the core of the national strategic nuclear deterrence and the main force of the national nuclear power development and nuclear power construction and shoulders the duel historical responsibilities for building of national defence force, increasing the value of state assets and developing the society.'

<sup>19</sup> Nuclear Engineering International 'Atomenergoproekt on track to market VVER-TOI in 2013' February 2012

<sup>20</sup> Until 2013, CGN was China Guangdong Nuclear (CGN).

<sup>21</sup> Te State Nuclear Power Technology Company was created in 2007 and merged with the smallest of the big four Chinese generation companies, China Power Investment Corporation (CPIC) to form the SPI

<sup>22</sup> http://www.cnnc.com.cn/tabid/643/Default.aspx (Accessed December 18, 2015)

It was in 1985 that construction work began on the frst reactor for the Chinese market, a small (300MW) indigenous design of Pressurised Water Reactor (PWR)23 designed by the Shanghai Nuclear Engineering Research and Design Institute (SNERDI), established in 1970 and supplied by CNNC. Four reactors of this design were exported to Pakistan between 1985 and 2011, China's only export market to date. In 1987, construction started on the frst large reactors (Daya Bay), two 1000MW units imported from the French vendor Framatome. However, despite it being the only Chinese reactor vendor, CNNC was not a major player in this project. Te Chinese partners in Daya Bay, primarily Guangdong Electric Power Company were consolidated into a new state-owned company, China Guangdong Nuclear (CGN)24 in 1994. In 1992, CNNC signed a technology transfer agreement with Framatome for the technology ordered at Daya Bay, the M310. In 1995, CGN signed a similar agreement with Framatome25. In 2008, construction work in China took of with six reactors beginning construction (four from CGN and two from CNNC) all based on the imported M310 design, CNP-1000. In 2009 and 2010, ten more reactors of this design started construction.

Te M310 design dates back to the 1960s, having been licensed by Framatome in the early 1970s from Westinghouse. Te Chinese authorities had already acknowledged more modern designs were needed. Its plan was to select one of the advanced designs on ofer from foreign vendors importing a few reactors initially but progressively transferring the technology to Chinese companies. Two designs were considered, the French EPR supplied by Framatome's successor company Areva and the AP1000 supplied by Westinghouse, which, by then was owned by Toshiba. Te AP1000 was chosen in 2006 with four reactors ordered, reportedly because of greater willingness of Westinghouse to transfer technology. However, a year later, an order for two EPRs was placed with CGN partnering Areva and EDF for this project.

It became clear that the AP1000 and the EPR were too expensive in their existing form and all three vendors began work to develop advanced reactor designs, using the designs of their licensee as the basis. Tese designs would meet the requirements of European and US regulators and would be Chinese Intellectual Property. CNNC and CGN developed smaller reactor designs (1000MW) than the EPR (1600MW) based on the M310, ACPR-1000 and ACP-1000 respectively. Four reactors in China using the CGN ACPR-1000 design and two reactor exports to Pakistan using the

<sup>23</sup> Te PWR is the most widely used type of reactor worldwide accounting for about two thirds of the world's operating reactors

<sup>24</sup> http://www.cgnpc.com.cn/n1500/index.html (Accessed December 15, 2015)

<sup>25</sup> Nuclear Engineering International 'Growth in China' November 2001

CNNC ACP-1000 design had started construction by 2018. However, in 2013, the Chinese government required CGN and CNNC to 'merge' these designs to create the Hualong One or HPR-1000 design. It appears that CGN and CNNC have their own versions of the HPR-1000 which may have more in common with ACPR-1000 and ACP-1000 than with each other. By 2016, CNNC had started construction of two reactors in China using their version of the HPR-1000 and CGN had started construction of one.

Following the Fukushima disaster in March 2011, there was a sharp reduction in ordering and from 2011–14, construction started on only six reactors, two using the old design based on M310, two imported from Russia and two ACPR-1000s. In 2015 six construction starts took place, three for the HPR-1000, two for the ACPR-1000 and one for the CNP-1000. However, by September 2018, there had been only one construction start in China since the beginning of 2016. It is not clear what has led to this new pause in construction starts. Possible factors include the slowdown of electricity demand growth, which has led to serious overcapacity in some regions, concerns about the new technologies and shortage of skills and technological capacities.

By 2013, CGN and CNNC were beginning to look to export markets and an order with CNNC was agreed with Pakistan for two ACPR-1000s26 (construction on the frst unit started in August 2015 and the second in May 2016). Te export markets are coordinated by the Chinese Atomic Energy Authority (CAEA) and the National Development and Reform Commission and the three Chinese vendors do not appear to compete in the same market. In December 2015, a CNNC/CGN joint venture company, the Hualong International, was announced to export Hualong One technology27. In May 2016, CGN and CNNC signed an agreement that they would not compete with each other in export markets28.

CNNC would focus outside Europe with South America, including Argentina (building one Canadian design reactor then an HPR-1000) and Africa, including Sudan, its most likely markets. CGN would focus on Europe where its best opportunities appear to be in UK and Romania (building a Canadian supplied reactor). Te UK would be a particular prize for CGN bringing prestige that would enhance CGN's prospects in other markets.

<sup>26</sup> Most reports now state the design is the HPR-1000.

<sup>27</sup> Nucleonics Week 'CNNC and CGN set up joint venture to export Hualong One reactors' January 7, 2016

<sup>28</sup> Nuclear Engineering International 'China's CGN and CNNC agree not to compete' July 2016, p 5

#### **SPI**

Te AP1000 was chosen in 2007 over the EPR with four reactors ordered and a new company created, State Nuclear Power Technology Company29 (SNPTC), which merged with a utility to form State Power Investment Corporation (SPI) in 2015, to indigenise the technology. SNERDI was made a subsidiary of SNPTC giving it experience and substance. SNPTC's advanced design was the CAP1400, a scaled up version of the AP1000. By September 2018, construction on the two CAP1400 units frmly planned had not begun despite press reports forecasting an imminent start. In May 2016, it was reported that the design was only complete enough for one year of construction work to be carried out and there was said to be discussion whether the CAP1400 should be for export only30. Whether China can credibly ofer a design for export that has not been built for the home market is questionable. Tere are reports that China is delaying start of construction on a CAP1400 until the frst AP1000 is operating successfully and the frst units only went critical in mid-201831.

In November 2014, Turkey announced it was in exclusive talks with SPI and Toshiba/Westinghouse to buy four reactors, two using the Toshiba AP1000 design and two using the CAP1400 with construction start forecast for 2018/19. However, by 2016, it was reported that the talks were not going well and were no longer exclusive32. At best, the timetable is likely to slip and at worst, not to go ahead. SPI is one of fve vendors competing in South Africa for an order for 6–8 reactors but it did not appear to be a front-runner and in August 2018, South Africa efectively abandoned its nuclear programme.

#### **4 A comparison of the competitive positions of the vendors**

For this analysis (see Table 1), we look at the current design being ofered by each of the vendors: for Westinghouse, this is the AP1000, for Framatome, the EPR, for Hitachi-GE the ABWR, for Rosatom the AES-2006, for CNNC and CGN the HPR-1000 and for SPI CAP1400.

<sup>29</sup> http://www.snptc.com.cn/en/ (Accessed December 18, 2015)

<sup>30</sup> Nuclear Intelligence Weekly 'Weekly Round-up' May 20, 2016, p 1

<sup>31</sup> Nuclear Intelligence Weekly 'Nine Projects Top Priority List' May 6, 2016, p 5

<sup>32</sup> Nuclear Intelligence Weekly 'Akkuyu's Prospects Pull Past Sinop' July 22, 2016, p 3–4.

#### **Home market**

A strong home market provides a vendor with a market that may be less cost sensitive and competitive than export markets giving it a more assured fow of orders and a proftable base. An assured fow of orders will allow the build-up of a strong, efcient supply chain and reactor importers will see regulatory approval in the home market as a demonstration of the licensability of the design, especially where the home market has a long history of building and operating reactors and where the regulatory body is open and accountable.

On this criterion, the Chinese vendors appear strongest with the likelihood that all three vendors will receive at least two orders per year, although doubts about the role of the CAP1400 may weaken the position of SPI. Ten years ago, Russia and France were forecasting a strong market to replace existing reactors and to meet electricity demand growth. For France, the economics of life-extension appear far more attractive than new-build and there is little prospect of many orders being placed. Russia is still talking about new projects but these have been constantly delayed. Prospects for the Japanese home market appear for Hitachi and Toshiba appear poor with the priority likely to be getting existing plants back on line rather than trying to build new ones. Westinghouse is ofen seen as a US company because of its US base, but the prospects in the USA for new orders, particularly following the problems at the Summer and Vogtle projects also appear equally bleak there.

#### **Regulatory approval**

Te USA and the UK are both carrying out rigorous generic reviews of designs to establish for all sites the licensability of the design, a process that has taken 5–10 years. Design approval means that for a period of 10 (UK) or 15 (USA) years the design is approved leaving only site-specifc issues to be reviewed in any application to construct or operate a plant. Te AP1000 has completed the US and the UK process. EPR has completed the UK process but the US process was abandoned in 2015 largely because there were no immediate prospects of reactor sales to the USA. Te GE/Toshiba/Hitachi ABWR was licensed in the US in 1997 but this expired in 2012. Renewal was applied for independently by both GE-Hitachi and Toshiba but by 2016, little progress appeared to have been made and Toshiba efectively abandoned its renewal application. Hitachi-GE submitted their updated version of the ABWR to the UK authorities in 2014 and was completed in December 2017. Te Russian regulatory process is opaque and documentation is not available so buyers would have to trust in the rigour of the Russian process. Equally, the Chinese process is not transparent. Te reviews that do take place seem to take about a year, suggesting they are not in the same depth as the US/UK equivalent.

#### **Experience with their current designs**

Only the ABWR has actual operating experience with four reactors completed in Japan, the frst in 1992. Tese have not operated very little since the Fukushima disaster but up to that point, their lifetime load factor was poor, only about 60 per cent. Four further ABWRs have started construction, two in Japan and two in Taiwan but none of them were actively being built in 2016 and they are unlikely to be completed. Te EPR has four reactors under construction (two in China and one each in Finland and France) and by 2016 these were 4–10 years late and well over-budget. Te two reactors under construction in China were started last but the frst reactor in China went critical in June 2018. Te eight AP1000s that started construction are also very late and over-budget. Te Summer project was about 4 years late when it was abandoned and the Vogtle project is also at least 4 years late. Te AP1000s nearest to completion are the four reactors under construction in China, the frst two of which went critical in mid-2018. Six AES-2006s have started construction with the four in Russia are all at least four years late. Te frst two reactors were completed in 2017 and 2018. In July 2016, one of the reactor vessels for the Belarus project was dropped while it was being manoeuvred into position. Belarus has demanded that the vessel be replaced and Rosatom has agreed. It is not clear how far this will delay the project33. Two each of the CNNC and the CGN versions of HPR-1000 were under construction by September 2018. Tere is no construction experience yet with CAP1400.

#### **Government support**

Te support of the vendor's national government is increasingly key for winning orders, particularly providing fnance and coordinating other companies to participate. China appears to have particular advantages in this respect because of the strength of China's economy and its ownership of the vendors. Tese advantages remain unproven in export markets and if economic growth in China is not sustained, there may be less scope for China to support its vendors. Te Russian government is also intimately connected with its vendor, Rosatom, and most of the export orders it claims are reliant on Russia providing the fnance. However, international sanctions resulting from the Ukraine issues, the collapse of the oil price and the money spent by the Kremlin trying to defend the rouble mean the capacity of Russia to provide fnance for exports must be in doubt. One of the main

<sup>33</sup> TASS 'Rosatom to observe Minsk's demand for replacement of Belarus NPP reactor vessel – company' August 12, 2016

reasons given for delays completing nuclear power plants in Russia is lack of funds (Tomas, 2015).

Ironically, the Japanese government was in the process of setting up government mechanisms to support Japanese vendors Hitachi and Toshiba, including provision of loan guarantees in 2010 at the time of the Fukushima disaster. Te Japanese government still seems determined to support nuclear power but it remains to be seen whether it can get the political support to do this and by 2018, Japanese vendors had won no orders with this government support and Toshiba's future as a reactor vendor was in doubt.

Areva claimed that it could supply sovereign loan guarantees for reactor exports34 for example to China and South Africa. It did provide €610m in loan guarantees for the Finnish Olkiluoto project in 200335, but this project has gone badly and it may be that the guarantees will have to be paid. However, this sum, 20 per cent of the expected construction cost, would appear not to be adequate coverage for a project now and the expected cost of nuclear has increased markedly. For example, the expected cost of the two reactor Hinkley Point project is about £30bn and this is expected to require 70 per cent coverage by loan guarantees for the deal to be viable. Tis would result in guarantees worth about £21bn. Whether the French government is willing to guarantee such sums must be in doubt. Whether Framatome, under the control of EDF, would continue to try to sell reactors was not clear by mid-2018.

#### **Vendor's fnancial position**

Te decline of markets for reactors has lef several of the vendors in fnancial difculties. Most serious of these are the collapses of Areva and Westinghouse. In March 2015, Areva announced annual losses of €4.8bn, the ffh consecutive year of losses36. Te public stake in Areva had continued to increase to around 87 per cent by then. It became clear that the company could not continue in its existing state and the French government launched a rescue attempt. Te company was split into two main parts, the fuel cycle business, Areva NC, renamed Orano, and the reactor vendor and servicing business, Areva NP, renamed Framatome. EDF, itself 83 per cent state-owned, was required to take over up to 80 per cent of Areva NP for about €2bn. Te plan is that EDF would sell up to a 29 per cent stake to a

<sup>34</sup> Nucleonics Week 'French export credit agency to insure loans for Cgnpc, Eskom' August 21, 2008

<sup>35</sup> Nucleonics Week 'European 'green power' generators challenge EPR's competitiveness' December 16, 2004

<sup>36</sup> http://www.areva.com/fnance/liblocal/docs/doc-ref-2014/DDR\_EN\_310315.pdf (Accessed March 1, 2016)

third party leaving it with a 51 per cent stake. In July 2016, Mitsubishi and EDF signed a deal increasing cooperation and in 2017, Mitsubishi took a 19.5 per cent stake in Framatome37.

Te French government had to recapitalise Areva with about €4bn of public money38 and it also had to assume liabilities for failings with existing orders, for example, the cost overrun at Olkiluoto.

In July 2015, a report by an independent panel of accountants and lawyers from within the company showed that Toshiba had been overstating its profts for seven years. Tis led to mass resignations at board level including the CEO39. Tis resulted in all the credit rating agencies reducing Toshiba's credit rating and in December 2015 both Standard & Poors and Moody's reduced the rating to 'junk' (non-investment grade)40. In May 2016, Toshiba wrote down the value of the Westinghouse nuclear business, which it had acquired in 2006 for \$5.4bn by \$2.4bn41. In May 2016, Toshiba announced its largest ever loss of Yen460bn (\$4.2bn) for FY 201542 and in March 2017, Westinghouse declared bankruptcy. Toshiba efectively cut the Westinghouse division adrif and it was sold to the Canadian company, Brookfeld Business Partners. By mid-2018, it was not clear whether Westinghouse's new owners would pursue new reactor orders or whether it would concentrate on the less risky and more lucrative reactor servicing and maintenance market. By mid-2018, it was not clear whether Toshiba would attempt to rebuild a reactor vendor division based on its BWR capability.

Te Hitachi group does not appear to be in serious difculties although its nuclear division has not sold a reactor for nearly 20 years. Te three Chinese vendors appear proftable. It is difcult to determine the strength of the Rosatom group but the weakness of the Russian economy in general is likely to restrict its scope.

39 Japan Times 'Heads roll at Toshiba as scandal claims top brass' July 22, 2015

<sup>37</sup> Nuclear Intelligence Weekly 'EDF's Balancing Act Between MHI and CGN' July 8, 2016, p 4

<sup>38</sup> Nucleonics Week 'EDF taking over Areva reactor business: government' June 4, 2015

<sup>40</sup> Agence France Presse 'Moody's, S&P cut scandal-hit Toshiba's credit rating to junk' December 22, 2015

<sup>41</sup> Nuclear Intelligence Weekly 'Toshiba Warns of \$2.4 Billion Westinghouse Impairment' April 29, 2016

<sup>42</sup> http://www.toshiba.co.jp/about/ir/en/pr/pdf/tpr2015q4e\_ca.pdf (Accessed July 20, 2016)

#### **5 Conclusions**

Te nuclear reactor supply industry, once seen as an essential component of diversifed companies with an electrical engineering capability, is now seen in Europe and USA as a risky niche business for specialist companies. In Japan, the capability is still in the hands of national champion companies but their commitment to the sector must be in doubt following the Fukushima disaster.

If the nuclear reactor vendor business is to have a future, it appears increasingly likely that it will be driven by Russia and China. For both countries, their nuclear industry appears to be part of national policy to expand their political and economic infuence. However, neither of these has signifcant experience in developed countries with well-resourced critical customers, with experienced, independent safety regulators and with well-developed public participation channels. For some developing country markets that have less capability to be critical customers, this may not be a restriction, but such markets are usually of limited scale, require signifcant fnancial support and, historically, nuclear programmes in such countries ofen do not materialise.

Te volume of nuclear orders being placed for China are ofen seen as China 'going nuclear' but the reality is that nuclear only makes up about 3 per cent of its electricity supplies and because of its rapid electricity demand growth, even if its most ambitious plans are realised, it will still get less than 10 per cent of its electricity from nuclear power. If these plans are to be realised, China needs to get over a major hurdle of siting plants inland rather than on the coast where all the existing plants are. Tere is considerable resistance to inland siting (King and Ramana, 2015) and if this is not overcome, the scope for further nuclear capacity will be heavily restricted. So while the world nuclear industry may well need China for its survival, China does not necessarily need nuclear power. So if exports of nuclear plants are not bringing it the political infuence and economic infuence it is hoping for, it may not pursue the export market, even if it does continue to build in China.

For Russia, the dynamics are rather diferent. Electricity demand in Russia is falling, and, in the short-term, it probably lacks the fnancial resources and the supply chain to build many reactors either for export or the home market. Its economy is nowhere near as fexible and competitive as China's so it cannot as easily as China switch the focus of its export eforts to other sectors.

It is hard to see the vendors from Japan and Europe – Hitachi-GE, Toshiba and Framatome – being competitive in nuclear export markets. Teir technologies are problematic, they lack the comprehensive government backing that Russia and China give, and their home markets are minimal. Te question then becomes do they need to sell new reactors to survive and perhaps proft. From 1991, when it

started building the last completed reactor in France, Framatome/Areva has started building only four reactors, two in China, and one each in France and Finland. Tese orders have been highly problematic are unlikely to be proftable and have seriously damaged their reputation. Te fow of work servicing and providing replacement parts for operating plants is much more predictable and probably more proftable. With utilities under more fnancial pressure than in the past, this work is perhaps less proftable than it was in the past and the original vendor is no longer so sure of getting the servicing work, but it still appears a better route than very risky new reactor projects. With about 160 reactors in USA and France beginning to reach the end of their design life and with their owners generally anxious to run them a further 20 years or more, this appears a market that would provide a continued fow of work for Hitachi-GE, Toshiba and Framatome. It would also give them the opportunity to think afresh on new reactor designs, taking into account the lessons from Fukushima, which are only now beginning to emerge.

#### **References**



**Tab. 1** A Comparison of the Competitive Position of the Major Nuclear Reactor

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## **Technical**

## **The Technological Development of Diferent Generations and Reactor Concepts**

David Reinberger, Amela Ajanovic, and Reinhard Haas1

**The Technological Development of Diferent Generations …**

#### **Abstract**

Tis chapter documents the technical development of diferent generations of nuclear power plants and provides an outlook for possible future concepts and their market prospects. Te objective is to assess whether there is really significant technological progress on the horizon and whether these "new" concepts have prospects to become cost-efective. A major conclusion is that most of the so-called Generation IV concepts have already been discussed in the 1950s. At that time, they have not been pursued further due to problems such as costs, limiting factors in material properties and problems in appropriately controlling the fssion processes. Yet, since about 2000 a modest revival of the discussion on these concepts is observed, obviously mainly motivated by securing the fow of public money for nuclear research and the broad recognition that with present reactor concepts the nuclear industry will not succeed.

<sup>1</sup> Reinhard Haas, Technische Universität Wien, Austria, haas@eeg.tuwien.ac.at; Amela Ajanovic, Technische Universität Wien, Austria, ajanovic@eeg.tuwien.ac.at; David Reinberger, Magistrat Stadt Wien, Austria, david.reinberger@wien.gv.at

#### **1 Introduction**

Since the frst nuclear power plants (NPP) were built in the 1950s, several technical developments have taken place. Tis chapter documents the changes in various generations of nuclear power plant designs, their major features and diferences and to analyze technological problems arising mainly with respect to safety. In addition, we focus on the prospects of so-called Generation IV (GEN IV) reactors.

According to the WNISR (2018), as of mid-2018, world-wide 413 nuclear power reactors were operating in 31 countries. Te design, size and age of these reactors vary widely. Some of them are from the 1960's, directly derived from designs for military purposes. Over two thirds (69 %) of the reactors in operation are Pressurized Water Reactors (PWR), 13 % Boiling Water Reactors (BWR), 11 % Pressurized Heavy Water Reactor (PHWR). Te majority of them is older than 30 years.

Apart from the basic features (i.e. type of coolant, moderator material, working temperature, thermal/fast neutrons), the designs are categorized by "generations" (GEN); i.e. Generation I, II, III, III+, and IV. For GEN III and GEN III+, there are no clear defnitions of which reactor design fts to which generation. It can be seen as an indicative classifcation. Te major motivation for the nuclear industry for developing new reactor concepts are: (i) high current costs; (ii) low current fuel use efciency; (iii) limited available uranium-resources; (iv) problems with refueling schedule; (v) problems concerning safety and waste management.

#### **2 Historical development of reactor concepts**

Tis sub-chapter provides a concise overview and critical review of the history of reactor concepts from GEN-I to GEN-III+, their advantages and their weaknesses*.*  In addition, an outlook on GEN-IV reactor types is given. It is claimed that they are radically diferent designs compared to those in use today. If ever, they are expected to enter markets in 20 to 40 years.

Today three generations of nuclear reactors are operating worldwide. (Goldberg et. al (2011)). Figure 1 shows when specifc concepts entered the market or are expected to do so. Today, both GEN II and GEN III plants are still being planned, built and used. Even GEN I plants are still in operation despite their lack of safety features.

#### **Generation I**

GEN I plants are the early prototypes and power reactors from the 1950s and 1960s that were launched to generate nuclear power for commercial (civilian) purposes. Tey were deployed directly from military applications for commercial purposes without any additional safety devices. At least some of them were clearly built for dual-use (civil and military) purpose. GEN-I plants did not have any (active or passive) dedicated safety devices.

Examples of GEN I are the Soviet AMB in Belojarsk or the AM-1 in Obninsk (both are graphite moderated types which have advantageous properties for the plutonium production) , the UK's "Magnox" gas-cooled reactor – e.g. Calder Hall-1 (1956–2003), Wylfa (1959-2012) (also Graphite moderated) – and the US reactors of the frst generation such as Shippingport (1957–1982) in Pennsylvania (PWR) and Dresden-1 (BWR) (1960–1978) in Illinois. Most of them have already been shut down.

Te last European remaining commercial Gen I plant, the Wylfa Nuclear Power Station in Wales, has been scheduled for closure in 2012, and fnally was shut down in December 2015. In Pakistan the last GEN-I plant – a CANDU-137 – is still operational at Karachi.

#### **Generation II**

GEN II systems began operation in the late 1960s and comprise the vast majority of today's operating reactors ordered from the mid-60s to the 2010s. Tey are designed for a typical average operational lifetime of 40 years. Te major diference to the GEN-I reactors are dedicated active safety designs and that they were in principle designed for civil use only.

GEN-II reactors are typically light water reactors (LWRs) even though there are heavy water designs too. Tey use safety features involving electrical or mechanical operations that are initiated automatically and, in many cases, can be initiated by the operators.

Figure 1 depicts the evolution of diferent generations of nuclear power reactors: GEN I, II and III in operation, GEN III+ as near-term deployment, and fnally the GEN IV expected to be deployed not before 2030.

**Fig. 1** T e evolution of dif erent generations of nuclear power reactors

Most of the GEN II plants still in operation in the Western countries were manufactured by Westinghouse, Framatome, and General Electric (GE). In the following section, the most important GEN-II systems are described in more detail.

#### **Pressurized water reactors**

T e pressurized water reactor (PWR) was developed from the reactors used to propel submarines. In contrast to submarine reactors, which use high-enriched uranium, PWRs employ low-enriched uranium. T ey are water cooled and moderated. T e power density of PWRs can be relatively high (100 MW/m3 ) due to the ef ectiveness of the heat removal.

**Fig. 2** Description of a pressurized water reactor (based on Greenpeace (2005))

T eir primary circuit is characterized by high pressure (~15M Pa) and high temperature (~600°F/ ~300 °C). Safety shall be guaranteed by dif erent systems to control the power output and to cool the core and the barrier system, consisting subsequently of the material structure of the uranium-pellets, the cladding of the fuel rods, the reactor pressure vessel (RPV) itself, the concrete structure around the RPV and the containment, which encloses the primary circuit.

T e steam generators, the link between the primary and secondary circuits, are a potential source for radioactivity leaking to the outside. Due to the high power density and the correspondingly high decay heat generated af er shutdown, PWRs depend heavily on the availability of the cooling system. T e active systems depend on a continuous electricity supply. Even when emergency diesels, redundant grid connection and batteries are installed, station blackouts represent a serious risk, which i. e. in Fukushima led to the destruction of all safety barriers.

Safety systems are usually redundant (i.e. more components are provided for a task than needed). However, redundancy becomes useless if a so-called 'common cause-failure' like f ooding or f re disables all parallel trains of a safety system. In principle, there is a continuous trend worldwide towards increasing automation in

nuclear power plants' safety, which potentially can reduce the hazards of human error. T ere is also a trend to replace original analog I&C with digital systems. T e implications on safety of this shif are discussed still controversial.

#### **Boiling Water Reactors**

T e boiling water reactor (BWR) was developed from the PWR, in an attempt to achieve greater simplicity of design and higher thermal ef ciency by using a single circuit and by generating steam within the reactor core. As for PWRs, water acts as moderator and coolant. T e result is a reactor that still exhibits most of the hazardous features of the PWR, while introducing a number of new problems.

**Fig. 3** Description of a boiling water reactor (based on Greenpeace (2005))

BWRs have lower power density (~50 MW/m3 ) in the core as well as lower pressure and lower temperature in their cooling circuit than a PWR. T e uranium inventory in the core is higher than in PWRs.

T e primary circuit of a BWR passes outside the reactor containment. T e radioactive steam is directly used to power the turbine(s). Neutron f uxes are considerably lower (by a factor of 10) than in a PWR, leading to signif cantly less neutron induced aging of the reactor materials. On the other hand, the vessel is much larger; longitudinal welds may be required, whereas there are only circumferential welds in a PWR vessel. Tere is also a much more complicated inner structure, as well as many penetrations at the bottom. Like a PWR, a BWR depends heavily on fast and reliable active safety systems, while the plumbing of the BWR's emergency core cooling system is much more complex. Control rod injection is – against gravity – from underneath the pressure vessel, Regulating the operation of a BWR is generally more complex than in a PWR. Under certain circumstances, the collapse of so-called steam voids in the core can lead to increasing reactivity and thus increasing power during an accident.

#### **3 Generation III and Generation III +**

GEN III designs began to emerge in the mid-1980s onwards, based on learning from the Tree Mile Island and Chernobyl accidents. A number of 'evolutionary' GEN III designs were developed from GEN II reactor types without any drastic changes.

According to the World Nuclear Association (WNA), GEN III reactors are characterized by improvements in the following areas (WNA 2004):


Te most signifcant improvement of GEN III systems is the incorporation of passive safety features in some designs, which do not require active controls or operator intervention but instead rely on gravity or natural convection to mitigate the impact of abnormal events. Passive systems do not work under any circumstances. Tey may not relay on functioning of some technical systems but they relay on certain external (uncontrollable) parameters under which the desired physical/chemical process works.

Diferent concepts bearing the labels GEN III and GEN III+ are in various stages of development and implementation today. In the following, the most important examples as mentioned by WNA (2004) and the International Atomic Energy Agency (IAEA, 2004) are provided. Usually, the concepts are classifed into two categories: Large designs >700 MWe and medium designs <700 MWe.

#### **1. Pressurized Water Reactors**

Te principal large designs are APWR (Mitsubishi Heavy Industries (MHI)/ Westinghouse), APWR+ (MHI), EPR (AREVA), AP-1000 (Westinghouse), KSNP+ and APR-1400 (Korean Industry) and the CNP-1000 (China National Nuclear Corporation). Regarding the Russian VVERs, an advanced VVER-1000 has been developed by Atomenergoproject and Gidropress.

Te main small- and medium-size advanced PWR designs are the AP-600 (Westinghouse) and the VVER-640 (Atomenergoproject and Gidropress).

#### **2. Boiling Water Reactors**

Te main large concepts are the ABWR, (Hitachi, Toshiba, GE), the BWR 90+ (Westinghouse Atom of Sweden), the SWR-1000 (Framatome ANP) and the ESBWR (GE). Te HSBWR and HABWR (Hitachi) are small- and medium-sized advanced BWR concepts.

