Opinion Columns

UK Nuclear Subsidies: in between safety flaws and legal challenges

29 April 2015

By Paul Dorfman

The UK new nuclear deal
The UK government has guaranteed EDF, the French nuclear corporation, an index-linked price of £92.50 – twice the current market price of electricity – for each megawatt-hour over a 35-year locked-in contract period. These subsidies will be funded through levies on all UK consumer energy bills. The UK Treasury has also offered a credit guarantee to underwrite up to £10bn of debt on the construction project.

The EC Competition Directorate-General’s initial view
Early last year, the European Commission’s Directorate-General for competition said that the deal provides utmost certainty of a stable revenue stream under lenient conditions by eliminating market risks from the commercial activity of nuclear electricity generation for the very long 35-year contract length. They went on to say that the deal seemed incompatible with EU State aid rules, and the proposed Investment Contract would provide EDF with a clear selective advantage.

The EC Competitions Directorate-General’s final decision on the deal
Late last year, the Commission concluded that the ‘modified’ UK measures for Hinkley Point nuclear power plant are compatible with EU rules. This seems interesting – as there have been no real ‘modifications’ in the UK position.

So what happened?
Well, maybe the Commission doesn’t want to be seen to be determining UK energy policy. Perhaps the Commission made the decision because of Eurosceptic undercurrents in the UK Coalition government – knowing that their decision has substantial flaws, especially in terms of energy market distortion? In other words, it could be that the Commission made this decision, knowing that it was open to legal challenge.

Why is it so important?
The EC decision sets an important precedent and could have significant consequences across Europe. It directly informs the future direction of EU energy policy. Annually, billions of euros rest on the result of this policy appraisal and it sends important signals internationally. Europe can overestimate its role in setting global norms – but many countries still look to Europe as a laboratory for low-carbon transition. This is because EU structural energy reform informs the kind of robust international energy regimes needed to combat ramping climate change.

The Austrian Legal Challenge
In response, Austria, quite properly and transparently, signalled and declared a clear intention to challenge the Commission’s decision to allow UK subsidies for new nuclear through the Court of Justice of the European Union.
Without knowing the details of the Austrian case, it seems likely that the key reason for this challenge is that the UK nuclear deal distorts both UK and pan-EU electricity markets – because vendors require large-scale pre-emption of the wholesale market in order to accept the commercial risks of construction.
UK targeted state aid to new nuclear construction through the Investment Contract and Loan Guarantees seem specifically designed to develop nuclear at the expense of other low carbon investments. This level of financial support and length of contract are not available to other low-carbon technologies. Because of this, there will be substantial repercussions on pan-EU trade and competition and state aid regimes. And given the risk profile of this project, the fees for the Loan Guarantees being offered to EDF by the UK government are well below the commercial rates – given the scale of risk in the light of current experience of constructing the French EPR Areva reactor planned for the UK.
So there seems to be a clear market competition failure here, and UK plans to provide operating State aid through price support mechanism to guarantee profitability seem incompatible with EU State aid rules.

The UK threatens Austria
It may not be cricket – but early this year, a leaked memo from Vijay Rangarajan, a Senior UK Foreign Office official, stated that the UK will take “every opportunity to sue or damage Austria if Vienna does not drop a legal challenge… The U.K. will take every future opportunity to sue Austria in areas that harm or that have strong domestic political implications”. However, the Austrian Environment Minister Andrae Rupprechter said that
“We won’t let ourselves be intimidated… No subsidies for atomic power”.

The UK refuses public access to information on key reports
Now, Nuclear Transparency Watch is a European network that promotes a citizen watch on nuclear safety and transparency. Here, its important to know that the UK government has refused public access to information on key reports about the economic case for new nuclear subsidies, including studies by energy consultants: a study by KPMG on potential distortions to competition; a study by Oxera on market failures, proportionality and potential distortions of competition; a study by Pöyry on potential distortions to the internal market and alternatives to new nuclear; a report by Redpoint on the evolution of the UK electricity sector; and details of the Cost Discovery and Verification process, compiled by KPMG and LeighFisher.
Without question, all these documents will be subject to access to information requests to the Commission as the court case unfolds.

Areva and safety flaws in their EPR reactor pressure vessels
Unfortunately, Areva, the French nuclear corporation hoping to build their EPR in the UK, has just issued its fifth profit warning in seven months, saying it expected to report a 4.8 billion euros loss for 2014 as cost overruns ballooned on key European nuclear build projects. Areva has cut its wage bill 15% as prospects worsen – weighed down by heavy debt and suffering from an industry slowdown, a lack of orders, and legal troubles over huge costs over-runs and delays at the EPR nuclear builds in Finland, France and China. Their shareholders equity is ‘close to zero’.
Added to this, it has recently been revealed that there are significant flaws in the bottom and top of the reactor pressure vessels already installed at Flamanville in France and Taishan 1 and 2 in China. These flaws are serious and inevitably mean more significant delays, cost over-runs, or worse.
The flaws also put into question Areva’s quality assurance protocols and further damage the reputation of their reactor, the EPR – since, if there’s one place you really don’t want any faults, it’s the reactor pressure vessel. For there to be serious flaws in these components means that an unthinkable error has occurred in construction – and puts at risk the basic safety case for this reactor.

So What?
Well, between a lengthy EU court case and trying to negotiate around the important safety flaws found in the reactor planned for the England, things don’t look good for new nuclear projects anytime soon in UK. And given a significant aspect of the UK’s energy policy and carbon budget is built around subsidising new nuclear, this could even mean a sea change in energy policy – which, all things considered