Tree ABWRs were already operating in Japan: Two at Kashiwazaki-Kariwa since 1996, a third started operating in 2004. As of the end of 2018, none of them is operational due to shutdown following earthquakes in July 2007 and March 2011.

#### **Generation III+**

Generation III+ reactors are slightly modifed GEN III designs initiated in the late 1990s, when the nuclear industry began to promote a 'nuclear renaissance'. Tese should solve three key problems: safety, cost and buildability. Te central claim was based on the premise that the existing designs have become too complex and expensive due to new safety systems.

Construction costs of US\$1,000/kW were forecast, a level that would make nuclear competitive with gas, and construction times of four years or less were expected (see previous WNISRs). Te promise that nuclear power could be the cheapest option reignited interest in nuclear power in a number of key markets.

What are the lessons learned today? Regarding the claim that designs would be easier to build, 20 years since a 'nuclear renaissance' has been announced, only a handful of GEN III+ reactors – four AP-1000, one EPR – have started operating, in 2018, in China. Standardization did not take place, and the introduction of modularized design seems to have simply shifed the quality issues from construction sites to module factories.

By end of 2018, an additional 11 reactors claiming to meet GEN III+ criteria – whatever they are – were under construction: six AES-2006, three EPRs and two AP-1000, all of them years behind schedule and signifcantly over budget. Te construction of two AP-1000s in the U.S., at the VC Summer site in South Carolina, was abandoned in 2017 afer builder Westinghouse went bankrupt.

#### **4 Small Modular Reactors (SMRs)**

As nuclear power generation has been established in the 1950s, the capacity of reactor units has grown from 60 MWe to more than 1400 MWe, with corresponding economies of scale in operation. However, these large plants operating today set a high and expensive standard for safety.

Several frms are working on designs that are smaller in scale than the current GEN III designs. A basic feature of these plants is that they would make use of modular construction techniques. Small components shall be assembled in a factory environment (ofsite or onsite) into structural modules weighing up to 1,000 tonnes. Te idea is that these new reactors—at a 300 MW scalable, smaller than a rail car and one-tenth the cost of a big plant—could be built quickly.

Te driving forces for SMRs are the reduction of investment per unit and the need for integration into smaller grids in developing countries. However, there are serious doubts concerning these prospects. Furthermore, the opinion that the only way to make nuclear power cost competitive is the use of small modules is not shared by all nuclear industry experts. Te reason is – see above – the achieved economies-of-scale with respect to LWR. Capital construction costs (price per unit of electric capacity, or \$/kWe) of a nuclear reactor decrease with size, but the economy of scale applies only if reactors are of a very similar design, as has historically been the case.

Te design characteristics of SMRs, however, are signifcantly diferent from those of large reactors. SMRs approach the economies of scale problem by achieving signifcant cost savings elsewhere leading to signifcant learning-by-doing efciencies. For example, SMR designs seek to streamline safety and safeguard requirements by replacing (at least some) security guards with concrete security barriers and/ or by building underground, streamlining the requirements for operators and the emergency planning zone requirements.

Te new designs do stretch out refuelling schedules, from 18 months to possibly 3–5 years and potentially to as long as 10 years.

#### **5 Generation IV**

Te above-mentioned problems of the industry have led to the development of a so-called GEN IV reactors. Tey are described as radically diferent designs to reactors operating today, some involving a closed fuel cycle. Moreover, GEN IV reactors are said to be highly economical, to incorporate enhanced safety and reliability features and embed physical protection. Tey should produce minimal amounts of waste and be proliferation resistant, as these designs include advanced actinide management.

In addition, GEN IV reactors should have all of the features of Gen III+ units, as well as the ability, when operating at high temperature, to support economical hydrogen production, thermal energy of-taking, and perhaps even water desalination.

Yet, today, in 2018, GEN IV reactors are considered to be decades away from commercialization, as they have been when the discussion on these concepts started again in the early 2000s. Te few attempts in the past based on concepts like fast neutron reactors nowadays called GEN IV ended with severe technical issues (e.g. Phénix and Superphénix in France) or accidents (e.g. Monju in Japan), which forced a closure of the respective project. Only two are currently in operation (Beloyarsk-3 and -4).

Te start of the GEN IV initiative can be pointed to the year 2000, when the U.S. DOE launched the "Generation IV International Forum" (GIF) with the aim of developing a technically new generation of reactors. Today, ten member-countries participate in this initiative (Argentina, Brazil, Canada, France, Japan, Republic of Korea, South Africa, Switzerland, U.K. and the USA), as does EURATOM. Te initial goal was to develop innovative nuclear systems (reactors and fuel cycles) likely to enter markets by as early of 2020.

Te concepts selected for Generation IV were discussed within the GIF groups of international experts from industry, universities and national laboratories. Tey were organized to undertake the identifcation and evaluation of candidate systems, and to defne research and development (R&D) activities to support them. Initially, some 100 diferent designs were identifed as candidates and evaluated.

Tese designs ranged from concepts that rather belonged to Generation III+ to a few that were radically diferent from all known technologies. At the end of the process, six concepts were recommended for further development in the framework of GIF. A roadmap describes the R&D required to develop each of the six systems as well as the approximate time and cost for completion. Many of the technological gaps were common to more than one system and the roadmap identifes several areas where crosscutting R&D would be required. Te necessary R&D would be very expensive, and no single country had the necessary facilities and expertise to carry it out alone (DOE, 2002).

#### **5.1 Sodium-Cooled Fast Reactor System (SFR)**

Te SFR system consists of a fast-neutron reactor and a closed fuel cycle system. Tere are two major options: One is a medium size (150 to 500 MWe) reactor with metal alloy fuel, supported by a fuel cycle based on pyrometallurgical reprocessing in collocated facilities. Te second is a medium to large (500 to 1,500 MWe) reactor with MOX fuel, supported by a fuel cycle based upon advanced aqueous reprocessing at a centralized location serving a number of reactors. Te primary coolant system can either be arranged in a pool layout or in a compact loop layout. (DOE, 2002; Lineberry, 2002).

According to GIF, the SFR has the broadest development base of all the GEN IV concepts. Te existing know-how, however, is based mainly on old reactors, which have already been shut down for various reasons (safety, economics, resistance from the population), e.g Superphenix in France (1988) and Kalkar in Germany (1989).

Considering its history, as well as the signifcant hazards of this reactor line it is difcult to understand, why the SFR has been selected by GIF. According to GIF, research on both, the fuel cycle and the reactor system, is necessary to bring the SFR to deployment. Furthermore, there is important work to be done regarding safety. It has been argued that the SFR system is top ranked in sustainability because of its closed fuel cycle and potential for actinide management. It has been rated good in safety, economics, proliferation resistance and physical protection. In 2002 the SFR system was estimated to be deployable by 2015 (DOE, 2002). It did not happen.

#### **5.2 Very-High-Temperature Reactor System (VHTR)**

Te VHTR is considered as a next step in the evolutionary development of high-temperature gas-cooled reactors (HTGR). Tis reactor line has been pursued until the late 80s in several countries; however, only prototype and demonstration plants were ever operated, all of which were decommissioned afer rather short and unsuccessful overall operating times about twelve years of operation at most such

as the small Dragon reactor experiment (20 MWth, 1966 -1975, U.K.), the THTR Hamm-Uentrop, (308 MWe, 1986–1988, Germany) as well as the U.S. plants at Peach Bottom (42 MWe, 1967–1974) and Fort St. Vrain (342 MWe, 1976–1989).

Te VHTR system uses a thermal neutron spectrum and a once-through uranium fuel cycle. Te reference reactor concept has a 600-MWth graphite-moderated helium-cooled core based on either the prismatic block fuel of the GT-MHR or the pebble bed of the PBMR. It is regarded as the most promising and efcient system for hydrogen production, either using the thermochemical iodine-sulphur process, or from heat, water, and natural gas by applying the steam reformer technology at core outlet temperatures greater than 1,000°C. Te VHTR is also intended to generate electricity with high efciency (over 50%).

Furthermore, it is hoped that the concept could beneft from the experience gained with the Japanese HTTR research reactor and the Chinese HTR-PM still under construction, as well as from the GT-MHR and the PBMR projects at present in the planning phase.

#### **5.3 Supercritical-Water-Cooled Reactor System (SCWR)**

Te SCWRs are high-temperature, high-pressure water-cooled reactors that operate above the thermo-dynamic critical point of water (T > 374,12 °C and p > 22,06 GPa). Te reference plant has a 1700 MWe power level, an operating pressure of 25 MPa, and a reactor outlet temperature of 550°C. Fuel is uranium oxide. SCWRs could be designed as thermal or as fast-spectrum reactors, but current worldwide eforts focus on the thermal design.

Te thermal efciency of a SCWR can approach 44%, compared to 33–35% for LWRs. Because no change of phase occurs in the core and the system utilizes a direct cycle (like the BWR), steam separators, dryers, pressurizes and recirculation pumps are not required, resulting in a considerably simpler and more compact system than traditional LWRs. SCWRs are hoped to be more economical than LWRs, due to plant simplifcation and high thermal efciency. Te Governments of Japan, the U.S. and Canada are developing the SCWR. Tere have been no prototypes built so far.

Te technology for the SCWR is based on the existing LWRs and supercritical-water-cooled fossil-fred power plants. However, there are important SCWR technology gaps in the areas of materials and structures, including corrosion and stress corrosion cracking (SCC), safety and plant design. Te main feasibility issues are the development of suitable in-core materials and the demonstration of adequate safety and stability.

#### **5.4 Lead-Cooled Fast Reactor System (LFR)**

LFR systems are reactors cooled by liquid metal (lead or lead/bismuth) with a fast-neutron spectrum and closed fuel cycle system. A full actinide-recycle fuel cycle with central or regional facilities is envisaged. A wide range of unit sizes is planned, from ´batteries` of 50–150 MWe, and modular units of 300–400 MWe to large single plants of 1200 MWe. Te LFR battery option is a small factory-built turnkey plant with very long core life (10 to 30 years). It is designed for small grids, and for developing countries that may not wish to deploy a fuel cycle infrastructure.

Among the LFR concepts, this battery option is regarded as the most promising, concerning fulflment of Generation IV goals. However, it also has the largest research needs and longest development time.

Experience with the technology is restricted to seven Russian Alpha class submarines, which stopped operation in 1995, and on the advanced liquid-metal fast breeder reactor (ALMR), the design of which was withdrawn from the U.S. NRC review at an early stage (WANO, 2004).

Te LFR system is top-ranked in sustainability because a closed fuel cycle is aimed at, and in proliferation resistance and physical protection because it employs a long-life core. It is rated good in safety and economics. Te LFR system was estimated in 2002 to be deployable by 2025 (DOE, 2002). Tat is out of reach today.

#### **5.5 Gas-Cooled Fast Reactor System (GFR)**

Te GFR system is a helium-cooled reactor with fast-neutron spectrum and closed fuel cycle. It is primarily envisioned for electricity production and actinide management. Te GFR reference assumes an integrated, on-site spent fuel treatment and re-fabrication plant, but the viability of the planned technology has yet to be demonstrated. Fuel cycle technology is the most comprehensive technology gap of the GFR.

In spite of large technology gaps, according to GIF, the GFR system is topranked in sustainability because of its closed fuel cycle and excellent theoretical performance in actinide management. It is rated good in safety, economics, as well as proliferation resistance and physical protection. Te GFR was estimated in 2002 to be deployable by 2025 (DOE, 2002). Tat will not happen.

Several GIF members have a specifc interest for a sequenced development of gas-cooled system: Te frst step of the ´Gas Technology Path` aims to develop a modular HTGR, the second step would be the VHTR, and the third step the GFR

(Carré, 2004). Te gas-cooled systems VHTR and GFR are seen as the top priorities of GIF members in Europe and the USA.

#### **5.6 Molten Salt Reactor System (MSR)**

During the 1960s the USA developed the molten salt breeder reactor as the primary back-up option for the conventional fast breeder reactor (cooled by liquid metal). A small prototype (8 MWth), the Molten Salt Reactor Experiment (MSRE), was operated for only four years. Te next project planned, the Molten Salt Breeder Reactor (MSBR), was never built. Te present work rests only on these projects. Detailed designs of an MSR have not been produced since the 1970s (Forsberg, 2002).

Te MSR system is based on a thermal neutron spectrum and a closed fuel cycle. Te uranium fuel is dissolved in the sodium fuoride salt coolant that circulates through graphite core channels. Te heat, directly generated in the molten salt, is transferred to a secondary coolant system, and then through a tertiary heat exchanger to the power conversion system.

#### **5.7 Discussion of GEN IV concepts**

GIF considers a closed fuel cycle as a major advantage of Generation IV concepts. A system with a closed fuel cycle is regarded as more efective, and sustainable. However, not all of the six concepts selected for development employ a closed fuel cycle. Te VHTR, most favoured, relies on an open cycle; and for the SCWR, once-through constitutes the nearer-term option. Furthermore, it is questionable, whether it will actually be possible to successfully develop and implement a closed fuel cycle. In addition, the costs of such closed fuel cycle concepts would be very high. According to the study "Te Future of Nuclear" of the U.S. Massachusetts Institute of Technology (MIT, 2003), a convincing case has not yet been made that the long-term waste management benefts of advanced closed fuel cycles involving reprocessing of spent fuel are not indeed outweighed by the short-term risks and costs, including proliferation risks. Te waste problem of nuclear industry can only be reduced even in an optimistic closed cycle scenario but remains far from being solved. (e.g. Gutachten Transmutation, Gerald Kirchner et al., 2015) Also, the MIT study found that the fuel cost with a closed cycle, including waste storage and disposal charges, to be about 4.5 times the cost of a once-through cycle. Terefore, it is not realistic to expect that there will be new reactor and fuel cycle technologies that simultaneously overcome the problems of cost, safe waste disposal and proliferation. As a result, the MIT study concludes that the once-through fuel cycle best meets the criteria of low costs and proliferation-resistance (NEI, 2003).

Te basic concepts of the "new generation" have been around as long as nuclear power, but they were forced out of the market in the early years by the LWR – not without reason, considering the experiences so far, which are dominated by technical and economic problems, and safety defcits.

In order to overcome these problems, materials, processes and operating regimes that are signifcantly diferent from those of currently operating systems or previous systems would have to be developed. So far, none of the six reactor concepts selected for development fulfls all GEN IV aims.

#### **6 Conclusions**

Practically all of the 413 world-wide operating reactors (as of mid-2018) are GEN-II reactors carrying the well-known risks with respect to safety issues and proliferation. By the end of 2018, only a hand full of GEN III+ reactors – attributed with higher safety levels – are in operation (all in China). Tere are only 11 are under construction world-wide. Tey should be safer due to additional passive safety features. Te lessons learned so far are that these generations' plants are much more expensive and can experience huge delays in construction times.

Diferent international, government sponsored organisations such as GIF are selling the idea of so-called GEN IV reactors. Tey pretend that under that umbrella term a completely new generation of reactors is being developed. Te envisaged concepts are surely diferent from the light water concepts used so far. Te message for the media, politicians and the public is: GEN IV is a safe, economical competitive, proliferation-resistant power source without the problem of increasing greenhouse gas emissions.

However, these expectations are very high, and their realization is at least 20 years away. In addition, the underlying basic concepts of "GEN IV" are decades old and encompass a range of ideas, which were already discussed in the 1950s. Tey were not pursued further due to severe problems such as high costs, limiting factors in material properties and difculties in controlling the fssion processes. Tey were forced out of the market already in the early years by the LWR.

It is of core interest to understand what the real motivation behind the GEN IV initiative is. To some extent it seems the revival of the discussion on GEN IV is mainly driven by the wish to secure the fow of public money for nuclear research. Whether it will really lead to the development of new reactors remains highly

doubtful. Te sobering fnal conclusion is that substantial amounts of money are invested in eforts which are not likely to solve any of the problems of nuclear power, climate change and energy supply security.

#### **References**


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**Nuclear Waste, Proliferation**

## **Decommissioning of Nuclear Power Plants and Storage of Nuclear Waste Experiences from Germany, France, and the U.K.**

Ben Wealer, Jan Paul Seidel, and Christian von Hirschhausen1

#### **Abstract**

Te decommissioning of nuclear power plants and the storage of nuclear waste are major challenges for all nuclear countries. Both processes are technologically and fnancially challenging. We provide an analysis of the status quo of both processes in three major nuclear countries: Germany, France, and the U.K. Germany was able to gain some decommissioning experiences but not one large-scale reactor has been released from regulatory control. EDF was forced to cancel its target to immediately dismantle all GCRs by 2036 due to underestimated technological challenges, while in the U.K., decommissioning of the legacy feet lasts well into the 22nd century. Until now, no scale efects could be observed, if EDF can reap scale efects due to the standardization of its feet remains to be seen. Te search for a deep geological disposal facility is the most advanced in France, where the start date is fxed by law to 2025. Tere are many uncertainties related to estimated future costs. In the three countries, three diferent funding schemes are implemented: Germany switched from internal non-segregated funds to an external segregated fund for waste management. In the U.K. the decommissioning of the

<sup>1</sup> Ben Wealer, TU Berlin, Germany, bw@wip.tu-berlin.de; Jan Paul Seidel, TU Berlin, Germany, janpaulseidel@gmail.com; Christian von Hirschhausen, TU Berlin, Germany, cvh@wip.tu-berlin.de

legacy feet will be paid by the taxpayer for the next 100 years while an external segregated fund was established for the current operational feet. In France, an internal segregated fund fnances the future liabilities of EDF.

#### **1 Introduction**

Te decommissioning of nuclear power plants (NPP) and the long-term storage of nuclear waste are important elements of the life cycle of nuclear power plants, but both processes have been underestimated for a long time, both in terms of the technological challenges as well as the fnancial implications. Traditional economic analysis has discounted the future costs for decommissioning and storage so that these never appeared in the fnancial calculations. Furthermore, the little available experience leads to a high uncertainty about future pathways. In addition, technical and fnancial data are difcult to compare between countries.

In this chapter we provide an in-depth analysis of decommissioning and waste storage processes in three major European nuclear countries: Germany, France, and the United Kingdom. To do so, we are going to compare the diferent national strategies of organizing and fnancing the decommissioning of NPPs and the storing of high-level nuclear waste. We distinguish between the two main elements of the strategy: production and fnancing. First, someone has to manage and organize the decommissioning and storage process (the production): this can either be private or public companies, or a mixture of both. Second, both processes need to be fnanced: Tis can be done by the federal budget, an external segregated fund, or in-house fnancing by the companies, usually done in internal funds—segregated or non-segregated (OECD/NEA 2016a).2

Te shutdown reactors in the three observed countries France, Germany, and the U.K. account for more than 77% of the reactors in shutdown state in the European Union (European Parliament 2013). In addition, these countries represent interesting features that reveal the diferent experiences and challenges. Germany is just exploring ways for large-scale decommissioning, having decided to phase out

<sup>2</sup> External segregated fund: Te operators pay their fnancial obligation in a publicly controlled fund managed by private or state owned external independent bodies. Internal non-segregated fund: Te operator of a facility is obliged to form and manage funds autonomous, which are held within their accounts as reserves. Internal segregated fund: Te operator feeds a self-administrated fund, which is separated from the other businesses.

nuclear power by 2022. Both, France and the U.K., are facing specifc technological challenges with the graphite-moderated reactors of the 1960s. Tere are concerns in France that the fnancial challenges of the future decommissioning process—with 58 still operational reactors France will face the largest decommissioning project in Europe—are not yet well understood and underestimated. Te case study of the U.K. reveals organizational and fnancial challenges of having to clean up afer a few decades of operating the nuclear sector, and the long time frames to be expected.

Te focus of this chapter is on the decommissioning of large-scale NPPs that were operated commercially for electricity production and the management of high-level radioactive waste (HLW). Te two light water reactor (LWR) concepts the pressurized water reactor (PWR) and the boiling water reactor (BWR)—are the most widely installed reactor designs in the world. However, in this case study, the only BWRs are located in Germany while France only operates PWRs. Te concepts for gas-cooled and graphite-moderated reactors (GCR) were developed

**Fig. 1** Operational and shutdown reactors by reactor type in the observed countries, own depiction based on IAEA (2017).3

<sup>3</sup> Te cluster "other" comprises for France: two fast breeding reactors (FBR) and one heavy-water moderated gas-cooled reactor (HWGCR); for Germany: one high-tem-

and installed in France and the U.K. While France ceased operations of its entire GCR feet, they are still operational in the U.K. Te number of shutdown reactors in the United Kingdom and Germany outweigh the operational reactors by a large amount, as can be seen in Fig. 1.

Te decommissioning and clean-up of the global civil nuclear legacy and the longterm storage of nuclear waste represents technological, safety and environmental challenges for all nuclear countries. During the period when nuclear energy was established, the focus of planners and operators was predominantly on designing, building and operating a safe plant and only limited on the eventual decommissioning of the facility and the management of resulting radioactive wastes (McIntyre 2012). In general, the decommissioning process of an NPP moves from the outer to the inner area of the reactor. Simultaneously, the degree of contamination of the handled parts increases. Te eventual process of decommissioning of the nuclear power plant can be divided into fve main stages.4 A geological disposal facility for high-level waste is still missing worldwide. As spent nuclear fuel (SNF) has to be stored for 40–50 years in order to cool down, before it can be permanently stored in an underground disposal repository, the time was not that pressing to tackle this problem for the responsible actors, which led to the construction of interim storage facilities for high-level wastes.

As the goal of this chapter is an analysis of the technical, organizational and fnancial status quo of both processes in Germany, France, and the U.K., the different national strategies and approaches of organizing the production and the fnancing of the decommissioning process, and storing the nuclear waste will frstly be analysed and then compared; the fnal section concludes.

perature gas-cooled reactor (HTGR), one FBR, two pressurized heavy-water reactors, one HWGCR, and one FBR; for the U.K.: two FBRs and one SGHWR

<sup>4</sup> Stage 1: Dismantling of systems that are not needed for the decommissioning process and installation of the logistic in the hot zone. Stage 2: Dismantling of higher contaminated larger system parts. Stage 3: Dismantling in the hot zone, e.g. deconstruction of the activated reactor pressure vessel (RPV) and its internals (RVI) and of the biological shield. Stage 4: Deconstruction of contaminated system parts, removal of operating systems and decontamination of buildings. Stage 5: Demolition of the building or further nuclear or non-nuclear use (Wealer et al. 2015).

#### **2 France**

With a nuclear share in the net electricity production of 72.28% in 2016 (IAEA 2017) France still relies heavily on nuclear power. Te Energy Transition for Green Growth bill, approved by the National Assembly in 2015, foresees a reduction of this share to 50% by 2025. In 2017, Electricité de France (EDF) operates 58 NPPs on 19 sites across the country with a total installed capacity of 63.2 GW. Te oldest running reactors are the two Fessenheim units which became critical in 1978, and the most recently installed NPPs are the two Civeaux units, commissioned in 2002. Te French nuclear feet has an average age of around 30 years and has with its three PWR designs5 the highest degree of standardization in the world (World Nuclear Association 2017). All the nuclear steam supply systems of the operational NPPs were designed by Framatome (IAEA 2017). In 2010, EDF announced that it was assessing the prospect of raising the 40-year lifetimes to 60 years for all its existing reactors. Tis strategy would involve replacement of all steam generators in the 900 and 1,300 MWreactors and other refurbishments costing 400–600 million EUR per unit.6 As the focus of this chapter lies on the decommissioning and waste management of commercial NPPs, the activities of EDF will be the focus in the following.

#### **2.1 Production**

#### **2.1.1 Decommissioning of nuclear power plants**

Currently, there are 13 NPPs in a stage of permanent shutdown; of which nine NPPs are from the frst-generation GCRs, similar to the U.K. Magnox reactors. Chooz-A is the only PWR currently being decommissioned by EDF. Te decommissioning of the former military installations in Marcoule G-1, G-2, and G-3 is taken over by the public nuclear research agency Commissariat à l'énergie atomique et aux énergies alternatives (CEA). French regulation states that NPPs have to be immediately dismantled and the process has to be carried out as fast as possible; depending on the complexity of the plant this could mean several years up to several decades (Autorité de sûreté nucléaire 2016b). Initially EDF planned to decommission its shutdown NPPs in two waves within 25 years with an estimated end in 2036 (Au-

<sup>5</sup> Te three-loop 900 MW reactors (CP0, CP1, CP2), the four-loop 1,300 MW reactors (P4), and the four-loop 1,450 MW reactors (N4).

<sup>6</sup> So far EDF has replaced the three steam generators in 22 of their 900 MW reactors, ordered 44 steam generators for eleven of the 1,300 MW class and will proceed with the other nine (World Nuclear Association 2017).

torité de sûreté nucléaire 2016a). Te frst wave consisted of the FBR Super-Phénix, the HWGCR Brennilis, the PWR Chooz-A and the GCR Bugey-1; in the second wave the last fve GCRs Chinon A 1–3 and Saint Laurent A 1–2 were planned to be decommissioned. Tis ambitious plan was changed in 2016.

Chooz-A (operational from 1967 to 1991) was the frst European commercial PWR and built under a Westinghouse license. By December 1995 the reactor was defueled and the SNF dispatched to the reprocessing centre in La Hague. Te policy change in the French decommissioning strategy in 2011 from Long-Term Enclosure to Immediate Dismantling accelerated the decommissioning plans and reduced the enclosure period from 50 to only a few years (European Parliament 2013). Since 2014, the reactor pressure vessel of Chooz-A is being decommissioned under water. Te work was contracted to a Westinghouse-Nuvia France consortium (Hitchin 2010). Te experiences with the PWR dismantling are seen as an important feedback source for the further dismantling of the still operational PWR feet, but this is questionable (Seidel and Wealer 2016) as Chooz-A is an early reactor design and quite unique with its embedment inside a bedrock of a hill in the Ardennes. Chooz-A is therefore not really comparable to the other PWRs. EDF missed the ambitious target of completing the decommissioning process by 2016, the process is now expected to be completed by 2020–2025 (Martelet 2016).

As disposal routes for irradiated graphite waste are still missing, the Long-Term Enclosure of a GCR is the worldwide preferred decommissioning strategy. Nonetheless the change of EDF's strategy also afected its GCR decommissioning strategy, which was considered to be more global and interconnected as it had to cope with a considerable amount of irradiated graphite. To cope with this waste, EDF initially started with the construction of an interim storage facility on the Bugey site, but the construction was stopped in 2012. In 2016, EDF announced a change of its GCR strategy to the regulatory authority ASN (Autorité de sûreté nucléaire): the focus for the next 15 years would lie on dismantling nuclear installations except for the reactors and its buildings. Te plans foresee that the frst reactor (Chinon A-1) will start the dry dismantling in 2031; during the estimated dismantling duration of 25 years, the fve remaining reactors will be enclosed. Tis new strategy will lead to a possible release of the GCRs from regulatory control in the beginning of the 22nd century. Te major motivations for a switch to a dry dismantling strategy were constrains due to the long immersion times of the reactors, i.e. corrosion and leak tightness (Martelet 2016). Te initial plan with the continuous fow of graphite waste and the very tight focus on the reactor core could not be implemented because the actual dismantling is technologically complex and needs more preliminary tests than expected.7 ASN recognized the proposal and expects by the end of 2017 a detailed decommissioning plan for the next 15 years and EDF to take a position regarding this sudden change in strategy. In France, EDF ofcially uses the term "Safe Confguration" instead of Long-Term Enclosure (or Safe Storage), while in the U.K., where EDF Energy is responsible for the decommissioning of the operational GCR feet, the company opts ofcially for the Long-Term Enclosure strategy. It is also unsure, if the new strategy is compatible with the implication of the French regulatory authority to carry out the decommissioning as fast as possible (Seidel and Wealer 2016).

#### **2.1.2 Storage of high-level wastes**

As France operates a closed fuel cycle, SNF is not declared as waste but as a resource and is reprocessed in La Hague by Areva. Te glass canisters containing vitrifed HLW are stored at the production sites Marcoule, Cadarache, and La Hague (Lehtonen 2015). Te fnal forecasts for the generated waste of the operational nuclear feet—assuming an average life of 50 years—is expected to be around 10,000 m³ (OECD/NEA 2016b). Te Waste Management Act established the way to treat radioactive waste and set the direction of research undertaken by the government agency ANDRA. Research for a fnal storage is mainly undertaken at the 500-metre deep underground rock laboratory Cigéo in Bure situated in clays. ANDRA expects to present its master plan to the government for operation and disposal at Cigéo site in 2017 and expects a construction permit in 2018. Construction should start in 2020 and the start of the pilot phase is set by law to 2025. Contrary to other countries, research is also undertaken in the feld of partitioning and transmutation, and long-term surface storage of wastes following conditioning. A major part of the low-level long-lived waste is the graphite from the GCRs, which is probably going to be stored 200 meters underground in a layer of clay as ("Intact Cove Disposal") or going to be stored with the HLW in the Cigéo disposal (Ministry for Ecology, Sustainable Development and Energy 2014).

<sup>7</sup> According to EDF's previous time schedule, the critical path of the former GCR initial decommissioning project consisted of the graphite removal from the reactor core and the decommissioning of the reactors was already well behind in schedule in 2011 (Laurent 2011).

#### **2.2 Financing**

Applying the polluter-pays-principle, the operators of nuclear power plants are responsible to bear all costs related to decommissioning and waste management. Te fnancing scheme is based on two diferent kinds of funds. Te frst is characterized by a segregated internal fund set up by EDF and Areva8 and managed under separate accountability. Besides that, there are two more internal restricted funds related to ANDRA: one for research for future storage facilities and one for the construction and operation of a future storage facility for medium and long lived high-level waste. Te majority of future costs is related to the facilities of EDF. **Table 1** provides this cost estimation and the provisions set aside by EDF.


**Tab. 1** Estimated costs of EDF end of 2016 in million EUR (EDF 2017).

In total, the estimated costs are more than 79 billion EUR, with the main parts being for the geological disposal facility Cigéo (~ 30 billion EUR) and decommissioning (~ 27 billion EUR). Critical reports about the cost estimations mention that, especially the decommissioning costs of 27 billion EUR for 58 reactors are underestimated. Extrapolations of costs estimations of other countries show that EDF is expecting comparatively low costs per unit (Cour des Comptes 2014). EDF argues that the costs will be lower due to the high standardization degree of their feet and because multiple reactors are situated on the same site (Assemblée Nationale 2017). Nonetheless, the cost estimations are increasing continuously every year. In only three years, since the end of 2012, the estimated costs increased by nearly 10 billion EUR. Te current provisions are discounted with an interest rate of 4.2% and an assumed infation rate of 1.5%. As always, little changes of the estimated interest or infation

<sup>8</sup> Areva has no NPPs and operates nuclear facilities like the reprocessing center in La Hague.

rate for provisions and cost can have large infuences on the calculations resulting in an underestimation of the needed fnancial resources. In its assessment of the EDF decommissioning and waste strategy, the French National Assembly could not the share "the excessive optimism" of EDF for its future decommissioning projects. Te report concluded that the decommissioning and the clean-up will take more time, the technical feasibility is not fully assured, and will cost more money than EDF currently anticipates (Assemblée Nationale 2017).

Te two funds set up by the waste management agency ANDRA are fed by payments from the operator's internal funds at the time they are needed. Te only fund fed right now is the research fund, receiving payments through a tax paid by the operators. As there is not yet a construction license, the construction fund is currently not fed but the operators make payments from their internal funds to ANDRA's general budget to fnance operations related to the storage facilities for short-lived, medium-level wastes. AREVA and EDF were forced to advance their back-end provisions and accountancy practice because of partial privatizations. Both have now set up restricted internal segregated funds for the fnancing of the nuclear back-end. EDF feeds its fund by a charge of 0.14 Eurocent/kWh included in the price of electricity. Due to the Waste Law of 2006, the assets in the funds of EDF and Areva have to be accounted separately and the market value has to be at least as high as the provisions to be covered. In cases of insolvency or bankruptcy of an operator, the state can claim right over the assets. Te internal funds are supervised by an administrative authority, who is authorized to impose corrective measures. Tis also includes the right to impose payments to ANDRA's budget. A detailed report about the estimated costs, the timing and the value of the provisions has to be presented at least every three years (European Commission 2013).

#### **2.3 Conclusion for France**

Te operators EDF and CEA are responsible for the decommissioning of their power plants. While the latter is clearly a public agency, this classifcation is not so clear for EDF. Te major shareholder of the private company is the French state (over 85%), making EDF de facto a public enterprise. Te gained decommissioning experiences are not sufcient and the strategic impact of Chooz-A for the future decommissioning of the operational PWRs is questionable. If Chooz-A fnishes in 2025, the process will have taken 34 years to complete. Te decommissioning process of the GCRs has not really started yet and an end is not in sight. A long time frame is to be expected, reaching well into the 22nd century. Te management of high-level radioactive waste is in the hands of the public agency ANDRA. Te anticipated

start of operations of the HLW disposal facility to begin in 2025 is ambitious. Te fnancial aspects of the nuclear back-end in France are dominated by questionable cost estimations and hence set aside fnancial resources which are likely to be too low. Te internal segregated funds are managed by the operators and subject to an administrative control and oversight by national authorities. If this control will be able to prevent a shortfall of fnancial resources in the future is uncertain.

#### **3 United Kingdom**

Te U.K. currently operates 15 NPPs on 8 sites—all operated by EDF Energy, a subsidiary of EDF—and has an installed nuclear capacity of 8.8 GW representing a nuclear share of 20.4% of the British electricity production in 2016 (IAEA 2017). Te latest shutdown was Wylfa-1 in 2015. A particularity of the British nuclear feet is that, with the exception of Sizewell B (PWR) only GCRs are operational. At the moment, EDF Energy is considering lifetime extensions for its nuclear feet until 20239 , and is therefore investing about 600 Mio. GBP in plant upgrades (EDF 2017). Currently, there is a controversial discussion about plans to commission new reactors with a total capacity of 16 GW starting in 2030, including the well discussed NPP Hinkley Point C.

#### **3.1 Production**

#### **3.1.1 Decommissioning of nuclear power plants**

Te frst generation of British NPPs—the so-called Magnox line—was operated by the publically owned British Nuclear Fuels Limited and U.K. Atomic Energy Authority (UKAE) and is in a state of shutdown now. Te public body Nuclear Decommissioning Authority (NDA) is responsible for the decommissioning of this legacy feet. Te NDA estate comprises besides the Magnox NPPs, research centres, fuel-related facilities, and Sellafeld, the most hazardous site in Europe. Here the site operations include fuel reprocessing, fuel fabrication, and storage of nuclear materials and radioactive wastes. With the exception of the latter, all sites are managed through private-sector consortia, while Sellafeld is managed by the NDA itself. Te NDA has employed more than 3,500 contractors all over the U.K.

<sup>9</sup> Sizewell B will probably be extended until 2055.

and already spent around 12 billion GBP; contracting is critical to the NDA, as 95% of the NDA's funding is spent externally (NDA 2016c).

Te 17 sites of the estate are grouped into 6 Site Licence Companies (SLC). Te NDA owns these sites and takes the role as the supervising and contracting authority and is turning the management over to the contractors, the so-called SLCs under European public procurement law. Te latter are the long-term shareholders of the sites but the management is periodically open to competition. Te winner of these contracts acts as the Parent Body Organization (PBO). Te PBO receives the shares of the SLC and organizes the strategic management for the duration of the contract. Tis mechanism was introduced with the idea to increase the efciency of the procedure by opening the work to private contractors (MacKerron 2015). Te NDA is responsible for defning both the target and the timing of decommissioning and remediation, allowing the SLCs to determine how best to deliver this outcome. Te current plans of the NDA indicate that it will take around 110 years to complete the core-mission of nuclear clean-up and waste management (NDA 2016c).

With the exception of Calder Hall 1–4, part of the Sellafeld complex, all the sites with Magnox reactors are operated by Magnox Limited. Since 2014 Cavendish Fluor Partnership10 is the current PBO and hence the long-term owner of Magnox Ltd. and supplier of the strategic management and additional resources. Te Sellafeld complex is operated by the SLC Sellafeld Limited. Te organization of this site was changed in April 2016 and Sellafeld Ltd is now a wholly owned subsidiary of the NDA. A detailed review concluded that the complex, technical uncertainties at the Sellafeld site were less suited to the PBO model (NDA 2016a). Its mission to retrieve nuclear waste from some of the world's oldest nuclear facilities extends well into the 22nd century and the sums of money involved are much greater than on other NDA sites.

Since 1977, 30 reactors were shut down and 26 of these are currently in the dismantling process. Te current strategy for the Magnox feet is the Long-Term Enclosure approach. With the exception of the Wylfa reactors, the reactors are defueled and most of the systems external to the biological shield have been removed. According to NDA's strategy, the biological shield, the reactor pressure vessel, the external pressure circuit, and steam generators would be sealed and stored. Te dismantling of the reactors will begin 85 years afer the shutdown of the plant. However, the NDA and Magnox Ltd are currently reviewing their strategy as there have been advances in remote decommissioning techniques and considerable experience gained in remote handling, packaging, and storage of highly activated waste at Magnox sites. In addition, an improved understanding of

<sup>10</sup> A consortium of Cavendish Nuclear—a subsidiary of Babcock International—and Fluor.

the implications of radioactive decay has shown that afer the long period of Long-Term Enclosure, the larger amount of the reactor waste will still not be suitable for management as low-level waste. A last development is the realization that the reduction in decommissioning costs with the increase in deferral time is largely ofset by the increased cost of preparing and managing the Long-Term Enclosure of the reactor. Te waste has been conditioned on-site and interim storages have been built to store the waste until the fnal disposal route is available. Some site decommissioning and remediation work has been undertaken at most sites with a major focus on the preparation of the ponds for the Long-Term Enclosure state. Since 2011 the focus has been on the plants in Bradwell and Trawsfynydd. Magnox is working towards a target of placing all the reactors into the Long-Term Enclosure state by 2028. Te ultimate goal for NDA's mission is to achieve the end state of all sites by 2125 (NDA 2016c).

#### **3.1.2 Storage of high-level wastes**

Te NDA advocates an approach where wastes are managed according to the radiological, physical, and chemical properties and divides its strategy of radioactive waste management in two topics: Higher Activity Waste (HAW) and Lower Activity Waste (LAW).11 According to the NDA (2015), the radioactive waste stocks and future arising sum up to around 4,720,000 m3 in terms of fnal packaged volume. About 90% of this volume can be attributed to LAW and about 10% consists of HAW. 75% of the NDA-owned HAW is from the Sellafeld Site and about 22% from Magnox sites (NDA 2015). Within the U.K., there are large quantities of graphite present with approximately 60,000 tonnes on the Magnox sites alone (NDA 2016b). As the dismantling of the reactors is deferred, the biggest amount of graphite will arise from 2070 onwards. High-level vitrifed waste stemming from reprocessing SNF is stored in stainless steel canisters in silos at Sellafeld. In 2016, a dry cask storage facility for SNF was commissioned at the Sizewell B station. U.K. policy states that SNF management is a matter for the commercial judgement of its owners, subject to meeting the necessary regulatory requirements. SNF is not considered as waste and the U.K. has a closed fuel cycle in place, i.e. used fuel was reprocessed. If the U.K. government gives up reprocessing and declares SNF as a waste, SNF would be

<sup>11</sup> Te term HAW refers to all radioactive material that has no further use and is either LLW, ILW or HLW and deemed not suitable for the disposal at the LLW repository in Cumbria or the LLW repository in Dounreay. Te strategy of the NDA consists in converting HAW into a form that can be safely stored and managed for many decades awaiting the opening of the geological disposal facility (NDA 2016b).

consigned to a geological disposal facility. Te aim of the NDA is to reprocess at least all of the Magnox fuel, which should be achieved by the year 2020 (NDA 2016c).

Te long-term management policy for HAW is to package and store wastes in interim storages until they can be transferred to a geological disposal facility. Te inventory to be disposed of is currently being stored by the waste owners.12 In 2014, the Department of Energy and Climate Change (DECC) published a White Paper on implementing a geological facility and the Radioactive Waste Management Limited (RMW) was established as an NDA subsidiary. As a legal entity, RWM will be able to apply for and hold the regulatory permits and licenses required for the siting, construction and operation of a geological disposal facility (DECC 2014). A public agency is therefore responsible for the preparatory work to plan the geological disposal of HAW and delivering the disposal facility. Until today no possible suitable sites have been identifed. Te detailed layout and design of the facility will depend on the waste inventory and the specifc geological characteristics of the site. Te underground facilities are expected to comprise a system of vaults for the disposal of ILW, and an array of engineered tunnels, for the disposal of HLW and SNF (DECC 2014). During the construction and operational stage, which will last around 100 years, wastes that have been placed in the facility could be retrieved, which is not an option afer the closing of the facility. Te siting is still based on a voluntarist approach, i.e. the willingness of local communities to participate in the process, although this approach has already failed once. Current plans predict the deep geological facility being available around 2060 (NDA 2016c).

#### **3.2 Financing**

Following the reorganization of the nuclear sector in the United Kingdom there, are three diferent fnancing systems for the nuclear back-end in place: one for the NDA facilities, one for the reactors owned by EDF Energy, and one for possible newbuild power plants—the decommissioning costs for the nuclear facilities in the U.K. have to be considered separately for the NDA and the EDF Energy sites. Te NDA expects in their annual report for 2016/17 discounted costs of 116 billion GBP for more than 120 years; the majority (around 75%) of the costs are attributed to the Sellafeld site alone (NDA 2017).13

<sup>12</sup> NDA and its SLCs, EDF Energy, Urenco U.K. Ltd, Ministry of Defence, GE Healthcare and other non-nuclear users of radioactive material.

<sup>13</sup> Te uncertainty of this estimation was mentioned in the NDA annual of 2012/13 report as follows: "*Given the very long timescale involved and the complexity of the plants and* 

Te decommissioning process is managed by the NDA and undertaken by contractors, which are primarily fnanced through public funds. Te annual budget for the NDA is set by the U.K. Department for Energy and Climate and HM Treasury (OECD/NEA 2016a). In addition to the governmental funding, the NDA generates income with commercial activities. In the commercial year 2016/17, the NDA earned around 1 billion GBP, with 612 million GBP coming from reprocessing and waste management activities (NDA 2017). With the shutdown of Wylfa, income through selling of electricity production, which used to decrease the payments from the taxpayers, came to an end. So the funding of the NDA will become even more dependent on the British taxpayers in the future.

Te decommissioning of the EDF Energy NPPs will be primarily payed by the Nuclear Liabilities Fund (NLF), an external segregated fund established by the U.K. government in 1996. Te only function of the fund is to provide funding to meet specifc waste management costs and the decommissioning liabilities for the NPPs originally owned by public utility British Energy (OECD/NEA 2016a). Te NLF had assets with a market value of around 8,935 million GBP at the end of the fnancial year 2015 (NLF 2015). In 2005, when British Energy was restructured and became EDF Energy, the U.K. government announced that it would fund the qualifying liabilities for the case that they exceed all the assets of the fund (OECD/ NEA 2016a). Te owner of the NLF is the Nuclear Trust, a public trust established under Scottish law.14 When the NLF was established it received an initial endowment of 228 million GBP from the U.K. government. Today, the fund is fed by two sources: one source is a small quarterly payment by EDF Energy, the second and predominant sources are the revenues of the investments of the fund (OECD/NEA 2016a). In the fnancial year 2014/15, EDF Energy made contributions of around 26.5 million GBP to the fund and the operating proft before tax was around 155 million GBP (NLF 2015). If EDF Energy wants to receive payments from the fund to meet liabilities, it has to apply to the NDA, which acts as an agent of the U.K. government. Te NDA as the administrator of the Liabilities Management Agreements approves the NLF payments for decommissioning and waste management. Table 2 provides the cost estimations and the provisions set aside by EDF Energy. Te provisions for the eight operational NPPs of EDF Energy are calculated with a discount rate of 2.7% and an implicit infation rate based on long-term forecast of adjusted retail prices.

*material being handled, considerable uncertainty remains in the cost estimate particularly in later years.*"

<sup>14</sup> Te fve trustees—three are appointed by the U.K. government and two by EDF Energy—also act as the directors of the NLF.



According to EDF's fnancial statement, the provisions for decommissioning and waste management are reported in the assets as "receivables" (EDF 2017, 93). Te current value of the fund exceeds the discounted cost estimates of EDF Energy. But already in 2012, the NLF expressed the view, that the fund may not be large enough in the end. In addition, the U.K. government insists that the fund is deposited almost entirely in the National Loans Fund to earn an annual rate of interest used to reduce the overall U.K.'s public debt (MacKerron 2015). EDF Energy is responsible for all operational aspects of the decommissioning of the existing NPPs, but the U.K. government has the power to decide to transfer the decommissioning responsibility to the NDA at any point afer the electricity generation at the power stations ended (OECD/NEA 2016a).

According to the Energy Act of 2008 operators that want to construct new nuclear power plants have to establish secure fnancing arrangements and exact plans for decommissioning and disposal before they get the application to build a new plant.Te fnancing has to be realized by an independent external fund that will be fed during the operational time of the plant with levy of a certain amount per generated kWh.

#### **3.3 Conclusion for the U.K.**

Te public agency NDA is responsible for the decommissioning of the legacy feet. Te licenses remain with the NDA, but the work is tendered to a PBO, a consortium of private enterprises. Tis was a changed in 2016 for the Sellafeld site, where a public organizational model is seen as more suitable for the complex and long-lasting

clean-up of the site. Nearly all the shutdown reactors have been defueled and are currently being prepared for the Long-Term Enclosure. A long time frame is to be expected, reaching well into the 22nd century. For the current operational NPPs the operator EDF Energy—a private enterprise and subsidiary of EDF—is responsible for the decommissioning. Concerning the high-level waste management, the construction of a disposal facility is the scope of a NDA subsidiary and thus a public matter. Up to now all site selection activities failed and have to restart again. Te fnancing of decommissioning and waste management will be challenging too, especially for Sellafeld. Te costly decommissioning and site remediation of the legacy feet have to be fnanced by the taxpayers over more than 100 years. Te lessons learned from the shortfall of former provisions led to the establishment of an external segregated fund for the operational NPP feet, which should prevent public payments in the future but it remains questionable if the fnancial resources set aside in the fund will cover these costs.

#### **4 Germany**

With a nuclear share of 13.1 percent (80.07 TWh) in 2016 (IAEA 2017), Germany has the smallest share of nuclear energy among the observed countries, but the 28 shutdown NPPs (in 2017) constitute the most diverse NPP feet to dismantle of the observed countries (see Fig. 1). Te 13th amendment of the Atomic Energy Act in August 2011 withdrew the operating licenses of the seven oldest NPPs and Krümmel. Te remaining eight operational plants will be gradually shutdown by the year 2022. Te current feet is operated by the German utilities EnBW, PreussenElektra (E.ON subsidiary) and RWE as well as the Swedish utility Vattenfall Europe Nuclear Energy. Siemens Krafwerke Union AG (KWU), later to be dissolved with the French frm Framatome into Areva NP, built all the nuclear steam supply systems—the reactor and the reactor coolant pumps and associated piping in an NPP—in the operational power plants. Te operational Pre-Convoi PWRs (Vor-Konvois) will be shut down in 2021. Te Convoi reactors (Konvoi)—the latest PWR-design commissioned in the late 1980s—are the last NPPs to be shut down in 2022.

#### **4.1 Production**

#### **4.1.1 Decommissioning of nuclear power plants**

Te diferent shutdown reactors are in diferent stages of their decommissioning process: two are in a stage of Long-Term Enclosure (LTE), three plants have been successfully dismantled and released from regulatory control, two plants have been dismantled but await regulatory release, while the remaining NPPs are currently in diferent phases of the decommissioning process.

Te BWR Lingen was put into Long-Term Enclosure15 in 1998, the request for decommissioning was submitted to the regulatory authority by RWE in 2008 and approved in 2016. Te three NPPs—two BWRs and one HWGCR—that have been successfully decommissioned and released from regulatory control were rather small prototype reactors. Of the three, VAK Kahl (BWR, 25 MW), was the only reactor that operated for a longer period of time (24 years) and was afer its shutdown immediately dismantled and released as a greenfeld in 1998.16 Te BWR Würgassen was the frst larger commercial NPP to be dismantled. Te reactor was of the frst generation BWRs and had a capacity of 640 MW. Afer 19 years of operating time, the NPP was shut down in 1994 and de facto decommissioned by 2014. During the dismantling in the hot zone (stage three) PreussenElektra tendered the dismantling and conditioning of the reactor vessel internals to Areva NP GmbH. Te site has not yet been released as a greenfeld as parts of the buildings are used as an interim storage for low and medium level wastes awaiting the opening of the disposal site Konrad. Decommissioning of Gundremmingen-A, another frst generation BWR (237 MW), started in 1983 and in 2016 the majority shareholder RWE fnished the actual decommissioning process with the decontamination of the buildings (Bredberg et al. 2017), but as it is the case with Würgassen the site cannot be released from regulatory control as parts of the building are used for future decommissioning works for the still operational units B and C.

Tere are currently 12 power plants in the process of being dismantled, the major part of them are PWRs.17 Te NPP Stade has nearly fnished decommissioning, here PreussenElektra again tendered the removal and conditioning of the reactor vessel

<sup>15</sup> Te other NPP in Long-term Enclosure is the pebble bed HTGR THTR-300.

<sup>16</sup> HDR Großwelzheim (Superheated BWR, 25 MW, 1969–1971) was decommissioned from 1988 until 1998. Niederaichbach (HWGCR, 100 MW, 1973–1974) was decommissioned from 1987 until 1995.

<sup>17</sup> Other NPPs being decommissioned are AVR Jülich (HTGR, 15 MW), KNK II (FBR, 17 MW), and MZFR Karlsruhe (PHWR, 1,219 MW); all three reactors are decommissioned by the public company EWN respectively EWN subsidiaries.

internals to Areva. Te legacy feet of the former German Democratic Republic (GDR) Rheinsberg and the fve units of Greifswald are being decommissioned by EWN Entsorgungswerk für Nuklearanlagen (EWN), a public company under control of the Federal Ministry of Finances. For both sites, the deferred dismantling strategy was chosen. Te Rheinsberg reactor pressure vessel was transported to the centralized on-site interim storage facility (Zwischenlager Nord), also operated by EWN. In Greifswald the reactor vessel internals of reactor one and two were immediately dismantled and conditioned. For the internals of reactor three and four as well as all the reactor pressure vessels of the fve reactors deferred dismantling was the strategic choice; also in storage and planned to be dismantled later on are the 17 steam generators and parts of the primary cooling system. Decommissioning of Obrigheim, operated by EnBW, should be completed sometime between 2020 and 2025. Mülheim-Kärlich, the only RWE power plant and the only Konvoi reactor currently being dismantled, is entering the reactor decommissioning phase and is planned to be released from regulatory control in 2021.

All NPPs shut down in 2011 and Grafenrheinfeld shut down in 2015 have submitted their decommissioning proposal at the regulatory authority; the proposal was also submitted for Gundremmingen B, which shut down in December 2017. Of these, Brunsbüttel, Isar 1, Biblis A and B as well as Neckarwestheim 1 have been granted their decommissioning requests in 2017. Te major part of the NPPs are still in the post-operational phase or are just starting with the decommissioning process. Te German operators currently face several obstacles in order to be able to conclude the decommissioning process in a timely manner without escalating costs. At the moment there is still not a sufcient number of transport and storage casks being produced in order to defuel the reactors. Te quick shutdown of the NPPs afer the Fukushima incident caused a high number of special fuel rods—not completely burnt-down fuel—in the reactor cores. For these fuel rods no casks for the safe storage have been approved by the regulatory authority at this point. Te defueling of the reactors cores and subsequently storing in an interim storage cannot be achieved until the required casks are available.

#### **4.1.2 Storage of high-level wastes**

Te high-level radioactive waste consists of SNF and vitrifed structures from the reprocessing process. Te political decision to stop German reprocessing was fnal in 1989, afer this the German operators invested in the French reprocessing facility in La Hague. Until 2005, nearly half of all the SNF was sent to France and the U.K. for reprocessing. From 2005 on, the policy was direct geological disposal—which meant interim storage of SNF and no more reprocessing (Hocke and Kallenbach-Herbert 2015). For this, the utilities operated through Gesellschaf für Nuklearservice (GNS) two centralized interim storage facilities in Gorleben and Ahaus; a third facility is Zwischenlager Nord operated by the public company EWN. But the major part of the SNF is currently still stored in the storage pools or in one of the twelve de-centralized on-site storage facilities.

In 2016, the institutional framework of the waste management process was changed with the introduction of the law aimed to restructure the responsibilities in the nuclear waste management process.18 Te ownership of the centralized interim storage facilities was transferred to the newly created public company Gesellschaf für Zwischenlagerung (BGZ, "company for interim storage"), which will also take over the decentralized interim-storage facilities and the low-level waste repositories. According to the fnal report19 of the high-level waste management commissionset up by the Repository Site Selection Act in July 2013 –the site for the deep geological facility with "the best safety" for the 30,000 m3 of high-level waste20 is to be found in a three-phase process, accompanied by extensive public participation. For the up 200,000 m3 of low- and intermediate waste and salt mixture to be retrieved from the Asse II geological facility currently no disposal solution exists. Te goal of the Repository Site Selection act is a "deep geological repository with reversibility" in either clay, salt or granite. Te plans foresee a start of operation of the disposal site afer 2050, but more realistic estimates expect the start afer 2080 (Tomauske 2015). Afer 50 years of operation time the disposal facility is planned to be sealed of.

#### **4.2 Financing**

Te funding system in Germany difers between purely public-owned facilities, facilities with mixed-ownership and the facilities in private ownership. Te costs for the decommissioning of the former owned nuclear facilities are fnanced from the current public budget; the Federal Government covers the majority of the costs, while some are covered by State Governments. Te most common examples for public funding are the former GDR NPPs Greifswald and Rheinsberg, the decommissioning of which is totally funded by the Ministry of Finance. For the facilities in mixed-ownership, there is a proportional split of the costs between the public and the private utilities clarifed by special arrangements (European Commission

<sup>18</sup> Gesetz zur Neuordnung der Verantwortung in der kerntechnischen Entsorgung (BT 768/16).

<sup>19</sup> See Kommission Lagerung hoch radioaktiver Abfallstofe (2016).

<sup>20</sup> Tis includes the high-level waste until the shut-down of the last power plant on 31.12.2022.

2013). However, the majority of the costs are related to the nuclear back-end of the privately-owned NPPs. In 2015, the auditing company Warth & Klein Grant Tornton AG provided on behalf of the German government an estimation of the whole costs for the nuclear back-end of 23 commercial NPPs: 47.5 billion in 2014 Euros. Te several undiscounted cost categories are presented in Table 3.


**Tab. 3** Estimated Nuclear Back-End Costs in Germany (Warth & Klein Grant Tornton AG Wirtschafsprüfungsgesellschaf 2015).

In addition, there are costs the for the public funded decommissioning of Greifswald and Rheinsberg and for research facilities: Te initial decommissioning costs for Greifswald were estimated to be about 4 billion EUR and for Rheinsberg 600 million EUR; the latest cost estimate in 2016 was around 6.5 billion for both facilities. As always, all cost estimations are subject to many uncertainties related to expectations about future infation rates, cost increases, and time delays. Te estimation of Warth & Klein Grant Tornton AG considered this by a computation of the estimated costs with a nuclear specifc infation rate of 1.97% until 2099, which resulted in total discounted costs of around 169.8 billion EUR. Te audit concluded that the efect of changing the estimated nuclear-specifc infation rate on future costs is strong and causes the most uncertainties.

In the old fnancing system, the fnancial resources to cover decommissioning and waste disposal were managed by the private companies in internal non-segregated funds with no public authority controlling them. Te companies set up the provisions according to international accounting standards and were free to choose where to invest it. Te OECD/NEA (2016a) highlighted the unregulated and uncontrolled system of internal non-segregated funds itself as the most critical aspect of the German system. In the case of a bankruptcy of the operator, the fnancial resources to cover future costs would probably have been lost. Te fnancial situation of the utilities was and still is not secured to exclude the risk of bankruptcy in the future. In the case of the loss of the funded provisions, the public budget would have been obliged to cover the costs. Table 4 presents the provisions of the companies as mentioned in their annual fnancial statements at the end of 2014. Te calculations of the private companies were based on an average interest rate of 4.58% and the before mentioned nuclear specifc infation rate of 1.97%; both are highly uncertain. A lower real interest rate on the provisions set aside would have had a crucial efect. With an average interest rate of 2.03 %, the present value of the set provisions would have to be today around 77 billion EUR to cover the future costs (Warth & Klein Grant Tornton AG Wirtschafsprüfungsgesellschaf 2015).


**Tab. 4** Provisions of German Operators end of 2014 (Warth & Klein Grant Tornton AG Wirtschafsprüfungsgesellschaf 2015)

On behalf of the government, an expert commission reviewed the fnancing system and provided reform proposals to meet the actual risk related to the system of internal non-segregated funds.21 Teir recommendations and the new law published in December 2016 (BT 768/16) led to a fundamental change of the German funding system. Tis change was also motivated by concerns that the private utilities would not be able to cover all future liabilities with their internal non-segregated fnancial resources due to the experiences with high cost increases in former decommissioning and waste disposal projects. Tere were annually cost increases between 2.9 and 6 percent, which is much higher than the general infation rate or the assumed

<sup>21</sup> See KFK – Kommission zur Überprüfung der Finanzierung des Kernenergieausstiegs (2016).

nuclear-specifc infation rate (Warth & Klein Grant Tornton AG Wirtschafsprüfungsgesellschaf 2015). Based on the reform proposals, an external segregated fund was implemented in 2016, which will have to fnance all aspects related to waste disposal, i.e. interim and fnal storage. Te fund was fed by the former provisions for these tasks totalling 23 billion EUR, including a risk premium. Te utilities are still responsible for decommissioning and for the conditioning of the wastes, but all tasks as well as the operation of the interim storage facilities will be done by public companies and paid from the fund. Te responsibility as well as risks, including the fnancial ones in the case of insufcient set-aside money, will have to borne by the public, which infringes the polluter-pays-principle (Jänsch et al. 2017).

#### **4.3 Conclusions for Germany**

Germany was able to gain some experience in the decommissioning of NPPs. Te four private utilities have chosen the Immediate Dismantling strategy in nearly all cases. Te public enterprise EWN chose the deferred dismantling strategy for the reactor pressure vessels. Te private operators carry out themselves the dismantling process, although specialized private companies carry out some part of the work; this is especially true for the technologically challenging dismantling of the reactor pressure vessel and its internals. All NPPs currently in the post-operational stage still face several obstacles in order to be able to conclude the decommissioning process in a timely manner without escalating costs, e.g., still not a sufcient number of transport and storage casks being produced in order to defuel the reactors. Te future disposal path for HLW is still highly uncertain—this also applies for the disposal of low- and medium-level wastes—and has retroactive efects on the timing, progress, and costs of the decommissioning process. Additionally, all estimated future costs are underlying many uncertainties due to cost increases and interest rates. Tis is especially true for all future costs related to the management for both low-and intermediate, and high-level waste. It is questionable if the fnancial resources set aside in the fund will cover these costs.

#### **5 Conclusions**

Overall, the three case studies show that the biggest challenges concerning the decommissioning and storing still wait for solutions. Decommissioning was in most cases neglected, only Germany has gained some experiences in decommissioning NPPs but no large-scale reactor (over 1 GW) has successfully been decommissioned. It can be stated that overall the experience is still lacking, considering the high need for decommissioning in the coming years in all of the observed countries. Until now, no scale efects could be observed, if EDF can reap scale efects due to the standardization of its feet remains to be seen. Te preferred strategy for light water reactors is Immediate Dismantling, while in some cases the radiological decay was used and the deferred dismantling strategy was applied to highly activated components. In contrast, the worldwide preferred strategy for GCRs is the Long-Term Enclosure. EDF is now also considering this strategy for its French GCR feet due to underestimated technological challenges and missing graphite disposal routes. Tis postpones the end of the decommissioning of the legacy feets in the U.K. and France well into the 22nd century. In all three cases, the decommissioning of the NPPs is critical due to the missing disposal facilities, which led to the construction of interim storage facilities.

Considering the production of the decommissioning process in the observed countries, we have two public companies EWN and Magnox Ltd. organizing the decommissioning of the legacy feets, while the latter tenders the work to a private consortium. In Germany and France, the operators are responsible for the decommissioning of their NPPs. Some part of the work, especially the most challenging work—the dismantling of the reactor pressure vessel and its internals—has been tendered to specialized nuclear companies. In the U.K., the decommissioning of the operational NPPs has to be done by the operator, but the NDA has a "take-over" option and can decide to transfer the decommissioning responsibility to the public body. On the other hand, the high-level disposal facility is in the three countries the scope of the government. If the construction permit for Cigéo is granted, France will have the most advanced process of implementing a deep geological disposal facility while Germany and the U.K. are still in the site selection process.

Te fnancing of decommissioning and radioactive waste management will be a long-term challenge in all three countries. All cost estimations are underlying uncertainties due to long time-scales, cost increases, and estimated interest and infation rates. Tis could lead to an underestimation of future costs. Of all the observed fnancial systems, the old German system of internal non segregated funds seemed to be the most uncontrolled and unsecured. Tis led to a change in the fnancial system and the implementation of an external segregated waste

fund. In France, the fnancial resources are held in internal segregated funds with administrative control and oversight by national authorities. However, this does not prevent comparatively optimistic cost estimations and due to this, likely inadequate set aside fnancial resources. In the U.K., the costliest aim will be the decommissioning and site remediation of the legacy feet and Sellafeld payed by the taxpayers over the next 100 years. To prevent a repetition of a shortfall of funded provisions, a system with an external segregated fund for the operational nuclear feet was introduced. Tis approach seems to be the most suitable to fnance the future cost of the nuclear back-end, even if it also could not overcome the problem of too low cost estimations.

#### **References**


IAEA, 2017. *Nuclear Power Reactors in the World*. Vienna: IAEA.



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## **Future Prospects on Coping with Nuclear Waste**

Gordon MacKerron1

#### **Abstract**

Finding safe and publicly acceptable routes for the management of long-lived nuclear wastes has been problematic in all countries that have used nuclear power. Te dominant expectation on the part of Governments and the nuclear industry has been that the best option will be deep underground disposal. However even in Sweden, where political consensus has emerged over a site for a repository, disputes continue about long-term safety. Ethical issues, especially inter-generational equity, are relevant given continuing delays in implementing long-term management and where countries, like the UK, continue to build new reactors, achieving political acceptability is more problematic than where new-build is not an option. Failure to resolve nuclear waste issues is a major obstacle to public acceptance of nuclear technology.

<sup>1</sup> Gordon MacKerron, University of Sussex, United Kingdom, gordon@mackerron.co.uk

#### **1 Introduction**

Radioactive waste is for many people the single most problematic issue surrounding nuclear power. For the great majority of countries using nuclear power, there has been little or no progress in resolving the waste issue. Tis chapter provides an overview of the main issues, with illustrations from a range of countries.

Generation of nuclear electricity produces radioactive substances, some not found in nature that are extremely hazardous. In many cases they remain potentially harmful to human health and the environment for thousands of years. Although there is now a history of nuclear generation stretching back 60 years – and a military legacy that goes back further – there is, as yet, no long-term management facility for the most problematic civilian wastes completed anywhere in the world.

Tis is not for want of trying. Most nuclear-using countries have ofcial policies that endorse the option of deep geological disposal (DGD) as the favoured strategy for trying to isolate wastes from the biosphere for very long periods in the future. But few countries have made any signifcant progress towards building such a repository (Finland and Sweden (Swahn and Kaberger 2015) are rare, if still partial, exceptions). Te failure to establish long-term management routes is a predominantly social and political question and can generally be attributed to a lack of trust on the part of afected populations, locally and nationally, in the technical solutions that have been proposed, refecting in turn a poor history of nuclear waste governance.

#### **2 The wastes**

Radioactive wastes arise at several points in the nuclear cycle but the main problem is about so-called 'higher activity' wastes. Tese have the characteristics that they are highly radioactive and remain hazardous for long periods in to the future – generally measured in centuries or longer.

Tese higher activity wastes are of two main types. Te frst are 'high level' wastes (HLW), which besides being highly radioactive and long-lasting are also heat generating and so need periods of cooling before they can be managed efectively [(MacKerron 2015). Tese wastes are almost entirely the product of fssion in reactors and consist either of spent fuel, or some of the separated components of spent fuel, including plutonium. Separation of plutonium and unburned uranium from spent fuel is known as 'reprocessing'. Tis is a complex chemical and mechanical process that creates new waste streams and is now undertaken by few countries (including the UK, France and Russia, with Japan expected to open its long-delayed reprocessing plant sometime soon (World Nuclear News 2017)). Plutonium is sometimes combined with uranium to make so-called mixed-oxide fuel (MOX) and then used in current commercial reactors. Tis however only postpones the waste issue. Te reason is that it is impractical to reprocess MOX fuel, which is radioactively hotter and more difcult to manage than conventional spent fuel (von Hippel and MacKerron2015).

However, much of the world's civilian separated plutonium is currently stored (especially in the UK and France), pending decisions on whether to treat it as waste or frst make it into MOX. Te rationale for plutonium separation was originally found in the nuclear weapons' states desire to produce fssile material for bombs (Gowing 1974). Later a new rationale developed. Tis derived from the intention of several countries from the 1950s onwards to develop 'fast breeder' reactors, which would depend on large quantities of plutonium as a start-up fuel, afer which reactors would generate their own fuel. Fast reactors have now been abandoned by most of their original supporting countries (the USA, the UK, France and Germany) though ambitions for fast reactors persist in Russia, India, and China (Cochran et al. 2010).

Te second waste category consists of 'intermediate level' wastes (ILW) which are also radioactive and long-lasting but not heat-generating. Most countries expect to manage HLW and ILW (especially the longest-lasting ILW) together in a deep repository (OECD/NEA 2013 chapters 1 and 2). ILW arises from a number of sources, including reactor operation and – where reprocessing of spent fuel takes place – some of the waste streams that reprocessing creates. Other wastes, mostly low level (LLW) are less radioactive and are dangerous for shorter time periods. Such wastes are in most cases already managed with little controversy, ofen in shallow burial sites. Te rest of this chapter concentrates on the higher activity wastes.

#### **3 Proposed technological solutions**

For several decades the overwhelmingly dominant expectation on the part of Governments and the nuclear industry has been that higher activity wastes will at some point be subject to buried in a deep geological disposal (DGD). Tis would be some distance underground – at least 500 metres or more – and would rely both on the host rock as well as engineered safety to contain the wastes safely for what is hoped to be more or less indefnite periods in to the future. While other routes for long-term management of wastes have been seriously considered – for example sub-seabed disposal, shooting wastes into space or beneath ice caps – all have

fallen by the wayside in recent years in the face of perceived risks, international law obstacles or excessive cost (CoRWM 2006, Chapter 10).

Several diferent geologies appear in principle suitable as host environments for a DGD repository. Tis has included granites (Scandinavia), salt (Germany) and clay (France). (Brunnengraber et al. 2015, Part 1) While the geology is expected to form part of the barrier to the escape of radioactivity, all DGD proposals also expect that there will be multiple engineered barriers. Wastes will be sealed in canisters or drums which themselves contain internal barriers and then further materials, for example bentonite clay, may be used to provide a further barrier between the waste-containing structure and the host rock.

One variant of the DGD idea is the potential use of boreholes for the disposal of particularly difcult wastes, such as immobilized plutonium (Gibb et al. 2008). Such boreholes might be at a depth of 3 – 5 kilometers, where geological formations are in principle especially stable. If such a method became feasible – and at present there are concerns about the reliability of drilling technology to such depths – the relatively small diameter of boreholes suggests that such an option would probably only work for quite small waste volumes.

While the great bulk of opinion favours a DGD route for long-term management of higher activity wastes, there are sharp divisions between those who want a repository closed and sealed as soon as all relevant waste is emplaced, and those who favour retrievability or reversibility for some substantial future period (CoRWM 2006, Chapter 10). Te argument in support of prompt closure is that the safety and security cases are stronger if a repository is closed and sealed as soon as possible. In practice such 'early' closure will probably be at least 100 years in the future for major nuclear-using countries and there are concerns that leaving a repository accessible for longer is risky, given the difculty of knowing how societies will evolve centuries into the future.

Te opposing argument – in favour of retrievability – is that maintaining access to waste, proposed in the UK case for up to 300 years (MacKerron 2015), allows for fexibility if circumstances change. Tere are two possible changes in circumstances envisaged in this argument. Te frst is that is that new technology might allow the period over which waste is hazardous to be radically reduced. Such ideas already have some currency in the notion that so-called partitioning and transmutation (P&T) might drastically reduce the half-lives of several isotopes (Schneider and Marignac 2008). However P&T would be extremely expensive and in any case could not reduce half-lives of some of the isotopes with longest lives. Te second possible change is that it might be possible to recover the waste and use it as fuel for new kinds of nuclear technology. Tis also has current advocates but runs into the problem that further wastes will be created (OECD/NEA 2013 Chapter 4).

#### **4 Issues of repository design and long-term safety**

Beneath this widespread generic endorsement of DGD there are many technical arguments about specifc repository design. For example in Sweden the confdence that was once widely shared about the so-called KBS design – which has provided a starting point for other countries' eforts, including Finland and the UK – has been eroded in recent years by concerns that the corrosion-resistance of the copper that is integral to the design might be compromised. Equally there have been long-running disputes in the US scientifc community about the long-term safety of the design proposed for the (now abandoned) Yucca mountain site in Nevada (Macfarlane and Ewing 2006).

While no country has expressed the view that an alternative to DGD is a good long-term way forward, some have deliberately postponed any long-term decision. Te Netherlands for example has a policy of storing wastes for around 100 years before expecting to make a long-term decision (Arentsen 2015). A few countries, for example Italy and Spain, have been infuenced by this approach, but no-one seriously argues that continuing storage is an acceptable long-term way forward. Tis raises questions of equity between generations that are explored further below. Virtually all other nuclear-using countries are committed to a search for a way to move DGD forward as quickly – in practice generally very slowly – as possible.

In this process of trying to fnd a way to implement DGD the almost universal assumption has been that every country needs to take responsibility for managing its domestically generated wastes within its own borders. Tere have been a few exceptions to this. Russia used to take back spent fuel from the reactors it sold to its East European client states, and very small quantities of waste have been transferred between countries (for example between Georgia and the UK) (Abbott 1998). But the principle that wastes should be the responsibility of the states that generate them is still the norm.

Nevertheless proposals periodically surface to develop multi-national disposal sites – for example within Europe and more improbably in Western Australia. While these have superfcial attractions, such as possible cost savings and the remoteness of some of the potential sites, thy have all foundered on mixed political and ethical grounds – the unacceptability that some countries will take on burdens that should belong elsewhere. For all practical purposes the issue of waste disposal is one that needs to be solved within each individual nuclear-waste-producing country.

Despite the near-consensus on the desirability of a DGD approach to waste management, the very limited progress to date on implementing such projects is striking. Only Finland and Sweden have made serious progress in this area. In the case of Sweden it is noteworthy that there has been serious engagement with local

candidate communities – both of which were very close to pre-existing nuclear sites – and they were given the option of withdrawal if the terms ofered were regarded as unacceptable (CoRWM 2006, Chapter 9). In Finland, with a tradition of consensual decision-making, there has been community consent for the construction of a repository and the process of frst building an underground laboratory has been ongoing since 2011 (Aufermann et al. 2015). Construction of a full-scale repository has started and it is possible that an operating licence may be granted by 2020. Sweden has also gone through a process of canvassing communities for volunteers and two sites proved willing to act as hosts, with one now selected (Swahn and Kaberger 2015). Even in these countries, the process of emplacing wastes will take many decades, and for other countries the timescale will be substantially longer.

In all other countries progress has been much more limited. In France a candidate site – Bure, in a thinly populated part of eastern France – has been selected in a much more top-down process, but it is not clear when (or of) construction will begin (Blowers 2017, chapter 4). Elsewhere there is even less progress. In the USA, there has been a protracted process in which Yucca Mountain was selected as the preferred site for DGD, but there were a long series of legal challenges and much public and local political resistance over many years which led to the site being efectively abandoned in 2011 (Macfarlane and Ewing 2006). In Germany, where there have long been proposals for three sites for diferent waste categories, there have been apparently intractable delays, and a ferce anti-nuclear movement, as well as local citizen movements, that have meant that there has been no progress towards a solution for many years (Hocke and Kallenbach-Herbert 2015). In Canada a stepwise process through its NWMO, involving wide-ranging engagement has led to the potential choice of a site in Ontario but recent progress has been slow, with no agreement yet reached (NWMO 2018).

In the UK a new process was initiated in 2003 with the formation of the Committee on Radioactive Waste Management (CoRWM) charged with formulating a new approach to policy. CoRWM reported in 2006, broadly endorsing a DGD end-point and recommending that only a voluntarist approach would work (CoR-WM 2006, Chapter 14)]. Tis was endorsed by the UK Government (Defra, BERR and the devolved administrations for Wales and Northern Ireland 2008) and afer local authorities in the area around the Sellafeld nuclear site provisionally volunteered there followed a three year period of intense negotiation. However this was brought to a halt in 2012, when Cumbria County Council refused permission to take negotiations any further. Tis means that the UK, in common with many other countries, still has no agreed site for a repository.

#### **5 Ethics**

Te objective of implementing long-term management options for higher activity wastes raises important issues in ethics – specifcally, equity both within and across generations. Intra-generational equity issues surround the location of waste management sites, where local communities assume the burden of responsibility while distant communities are exempted. Tis strongly suggests recompense for the community willing to take on a national burden.

Inter-generational equity is more problematic. Te benefts of nuclear power in terms of power production have been experienced in the present and past. But in the absence, as seen above, of any satisfactory waste management solution in most countries, the costs and risks associated with nuclear waste will afect future generations, who will experience no compensating advantages (CoRWM 2006, Chapter 6) In terms of environmental principles this is a clear case of violating the 'polluter pays' principle. Attempts to avoid this violation by ensuring that funding is put aside now to cover future costs are not credible. Te existence of such funds may mean that future generations have a prior claim on resources to manage waste, but the real resources needed – labour and capital equipment – fall to future generations to fnd and are at the expense of other potential uses of those resources in the future as well as representing risks to workers and possibly others.

On ethical grounds it is therefore important to try and fnd a way to manage wastes in a safe and secure way as soon as practically possible because the interests of all generations are at stake. If above-ground storage is more hazardous in the next few decades than burying waste, then the interests of this generation as well as future generations are that burial should be achieved as soon as practical. Te argument for early action is therefore strong provided there is confdence that early commitment to a repository does not jeopardize the safety of future generations (CoRWM 2006, Chapter 13). But as argued above, the universal expectation is that even in countries where waste management plans are far advanced, the process of completing the burial of wastes will take up to a century or more. So even an efective waste management programme will cause some burdens to be passed to future generations and possibly expose current generations to signifcant risks in the meantime.

#### **6 The politics of nuclear waste**

Given the scientifc consensus, established over decades, that a DGD route is potentially achievable and can in principle be made safe over many future generations, the extreme slowness in the process of implementation needs explanation. Te most commonly observed reason for this universal failure is a chronic lack of public trust in the process of nuclear waste governance, and that this lack has made progress at potentially favoured DGD sites impossible – or at best exceptionally slow.

Te question behind this observed lack of trust is why it should be so. Until around 2000, decision-making processes for nuclear waste management were almost universally centralized, opaque, used narrowly scientifc criteria, and failed to engage with either local communities or publics. Tis was, especially for nuclear weapons states, partly a legacy of the secret and closed nature of all decisions about nuclear technology. Characteristically, the process was that a small elite group of government ofcials, nuclear industry leaders and scientists would endorse the idea of geological disposal and then announce a chosen site for a repository. Tis would be followed by highly vocal, local campaigns against the choice of the site, ofen involving coalitions of actors of quite diferent general political views, sometimes national and even international. Abandonment of the proposed site followed (the UK) or there would be delays lasting decades and becoming indefnite (USA and Germany)

Tis became known as the 'decide-announce-defend' style of decision-making (CoRWM 2006, Chapter 1), to which could then be added 'abandon' (DADA) when local communities and their wider supporters resisted. Tis exacerbated and to a degree helped create the lack of trust on the part of many citizens towards decision-makers in Government and the nuclear industry.

Around the turn of the century a combination of repeated failures to establish a DGD site and a new more participatory approach to decision-making in several countries – an approach which was applied to other 'difcult' areas of decision involving controversy, such as GM food – led several countries to introduce a more deliberative and open style of decision-making (Chilvers and Burgess 2008). Tis so-called 'deliberative turn' in decision-making processes has had some positive results. Where such processes have led to some real progress, as in Sweden, there seem to have been two conditions, one pre-existing and the other specifc to waste management. Te frst condition seems to have been relatively high levels of initial public trust in relevant institutions including the nuclear industry. Te second, strongly exemplifed in Sweden, was a process of deep engagement with communities that frst volunteered as repository sites, but were also given the opportunity to withdraw from the process if they found the proposals being ofered were unattractive (CoRWM 2006, Chapter 9)

Countries like Canada and the UK also followed more participatory and deliberative models in trying to formulate more efective waste policies in the 2000s. In the UK, CoRWM was given a 'blank sheet of paper', with emphasis in its terms of reference to consult widely and to 'inspire public confdence' (CoRWM 2006, Annex 1), a commodity previously in short supply. CoRWM took a consciously 'analytic-deliberative' approach to its work and conducted very wide-ranging engagements with both stakeholders and non-aligned members of the public. Its 2006 report endorsed DGD as the desirable end-point but its most important recommendation[c], endorsed subsequently by Government (Defra, BERR and the devolved administrations for Wales and Northern Ireland 2008), was that communities should be invited to volunteer to become potential repository sites, to be resourced to do this efectively, and to be given a right to withdraw participation if the terms being ofered were unattractive.

Tis new approach did improve the level of trust in the policy process but was no guarantee of success. As outlined below the ongoing revival of Government commitment to new nuclear power (HMG 2017) has made it more difcult to achieve agreement on a way forward for higher activity wastes.

While the widespread move towards more participatory forms of decision-making has improved trust and made progress more likely, it has not been a panacea. Even in its own terms it has had problems in rectifying the power imbalances that inevitably exist between local communities and the combined forces on the State and the nuclear power industry. A critique of the CoRWM process suggests that while its greater openness and engagement were helpful, it was still subject to important framing processes within which the infuence of powerful incumbent actors could not be countered (Chilvers and Burgess 2008).

Te politics of nuclear waste also extend well beyond the issue of local siting. Local opposition to siting proposals have ofen been infuenced and bolstered by national and international forces. Environmental NGOs like Greenpeace have ofen majored on the waste (and associated reprocessing) issues and in countries like Germany a wide range of political forces – not all of them associated with environmentalism – have joined together to resist proposals for waste management solutions at national level.

Tis wider than purely local current of resistance to the policy of burying waste has at least two strands. One is the idea that it is impossible to demonstrate that any underground repository can guarantee that there will be no return of radioactivity to the biosphere for hundreds of thousands of years. And while most scientists in this feld argue that it may be possible to make a DGD adequately safe this ofen falls

short of endorsing a particular site, and/or the precise methods proposed to try and contain the waste within the repository. And of course no-one can guarantee the integrity of a repository thousands of years in the future (CoRWM 2006, Chapter 13)

A second strand concerns the meaning of emplacing waste deep underground. Te colloquial version of this argument is 'out of sight, out of mind' involving a suspicion that the purpose of deep disposal is to make invisible the problem that the waste was created in the frst place. Tis argument is used by those who have more wide-ranging objections to nuclear power, but is also visible among others who do not hold such views. It is ofen associated with scepticism about the robustness of the safety case that can be made for DGD and has been particularly strong where reprocessing of spent fuel has added complexity to the management task.

Te politics (and ethics) of waste management can also vary sharply depending on the status of nuclear power within a country. Where a decision is made to abandon nuclear power the waste issue becomes purely one of managing a legacy. If there is trust that the decision to abandon nuclear power is fnal, then the issue becomes simply one of fnding the 'least worst' way of managing the waste legacy (CoRWM 2006, Chapter 14). In such situations it has sometimes proved possible to bring together people of varying opinions about nuclear power – supporters and opponents – in the common cause of fnding a solution. Tis was the case in 2003 in the UK when, on the formation of CoRWM in 2003, it appeared that there would be no future role for nuclear power in the UK (DTI 2003).

Te problem can become more intractable when there is an ongoing programme of building new nuclear power. Te politics and ethics here are diferent. Te question is no longer how to fnd the least worst way to manage waste but rather whether proceeding with nuclear power is justifable, given that more waste will ensue, and that there are alternative paths for power production that do not impose the same potential burdens on future generations. At local level this translates into uncertainty for a community in terms of how much waste they may eventually need to receive, and is likely therefore to lead to greater resistance than if it knows it will host a fxed legacy. Where such commitments to new nuclear construction are strong, as in the UK, resistance to an 'out of sight out of mind' solution to waste management has become stronger – due to a conviction that getting the waste out of the way is being used simply as a legitimation device for the advance of new nuclear construction. Te stance of the UK Government on this – that it has confdence that a long-term management route for waste 'will' exist (Defra BERR and the devolved administrations for Wales and Northern Ireland 2008)– has had the tendency to reduce public trust, especially as it was as long ago as 1976 that an infuential report advocated that there should be no going ahead with a substantial nuclear programme unless it could be demonstrated that a route existed (Royal Commission on Environmental Pollution1976) (not 'will exist') to manage waste efectively.

#### **7 Conclusions**

Failure across all nuclear-using countries to implement technically convincing and publicly acceptable ways of dealing with higher activity wastes has been a feature of nuclear power across the world for several decades. Tere have been some small advances since the Fukushima accident in a few countries, primarily Finland and Sweden, but even in those cases, no operating repository will open until 2020 at best. Further, there seem to be distinct features of Nordic political systems, especially higher degrees of public trust and consensual decision-making styles that are hard to replicate elsewhere. While issues like safety, security and proliferation risk remain problematic, it is the inability of all countries yet to fnd a credible long-term way forward to manage the most dangerous categories of waste that is the primary stumbling bock to acceptance of the technology.

#### **References**


Blowers, A., 2017. Te Legacy of Nuclear Power Earthscan



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## **Riding to the Rescue? The Changing Picture in China and the Global Future of Nuclear Power**

#### M. V. Ramana1

#### **Abstract**

China has the most ambitious targets for nuclear power and some expect that it would shore up the fagging prospects for a large expansion of nuclear power around the world. But in recent years, China's nuclear program has not grown as fast as projected. Tis chapter explains why there are good reasons to expect nuclear power growth to slow down further. Promises that new reactor designs will be constructed in large numbers in China or exported from China to other countries seem unlikely to materialize. As a result, nuclear power's salience to future global electricity generation will continue to diminish.

<sup>1</sup> M. V. Ramana, Liu Institute for Global Issues, University of British Columbia, Vancouver, Canada, m.v.ramana@ubc.ca

#### **1 Introduction**

For long, China was expected to be the engine that would propel a large-scale expansion of nuclear power in the 21st century. Starting around 2005, the country embarked on constructing a very large number of nuclear plants (see Figure 1). Afer a short pause following the 2011 Fukushima Daiichi accidents, China resumed new reactor construction in late 2012 and today has the most number of reactors under construction—18 reactors, nearly a third of the global total (IAEA, 2018).

Te dominance of China in nuclear reactor construction testifes not just to China's emergence as an industrial powerhouse but also the decline in nuclear growth elsewhere. Indeed, in recent years, both the United States and Western Europe have seen many reactors shut down well before their license period expire in comparison with new reactor construction. Globally nuclear energy production as a share of all electrical energy generated has declined to around 10.5 percent, nearly 40 percent below the maximum of over 17 percent in 1996 (Schneider and Froggatt, 2017).

**Fig. 1** Annual commencement of nuclear reactor construction Source: "Global Nuclear Power Database" http://thebulletin.org/global-nuclear-powerdatabase

Targets for nuclear capacity in many countries have also been declining, especially in the afermath of the disaster that started in 2011 at the Fukushima Daichi nuclear plant (Ramana, 2016). In contrast, China has continued rolling out impressive targets for the future. More recently, the country has also started making determined attempts to export its reactors (Tomas, 2017), for example, by infusing capital into a very expensive nuclear power project in the United Kingdom, as a result of which some were even asking if China might be able to rescue Europe's nuclear energy industry (Brown, 2015; Sputnik, 2015).

Is this a realistic projection of China's role in the future of nuclear power? Will China really be able to compensate for the ongoing decline in nuclear energy? Tis article tries to answer these questions by examining the targets that have been set and the plans that were announced, and following these by an examination of the actual experience of reactor construction and exports. Tis is followed by a discussion of some drivers of reductions in nuclear plans and a brief conclusion.

#### **2 Current status**

According to the IAEA's Power Reactor Information System, as of January 2019, China had 46 operating reactors with a total net capacity of around 43 GW (gigawatts), and a further 11 reactors with a total capacity nearly 11 GW are under construction (IAEA, 2019). In 2017, nuclear power contributed 247.5 TWh, which constituted 3.9 percent of all electricity generated in China, up from 3.6 percent in 2016. Te nuclear fraction has been very gradually increasing since 2010 (see Figure 2). Nevertheless, the small magnitude of that fraction implies that the large buildup of nuclear power was part of a general strategy that called for building up all kinds of electricity generation plants. In particular, China has been ramping up construction of modern renewables. In 2017, wind energy contributed 306 TWh, up by 26 percent from its contribution in 2016, while solar energy contributed 118 TWh, up by 75 percent from 2016 (China Energy Portal, 2018).

Source: Authors calculations based on fgures in BP, 2016, Statistical Review of World Energy 2016: BP, accessed October 18, 2016, at http://www.bp.com/en/global/corporate/ energy-economics/statistical-review-of-world-energy.html.

#### **3 Ambitious targets**

Although China is a relatively late entrant to nuclear power, with construction of nuclear power plants starting only in the 1980s, three decades afer the nuclear weapons program started, it has periodically laid out impressive targets.2 Some of these are listed in Table 1. Perhaps the highest of these was the fgure of 114 GW by 2020, released by the National Development & Reform Commission in 2010 (Power Engineering, 2010). Tese fgures have come down and according to the latest 13th Five-Year Plan, the targets for 2020 were to have 58 GW of nuclear generating capacity in operation and a further 30 GW of capacity under construction (WNN, 2016c). Even this target will likely not be met and Chinese ofcials admit that it might be only 53 GW by 2020 (Stanway and Chen, 2016). But in the longer term, Chinese nuclear advocates continue to posit impressive targets, up to 150 GW by 2030, nearly thrice what is likely to be the operating capacity in 2020. For example, the China General Nuclear Power Corporation foresees a nuclear capacity of "120-150 GW by 2030" (Stanway, 2016).

<sup>2</sup> One early projection by Professor Lu Yingzhong who was then Director of the Institute of Nuclear Energy Technology at Tsinghua University envisioned nuclear power contributing 12.7 percent of all energy (including heat and electricity) in China by 2020 with that fraction rising to 19.35 percent by 2030 (Lu, 1984).


**Tab. 1** Nuclear Power Targets

Sources: (Dazhong and Yingyun, 2002; Meyers and others, 1993; Ran and Li, 1998; Sternfeld, 2009; WNN, 2016c)

When it comes to exports, too, Chinese nuclear advocates have been making extravagant claims (Tomas, 2017). Tis trend has become stronger afer the Fukushima accidents that commenced in 2011. Tat accident set back nuclear programs around the world, leaving China in a comparatively better place. Tis has been welcomed by Chinese ofcials; according to Zhang Guobao, a former Administrator at China's National Energy Administration "history has given China an opportunity to overtake the world's nuclear energy and nuclear technology powers" (Stanway, 2013). In 2016, the president of China National Nuclear Corporation (CNNC) announced that "China aims to build 30 nuclear power units… by 2030"; this goal, in turn, was based on the assessment that "more than 70 countries" were "planning or are already developing their own nuclear power projects, and it is estimated 130 more nuclear power units will have been built by 2020" (Xinhua, 2016).

#### **4 Interest in Chinese market**

Because of the expectation that China will be building up its nuclear capacity rapidly, reactor vendors and national government representatives have been focking to the country since the 1980s in the hope of selling their wares (MacDougall, 1984; Lu, 1993; Silver, 1994; Bratt, 1996; Zhou and Zhang, 2010). Foreign government ofcials, sometimes at very high levels, have been involved in advocating for their reactor designs (Silver, 1994; Silver, 1996b; Silver, 1996a; Zuercher, 1995; Bodgener, 2008; Ria, 2008; Cultice and Feng, 2009).

Te nature of the competition is made clear by a 2008 cable from the U.S. embassy in Beijing to Washington and is worth quoting at some length:

"Efective advocacy for U.S. nuclear suppliers is essential to ensuring access to China's rapidly growing civil nuclear power market. With the exception of the bidding process that resulted in a contract for four Westinghouse AP1000 reactors, all reactor purchases to date have been largely the result of internal high level political decisions absent any open process. Even the Westinghouse decision was arguably a political one, which was quickly followed by subsequent non-competitive purchases of the competing French and Russian plants. China is currently in the process of building as many as 50 to 60 new nuclear plants by 2020; the vast majority will be the CPR-1000, a copy of 60's era Westinghouse technology that can be built cheaply and quickly and with the majority of parts sourced from Chinese manufacturers… Pressing for open and transparent bidding processes for reactor sales (for complete plants or individual major component purchases), as well as advocating for China to pursue advanced reactor technology for future sites so that it's reactor feet is not so reliant on aging technology through the next half century could be a more efective approach to bolster U.S. interests in China's nuclear market. Regardless of how the United States decides to advocate, it should be done continuously and from a high level in order to keep up with the French and Russians" (U.S. Embassy Beijing, 2008).

Two claims made in this cable are worth noting. First, all nuclear contracts were political decisions. In other words, they may not really be technically or economically justifable. Neither the Chinese government nor any of the countries seeking to export reactors to the country ofered a public cost-beneft analysis in support of the decision to import one or the other reactor type. Further, vendors enticed Chinese policymakers with varying degrees of technology transfer, attractive fnancing arrangements, and other political benefts (Ramana and Saikawa, 2011).

Second, all countries that seek to sell nuclear reactors have been engaged in high level governmental campaigning, on a continuous basis. As the *New York Times* reported in 2004: "In recent months, a procession of political leaders has pressed China to favor power plant designs and equipment from their home countries. Tey have included President Jacques Chirac of France; former Prime Minister Jean Chretien of Canada; Viktor Khristenko, who was named fuel and energy minister in Russia on Tuesday; and dozens of less-prominent ofcials. President Bush even raised the virtues of American nuclear technology with the Chinese prime minister, Wen Jiabao" (Buckley, 2004). Te justifcation for the high level political engagement was the poor state of the nuclear reactor market elsewhere and the promises of growth in China.

#### **5 Recent experience with reactor construction**

Partly as a result of such high level intervention, China's nuclear establishment did import a number of reactors. China's entry into nuclear energy began with the construction of a series of indigenously designed reactors at the Qinshan site. However, in the late 1980s, China imported reactors with the M310 design from Framatome in France for the Daya Bay site; the majority of the reactors built in China involve the CPR-1000, a modifcation of the M310 design. Te only exceptions were two VVER1000s and two Candu-600 reactors imported from Russia and Canada, respectively, but there was never any plan to make those the mainstay of the Chinese nuclear feet. It was only afer 2005 and the eleventh 5-year plan that imported reactors came back into consideration, with the specifc aim of introducing third-generation reactors from other countries (Xu, 2008).

Te relevance of the construction of the reactors was heightened in the afermath of Fukushima because of the decision made by policy makers that China would build *only* Generation III or III+ reactors. Te initial assumption was that this stipulation would lead to the adoption of AP1000 technology, in part because senior nuclear policy makers promoted the idea that this reactor design would have withstood the conditions that led to the events at Fukushima. For example, a general manager in the China Power Investment Corporation pointed out that the "reactors in the Japanese nuclear power plants, which have been afected by the massive quake, are Generation II reactors and have to rely on back-up electricity to power their cooling system in times of emergency", whereas the "AP1000 nuclear power reactors, currently under construction in China's coastal areas and set to be promoted in its vast hinterland, are Generation III reactors and have built in safety features to overcome such a problem" (Reporter, 2011). Tis was very much the same claim that Westinghouse itself peddled. As the Westinghouse President and Chief Executive Ofcer Aris Candris put it to ABC News: "Everyone has heard of what happened at the Fukushima Daiichi plant…Had an AP1000 been on that site we would have got no nuclear news post-tsunami" (Sy, 2011).

Te other reason to have expected an important role for AP1000s in China's nuclear plans is that a key player in the Chinese nuclear power sector, the State Nuclear Power Technology Corporation (SNPTC), held the sole rights "to sign contracts with foreign parties to receive… 3rd generation nuclear power technology" (SNPTC, 2011). Specifcally, the 3rd generation nuclear power technology that SNPTC was to contract for was the Westinghouse AP1000, which it was expecting would become "the dominant technology for China's future nuclear industry development" (Lawrence and Katz, 2007). Te Fukushima accidents and the Chinese government's decision that future nuclear construction would be limited to

Generation III reactors gave SNPTC an opportunity to translate their expectation about the AP1000's dominance into reality. By May 2011, SNPTC had convinced ofcials at Westinghouse Electric Company that the AP1000 was going to dominate the Chinese reactor market from then on (Li and Tranum, 2011). But the actual experience of the projects involving AP1000s proved more problematic.

Before going on to the AP1000 projects, let us frst look briefy at the European Pressurized Reactor (EPR) units being built at Taishan. Tese were originally scheduled to "be commissioned at the end of 2013 and in autumn 2014" respectively, and France's Areva had hoped "to have started work on more reactors" by then (Tibault, 2010). As of February 2017, China General Nuclear Power maintained that the two units will start commercial operations in "the second half of 2017 and the frst half of 2018, respectively" (AFP, 2017). Despite the serious concerns set of in April 2015 when the French nuclear safety regulator, Autorité Sûreté Nucléaire (ASN), revealed that the reactor bases and lids Areva had supplied from its Le Creusot plant did not meet safety specifcations (Chafee, 2015), the frst EPR was opened for commercial operations in December 2018 (IAEA, 2019). Te delays with the EPR were not surprising, at least in retrospect, because by the time construction started in Taishan, the corresponding projects at Olkiluoto in Finland and Flamanville in France had already run into trouble and were expected to be signifcantly delayed (Kanter, 2009).

In contrast, the AP1000s at the Sanmen and Haiyang sites were the very frst constructions of this design anywhere in the world. When construction started at Sanmen, the Shaw Group, one of the partners in the consortium building the reactor, proudly proclaimed, "As with the successful, on-time and on-schedule pour of the frst nuclear concrete for the Reactor Building mat earlier this spring, we have again shown that next generation nuclear power plants can be, and are being, built in an efcient and timely manner" and looked forward "to bringing this plant on line as scheduled in 2013" (Shaw Group, 2009). Unfortunately for Westinghouse and Shaw, these promises did not come to pass.

An important source of problems, although not the only one, has been the reactor coolant pumps (RCPs) that were supplied by US manufacturer Curtiss-Wright Corporation. Te RCP forces water to circulate through the reactor and transfer the heat generated by the fssion reactions in the reactor core. In January 2013, Curtiss-Wright found that a piece of a "blade within the pump had separated from the… casting" and it had to recall the RCPs that had already been shipped of (NIW, 2013). Te RCP had to undergo design changes and fxes that took two years to complete. Te problem with the RCPs was symptomatic of a larger problem: construction of the Sanmen and Haiyang power plants had began well before the engineering of the plant's design was completed (Spegele, 2016).

Because the design has never been constructed anywhere, new problems keep surfacing.3 One such problem was observed during tests that were conducted at the frst AP1000 unit at Sanmen-1. Tese tests were conducted without any radioactive material being loaded into the reactor, but at high temperatures. Te problem involved neutron shield blocks that are supposed to stop neutrons from the nuclear core from escaping into the rest of the reactor. During these tests, the material that was in the shield blocks had "volumetrically expanded and extruded out of the shield blocks into the nozzle gallery" and there was "internal pressurization of the shield blocks," according to a heavily redacted report on the issue presented by Westinghouse to the U.S. Nuclear Regulatory Commission in February 2017 (Cooke, 2017, p. 5). Westinghouse was forced to admit that it had "not properly considered" the possibility that the shielding material might expand in volume.

Any of these problems could result in serious safety consequences. Chinese nuclear ofcials have expressed concern in the past about these problems. In 2013, for example, a former vice-president of CNNC complained to *South China Morning Post*: "Our state leaders have put a high priority on [nuclear safety] but companies executing projects do not seem to have the same level of understanding" (Ng, 2013). Te result has been a very long series of delays. All four AP1000s went into commercial operation in late 2018 or early 2019 (IAEA, 2019).

Cost estimates have risen too. Early estimates by China's Nuclear Energy Agency put the cost of constructing AP1000 reactors at \$2300/kW (NEA, 2010, p. 48). A newspaper article from 2016 claims implicitly that the cost might be \$3000/ kW (Abe, 2016). In its environmental impact assessment for the Sanmen project, China's National Nuclear Safety Administration "projected a total project pricetag of 52.5 billion yuan (\$8.3 billion) — more than double the original budget for the two units of 25 billion yuan"(Yu, 2018).

Te problem that this higher cost of construction poses is that of economic competitiveness. In 2016, Steve Kidd, who was formerly with the World Nuclear Association, suggested that a tarif of 0.50 RMB per kWh has been mentioned for AP1000 and EPR nuclear projects, up from 0.43 RMB per kWh for projects that constructed more traditional nuclear reactor designs (Kidd, 2016). But the tarif available to the project developers was signifcantly lower. In April 2018, Sanmen "cleared the annual power exchange auction in Zhejiang province, making it eli-

<sup>3</sup> However, it bears remembering that even with the follow on AP1000 constructions in the United States, there have been a number of technical problems with signifcance for safe operations, which raises fundamental questions about the soundness of that design. Tese problems were to cause record losses for Toshiba and drive Westinghouse to bankruptcy (Asahi Shimbun, 2017; Cardwell and Soble, 2017; Lewis, 2016).

gible to sell 766 gigawatt hours of output during 2018 at a price of 0.385 yuan per kilowatt hour (\$0.061¢/kWh)...roughly 10% less than the standard nuclear tarif of 0.43 yuan/kWh" (NIW, 2018a).

Te poor experience at Sanmen and Haiyang has not stopped Westinghouse from making unrealistic claims about the future of the AP1000 in China. In 2016, Jose Gutierrez, interim chief executive of Westinghouse, indulged in wishful thinking: "We expect to see a feet of AP1000 reactors in China ... We don't know how many China wants to build, but it could be tens" (De Clercq, 2016). Tis does not appear to have any basis in reality and refects an attempt to boost its plunging fortunes. Indeed, Westinghouse ofcials themselves may not believe in this. Te Wikileaks cables reveal that nearly a decade ago, at a meeting convened by the DOE China Ofce, Westinghouse representative in China, Gavin Liu, "noted that because China's technical capacity is increasing, the longer it takes to start the next round of AP1000 reactors, the less scope will be available for Westinghouse" (DOE China Ofce, 2008).

Te outlook for Westinghouse in China is bleak. As Lin Boqiang, director at the China Center for Energy Economics Research at Xiamen University told *Bloomberg News*, "Te only way Westinghouse can win contracts in China is to demonstrate they can build reactors quicker and cheaper than anyone else in China's market and win hearts with actions, not words…Westinghouse so far hasn't demonstrated such abilities" (Stapczynski and others, 2015). Li Ning, from Xiamen University, told the *Wall Street Journal* that Chinese ofcials "are certainly very frustrated" and "they feel Westinghouse oversold the system, oversold the technology, promised more than they could really deliver" (Yap and Spegele, 2015). Of course, ever since Westinghouse fled for bankruptcy in the United States in March 2017 (Cardwell and Soble, 2017), the future of the company itself has been highly uncertain.

#### **6 New reactor designs**

China has also been at the center of eforts to rescue nuclear power by adopting new reactor designs in place of the now-standard Light Water Reactor design that has dominated nuclear power around the world. Tese newer reactor designs, which are mostly paper designs, are held out as solving one or more of the many problems that have plagued nuclear power.

Tere are at least two reasons ofered for the focus on China. Te frst is the idea that if any country is to be capable of supporting the production of, and ofering a market for, a large number of units, it would be China. Growth of nuclear power in other markets is either slow or non-existent (Schneider and Froggatt, 2016). Terefore, the idea goes, if a new reactor design is to be tried out at some scale, it would be possible only in China. As Charles Forsberg, executive director of the MIT Nuclear Fuel Cycle Project, puts it, "Tere have been studies that indicate that if reactors are mass-produced, they can drive down costs…Te Chinese market is large enough to make that potentially possible" (Martin, 2016).

Second, there is the idea that the Chinese nuclear regulatory system might be more open to licensing non-traditional reactor designs (Eaves, 2017). One example of a non-traditional reactor design that some in China are working on, and where U.S. nuclear advocates have been pointing to China as the role model, is the molten salt reactor (Halper, 2015; Martin, 2015; Reischer, 2016). Some of the proponents are Chinese but there are also a number of foreign designers, many from the United States, who seek to have their designs frst be commercialized in China.

Two other designs with a connection to China are the High Temperature Gas Cooled Reactor (HTGR) and the Travelling Wave Reactor. In an article in *Issues in Science and Technology*, for example, Richard Lester, another MIT professor, lists several features of the way the U.S. Nuclear Regulatory Commission carries out regulation of new reactor designs and ofers the Travelling Wave Reactor design promoted by Bill Gates and Nathan Myhrvold as an example of a technology that was going to be developed in China because of the stricter and more rigid safety regulatory regime in the United States (Lester, 2016).

Te saga of the HTGR is also relevant. Tis reactor design was frst proposed in the 1940s and was extensively researched by German technologists, who built two reactors based on this design, but who eventually abandoned the efort to commercialize the technology. In the 1990s, South Africa set up a major program to develop a commercial HTGR called the Pebble Bed Modular Reactor (PBMR). Tis efort was to collapse a decade later, and the South African government abandoned the project (Tomas, 2011).

In China, work on the HTGR design started in earnest afer the country signed a cooperation agreement with Germany in 1984 (MacDougall, 1984). Te pilot scale HTR-10 reactor reached its criticality in 2000, achieved full power operation, and began to supply power to the grid in 2003 (Zhou and Zhang, 2010). Soon afer the HTR-10 attained criticality, in 2001, the commercial scale design, called the high-temperature gas cooled reactor pebble-bed module (HTR-PM) project, that is capable of generating 250 MW of electricity, was launched (Zhang and others, 2009). Te development of this reactor became a high priority under the "Chinese Science and Technology Plan" for the period 2006–2020.

In February 2008, the implementation plan and the budget for the HTR-PM project was approved by the State Council of China. Te HTR-PM received fnal

approval from China's cabinet and its national energy bureau around two weeks before the Fukushima accidents (Bradsher, 2011). However, in the afermath of Fukushima, all nuclear construction was frozen. In December 2012, construction of HTR-PM commenced at Shidaowan in China's eastern Shandong province (IAEA, 2019). Te reactor was "expected to start commercial operation in late 2017" (WNN, 2016b).

Chinese HTR proponents have painted an ambitious future for that reactor design. When construction of the plant was starting, there were plans for eventually constructing a further 18 units of the same type at the same site (NucNet, 2013). Tere are also plans to export these reactors to other countries, and China has entered into exploratory agreements with Saudi Arabia and Indonesia (Can, 2016; WNN, 2016a; WNN, 2016b), but has not completed construction as of January 2019 (IAEA, 2019).

China's construction of the HTR-PM and more generally its pursuit of this reactor design has been much lauded by nuclear advocates around the world, especially by those who seek to promote a focus on HTGRs or other advanced reactors as a way to rescue nuclear power from its declining fortunes. Andrew Kadak, formerly President and CEO of the Yankee Atomic Electric Company (YAEC) that operated the Yankee Atomic Nuclear Power station, said: "Te industry has been focused on water-cooled reactors that require complicated safety systems. Te Chinese aren't constrained by that history. Tey're showing that there's another way that's simpler and safer. Te big question is whether the economics will pay of" (Reiss, 2009).

Unfortunately, for the proponents, the economics doesn't seem to be working out—even prior to the commencement of operations. According to the trade magazine *Nuclear Intelligence Weekly*, the high cost of generation (60 fen (¢0.9) per kilowatt hour, higher than the average 43 fen/kWh for Gen III reactors) is among the "key challenges" confronting HTGRs in China (Yu, 2016, p. 6). Te high cost is no surprise; even HTGR proponents estimate that the capital cost will be about 20% higher than LWRs, although they typically will also claim that this cost will come down as more plants are built (Zhang and Sun, 2007). Another key challenge that the HTGR faces is the fact that there are a host of other small modular reactor technologies under development in China (Ramana and others, 2013; Yu, 2016). Two such designs, the ACPR50 and ACPR100 from CGN and the ACP100 from CNNC, have been in the news recently, as a result of an announcement that China was going to build maritime nuclear power platforms in the South China Sea (NEI, 2016). In part as a result of these challenges, it appears that Chinese policy makers have dropped the plan of building 18 reactors at the Shidaowan site (WNN, 2016b).

Te idea of exporting HTGRs also appears to be somewhat wishful thinking. Te Indonesia case provides a good illustration. News reports suggest that Wang Shoujun, chairman of China Nuclear Engineering Group Corporation visited Batan (Badan Tenaga Nuklir Nasional, Indonesia's National Nuclear Energy Agency) in June 2016 in order to better understand the Indonesian market (Can, 2016). Despite such agreements—for example, Batan also has signed an agreement with the Japan Atomic Energy Agency on research and development of HTGRs in 2014 (WNN, 2014)—the odds of Batan being able to construct a commercial scale HTGR in Indonesia in the foreseeable future are essentially nil. Indeed, in December 2015, then Energy and Mineral Resources Minister Sudirman Said announced publicly that the government had concluded that "this is not the time to build up nuclear power capacity. We still have many alternatives and we do not need to raise any controversies" (NEI, 2015).

Other countries that have been targeted by China also have lengthy histories of ambitious announcements followed by little action; for example, over a decade ago, Argentina declared that it was embarking on "an eight year nuclear energy development program with the purpose of increasing the number of atomic plants plus resumption of uranium enrichment production" (Mercosur, 2006). Little was achieved by this program apart from the commissioning of the Atucha-II reactor in 2014, construction of which started in 1981 (IAEA, 2014b). Tere is little to indicate that Argentina will indeed embark on massive nuclear construction; instead it seems to be heading towards expanding its renewable energy sector (Maxwell, 2016). Indeed, in May 2018, the trade magazine *Nuclear Intelligence Weekly* reported that Argentianian ofcials have put plans for Chinese supplied reactors on hold (NIW, 2018b).

Te pattern that may be discerned is of making tall claims about numerous reactors of one design or the other, raising hopes among nuclear power supporters for a revival of the technology based on this new design. However, these initial announcements are almost always followed by a process of slowing down, and ofen abandonment, with the latter steps done quietly with little fanfare. Tis appears to be what has happened to the HTGR design and may well be the fate of the plans to construct foating power plants, unless the real reason for the latter are to raise the stakes on the south China sea disputes. In any case, it seems hard to visualize China as a laboratory for successfully developing a reactor design that solves the problems of nuclear power.

#### **7 Drivers for reduction**

In light of all these problems, then, it is not surprising that China's current nuclear target of 58 GW by 2020 is much lower than the earlier high value of 114 GW by 2020. But problems with constructing the current generation of nuclear reactors do not constitute the only reason for this change in the outlook for nuclear power in China. Tere are at least three additional reasons for a lowering of targets for nuclear deployment (Ramana and King, 2017).

Te frst is that energy demand in China is not growing at the same fast rate it has in the past. Te underlying reason for this is the deliberate shif in the nature of the Chinese economy, from one primarily focused on increasing manufacture, especially by heavy industry, to one that is actively promoting service sector and less energy-intensive sectors (Green and Stern, 2015; Green and Stern, 2016). At the same time, because of ambitious plans in the past, there is a real glut in power capacity. Most power plants, including nuclear reactors, are not being utilized at optimal levels. Tis trend might result in further reduction in the number of hours that nuclear reactors are operated: in March 2017, the National Energy Administration announced new rules on the priority order for diferent kinds of generators to supply electricity to the grid; Chinese nuclear companies are already complaining about being forced to reduce how many hours grid operators are willing to absorb the power outputs of reactors (Yu, 2017a).

Te second reason is that there are very few coastal sites available for new nuclear plants to be set up. Tere is a limit to how many reactors can be built on existing sites. Tere is real and justifed resistance to building nuclear power plants in inland sites, next to rivers and large lakes, water from which is already in demand for drinking, agriculture, and other higher priority uses (King and Ramana, 2015).

Finally the government seems to be paying attention local opposition to nuclear facilities; this is, again, entirely justifable. Opposition to nuclear facilities has been growing in China since the Fukushima accidents (Buckley 2015; Lok-to 2016). One study that explored the Chinese public's willingness to pay to avoid harm found that those surveyed were "particularly concerned about the development of nuclear power in the afermath of the Fukushima disaster and generally regard nuclear power as unsafe power generation technology" (Sun and others, 2016, p. 692). At least two nuclear facilities that were supposed to be constructed were cancelled afer public protests, the most prominent being the decision in 2016 to cancel a 100 billion yuan (US\$15 billion) nuclear reprocessing plant that was proposed for a location near the city of Lianyungang, Jiangsu province (Green 2016).

Tere is independent evidence that even industry insiders within China do expect a decline in nuclear construction going forward. For example, imports of uranium by China from other countries has been declining, from nearly 21,300 tons of uranium concentrate in 2014 down to 19,200 tons in 2015, to under 16,000 tons in 2016 (Chafee, 2017).

#### **8 Efect on global prospects for nuclear power**

What might be the impact of a reduction in China's nuclear targets on the future of nuclear power? One handle on this is provided by critically examining the projections put out by the International Atomic Energy Agency (IAEA). Te IAEA's projections have historically been well in excess of what actually materialized (IPFM, 2007, p. 85). Nevertheless, its projections are worthy of examination because they provide an indication of the nuclear industry's own outlook. Each year, the IAEA puts out two sets of projections, a low case and a high case. Te frst "represents expectations about the future if current market, technology and resource trends continue and there are few additional changes in explicit laws, policies and regulations afecting nuclear power" (IAEA, 2013, p. 6). In contrast, the "high case projections are much more optimistic, but still plausible and technically feasible. Te high case assumes that current rates of economic and electricity demand growth*, especially in the Far East*, continue. Changes in country policies toward climate change are also included in the high case" (emphasis added). In other words, the high case projections represent something like a best case scenario for nuclear deployment.

Table 2 below lists the high case estimates for the Far East region and the world as a whole from the last seven years. Since 2010, all of the projections—for nuclear power globally and for the Far East, which is defned as China, Japan, and Republic of Korea—have been declining. Even for the IAEA, the realities of the market cannot be completely ignored. However, barring a few years, although the projected nuclear capacity in the region is declining, the fraction of global capacity constituted by the countries of the Far East has been increasing. Te IAEA's low estimates also assume that similarly large fractions (35 to 40%) of the global nuclear capacity will be in the Far East. In other words, if there is to be a big revival of nuclear power, it would have to be fueled by construction in this region.


**Tab. 2** Figures from the IAEA's High Case Projections

Te IAEA does not break up its estimates by country. But the much larger size of China as compared to the other two countries in the region implies that it is likely to be the dominant contributor to the IAEA's projections for the Far East. In its latest projections, the high case involves 351 GW of nuclear capacity in this region, much of which has to be in China. Even with this massive buildup, nuclear power loses market share; nuclear power contributes a slightly smaller fraction to all electricity generated in 2050 than now.

#### **9 Conclusions**

Nuclear power in China has grown dramatically in the last decade or more, in large part because of high level political decisions to promote the technology even if it was not really technically or economically justifed. Tis rapid expansion and the ambitious targets announced by the Chinese nuclear establishment have led to the expectation that China might give the nuclear industry a new lease on life. But, as the IAEA's projections show, even if this trend is to change, and China does restart another phase of rapid expansion, nuclear power will become a smaller contributor to global electricity production than today.

Sources: (IAEA, 2010; IAEA, 2011; IAEA, 2012; IAEA, 2013; IAEA, 2014a; IAEA, 2015; IAEA, 2016)

Tis chapter has argued that because of the kinds of shifs seen in recent years, China will likely never build up the kind of nuclear power capacity that was foreseen for it even just a decade or less ago. Te country is not on track to meet its current target of 58 GW of nuclear power capacity in 2020. And unless there is a substantial shif in various policies, for example, a deliberate efort to build up nuclear capacity even if it is uneconomical or otherwise undesirable, it is quite likely that the targets set in future years will, if they are to be realistic, refect a much slower pattern of growth. Tere are many reasons to expect that such a policy reversal, namely for Beijing to actively promote the rapid construction of nuclear plants around the country, will not occur. In particular, there are shifs in the pattern of energy demand growth and growing public concerns about nuclear facilities that impacts the siting of reactors negatively.

Te export market is not growing fast either. Despite much talk, Pakistan remains the only country to which China has exported nuclear power plants. With the rapid reductions in the costs of renewable energy technologies, especially solar photovoltaic panels, and the continued pattern of high costs and lengthy construction periods of nuclear reactors, the demand for nuclear plants is likely to decline.

One way by which nuclear enthusiasts have held on to their hope for a major revival of nuclear power is to postulate that alternate reactor designs will be introduced and constructed in large numbers. In this scenario too, China is presumed to be the main actor because of two factors: its presumed large market for nuclear reactors and the expectation that its regulatory process will approve new reactor designs more easily. But these scenarios of new reactor designs coming in to save nuclear power ignore the lengthy history of failed experiments with alternate designs and the multiple challenges faced by nuclear power, which pose conficting priorities on reactor designers (Ramana and Mian, 2014).

Put together, these trends suggest that China is unlikely to rescue the global nuclear industry from its ongoing gradual decline.

#### **References**



IAEA, 2019. China, People's Republic of, accessed January 27, 2019, at PRIS – Country Details at https://www.iaea.org/PRIS/CountryStatistics/CountryDetails.aspx?current=CN.

IPFM, 2007. Global Fissile Material Report 2007: International Panel on Fissile Materials.

Kanter, J., 2009. In Finland, Nuclear Renaissance Runs Into Trouble: Te New York Times. Kidd, S., 2016. China – what are today's issues infuencing the reactor plans? Nuclear En-

gineering International.



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**Major Accidents**

## **Three Decades after Chernobyl: Technical or Human Causes?**

Nikolaus Muellner1

#### **Abstract**

Te accident of unit 4 at the NPP Chernobyl from 1986 was arguably the worst disaster of a nuclear power plant that happened so far. It became apparent to the broader public that the vast amount of radioactive fssion products that accumulate during operation of a nuclear reactor have the potential to render large areas inhabitable. Te root cause of the accident was therefore of major interest for all countries who operated nuclear power plants, or who had nuclear power plants in its vicinity. Considering all information available today it is safe to draw the conclusion that the reactor design was too complex at that time, and therefore errors have been made. It is not so easy to exclude that this could happen with other designs in other countries as well.

<sup>1</sup> Nikolaus Müllner, University of Natural Resources and Life Sciences, Vienna, Austria, nikolaus.muellner@boku.ac.at

#### **1 Introduction**

Tirty years afer the disaster at the Chernobyl Nuclear Power Plant (NPP), all details of the accident seem to be known. Te Chernobyl reactor was a pressure tube reactor of the type RBMK, which has been built several times in the Soviet Union. Experts from regulatory authorities and research institutes have analysed the existing accident data and results from accident simulations and gave their view in many published reports (GRS 1996, USNRC 1987, Snell and Howieson 1991, Sehgal 2012 – and many others). Te International Atomic Energy Agency IAEA and the "Nuclear Energy Agency" of the "Organization for Economic Co-operation and Development" organized conferences and published the resulting experts' opinions (INSAG 1986, INSAG 1992, OECD/NEA 2002). In most cases, the authors conclude that human error combined with weaknesses in the reactor design of the RBMK reactor have led to the accident. In this content the term "human error" indicates violation of operating procedures and lack of knowledge of the operators of the reactor. Defciencies in the safety culture of the power plant are typically identifed as root cause for the transgressions of the operators. Te long prison sentences for the main engineer Fomin of the Csernobyl NPP and his deputy Diatlov add to this picture.

Tis narrative of the accident and its root cause, as presented in many books, reports and papers, can be traced back to an IAEA meeting. A few months afer the accident, 25th to 29th of August 1986, the IAEA organized a "Post Accident Review Meeting" were Soviet experts gave detailed information on the accident to a large number of experts from IAEA member states. Te IAEA issued a report that summarized the meeting, the frst report of the "International Nuclear Safety Advisory Group" (INSAG 1986). Te report gave a clear statement on the reason for the accident: "… the accident was caused by a remarkable range of human errors and violations of operating rules in combination with specifc reactor features which compounded and amplifed the efects of the errors and led to the reactivity excursion.", where "human errors" refers exclusively to operator errors.

Five years afer the accident, the report INSAG-1 was revised by IAEA and reissued as INSAG-7 (INSAG 1992). Te new version is based on two Russian reports: One report (Shteynberg 1991) was issued by a commission, appointed by the Soviets' "State Committee for the Supervision of Safety in Industry and Nuclear Power". Said commission had the task to reassess the events of the Chernobyl accident. Te other report (Abagyan et al., 1991) investigates in detail the cause of the accident and is authored by prestigious Soviet institutes, such as the Kurtchatov Institute or the Scientifc Research and Design Institute for Power Technology (Russian abbreviation NIKIET). Both reports are annexed to INSAG-7. Tese reports present a completely diferent picture of the accident. In particular, Shteynberg (1991) contradicts the account of the accident of INSAG-1 regarding operator errors. Abagyan et al. (1991) draws a whole new picture on the RBMK designer organization. Te conclusions of INSAG-7 are therefore diferent than INSAG-1, but retain a certain emphasis on lacking safety culture and operator errors.

Te new perspective from Shteynberg 1991 and Abagyan et al., 1991 is rarely refected in the current literature on the Chernobyl accident. Large, infuential organizations such as US Nuclear Regulatory Commission (NRC) had already completed their analyses of the Chernobyl accident before the revised report INSAG-7 was published (e.g. USNRC 1987). Others, such as (OECD / NEA 2002), tend to follow the narrative of human error and violation of operating procedures notwithstanding their recent publication date. Tis leads to the fact that whenever the Chernobyl accident is portrayed based on literature, it is most likely that mistakes and violation of the operators are identifed as main cause for the event.

References to accounts of the events given by participants in the accident night are rarely found (a counter-example can be found in Schmid 2011). Te deputy chief engineer of the power station, Diatlov, who designed the test program that led to the accident of Chernobyl and who was present in the control room in the night of the accident published an article in a scientifc journal afer INSAG-7 was issued (Diatlov 1995). A book, which he wrote about the background and the course of the accident, was not published, but is available electronically from Internet libraries (Diatlov 2005). However, some aspects of the accident can only be understood by combining the information of the logs of the Chernobyl control system, the logbook entries, the interpretations of the various scientifc institutes of the events, and the description Diatlov on the events of the night of the accident. By combining all information a new view on the root cause of the accident becomes apparent.

#### **2 The Chernobyl reactor**

Te RBMK type reactor was not the frst choice for the Chernobyl site (Shteynberg, 1991). In fact the RBMK design was ranked third in a feasibility study. Nevertheless it was decided to construct a RBMK reactor since the required parts and components for the RBMK design were available, while components for the other two designs would have to be manufactured and long production times were expected. Te decision for RBMK reactors was taken in 1969, in 1972 it was decided to build a total of 4,000 MW electrical power (four reactor blocks). Te Gidroproekt and NIKIET institutions worked together to develop the reactor design, which was subsequently

examined by the Soviet State Committee for Construction and Planning. Finally, the design was approved by the Council of Ministers. Te blocks Chernobyl one to four went online between 1977 and 1983.

**Fig. 1** Schematic of an RBMK reactor (Nuclear Energy Institute 1997)

Figures 1 to 3 show the schematic of the RBMK reactor, a section through the reactor, and the reactor core. RBMK is a Russian acronym for high-performance channel reactor and is designed as a boiling water reactor. In contrast to the western type boiling water reactors the RBMK does not feature a reactor pressure vessel. Instead it is equipped with approximately 1660 parallel vertical cooling channels (or pressure tubes). Each pressure tube can be loaded with a fuel element with an active region of about 7m, which represents the reactor core. Te channels protrude vertically a graphite block (Figure 3, or (1) in Figure 2). Each single channel can be separated from the circuit by isolation valves at full load operation and a fuel element can be unloaded or loaded by the refuelling machine.

**Fig. 2** Cross-section through the RBMK reactor building (D'Auria 2005). (1) core, (2) pressure tubes leading tot he core, (3) lower biological shield (4) collector, (5) lateral biological shield (6) steam drum separator (7) pressure tubes (8) upper biological shield (9) refueling machine (10) upper core plate (11) upper pressure tubes (12) recirculation lines (13) collector af er pump (14) collector before pump (15) main circulation pump

T e reactor cooling circuit begins and ends with the steam separators (shown in (6) in Figure 2 and as a "steam (drum) separator" in Figure 1). T e steam separators separate steam from water. T e separated water, together with the feed water from the condenser (see "water from turbine" in Figure 1) is pumped to the reactor core by means of a total of six main circulation pumps (with two backup main circulation pumps in total eight main circulation pumps are installed). T e water is partially evaporated in the reactor core so that a two-phase mixture of water and steam is fed to the steam separator drum from the core exit. T e steam separator drum separates the steam from the water, the steam is led to the turbine via the steam lines, while the water is mixed with the feed water and fed back to the core. A total of eight turbines and generators were installed at Chernobyl Nuclear Power

Plant for the four reactor blocks (two per block). It is important to note that during operation not only water, but also a certain fraction steam is present the reactor core (which is also called "void fraction").

#### **Reactivity initiated event**

T e Chernobyl accident was a so called "reactivity initiated event", which means that the control over the reactor power was lost, and that the power output of the reactor increased tremendously in a short time period. T e power control of a reactor is a complex issue, and even more so in case of an RBMK reactor. T ere are a number of factors to consider:

T e source of power in the RBMK nuclear reactor stems from the uranium-235 in the fuel pellets, which, during operation, is hit by neutrons inducing f ssion, a process during which thermal energy and further neutrons are generated for further f ssions (chain reaction). T ose neutrons however, before being able to induce further f ssions, must be slowed down (moderated). Unlike light water reactors (which use water for moderation of neutrons) the RBMK reactor uses the graphite block surrounding the fuel channels as moderator (the black tiles in Figure 3). T e graphite of ers the advantage that a fraction of uranium 235 between 1% and 2% in the fuel is sufcient, while water-moderated reactors need a fraction between 3% and 5%. However, light water reactors have the advantage that the coolant is also the moderator at the same time. If a light water reactor loses its coolant (i.e., a pipeline breaks, the cooling water is lost and the reactor runs dry), the chain reaction collapses and the reactor power is sharply reduced. Te RBMK reactor in such a situation has to rely on its neutron absorber rods (control rods), which control the power and have to be inserted into the core.

Te power of a reactor is proportional to the number of neutrons which are generated in the chain reaction. An important parameter is therefore the so called "reactivity", a measure of how the generation of neutrons is changing. Positive reactivity means more neutrons are going to be generated and the power will increase. Negative reactivity means that less neutrons are going to be generated and the power will decrease. In principle, the following factors infuence the reactivity in the RMBK reactor core:


Te Chernobyl accident was a so called reactivity initiated event, an event in which the reactivity (and the power) increased in an uncontrolled way. All factors above played a role in the accident, but the last two bullet points were of special importance for the Chernobyl accident.

#### **Positive void coefcient**

A key fgure to characterize the behaviour of a reactor is the "power coefcient", and in case of the RBMK reactor, the "void coefcient". Te power coefcient describes how the reactor is going to react to a power change: a positive power coefcient means that an increase in power will induce a further additional increase, a decrease in power a further decrease. It is desirable (although not necessarily required) to construct a reactor with a negative power coefcient: this means, an increase in power would lead to a reduction in power, a decrease to an increase. Such a reactor will by itself tend to regulate its power at a fxed power level. Te other key fgure, the "void coefcient", describes the feedback of the reactor to an increase of steam in the core region. A positive void coefcient means that an increase of the steam

fraction in the pressure tubes in the core region leads to an increase in power, a negative void coefcient means that an increase in void leads to a decrease in power.

Te light water cooled and moderated reactors have a negative power coefcient, as well as a negative void coefcient. Te designers of the RBMK reactor aimed for a negative power coefcient, and accepted a positive void coefcient (during certain operational regimes). However, the designers of the RBMK were convinced that this efect was limited. Teir design calculations showed that if the pressure tubes were to be flled with steam, the reactivity would frst increase, but then decrease, and eventually become negative (see Figure 4, Abagyan et al., 1991). Tis calculation, although accepted by the regulatory authority, turned out to be wrong, as the Chernobyl accident showed.

Shteynberg (1991) points out that the impact of the steam fraction in the cooling channel on the reactivity was only evaluated for performance levels above 50% of the nominal reactor power (i.e. 1600 MWth and upwards). Te accident happened at an operating power of about 200 MWth, a region which should prove to be particularly unstable. However, as Shteynberg (1991) concludes, the designers did not expect any problems with this power range (which, according to him, is shown by the lack of supporting calculations for this range) and the operators were also unaware of the risks of operating the reactor in this dangerous power region.

#### **Control rods**

As in most nuclear power plants the reactor power of the RBMK reactor is controlled by control rods. Te basic principle of control rods is simple – rods with a neutron absorbing material are inserted into the reactor to "slow down" the chain reaction, or withdrawn to "accelerate" it. By inserting the control rods the power is reduced (negative reactivity is inserted), by withdrawing the control rods power is increased (positive reactivity is inserted).

According to Shteynberg (1991), as well as by Abagyan et al. (1991), the design of the control rods triggered the accident. Te RBMK reactor core is large compared to other cores, therefore a large number of control rods are necessary to ensure an even power distribution. Te so called "operational reactivity margin" (ORM) is a very important operational parameter for RBMK reactors which played a key role in the accident. Roughly speaking it specifes for the RBMK reactor how many control rods are fully extracted at a certain point in time. More precisely, the ORM reports the "equivalent" withdrawn control rods, which means that two control rods withdrawn to 50% count as one. Furthermore not all control rods are equally efective, and furthermore efectiveness of a rod is not equal over the whole size. Te algorithm for calculating the ORM takes those efects into account. According to the operating instructions, there is a minimum value for the ORM value, which must not be exceeded. Tere must always be 26–30 equivalent control rods withdrawn. Te main engineer may permit operation also down to an ORM value of 15 equivalent control rods. Operation below this value is not permitted.

Te reason for this rule (and especially its safety relevance) it is not immediately apparent. It seems safe to assume that the operators of the reactor at the night of the accident were not aware of the safety relevance of the ORM, because Diatlov, deputy chief engineer, who was present in the control room in the accident night, wrote (Diatlov 1995) regarding the purpose of the ORM: … "a guarantee that the reactor protection operates properly. At the same time the restriction is imposed not on the maximum, which would be natural, but on the minimum". A restriction on the maximum would be, indeed, more intuitive: Inserted control rods mean that the power can be further increased as needed (by pulling them out). On the other hand, if the control rods are withdrawn from the core it means that, if needed, more negative reactivity can be introduced to shut down the reactor. So one

would assume operating at power with the control rods withdrawn is safer, then with control rods inserted.

Another fact would lead the operators to neglect the ORM parameter. Usually safety relevant parameters are shown at prominent positions in the control room. Te ORM value, on the other hand, was computed by the PRIZMA program (Shteynberg 1991), on a console which was usually out of view. Te ORM computation would take several minutes. It was also known that the calculated ORM value was not precise, since a group of rods was not considered. In principle the ORM value could also be derived manually from the indicated penetration depth of diferent control rods by a hand calculation (correcting for the various efects mentioned above). Either way it would be a lengthy procedure.

But the ORM value has a critical infuence on the safe shutdown of the reactor. Due to the design of the control rods, the efciency of the reactor SCRAM (the emergency shutdown) system was linked to the ORM value. When the reactor emergency shutdown was triggered at an ORM value of 30 and more, negative reactivity could very quickly be introduced to reduce the power; at an ORM value of 15 it took six seconds to introduce the relatively small value of 1\$ of negative reactivity; and at an ORM value of 7 the introduced reactivity was positive over 8 seconds (which means the reactor power increases further for eight seconds when the operator hits the emergency shutdown button). Only afer that the power would decrease (Shteynberg 1991). Te design of the control rod is the reason for this efect: to ensure better performance during normal operation when the control rods are fully withdrawn, displacement bodies made of graphite were ftted with telescope rods at the lower end of the control rods. Tis means that during normal operation the middle of the core region (approximately 7m) was flled with a graphite displacer of 5m (see Figure 5). Above and below the displacer in the reactor core was a 1 m water column. When a fully withdrawn control rod was inserted, the graphite displacer had to pass through 1m of water in the lower core region. However at this position the water acts as a neutron absorber, the graphite body acts as a moderator, which means that positive reactivity is introduced into the lower region of the reactor (power is increased). In the upper part of the reactor core, negative reactivity is inserted because the absorber material is introduced into the core (see Figure 5). If the rods are already one meter inserted, the graphite displacer will be at the bottom of the core, and no positive reactivity will be introduced. Tis is the reason why a minimum ORM value is enhancing safety – it means, that a certain number of rods are already inserted into the core.

According to Shteynberg (1991) the way the ORM value was displayed in the control room suggests that the designers of the RMBK reactor themselves were not aware of the critical role of the minimum ORM value. As a safety-relevant parameter, the ORM would have been automatically calculated and displayed with constantly updated values. An automatic signal to shut down the reactor in case the ORM value drops below the allowed minimum would have been implemented in the reactor protection system.

**Fig. 5** Design of the control rods of the reactor protection system (Abagyan et al. 1991) (a) rod completely withdrawn with graphite displacer (b) situation while inserting the rod introducing positive reactivity over several seconds in the lower part of the core.

#### **3 The Chernobyl accident**

Te course of the accident is described and commented in many places (see, for example, GRS 1996, Shteynberg 1991, Abagyan et al., 1991, USNRC 1987 and others). Here a shortened presentation is given, which focuses on the cause of the accident.

On April 25, 1986, the Chernobyl NPP Unit 4 was scheduled for a shutdown and maintenance. It was planned to carry out a test before shutting down the unit. Like all nuclear power stations, RBMK reactors need energy to cool the reactor core even afer shutdown (the chain reaction is interrupted, but the decay heat, i.e. the

energy from the further decay of fssion products, must be dissipated). Usually the power for the residual heat removal system is drawn from the electricity grid. If, as is possible and even probable in the case of an accident, this connection is temporarily unavailable, emergency power generators (diesel generators) are put into operation. However, they need about a minute for starting up. In order to bridge the time between the loss of ofsite power and connection to the emergency diesel generators, the output of the running down turbine generators should be used.

Te test should confrm that this is actually possible. Te experiment should start at reduced power, at between 700 and 1000 MW of thermal power (nominal power are 3200 MWth). Four of the eight main coolant pumps (six plus two reserve pumps) should remain in operation to ensure cooling of the reactor, four should be supplied by the generator connected to the running down turbine. It should be observed for how long those main coolant pumps could be supplied with power.

In attempting to reach the test conditions, the reactor power was inadvertently decreased to 30 MWth instead of the intended range. Te operators decided to increase the reactor power again to be able to conduct the test. In certain accounts of the accident this is portrayed as violation of procedure, but according to (GRS 1996) an immediate re-start of the reactor in this situation would have been permissible in principle, if the ORM value were at least 30 equivalent control rods before power reduction. Shteynberg (1991) quotes the operating procedure manual, which states it is permissible to restore the power, as long as the power was not reduced below the (not clearly defned) "minimum controllable power level".

Te attempt to increase the power to the planned range was not successful. Te reason for this is that when the power in the reactor is reduced, more xenon is produced than is burned and there is a temporary increase in xenon. Xenon acts as a neutron poison and counteracts a power increase. Even though the ORM limit was violated again and signifcantly more control bars were withdrawn than planned (a breach of the operating regulations), the targeted power level could not be achieved.

Te crew decided to stabilize the reactor power at 200 MWth instead and start the test from this level. In some reports, e.g. (GRS 1996, INSAG 1986), it is noted that the team in had changed the test conditions without proper consultation of the relevant departments. However, one must point out that the author of the test program, the deputy chief engineer Diatlov, was part of the team of operators at that night and present in the control room. It is, of course, a violation of procedure to modify the proposed test program ad-hoc without appropriate analysis and verifcation. In INSAG (1986) it was noted that a low power range for the RBMK is a particularly unstable region. However, as Shteynberg (1991) pointed out, this did not appear to be known to the designers of the reactor, nor to the operators before the accident. Furthermore INSAG (1986), and other reports referring to INSAG (1986) states that continuous operation at that power level was forbidden. Shteynberg (1991) explicitly referred to that statement as untrue, there was no such rule. Furthermore operation at house load was an event which would be automatically triggered on some occasions. House load operation at RBMK reactors corresponds to a power level of 200–300 MWth.

Te range of power where the reactor was now operated was highly unstable. In addition the power distribution showed a maximum in the upper and lower regions of the reactor, instead of dropping from a maximum in the middle upwards and downwards. A reduction in the coolant density (such as steam formation) would lead to a strong increase in output, an increase in output to an accelerated reduction of Xenon and a further decrease in the coolant density and thus to a further increase in output. Te power coefcient was strongly positive.

Te test program was initiated. Te operators had disabled the automatic shutdown signal, which would trigger a shutdown together with start of the test, in order to be able to repeat the test if something goes wrong. INSAG (1986) states "had these trips not been disabled, the insertion of the emergency rods would have terminated the transient regardless of all the other circumstances" (as turned out later this statement is wrong). Diatlov (2005) wrote, the operators had the impression that the test started as planned and that the reactor could now be shut down. Tirty seconds afer the experiment was started, the chief operator, Akimov, gave the junior operator Toptunov the order to shut down the reactor. As again Shteynberg (1991) stated, up to this event, the manual shutdown, there were no processes which could have triggered the power excursion that destroyed the reactor.

In fact it was just the actuation of the emergency shutdown system (its particular design with graphite displacers at the bottom) that destroyed the reactor, and, contrary to the statement in INSAG (1986), would the system have been actuated automatically, it would have destroyed the reactor as well. Te accident occurred at 1:24 and according to Shteynberg (1991) already at 0:30 the conditions in the reactor were such that a shutdown with the shutdown system was not possible anymore. As was said earlier, due to the particular design and low value of ORM, the shutdown system increased the reactor power for eight seconds, before causing a reduction. And at 200 MWth, the reactor power coefcient was strongly positive, which means that an increase in power would lead to a further increase. Tose two circumstances together led to the power surge that destroyed the reactor.

A reactor power of more than 540 MWth was recorded seconds afer the actuation of the system. Te increase in power together with the test conditions, which in turn reduced the throughput continuously in four of the eight circulating pumps, led to increased steam formation, which in turn led to increased power. It is assumed (Shteynberg 1991) that in the lower part of the reactor the energy input in some fuel

elements exceeded 320 cal / g. Tis quantity of energy led to an explosion of the uranium fuel pellets, which led to a destruction of the fuel rods. Te coolant came into direct contact with the hot fuel particles and evaporated spontaneously, which led to a local pressure rise. Te increase in pressure resulted in the destruction of the fuel channels, which led to the formation of steam in the entire reactor core and to a further power excursion. Two loud explosions subsequently shook the entire building. Te heavy upper-biologic shield (see (8) in Figure 2) was raised and turned to a vertical position. Te temperatures in the reactor core rose to high levels and most likely the graphite moderator ignited, a fre that could not be extinguished for several days. Te radiological releases still led to excessive limits in many hundred kilometres from the accident site.

#### **4 Conclusions and reason for the accident**

INSAG (1986) mainly blamed the operators for the accident. Te crew operated the reactor in a dangerous power range, forbidden by operating procedures, violated numerous regulations, and the extremely unlikely combination of violations along with design weaknesses led to disaster. Within this reasoning it was only logical that Fomin, the chief engineer of Chernobyl NPP, and Diatlov, his deputy and author of the test program, were sentenced to prison.

Te updated report INSAG (1992) and especially the expert commission reports which are annexed to INSAG (1992) draw a completely diferent picture. Not only the operators, but also the designers did not know about the design weaknesses. Te authorities who had to examine the design did not ask the right questions.

Before the accident, however, there were several indications of the problems of the RBMK, both with regard to the steam bubble coefcient as well as the design of the control rods and their graphite displacer (Shteynberg 1991). But the response to those warnings came to slow and in some cases the warnings were ignored right away.

Afer re-examination of the up-to-date accounts of the accident it seems to be safe to conclude that the accident was caused mainly by design weaknesses of the reactor, together with violations of procedures by the operators.

Important technical design weaknesses can be named:


• Te way the central parameter ORM was displayed and the lack of automatic monitoring and response to a low ORM margin.

Essential violation of rules of the crew that can be named:


Te ORM parameter, the operational reactivity margin, was not defned precisely enough by the designer. Tus, the safety relevance of the ORM rule could not be known to the operators. Te "peripheral" nature of the evaluation led the operators to believe that this value was not safety-relevant. Tere are indications that even the designers of the RMBK reactor were not aware of the critical function of the ORM, since otherwise they would have displayed the parameter to the operators in a better way.

Coming back to the question technical or human errors a safe conclusion would be that there were components of both. Yes, there were violations of procedures by the operating crew, and yes, there were weaknesses in the technical design of the reactor. However the training and experience of the crew in the control room complied with all standards of the Soviet Union at that time (Shteynberg 1991). One important parameter (ORM value) was ignored, but by a whole team in the control room. Tere is no evidence that another team would have behaved diferently.

Te design weaknesses were certainly not known at the time the RBMK design was developed. Although there were new calculations in the years 1980 and 1985, which suggested that a completely steam-flled channel would not lead to a fading of the chain reaction, but would lead to a power excursion. However, no proper attention was paid to these calculations. Tere were also references to the "positive", i.e. reactivity-increasing efect of the control rods (Shteynberg 1991). It is therefore also important that there was no open technical debate on the technical weaknesses of the RBMK reactor in the Soviet Union, and that no consequences had been drawn by supervisory authorities and political authorities.

Te lessons learned from the Chernobyl accident nowadays points toward the importance of operator training. While this is certainly a valuable lesson, there is another lesson to be learned. Tere were warnings on the design errors that did not

receive proper attention. Tere are enough examples in Western countries where a warning of a supposed design weakness led to a lengthy review, while afected reactors remained in operation. One example is the possible deboration of the pump seal of a pressurized water reactor in the case of a small leak. Tere was the fear that a power excursion might occur if a deborated coolant plug could be transported into the reactor core. Te investigations have fnally shown that the concern was unfounded – but the reactors were still operating until clarifcation. A further example of a safety – critical issue that has long been discussed in the "Western" world (and is still discussed): If a severe accident occurs, are the containment sump flters clogged because of their narrow mesh width, or can the cooling water be recirculated? Here, too, the reactors were operated without waiting for the complete clarifcation of the question.

Te general perception of the Chernobyl catastrophe is still very much oriented along the lines of INSAG (1986). Human failure together with design weaknesses is determined as the root cause. Lessons for other nuclear power plants are generally confned to underlining the important role of safety culture. Chernobyl is perceived as a problem that is limited to the RBMK reactor in the Soviet Union. In Western nuclear power plants, an accident such as in Chernobyl is unthinkable. However, it is questionable whether this distinction is fully justifed. Of course, an accident will not take place in exactly the same way – but undetected faults in the technical design can lead to accidents or severe accidents in other reactor designs as well. Warnings of design weaknesses in general do not lead to a shutdown of the afected units, even in the Western industries, but are examined while the plants continue operation or are sometimes even ignored. With all the diferences between RBMK reactors and Western pressurized water reactors, there are similarities that are ofen overlooked. Reports such as D'Auria (2005) comparing the safety level (and related interpretations) of RBMK reactors to the safety level of Western reactor concepts without classifying the western designs as signifcantly superior are of little concern.

Designers of reactors are humans and humans make mistakes. Te computer systems that the designers of the RBMK reactors had available led them in the wrong direction regarding the behavior of the reactor in the formation of steam in the pressure tubes. Te supervisory bodies were not in a position to identify these errors. Tere was too little or no reaction to hints that the design calculations could be faulty. Te operators, afer all, did not follow instructions whose meaning they did not understand. All these are reasons for a catastrophic accidents against which also Western reactors are not immune. Te RBMK reactor was designed and operated by humans. In view of the complexity of this machine, mistakes have been made – and the consequences of mistakes can be severe when dealing with nuclear power plants.

#### **References**


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## **The Reality after Fukushima in Japan Actual Damage to Local People**

Tadahiro Katsuta1

#### **Abstract**

Tis study analyses the government's eforts and the actual situation of the victims of Fukushima Daiichi nuclear power plant accident fve years afer the accident. As of September 5, 2015, about 99 thousand Fukushima prefecture residents had been forced to evacuate from their homes. Currently, the government is seeking to lif evacuation orders aggressively. However, evacuees have mixed feelings. Te amount of legally required compensation for damages continues to increase; it reached 7.65 trillion yen (US\$76.5 billion) in the latest review as of the end of March 2016. TEPCO is practically bankrupt and has been collecting funds from all Japanese citizens. As of the end of December 2015, 51 people were diagnosed with malignant or suspected malignant thyroid cancer in the second examination conducted by Fukushima Prefecture. Government measures, i.e., disaster recovery plans, compensation for damages, and scientifc approaches, have been used as means to avoid taking responsibility through the use of power, the use of money to keep victims silent, and the use of science as an excuse; these measures are driving the victims into a corner instead of supporting them. Ultimately, two common causes of these problems are related to the nuclear energy policy of the past and the nuclear energy policy for the future.

<sup>1</sup> Tadahiro Katsuta, School of Law, Meiji University, Tokyo, Japan, tkatsuta@meiji.ac.jp

#### **1 Introduction**

Five years have passed since the Tokyo Electric Power Company (TEPCO)'s Fukushima Dai-ichi Nuclear Power Plant Accident (hereinafer referred to as the Fukushima accident) which occurred due to the magnitude 9.0 Great East Japan Earthquake of March 2011. Now, have the victims of Fukushima accident been able to get back to normal life without any problem? Unfortunately, they are still facing many problems. Recovery has been slow in Fukushima due to the existence of areas designated as evacuation zones, their dissatisfactions are suppressed by the compensation for damages, and they sufer from the fear of developing cancer through the participation in the thyroid examination. Tis study examined these three challenges as the current main issues faced by the victims to clarify the current status of the victims who are sufering not only from the efects of the Fukushima accident but also because of government measures. Te complex current conditions are described in Chapter 2 and the essential issues obscured by the current situation are clarifed in Chapter 3.

#### **2 Aspirations and the reality fve years after the Fukushima accident**

#### **2.1 Evacuation plan2**

Te residents of Fukushima prefecture, in which Fukushima Dai-ichi nuclear power plant is located, are exhausted from the prolonged evacuation and hope to be freed from the life as an evacuee. On the other hand, they have doubts about the hasty lifing of evacuation orders by the government due to their anxiety about radiation-related issues.

Te Reconstruction Agency, which was established afer the Great East Japan Earthquake, set the fve years following the earthquake of 2011 as the intensive reconstruction period, and the term from April 2016 to March 2021 as the reconstruction and creation period3 . Tey emphasized that the number of earthquake evacuees

<sup>2</sup> Reconstruction Agency, Current Status of Reconstruction and Challenges, March 2016. http://www.reconstruction.go.jp/english/topics/Progress\_to\_date/image/20160307\_Current\_Status\_of\_Reconstruction\_and\_Challenges\_rev1.pdf

<sup>3</sup> Reconstruction Agency, "Te Process and Prospects for Reconstruction", March 2016, http://www.reconstruction.go.jp/english/topics/Progress\_to\_date/image/20160307\_process\_and\_prspects.pdf

from Iwate Prefecture, Miyagi Prefecture and Fukushima prefecture has dropped to 174 thousand people as of February 2015 from its peak at about 470 thousand.

But if we look at the fgures closely, it becomes clear that Fukushima prefecture alone has been lef behind. As of September 5, 2015, about 99 thousand Fukushima prefecture residents—the number is greater than half of the total number of evacuees—had been forced to evacuate from their homes. Specifcally, about 55 thousand people had evacuated to other areas within Fukushima prefecture; among these evacuees, approx. 51 thousand people had been compelled to live in temporary housing. Te remaining approx. 43 thousand people had evacuated to other prefectures across Japan. According to the questionnaire survey involving 1,000 earthquake victims conducted in March 2016 by Japan Broadcasting Corporation (NHK), 310 people had to evacuate more than 5 times; among these people, 250 people were Fukushima prefecture residents. Besides, the percentage of people who responded that they do not feel that disaster recovery has been achieved was 17.6 % in Iwate Prefecture, 18.2% in Miyagi Prefecture, and 49.9 % in Fukushima Prefecture4 .

About 70 thousand people have evacuated from the designated evacuation zones due to the Fukushima accident: specifcally, about 24 thousand people evacuated from the difcult to return zone, about 23 thousand people from the restricted residence zone, and 24 thousand people from the zone in preparation for the lifing of the evacuation order. Te prolonged evacuation period has exhausted the Fukushima prefecture evacuees. As of the end of September 2015, the total number of disaster-related deaths—i.e. deaths that were not caused directly by the earthquake and tsunami but were due to indirect causes such as deterioration of physical conditions as a result of evacuation—was 3,407 people. Tese people had been living in 9 prefectures and Tokyo. Of these, Fukushima prefecture had the highest number at 1,979 deaths5 . According to the latest information released by Fukushima prefecture, the number of deaths has risen to 2,038 (as of 1 April 2016)6 .

Since the sum of deaths including deaths directly caused by the earthquake and tsunami is 3,866, the number of deaths caused by indirect reasons has exceeded that of the deaths caused by direct reasons. As the government hasn't provided a

<sup>4</sup> NHK (Japan Broadcasting Corporation), Great East Japan Earthquake, A Survey of 1000 Survivors, (in Japanese), http://www.nhk.or.jp/d-navi/link/shinsai5/shinsai5.pdf, accessed 26 April 2016.

<sup>5</sup> Reconstruction Agency, "Te number of disaster-related deaths due to the Great East Japan Earthquake" 25 December 2015. (in Japanese) see http://www.reconstruction. go.jp/topics/main-cat2/sub-cat2-6/20151225\_kanrenshi.pdf Accessed 12 April 2016.

<sup>6</sup> Deaths and injuries due to the Great East Japan Earthquake (as of 1 April 2016), https:// www.pref.fukushima.lg.jp/uploaded/life/198319\_445221\_misc.xlsx, accessed 26 April 2016.

defnition of the term "disaster-related death," bereaved family members must prove with great difculty that the death of the deceased family member is related to the disaster. Terefore, the potential number of disaster-related deaths may be higher.

According to the statistics collected by the Cabinet Ofce, the number of suicide related to the Great East Japan Earthquake has decreased everywhere else but Fukushima prefecture. Te number of suicides committed in Iwate prefecture and Miyagi prefecture in 2011 following the earthquake was 17 and 22, respectively; this number in 2015 dropped to 3 and 1, respectively. On the contrary, the number of suicides increased from 10 in 2011 to 19 in 2015 in Fukushima prefecture7 .

Currently, the government is seeking to lif evacuation orders aggressively. Among the zones in preparation for the lifing of the evacuation order, orders covering a part of Tamura city and a part of Kawauchi city were lifed in 2014, and an order covering a part of Naraha town was lifed in September 2015. In June 2015, the government announced that they will enable the lifing of evacuation orders for all restricted residence zones and zones in preparation for the lifing of the evacuation order by March 20178 . If this plan materializes, 47 thousand people will be able to return to their homes.

However, evacuees have mixed feelings. According to the results of the NHK survey, 45.8% of Fukushima evacuees responded that it is too early. For example, in February 2016, the government held a briefng in Minami-souma city and stated that they hope to lif the evacuation order in April. In response to this, numerous residents commented that it is too soon to lif the order since progress has been slow in implementing decontamination activities9 . In March 2016, Fukushima prefecture released the results of its questionnaire survey. Among the people who had evacuated to other prefectures and had no home to return to in Fukushima prefecture afer April 2017 which is when the program for ofering rental houses free of charge will be terminated, about 70% of them did not wish to return to Fukushima while about 10% wanted to return to the prefecture and about 20% responded that

<sup>7</sup> Cabinet Ofce, "Number of suicides related to the Great East Japan Earthquake" 13 March 2016. (in Japanese) see http://www8.cao.go.jp/jisatsutaisaku/toukei/pdf/h27joukyou/ jishin.pdf Accessed 12 April 2016.

<sup>8</sup> Nuclear Countermeasures Headquarters, "Accelerating post-nuclear disaster Fukushima recovery eforts" (Revised version), 12 June 2015. (in Japanese) see http://www.meti. go.jp/earthquake/nuclear/kinkyu/pdf/2015/0612\_02.pdf Accessed 12 April 2016.

<sup>9</sup> Tokyo Shimbun, "Residents oppose plan to lif evacuation order in April at an explanatory meeting in Minami-souma city", 21 February 2016. (in Japanese) see http://www. tokyo-np.co.jp/article/national/list/201602/CK2016022102000126.html Accessed 12 April 2016.

they are still debating on whether or not to return10. Tese response results may be due to the following reasons: the fact that their lives at the evacuation destination have taken root, concerns over changing the children's living conditions, and fear of radiation-related issues.

Decontamination work in the designated areas to be decontaminated under the direct control of the government has fnished in 6 municipalities among the 11 municipalities within Fukushima prefecture and the plan is to fnish decontamination in the remaining municipalities by the end of FY201611. But anxiety in Fukushima prefecture is strong. According to the NHK survey, 38.7% of evacuees responded that their fear of exposure had not changed even fve years afer the accident. In December 2015, the Ministry of the Environment announced that they will not decontaminate areas more than 20 km away from daily activities area in Fukushima prefecture12. However, as a result of local opposition, the ministry changed the policy to carry out decontamination in satoyama areas—border zones of agricultural land and forested land traditionally regarded as one area—where people may enter easily13.

#### **2.2 Compensation for damages**

TEPCO continues to pay compensation for nuclear damages to the people who sufered damages such as individuals, sole proprietors, and corporations.

Legally required compensation costs have continued to increase and the total reached 7.65 trillion yen (US\$ 76.5 billion) in the latest review as of the end of March 2016. Out of that total, the amount of the agreed-upon compensation was 5.92 trillion yen (US\$ 59.2 billion). Compensation costs include medical examination

<sup>10</sup> Fukushima Prefecture, "Interim report on the residence intentions survey", 25 March 2015. (in Japanese) see https://www.pref.fukushima.lg.jp/uploaded/attachment/158116. pdf Accessed 12 April 2016.

<sup>11</sup> Ministry of the Environment "Progress map of decontamination activities implemented under the direct control of the government" 4 March 2016. (in Japanese) see http://josen. env.go.jp/material/pdf/josen\_gareki\_progress\_201603.pdf Accessed 12 April 2016.

<sup>12</sup> Environmental recovery review meeting, "Direction of radioactive materials management measures for forests (draf)" 21 December 2015. (in Japanese) see http://www.env.go.jp/ jishin/rmp/conf/16/mat05.pdf Accessed 12 April 2016.

<sup>13</sup> Project team of relevant ministries and agencies for recovering forests and the forest industry in Fukushima, "Comprehensive approach for recovering forests and the forest industry in Fukushima", 9 March 2016. (in Japanese) see http://www.reconstruction. go.jp/topics/main-cat1/sub-cat1-4/forest/160309\_3\_siryou1.pdf Accessed 12 April 2016.

costs, compensation for psychological damages, voluntary evacuation expenses, and business loss expenses14. In terms of the number of claims, approx. 899 thousand cases by individuals, approx. 1.3 million cases by individuals (losses due to voluntary evacuation), and approx. 4.02 million cases by corporations and sole proprietors had been fled as of April 201615.

TEPCO has been showing consideration for the circumstances and feelings of the victims16. However, according to the Nuclear Damage Compensation Dispute Resolution Center, which was established as means to provide Alternative Dispute Resolution (ADR) by mediating disputes between victims and TEPCO to enable them to reach agreements without having to go to court, 4,239 claims were made in 2015 and the mediation process is still ongoing indeed for 2,746 of those claims17.

Reparation does not cover the only TEPCO. Te company has received the fnancial assistance from the nuclear power operators and government. Tat is, TEPCO has been bankrupt substantially and has attracted funds not only the consumer of electric companies without TEPCO but also the entire Japanese people.

According to the Nuclear Damage Compensation and Decommissioning Facilitation Cooperation, which was established newly to manage compensation funds, the cooperation received 508.3 billion yen (US\$ 5.1 billion) from nuclear power operators including TEPCO, an additional 110.0 billion yen (US\$ 1.1 billion) from TEPCO alone, and 9 trillion yen (US\$ 90 billion) of government bonds from the government as of FY201418.

According to the estimation released in March 2015 by the Board of Audit of Japan, the government will need 30 years at the maximum to collect the debt owed

<sup>14</sup> TEPCO, "New Comprehensive Special Business Plan" 31 March 2016. (in Japanese) see http://www.meti.go.jp/press/2015/03/20160331005/20160331005-1.pdf Accessed 12 April 2016.

<sup>15</sup> TEPCO, Records of Applications and Payouts for Indemnifcation of Nuclear Damage (as of 22 April 2016). http://www.tepco.co.jp.cache.yimg.jp/en/comp/images/jisseki-e. pdf, accessed 26 April 2016.

<sup>16</sup> TEPCO, Five Promises to the Aficted, https://www4.tepco.co.jp/en/images/5promises. pdf, accessed 26 April 2016.

<sup>17</sup> Nuclear Damage Compensation Dispute Resolution Center, Activities Report, March 2016. http://www.mext.go.jp/component/a\_menu/science/detail/\_\_icsFiles/afeldfle/2016/04/20/1347876\_009.pdf

<sup>18</sup> Nuclear Damage Compensation and Decommissioning Facilitation Corporation, FY2014, Business Report (in Japanese), http://www.ndf.go.jp/soshiki/zai\_h26jigyo.pdf, accessed 26 April 2016.

by TEPCO when it is assumed that the government provides fnancial assistance at the maximum government bond amount of 9 trillion yen (US\$ 90 billion)19.

#### **2.3 Thyroid cancer diagnosis**

In contrast to Fukushima prefecture's responses to evacuation plans and compensation, the prefecture has continued to deny the possibility of children's thyroid cancer together with the government. Tis may be because of the involvement of the government in the diagnosis process.

Fukushima prefecture is continuing its health survey which includes surveys of external and internal doses and thyroid examinations20 . In regard to the thyroid examination, the preceding survey—ultrasonic wave examination for residents who were under 18 years old and lived in Fukushima prefecture at the time of the accident—was conducted from FY2011 to FY2013. Of the about 370 thousand subjects, 300 thousand people were examined (participation rate: about 82%)21.

As of the end of June 2015, 113 people were diagnosed with malignant or suspected malignant thyroid cancer22. Of these, 99 people underwent surgery. Although this result is higher than the Japan's thyroid cancer statistics, the Fukushima Prefectural Citizens Health Survey Committee has not recognized these thyroid cancer cases as the result of the Fukushima accident; the Committee's reasoning is that these people were exposed to less radiation when compared with the case of Chernobyl accident and that some of the subjects may have been over-diagnosed.

A full-scale survey has been started involving the subjects of the preceding study and children who were born afer the accident. If nodules or cysts that are

21 ibid.

<sup>19</sup> Board of Audit of Japan, "Report on the results of the accounting audit regarding the implementation status of government's assistance provided to TEPCO for compensation for nuclear damage" March 2015. (in Japanese) see http://www.jbaudit.go.jp/pr/kensa/ result/27/pdf/270323\_zenbun\_01.pdf Accessed 12 April 2016.

<sup>20</sup> According to an estimation of external exposure dose rate based on a questionnaire survey, 93.8% of the respondents were exposed to doses between 0 to 2mSv as of December 2015. However, only 560 thousand people responded out of the 2.05 million subjects (27.4%). As for internal exposure measurements using a whole body counter, 281,228 people were exposed to less than 1mSv while 26 people were exposed to doses between 1mSv to 3mSv. Source: "Overview of the residents health survey" https://www. pref.fukushima.lg.jp/site/portal/43-7.html (in Japanese) Accessed 12 April 2016.

<sup>22</sup> Fukushima Prefectural Citizens Health Survey Committee, "Interim report on the prefectural citizens health survey", March 2016. (in Japanese) see http://www.pref. fukushima.lg.jp/uploaded/attachment/158522.pdf Accessed 12 April 2016.

larger than a predetermined size are found in the frst examination, those people undergo a second examination. As of the end of December 2015, 51 people were diagnosed with malignant or suspected malignant thyroid cancer in the second examination. Unfortunately, only 29 of them submitted a basic survey questionnaire that provides data on their exposure dose at the time of the accident. Among these values, the highest dose was 2.1 mSv23.

In May 2015, a research group of Okayama University published a paper of epidemiological studies related to frequent occurrence of childhood thyroid cancer24. According to the group, based on the results of the screening tests of Fukushima Prefecture, at the maximum, the number of thyroid cancer incidences in a certain area of Fukushima prefecture was 50 times higher than Japan's average annual number of thyroid cancer incidences. Accordingly, the group concluded that excessive occurrence of thyroid cancer has already been detected. However, this paper has received criticism and the academic debate on this issue has been continuing25.

Diagnosis results are reviewed by the Fukushima Residents Health Survey Committee for the purpose of obtaining professional advice from experts belonging to research institutes and universities across Japan.

In October 2012, it was revealed that this committee had held secret preparatory meetings prior to the open review meeting to pre-arrange the discussions of the committee members; it was also discovered that they had created a scenario to lead the discussion at the time of the meeting26. Furthermore, it was revealed that the former Chair of the committee had sent out a document to thyroid specialists across Japan in January 2012 to urge them not to respond to requests from the parents of

<sup>23</sup> Prefectural Citizens Health Survey Committee, "Tyroid examination (full-scale examination) implementation status" 15 February 2016. (in Japanese) see http://www.pref. fukushima.lg.jp/uploaded/attachment/151272.pdf Accessed 12 April 2016

<sup>24</sup> Tsuda, Toshihide et al., "Tyroid Cancer Detection by Ultrasound Among Residents Ages 18 Years and Younger in Fukushima, Japan: 2011 to 2014", Epidemiology: May 2016 – Volume 27 – Issue 3 – p 316–322., see http://journals.lww.com/epidem/Citation/2016/05000/ Tyroid\_Cancer\_Detection\_by\_Ultrasound\_Among.3.aspx Accessed 12 April 2016.

<sup>25</sup> Takahashi, Hideto et al., "Re: Tyroid Cancer Among Young People in Fukushima", Epidemiology • Volume 27, Number 3, May 2016, see http://journals.lww.com/epidem/ Fulltext/2016/05000/Re\_\_\_Tyroid\_Cancer\_Among\_Young\_People\_in.36.aspx Accessed 12 April 2016.

<sup>26</sup> Management Investigation Committee, Correction of survey results concerning the management of the meeting of Fukushima Residents Health Survey Committee. November 15, 2012, (in Japanese) http://www.pref.fukushima.lg.jp/uploaded/attachment/45898.pdf

the examination participants for a second opinion – an approach in which patients/ guardians choose the treatment by obtaining the opinion of several experts27.

#### **3 Challenges indicated by the reality**

#### **3.1 Problems of accident response measures**


<sup>27</sup> Michiyuki Matsuzaki, Opinion, What is happening to the children in Fukushima?, May 2015 (in Japanese). http://1am.sakura.ne.jp/Nuclear/kou131Matsuzaki-opinion.pdf

<sup>28</sup> Press Conference by Prime Minister Shinzo Abe on the Upcoming Fourth Anniversary of the Great East Japan Earthquake, March 10, 2015. accessed 26 April 2016. http://japan. kantei.go.jp/97\_abe/statement/201503/1210209\_9916.html

<sup>29</sup> See Ref.2

<sup>30</sup> (1) Decommissioning and contaminated water treatment costs of 2 trillion yen: Although TEPCO has already set aside a reserve of 1 trillion yen (US\$ 10 billion), the government has asked the utility to secure another 1 trillion yen (US\$ 10 billion) within 10 years. (2) Compensation costs of about 7.1 trillion yen (US\$ 71 billion): Te total of legally required compensation costs according to the latest data is about 7.7 trillion yen (US\$ 77 billion, see Table 3). (3) Decontamination costs of 3.6 trillion yen (US\$ 36 billion): Te Ministry of the Environment has estimated the decontamination cost at about 2.5 trillion yen (US\$ 25 billion) and the interim storage facilities cost at about 1.1 trillion yen (US\$ 11 billion). See Ref. 13.

3. Tyroid cancer diagnosis: Due to lack of clear information about the relationship between radiation exposure and cancer, the anxiety of people about the efects of radiation has increased more by the responses of the government and Fukushima prefecture. Although the health investigation committee of Fukushima prefecture is operating with the Fukushima prefectural health fund, since this fund received grants of 78.2 billion yen from the Ministry of the Environment31 and 25 billion yen from TEPCO32, the neutrality of this committee is unclear.

Traditionally, the Japanese government has tended to avoid dealing with radiation-related problems. For example, on October 20, 2015, Fukushima Bureau of Ministry of Health, Labour and Welfare (MHLW) recognized the leukemia developed by a worker who worked on decommissioning tasks afer the Fukushima accident as an occupational disease33. However, MHLW stated that "this recognition does not prove scientifcally the causal relationship of radiation exposure and its health efects." Te government's responses imply that it is trying to avoid an increase in workers' compensation due to recognition of occupational diseases.

Afer the Fukushima accident, the government created and released a quick reference table of radiation exposure in order to eliminate the people's radiation-related concerns. However, it was discovered that they had secretly corrected the fgures without providing sufcient explanation. In the table, the level of natural background radiation in Japan was changed from 1.5 mSv/year of the April 2011 version to 2.1 mSv/year in the May 2013 version. Furthermore, the comment "No observable increase in cancer incidence" for exposure levels under 100mSv was deleted34.

#### **3.2 Common factors**

Te results obtained are shown in Table 1. Government measures, i.e., disaster recovery plans, compensation for damages, and scientifc approaches, have been used as means to avoid taking responsibility through the use of power, the use of

<sup>31</sup> Ministry of the Environment, Support of Fukushima prefecture health research business, accessed 26 April 2016. http://www.env.go.jp/chemi/rhm/support.html

<sup>32</sup> See Ref. 13.

<sup>33</sup> Ministry of Health, Labour and Welfare, "Result of review at the 'review meeting on occupational/non-occupational ionizing radiation disease' and approval as occupational disease/injury" 20 October 2015. (in Japanese) see http://www.mhlw.go.jp/fle/05- Shingikai-11201000-Roudoukijunkyoku-Soumuka/kouhyousiryou.pdf

<sup>34</sup> National Institute of Radiological Science, Dose scale, accessed 26 April 2016, http:// www.nirs.go.jp/data/pdf/hayamizu/e/20130502.pdf

money to keep victims silent, and the use of science as an excuse; these measures are driving the victims into a corner instead of supporting them. Furthermore, it seems that these eforts are being made to obscure the responsibility rather than to resolve the problems, and in hopes that the victims will give up on seeking solutions.

Ultimately, two common causes of these problems are related to the below described past and future nuclear energy policies.

Common factor 1: Promotion of the aggressive nuclear energy policy of the past

Te cause of the current confusion concerning Fukushima accident responses is the claim aggressively made by the government and power companies in the past that a nuclear accident will not occur. As a result, the responses by the government and TEPCO were slow. Te victim's and general citizens' distrust in the government and TEPCO still remains.

Common factor 2: Promotion of an aggressive nuclear energy policy for the future

Te government is trying to forcefully settle all problems related to the Fukushima accident at an early stage because it is trying to maintain the already set out nuclear energy policy for the future. From that standpoint, evacuation, compensation and exposure problems are all inconvenient facts and the government is afraid that these facts will have a negative efect on its eforts to maintain the nuclear energy policy. On the other hand, victims and the general public continue to have anxiety about the future.


**Tab. 1** Measures and purposes of the government and TEPCO

#### **4 Conclusions**

At present, fve years afer the Fukushima accident, the government's responses so far to the evacuation problems, compensation issues and the risk of thyroid cancer have been insufcient. It is obvious that the government's intention behind these insufcient measures is to maintain the nuclear energy policy.

Terefore, the victims have been hurt not only by the impact of the Fukushima accident but also by the government's responses. People afected by the nuclear disaster caused by the nuclear promotion policy of the past are now sufering from the current promotion of the nuclear energy policy for the future.

**Open Access** This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

The images or other third party material in this chapter are included in the chapter's Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter's Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

## **Distributing the Costs of Nuclear Core Melts Japan's Experience after 7 Years**

#### Eri Kanamori, and Tomas Kåberger1

#### **Abstract**

Te costs of managing the consequences of the Fukushima-Daiichi nuclear have been signifcant already, and the estimated total future costs have increased over time. Te immediate payments have been possible by direct payments from the Japanese government. However, most these payments are not acknowledged as government spending. Instead, a complicated system of envisioned re-payments have been created.

Based on the three Special Business Plans published by TEPCO since the nuclear disaster, this evolving perception of the economic consequences and the increasingly complicated repayment schemes are described.

Te conclusion of the authors are that the repayment schemes are not compatible with a future efcient, competitive electricity market.

It is suggested that other governments who implicitly or explicitly accepting economic liabilities for nuclear accidents prepare themselves in order to avoid un-necessary indirect cost afer future reactors accidents.

<sup>1</sup> Eri Kanamori, Ritsumeikan University, Osaka, Japan, kanamori@ba.ritsumei.ac.jp; Tomas Kåberger, Chalmers University of Technology, Göteborg, Sweden, tomas.kaberger@chalmers.se

#### **1 Background**

In this paper, we attempt to describe the way the Government of Japan (GOJ) and Tokyo Electric Power Company (TEPCO) have managed to cope with the successively increasing acknowledged costs of the Fukushima core melts-downs, and following radioactivity leaks in 2011. Te evolving scheme of dealing with the cost are found in TEPCO's special business plans.

But frst, in this paper, a short description of the consequences of the core melts and of Japan's national energy policy. Tis, as a background in order to understand the challenges of TEPCO and the design of their recent special business plans:

It was on March 11, 2011 that the three operating TEPCO reactors at Fukushima-Daiichi nuclear power plants proved unable to cope with the efects of an earthquake. Te nuclear reactor core melts in Fukushima and consecutive explosions resulted is emission of radioactive substances into the air and water. Despite winds bringing most of the air emissions out into the Pacifc, there was also some contamination on land, and over a hundred thousand people were instructed to evacuate their homes, while many in addition relocated at their own initiative, without evacuation orders.

Systematic, comprehensive studies of health efects are not published. Only increased thyroid cancer among children in the afected areas are documented [Tsuda et al. 2015], but sometimes denied to have any relation to the contamination. Tus economic measures of health costs are uncertain and not included in the ofcial cost estimates.

Te eforts to control the emissions are still engaging in the order of 5 000 people at Fukushima-Daiichi Nuclear Power Plant. Tis is many more than the number of people employed when the plant produced electricity.

Removing spent fuel from damaged fuel pools, pumping contaminated water into new-built storage tanks by 2018 containing a million cubic meters, building treatment plants extracting as many radioactive isotopes as possible, and constructing an ice wall around the reactors in order to reduce the amount of water fowing into the most contaminated parts of the plant are some of the short-term eforts. For the longer term, attempts are made to fnd out where the melted reactor fuel is, and then to develop technologies and strategies for the long term decommissioning of the plant. Te work can be followed at the web-site of TEPCO. [TEPCO 2011–2018]

Estimating the total cost from the accident until all the remains of the reactors are brought to a condition where further spreading of radioactivity will be avoided in the very long term is difcult.

Te purpose of this paper is not to describe the long-term technical solutions, nor the long term fnancial solutions. Tis introduction was intended as a sketchy background to the fnancial challenges of managing the consequences. Te intention with this paper is to provide a description of how the short-term costs have been managed in Japan since the accident.

Similarly, a brief background of the energy policy follows to understand the way the consequences have been managed:

Japan's energy policy since the 1970s has focused on the development of nuclear power. Despite the absence of domestic uranium reserves, the import of this fuel has been seen as less problematic than dependence on fossil fuel imports. Uranium is easier to store, and a reprocessing ambition, making breeder reactors or production of mixed oxide fuels possible, made the envisioned future import volumes small compared to oil dependence.

Despite strong political backing, the nuclear strategy encountered problems. New reactors were expensive, slowing down the expansion. Even operation of existing reactors have faced problems and the peak in nuclear electricity generation was as early as 1998, with 327 terawatt-hours (TWh) delivered. Still, the last full year before the 2011 Fukushima failure, more than 290 TWh were produced by 54 nuclear reactors in Japan. [BP, 2017]

Te Fukushima-Daiichi failure was a serious disaster. Still the "4th Strategic Energy Plan" [GOJ, 2014], a cabinet decision made in April 2014, which is the basic and comprehensive Japanese energy policy today, aims at the "Re-establishment of nuclear energy policy" (p.47). Te plan says that "Nuclear power is an important base-load power source as a low carbon and quasi-domestic energy source, contributing to stability of energy supply-demand structure, on the major premise of ensuring its´ safety" (p.24). It also says that "Even afer the TEPCO's Fukushima nuclear accident, use of nuclear energy is expected to expand in the world. Te scale of the expansion is particularly remarkable in Asian nations where energy demand is rapidly increasing. Japan, with its experience of the accident, is expected to make contributions in the felds of safety, nuclear non-proliferation and nuclear security as an advanced nuclear nation" (p.50). Te latest "5th Strategic Energy Plan" [GOJ, 2018] holds the same attitude.

From these statements, it is obvious that Japan's energy policy is still supporting nuclear power. Under this national policy, TEPCO's special business plans have been made and, as we shall describe below, approved by the Government. In the national policy, allocation of the Fukushima costs is not explicitly dealt with. Tus the costs are not visible in the national budget, and not described as a cost of the government. Instead, the matter has been included in TEPCO's special business plans. It is assumed in Japan from provisions of the "Act on Compensation for Nuclear Damage" that only TEPCO is responsible for the accident while the Government is not.

While the government is prescribing how to manage the costs, and in fact providing the necessary funds, the roles of the current government and future tax- and ratepayers are not clearly presented and rarely debated in public.

Tis paper is an analysis of how the three consecutive special business plans for TEPCO, published afer the accident, have evolved; How they present the solution of the challenging task of fnding the money necessary to manage the immediate costs of the failure in reactor control afer the earthquake.

#### **2 TEPCO's special business plans**

In the 2012 special business plan of TEPCO, the acknowledged costs for Fukushima were estimated as 25 billion euros.2 (Figure 1) Tis is to pay compensation to victims who were ordered to evacuate from defned areas in the Fukushima prefecture.

In the 2014 plan, the estimated costs became 106 billion euros and it included not only compensation but also some decontamination, interim storage, and decommissioning. And in the 2017 plan, the total costs were assessed as 215 billion euros. Te scheme of dealing with these costs will be explained chronologically.

**Fig. 1** Te estimated cost of Fukushima accident

<sup>2</sup> In this paper, 1 trillion yen is assumed equal to 10 billion euros. In 2018, this is only the right order of magnitude as one Euro is close to 130 JPY.

#### **2.1 The 2012 TEPCO Special Business Plan**

In the 2012 plan (TEPCO, 2012a), called "Comprehensive Special Business Plan", Fukushima costs were seen as only compensation and estimated at 25 billion euros.

In the fnancial year ending 31 March 2011, TEPCO recorded a 12 billion euros net loss. Tis net loss was mainly from asset impairment and eforts to cool and control reactors. Because of the proven loss, TEPCO's equity was eroded from 21 billion euros in 2009/2010 to 12 billion euros in 2010/2011 (non-consolidated), despite raising a few billions from issuing new shares in October 2010. So, the 25 billion euros of compensation was already bigger than TEPCO's equity. Tus, this early estimated expense was unafordable for the company. Under normal economic conditions of limited liability companies in the world, this should have resulted in a bankruptcy where shareholders lost their assets in the company.

However, the government of Japan, instead, decided to rescue the shareholders. Te government provided 25 billion euros to TEPCO, for the company to be able to pay compensation, and an additional 10 billion euros in exchange for TEPCO's new, emitted shares giving the government ownership of 54.69%. Tis prevented TEPCO from going bankrupt and gave incumbent shareholders an opportunity to stay as owner. At the same time the government avoided making unlimited commitments.

Te 10 billion euros payment was mainly to make TEPCO able to pay for its ongoing business activity, such as buying additional fuels and paying interests to banks. Strictly speaking, the government did not do it directly, but through the "Nuclear Damage Liability Facilitation Corporation" (NDF) which they created afer Fukushima. As a result, it is the NDF that holds 54.69% of TEPCO's shares and TEPCO is now controlled by the Government via the NDF.

Te scheme of 2012 plan is shown in Figure 2, above. Te two government aids are shown as arrows 1 and 2. Arrow 1 shows that the NDF provided 25 billion euros for TEPCO to pay compensation to victims. In order to do this, the Government provided its bonds of 50 billion euros to the NDF. Tese government bonds were issued for special purpose of supporting compensation and had three features which are diferent from ordinary bonds: yielding no interests, prohibited to be transferred to a third party, and ready to be redeemed at any time on demand for the purpose. Terefore, when the NDF needed cash in order to assist TEPCO paying compensation, and the NDF demanded it ofcially to the GOJ, the NDF could acquire cash at any time. From 2012 onwards, the redemption has been repeated monthly. Te Government derived the cash from its annual energy budget. It seems that there was already a concern that 25 billion euros might not be sufcient for paying compensation, since the government special purpose bond was up to 50 billion euros already at this stage. At the same time, as arrows 2 show, the NDF invested

10 billion euros in 54.69% of TEPCO's share. To fnance this additional aid, the NDF borrowed the money from banks based on a guarantee from the government.

**Fig. 2** Te scheme of the 2012 plan

Te money for compensation to victims, it is said, will be paid back to the NDF in a complicated way. A new law was imposed whereby the responsibility to contribute to repayment was shared between all nuclear operators.

In other countries, the liable party would be a matter for courts under existing laws. Here, the Japanese government and diet retroactively distributed the economic liability to all nuclear operators. It may be seen as a retroactive insurance fee that could have been imposed on them beforehand.

As the electricity system, at the time, was operated by regional, vertically integrated, monopolies, costs were easily passed on to electricity customers. While an insurance fee, in a competitive market economy, would have given consumers the opportunity to opt for lower cost sources of electricity, the retroactive charge and the monopoly in the market simply forced customers to pay.

In Figure 2, arrows with the number 3 represent the planned process of repayment. Te money is called "contributions." Tere are "general contributions" from TEPCO and other nuclear operators and "special contributions" only from TEPCO. In the year of 2016, TEPCO and other operators paid about 1.6 billion euros as general contributions and TEPCO paid an additional 1.1 billion euros. It was considered that the payment of contributions would last for ten years or so. Of course, this money is expected to continue to come from electricity consumers.

#### **2.2 The 2014 TEPCO Special Business Plan**

In 2014, the "New Comprehensive Special Business Plan" was established which disclosed that not only compensation payments would be needed, but also paying for decontamination, interim storage and decommissioning (TEPCO, 2014). Te estimated compensation cost was doubled from 25 to 50 billion euros. Decontamination costs of 25 billion euros, interim storage of 11 billion euros and decommissioning of 20 billion euros were now taken into consideration.

**Fig. 3** Te scheme of the 2014 plan

Arrows with the number 1, in Figure 3, show how TEPCO was expected to pay 50 billion euros in compensation to victims, the NDF provides the same amount in order for TEPCO to do this. Te system for planned repayments stayed the same as in the 2012 plan. Te obvious change being that total "contributions" increased to 50 billion euros (arrows numbered with 3).

As for decontamination and interim storage, the two costs are shown together in Figure 3 for practical reasons, and the total amount was 36 billion euros. Te NDF

directly makes payments for decontamination and interim storage, not through TEPCO's fnancial statements. To cover this 36 billion euros, GOJ issued additional special purpose bonds of 40 billion euro. Terefore the total bonds provided to NDF increased from 50 to 90 billion euros (arrow numbered 1 from GOJ to the NDF).

Te next question was how to arrange the pay back of this latter amount. As seen before, the contribution from TEPCO and other nuclear operators remained 50 billion euros, which is the same amount of compensation (arrows numbered 3).

Nuclear power companies would not want to, and could not, increase electricity charges further, as a re-regulation process introducing some competition in the electricity sector had started and such obligations would weaken the competitiveness of the companies with nuclear power.

Instead new ways of repayment were invented; capital gain and a special tax. It was planned that 25 billion euros for decontamination is to be covered by imagined future capital gain of TEPCO's share which the NDF holds, termed capital gain. Te 11 billion euros of interim storage costs shall come from the Government energy budget (arrows 4).

As for the last category of Fukushima cost, 20 billion euros of decommissioning of Fukushima-Daiichi nuclear power plant is planned to be fnanced by TEPCO's management efort through cost reduction and sales of assets (arrow 5). Tis is a very ambitious task for TEPCO management, considering the plans to increase competition in the Japanese markets. And all this, while electricity consumption is falling, and decentralised solar electricity is increasing its' market share. To be able to collect the benefts of efciency as proft, the achieved efciency improvements must not only cover this cost compared to today operations, the improvements must be so much better than improvements among competitors, in order to generate the proft necessary to cover the costs.

In addition, there was one more important feature in the decommissioning scheme of 2014 plan. GOJ began to support research and development (R&D) of decommissioning methods applicable to the crippled reactors in Fukushima (arrow 6). It is unknown how much the NDF will pay for R&D of Fukushima decommissioning. Te law was changed and NDF before abbreviation was, as a consequence, renamed as "Nuclear Damage Compensation and Decommissioning Facilitation Corporation", and the function of decommissioning facilitation was added to NDF. (GOJ, 2014, p.48)

#### **2.3 The 2017 TEPCO Special Business Plan**

Te 2017 plan revealed that Fukushima estimated cost increased to 215 billion euros (TEPCO, 2017). Compensation, decontamination, interim storage and decommissioning were given as 79 billion, 40 billion, 16 billion, and 80 billion euros respectively. Te scheme to cover costs became even more complex.

**Fig. 4** Te scheme of the 2017 plan

Firstly, compensation of 79 billion euros is provided by the NDF as in the 2014 plan (arrows 1). But changes were made in the repayment process. Te contribution did not go up to 79 billion euros. Instead, a part of the compensation was to be repaid through a new channel: from a transmission charge (arrows 7). Tis, in practice, means that the economic liability for the nuclear accident consequences will be paid also by customers who are buying no nuclear electricity at all. Te interpretation that the contribution was a retroactive insurance payment by all nuclear operators is now no longer possible. Instead all electricity consumers are paying.

TEPCO's consumers split into two groups afer April 2016 when some competition was introduced in the Japanese electricity retail market. Some consumers remained TEPCO's customers and continued to pay electricity charges to TEPCO. Others switched retailers and are now paying electricity charges to other suppliers. TEPCO could not collect money from the latter consumers anymore.

So, the new way of collecting money from these consumers by using transmission charge was invented. Now, TEPCO's customers pay additional charges to TEPCO. And PPS who use transmission services of TEPCO also pay an extra charge. Tis charge is set to yield the 24 billion euros needed to pay back to the NDF and GOJ together with the contributions. Accordingly, the contribution becomes 55 billion euros in total. In other words, 55 billion euros (arrows 3) and 24 billion euros (arrows 7), both charged on consumers, will be used to pay back to the money of compensation.

Next is decontamination and interim storage. In the 2017 plan, the total cost of the two was 56 billion euros. But this amount cannot be fnanced by the 90 billion which the NDF provided to TEPCO in the 2014 plan, because from that sum, they already pay compensation of 79 billion euros. So, in the 2017 plan, the Government decided to provide additional bonds of 45 billion euros, resulting in total amount of 135 billion euros (arrows 1). Te repayment scheme of the two costs is the same as 2014 plan: Decontamination of 40 billion euros is to be paid back from capital gain, while interim storage of 16 billion is from Government's energy budget which means from other tax income or further national borrowing.

It might be necessary to note here that the anticipated capital gain of 40 billion euros is not a credible expectation in the absence of any privilege given to TEPCO in the future competitive electricity market. Te NDF holds 54.69% of TEPCO's share, afer paying about 10 billion euros. In order to get 40 billion euros capital gain, the share price must increase to 50 billion euros. 50 billion euro for half of TEPCO means around 100 billion euro for 100% of the company. Terefore, TEP-CO's market value in the future must become more than 100 billion euros. Tis is hard to imagine if customers in Japan are to enjoy electricity at prices that can make industrial customers competitive, and give households a decent standard. Te reality among large peers in Europe is that Edf, with roughly the dubble installed generation capacity to TEPCO had a market value of some 20 billion euros at the end of 2016.

Finally, decommissioning costs, that are estimated to be 80 billion euros in the 2017 plan, will be fnanced by TEPCO's management eforts. Tere is no change about this scheme. Ten, what is TEPCO's management eforts in 2017 plan? In Fuel/Termal Power business, TEPCO plans to reduce maintenance cost by 30% (TEPCO, 2017, p.28). Tis, again, is very ambitious. It is so, not only considering the Fukushima events but in relation to the track record of TEPCOs management before 2011. Pursuing cost cuts must not afect the safety of its business and the eforts to avoid more accidents. Tis is particularly relevant in the nuclear business, where they are planning to restart of Kashiwazaki-Kariwa nuclear power station (TEPCO, 2017, p.37), a plant that has experienced severe difculties in operation even before the Fukushima failure.

In Transmission and Distribution business, the plan says that TEPCO will raise 1.2 billion euro/year on average through rationalization (TEPCO, 2017, p.30). Rationalization, again means cost reductions. If this is possible, one may ask why it has not been done already.

#### **3 Discussion**

Te full costs of the Fukushima nuclear reactor core melts are not yet possible to quantify. Still, the costs already identifed and acknowledged by the Japanese government are so large they are beyond the paying capacity of any reactor owner in the world, and clearly beyond the paying capacity of TEPCO.

In a stepwise process, the unavoidable costs of the Fukushima disaster have been identifed and distributed by the Japanese government. Worth noting, is that in this process the government has protected TEPCO owners from bankruptcy. Tis could be seen as introducing a moral hazard: While the report by National Diet of Japan Accident Investigation Committee has concluded TEPCO is responsible for the consequences by neglecting warning of earthquakes and tsunamis, pointing out that "Risk of the arrival of a tsunami was known by both Nuclear and Industrial Safety Agency and TEPCO in 2006, but TEPCO neglected this risk and no measures were taken" (1.2 of PART 1), TEPCO has been protected from the economic consequences by the government. Te government has placed the economic cost and responsibility on the customers and tax payers, but not on the owners of the plant. Te moral hazard appear as other industries may come to expect similar protection and abstain from taking costly precautions when learning about risks in their activities.

Now, the Japanese people are compelled to pay for most of the costs. Still, the schemes set up for this purpose. Te complexity of the plans, and the lack of transparency in reporting the use of money provided by the Governments or regulated contributions collected from ratepayers, makes public debate and democratic control difcult or impossible.

Some part of the plan deserves public scrutiny as the current government plans may appear unrealistic, thus creating problems and defcits for future Governments. It is for example hard to believe that a 40 billion euros capital gain will be secured by TEPCO in the competitive electricity markets that exists in most countries and that is now also said to be developed in Japan. Similarly, it is hard to believe that

signifcant profts can be made by cost reducing management eforts if the markets are really competitive. Tese plans seem to rely on assumptions about electric power companies being able to in some way tax consumers rather that supplying in a competitive market.

Tus one may see these plans as only postponing the understanding of what the government is going to have to provide through increasing taxes on the Japanese people in an already weak government budget situation.

#### **4 Conclusions**

Seven years afer the nuclear core melts the experience shows a lack of readiness, and absence of any plan for how to manage the economic consequences of an accident of this magnitude.

Still, the improvised solutions, have for the seven years both kept the government's borrowing capacity intact, and allowed TEPCO to avoid going bankrupt.

We dare predict that the 2017 TEPCO Special Business Plan will be impossible to fulfl. Further improvised and complicated solutions may follow. However, it is increasingly unlikely that the current idea of nuclear power companies in diferent ways paying will be compatible with the global development of low cost renewable electricity generation technology and competitive electricity markets. Instead the development appears likely to make it impossible to generate profts by nuclear or other large scale thermal power plants. Even without the Fukushima related liabilities, Japan's electric power companies would have economic challenges.

A less complex solution, worth investigating further, would be that the government directly takes over all the nuclear liabilities from the power companies and have the power companies paying by transferring the transmission network to a government controlled national transmission system operator. Tat solution would support, rather than confict with, the ongoing electricity market reform, and transition to low cost electricity. It would, in one move, unbundle transmission from generation and create the conditions necessary for an efcient electricity market reducing costs for Japan's future electricity supply.

Te experience is also relevant when considering restarting reactors, re-introducing the risks of further reactor accidents in Japan. Had Japan seen winds bringing more contamination over land – or even worse, in the direction of Tokyo – the fnancial consequences may not have been manageable by the government or the Japanese society by itself.

Tis observation leads to the need to fnd market based solutions that will distribute costs globally. Here the idea of a compulsory insurance via catastrophe bonds appears as an option deserving further consideration [Radetzki & Radetzki 2000, Kåberger 2018].

Te experience of Japan may prove valuable for consideration also in other nuclear countries. Tough many of these are operating under diferent legislation and international conventions regarding liability for reactor accidents, the real magnitude of the economic consequences are ofen not understood by people within the democratic decision making processes in Europe or North America.

#### **References**


Tokyo Electric Power Company (TEPCO), 2011–2017. http://www.tepco.co.jp/en/index-e.html



**Open Access** This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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**Alternatives**

## **On New Thinking and Designs of Electricity Markets Heading towards Democratic and**

**Sustainable Electricity Systems**

Reinhard Haas, and Hans Auer1

#### **Abstract**

In recent years increasing shares of variable renewable energy sources (RES) have changed the structure of electricity markets in several countries. Te core objective of this paper is to provide insights into the conditions necessary to bring about a more democratic and sustainable electricity system by integrating even larger quantities of variable RES. Our major fnding is that a market-based approach would ensure that competitive forces rather than governmental interferences – such as capacity mechanisms – shape the future of the electricity markets. Tis transition towards a competitive and sustainable future electricity system will be based on an approach of "new thinking" which requires a paradigm shif in the whole electricity system. Tis includes switching to a more fexible and smarter concept allowing a greater scope for demand participation, storage options and other fexibility measures.

<sup>1</sup> Reinhard Haas, Technische Universität Wien, Austria, haas@eeg.tuwien.ac.at; Hans Auer, Technische Universität Wien, Austria, auer@eeg.tuwien.ac.at

#### **1 Introduction**

For a long time the electricity system has been determined by the generators. Until the mid-1990s, and in many countries even longer, large generation companies, which were of en highly vertically integrated, dominated the electricity system. T is was supported by the assumption of existing economies-of-scale. Huge power plants, mainly nuclear and hard coal, were constructed along the lines "the bigger, the cheaper". T is strategy was accompanied by high growth rates in electricity consumption.

Over the course of time these patterns have changed. At f rst, growth rates fell from 10% per year in the 1960s to about 5% in the 1980s and 90s and to almost zero (in some OECD countries) in recent years. T at is to say, today, there is less cake to be shared between generators, especially, given the preference for renewable generation.

T e f rst signs of criticism of such a generation-focused paradigm emerged already in the 1970s. Lovins (1978) was one of the f rst to predict three major developments: (i) that future electricity consumption rates would decrease; (ii) that decentralized generation mainly from PV systems would increase, and (iii) that the importance of demand-side issues would grow. In addition to this, with the liberalization of electricity markets the picture began to change. T e core objective of liberalization was the introduction of competition in generation in order to harvest the full benef ts of electricity supply for both citizens and industry. Due to huge excess capacities af er the f rst phase of liberalisation, the principle of "prices equal short-term marginal costs" in spot markets emerged.

**Fig. 1** "Old" thinking in electricity markets

It is important to note that in this frst phase of liberalized markets the old "one-waythinking" still prevailed,. which was characterized by the fact that the generators were at the core of the system and of the thinking of the policy makers, see Fig. 1.

In recent years, mainly due to the increase of variable renewables the capacity (factors) of the conventional plants has decreased leading to losses in revenues for their owners. Tis has resulted in growing concerns that most of these plants will be shut down thereby leading to decreases in supply reliability. Consequently, energy-only markets\* have been questioned and calls for capacity payments have been launched.

Te core intention of this paper is to serve as a primer for introducing truly competitive, democratic and sustainable electricity systems in every country worldwide. It is motivated by the current discussion on how to integrate large shares of variable RES but the basic intention goes beyond that. Te aim is to show how to attain real competition in electricity markets, including all dimensions such as generation and storage as well as demand-side options.

In addition, the European Commission has set ambitious targets for increasing the share of electricity from renewable energy sources (RES), e.g. EC (2009). Indeed, in the EU-28, in recent years electricity generation from variable sources such as wind and solar has increased dramatically, with Germany, Spain, Italy leading. In the EU-28, between 1997 and 2016 "new" renewables (excluding hydro) mainly from wind grew from less than 1% to about 16%. For 2030, the EU has set further goals of a share of 27% (compared to about 14% in 2016) energy from RES. Tis target is for all uses – heating, electricity and transport. Consequently, also electricity generation from RES will grow, as documented in the National Renewable Energy Action Plans (NREAPs), however, it is not clear to which absolute level. Another major motivation for this paper is to show what is needed in order to integrate these higher quantities into the electricity system.

Tese increasing shares of variable RES have especially in Germany changed the usual pattern of electricity markets in Western Europe. Yet, variable RES-E do not provide electricity simultanously with demand. It is important to note, that almost all other generation technologies do not either. Te fact that these must run capacities are ofered at Zero costs over a large time per year have led to the argumentation that fossil plants like Combined-cycled gas turbines (CCGT) or coal power stations become economically less attractive because of the lower fullload hours per year. Tis argument has led to the call for capacity mechanisms (CM) in addition to the current "energy-only" markets. Te idea is that specifc owners of a fexible power plant should be paid for holding the plant ready for operation.

Due to these developments, currently, the whole electricity system is at a crucial crossing. On the one hand, the way to a sustainable electricity system based mainly

on RES could be paved in the next years. In this context we emphasize especially the considerable price decreases of PV which has brought this technology close to cost-efectiveness on household level, see Haas et al (2013). On the other hand, there are forces which try to retain the old centralized fossil and nuclear-based generation planned economies. Capacity mechanisms (e.g. in France and England) should help to freeze this anachronistic pattern.

Te core objectives of this paper are: (i) to explain how a truly competitive market-based electricity system can be brought about in the future without continous governmental interferences; (ii) to explain why capacity payments do not contribute to such a system but rather preserve the present system and (iii) to show that generators will no longer be the heart of the system but rather balancing groups and the suppliers.

A specifc intention of this paper is to bring together all important aspects for heading towards a sustainable as well as competitive future electricity system. It considers technical options and aspects of market design and applies it to a further increase of RES in the electricity system. Moreover, it links the concept of residual load to price signals from the wholesale markets, the relevance of fexibility measures on the demand-side as well as demand response due to these price signals.

#### **2 How prices in electricity spot markets come about**

To analyze the impact of variable RES on the prices in wholesale electricity markets it is frst important to understand the current market rules and market structures, see Auer/Haas (2016). Of key relevance is to understand how prices in European electricity markets currently come about. In this context it is important to look at the historical dynamics. Te liberalization process in Europe started in the late 1980s in the UK and gradually migrated to continental Europe with the implementation of the EU-directive on Common Rules for the Internal Electricity Market (EC, 1997). One of the major features of the liberalized electricity markets was that the pricing regimes changed. In former regulated markets, prices were established by setting a regulated tarif, which was calculated by dividing the total costs of electricity provided by the number of kWhs sold – with some diferences between diferent groups of customers. Te major change that took place afer liberalization was that prices on the wholesale electricity markets were now expected to refect the marginal costs of electricity generation. Since then the price formation is mainly based on a fundamental approach where the intersection of a merit order curve on the supply-side and the demand curves results in the corresponding market price at every point-of-time, see Haas et al (2013b) and Fig. 2.

**Fig. 2** Merit order supply curve with and without additional PV capacities at on-peak time of a bright summer day with short term marginal costs for conventional capacities

T e typical historical pattern of electricity generation in the Western Central European electricity market consisted since decades of conventional fossil, nuclear and hydro capacities. Since the late 1990s in western central Europe, most of the time nuclear contributed the largest share, followed by fossil and hydro. Non-hydro renewables were not a signif cant factor until recently. However, since 2013 renewable electricity contributes the largest quantity in the EU-28. At the time when liberalization started huge already depreciated excess capacities existed in Europe. T is led to the expectation that prices will (always) ref ect the short-term marginal costs (STMC) as illustrated in Fig. 2.

**Fig. 3** Development of spot market (day-ahead) electricity prices in several European wholesale markets (1999-2017, 2017 preliminary)

#### **3 The impact of variable RES on prices in electricity spot markets**

Between 2011 and 2016 remarkable decreases in day-ahead prices at the Western European power exchanges were observed see Fig. 3. T e major reason for this decline in day-ahead prices was the increase of variable RES with zero short-term marginal costs.

It is the remarkable rise T is increase of renewables has started to impact spot prices, trading patterns and the dispatch of conventional generation by about 2011. T e explanation is simple. Assume e.g. a sunny day with ample solar generation. T en the supply curve is shif ed to the right as schematically shown in Fig 2, which essentially pushes nuclear and fossil fueled generation "out of the market", Haas et al 2013b.

T is impact of variable RES on electricity prices is already known since volatile hydro power was used for electricity generation. T e best example is the Nordic market, mainly Norway and Sweden, where since decades almost only technologies with Zero short-term marginal costs meet the whole supply. Since about 2007–2010 – in Denmark already earlier – there was experience with temporarily high wind in the systems, see e.g. Nicolosi (2010). In recent years increasing generation from photovoltaic systems was added to the production portfolios, mainly in Germany, Italy and Spain, and has contributed to temporarily very low – sometimes even negative – prices.

#### **4 The end of the myth of base load**

Te core question is, what the impact of the aggregate of various variable RES on the wholesale electricity markets is. Aside from the above-described efects, variable RES will also infuence the costs at which fossil generation – especially natural gas – is ofered. Te reason is that they would lead to much lower fullloadhours, e.g. only 1000 instead of 6000 h/yr before. Yet, the revenues earned from these hours must cover both the fxed and variable costs, see also Haas et al (2013a). Hence, in a market with large shares of renewable energy sources the role of conventional capacities will change see e.g. Nielsen et al (2011).

Tis leads to the following categories of presumed "problems": (i) Prices decrease to Zero or become even negative at a number of days; (ii) a lack in contribution margin to fxed costs for conventional fexible power plants. However, it is not yet clear, on how many days very high and on how many days very low (or negative) prices will prevail and how high or how low these prices will be.

Of further relevance in this context is how the price spread in European markets will evolve in the future as larger amounts of PV, solar thermal and wind generation are added to the network. Te consequence for electricity prices are shown in Fig. 4 where a hypothetical scenario with high levels of generation from wind, PV and run-of-river hydro plants over a week in summer are depicted using synthetic hourly data for an average year in Austria. Te fgure leads to signifcant volatilities in electricity market prices with total costs charged for conventional capacities – black solid line –within very short-term time intervals.

**Fig. 4** Development of variable RES from wind, PV and run-of-river hydro plants over a week in summer on an hourly base in comparison to demand and resulting electricity market prices with total costs charged for conventional capacities (Source: own analysis, adapted from Auer/Haas 2016)

Our method of approach is based on the following principles: (i) Most relevant is the coverage of residual load which is the dif erence between f nal electricity demand and generation provided by non-f exible electricity generation from variable RES as well as coal and nuclear power plants, see Fig. 5; this is modeled on an hourly base over a calendar year based on historical RES electricity generation; (ii) Deduction of available conventional and backup capacities including must-run; (iii) f exibility on the demand side based on consumer behavior incl. f exibility instrument such as storage etc.; (iv) hourly electricity prices equal to short-term marginal costs and scarcity as well as excess pricing.

**Fig. 5** New thinking: T e concept of residual load referring to Fig. 4

For the residual load shown in Fig. 5 a price pattern as described in Fig. 4 may emerge. Hence, in the long run the impact of variable RES on the price spread is that it will increase. T e intuitive explanation is that when renewables are plentiful, say during windy or sunny periods, the prices will be extremely low, approaching zero or possibly going negative, while at other times – when demand is high and renewables are scarce – prices can be much higher due to strategic bidding by fossil generators exercising market power.

While Fig. 5 shows the concept of residual load over a week, Fig, 6 shows the corresponding graph over a year classif ed by magnitude in decreasing order. In Fig. 6 the classif ed residual load curve over a year in the case of high shares of variable renewables is described including the relevant areas for the discussion. T e crucial areas in this load duration curve are on the top lef and on the bottom right. In the circle on the top lef the question is how to cover under shortage on these hours, in the circle on the bottom right the question is how to use this excess generation of electricity.

For both areas there are in principle two options:

• By regulated capacity payments ?

or

• By competition between supply-side and demand-side technologies and behaviour (incl. Storages, grid and other f exibility options)?

Important remarks: Flexibility measures will contribute in a competitive way to reduce these price spikes and consequently the price spreads and lead to new equilibria between supply and demand!

As an example in Fig. 6 the prof le of residual load in Austria 2013 and the development in a scenario up to 2030 with a much higher share of variable renewables is described. T e major f nding of Fig. 6 is that the duration curve of the residual load prof le will become steeper and that the number of hours with excess generation will become higher. T is ef ect will lead straightforward to higher price spreads and will also increase the attractiveness of storage, f exible peaking units and other f exibility options.

**Fig. 6** Development of residual load in Austria 2013 and in a scenario up to 2030 with high share of variable RES

#### **5 The core problems of regulated capacity payments**

If the price pattern described above in Fig. 4 is not accepted by politicians another option are capacity payments. Te fact that the renewable must run capacities are ofered at Zero costs over a large time per year have led to the argumentation that fossile plants like CCGT or coal power stations become economically less attractive because of the lower fullload hours per year. Tis argument has led to the call for "capacity" payments in addition to the current "energy-only" markets. Te idea is that specifc owners of a fexible power plant should be paid for holding the plant ready for operation.

Te major reason, why at least currently there is no need for centralized CP in Europe that there are still many other options in the market, which we think are by far not yet exhausted. However, to exhaust these options some dogmas has to be changed. Especially the historically prevailing and still existing defnition of supply security – that every demand has to be met at every point-of-time regardless of what are the costs – has to be revised in a way that compares the costs of (all) supply-side and demand –side options as well as customers WTP for capacity depending on time.

Te major open questions regarding centralized capacity payments are, see Haas (2014):


Tere are three core problems regarding CP:


#### **6 A market design approach for supply security**

One major argument for the call for centralized CM is to retain supply security in the electricity system. Te historical (anachronistic) defnition of supply security is: At every point-of-time every demand has to be met regardless of the costs. In this context it is important to note that supply security is an energy economic term. It is diferent from technical system reliability.

Te core problem is that so far world-wide the demand-side has been neglected widely with respect to contributing to an equilibrium of demand and supply in electricity markets. Major exceptions are: (i) in the 1980s and 1990s in the U.S., Sweden, Denmark and other advanced countries DSM-measures have attracted attention. Afer the liberalization of the electricity markets most of these programmes disappeared. (ii) In Denmark – the leading country for integrating variable renewables especially wind – has integrated a lot of power-to-heat technologies, that now play an important role in energy markets.

Te major reason for this ignorance of the demand-side is that in times of regulated monopolies every demand could be met due to signifcant excess capacities. And still in the liberalized markets huge excess capacities remained. Tis aspect – to develop the impact of demand-side and customers WTP – is essentialy for a real electricity market and it is actually regardless of the aspect of an integration of larger shares of RES.

Such a market-based approach would take into account customers willingness-to-pay (WTP). Te equilibrium between demand and supply would come about at lower capacities. It is also important to note that at points-of-time where WTP is lowest, e.g. in the evening, the marginal costs (MC) of providing capacity could be highest, see also Auer/Haas (2016).

#### **7 Flexibility: The key term of the future**

Our major fndings for integrating large quantities of variable RES-E into the electricity system by using market-based principles and how, straightforward, a sustainable electricity system could work, are that the following conditions have to be fulflled, see also EC (2015):

• Of core relevance for integrating larger shares of RES-E in a competitive way is a pricing system in revised energy-only markets where the prices signal provide information on scarcity or excess capacities at every point-of-time (at least at quarters of an hour);

• Another important issue is that the demand-side market is developed, see above. So far consumers have never been asked what the value of capacity is for them and what they are willing to pay for specif c quantities of capacity. An important analysis in this context has been conducted by Praktiknjo (2013). He clearly identif es two f ndings: (i) there is a quite dif erent WTP between dif erent groups of customers; (ii) it is very unlikely that generating electricity is always cheaper than saving capacity.

**Fig. 7** Dimensions of electricity markets


	- Technical demand-side management measures conducted by utilities like cycling, load management, e.g. of cooling systems;
	- Demand response due to price signals mainly from large customers to price changes, time-of-use pricing;
	- Transmission grid extention leads in principle to fatter load and fatter generation profles;

#### **8 New vs old thinking: Further development of the wholesale electricity market design**

Regardless of the issue of increasing quantities of variable RES in the electricity system there are some measures to be introduced which would improve the wholesale market structure and competitiveness basically. In addition to a revised EOM these are:


Finally we state that the transition towards a competitive and sustainable future electricity system will be based on the following principle of "new thinking", which is to accept a paradigm shif of the whole electricity system – including switching from an infexible and one-way system where variable load is met with changes in generation to a more fexible and smarter system allowing two-way electricity fows – to our understanding – a greater scope for demand participation by consumers needs to be included. In addition, suppliers (or balancing groups) are the most important part of the whole energy service providing chain, see also Fig. 8.

**Fig. 8** New thinking in electricity markets: a supply-oriented bidirectional system with very high f exibility

As indicated in Fig. 8 in future decentralized PV systems along with decentral battery storages may play an important role. T e astonishing changes in the solar industry epitomize the over-all way PV is heading to. (WNISR 2015): "T ere seems to be a general recognition that the fall in production costs of RE technologies, particularly of PV, coupled with the expected falling costs of electricity storage will accelerate the transformation of the power sector."

And the IEA, which has been tradionally skeptical with respect to RES states in the WEO (2017): "PV is on track to become the cheapest source of new electricity in most countries world-wide".

#### **9 Conclusions**

T e major conclusions of this analysis are:

• T e key to a sustainable competitive electricity system is the full exhaustion of f exibility options based on correct price signals in the wholesale as well as in the retail market. Currently on both levels the market does not yet provide proper price signals to trigger f exibility options (e.g. technical demand-side management, economic demand-response due to price signals as well as shortterm and long-term storage options) which would balance the residual load prof le more ef ectively.


In conclusion,

Tis transition towards a competitive and sustainable future electricity system will be based on an approach of "new thinking" which requires a paradigm shif in the whole electricity system where no longer the generators are the centre but the balancing groups respectively the supply companies. Tis includes switching to a more fexible and smarter concept allowing a greater scope for demand participation, storage options and other fexibility measures.

Finally we state is that the evolution of such a creative system integrating variable RES in Western Europe may also serve as a model for RES-based electricity supply systems world-wide.

#### **References**


EU: EU Energy in Figures, Brussels 2012.

European Parliament and Council: Directive of the European Parliament and of the Council on the promotion of electricity produced from renewable energy sources in the internal electricity market, Directive 2001/77/EC – 27 September 2001, Brussels, 2001.


**Open Access** This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

The images or other third party material in this chapter are included in the chapter's Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter's Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.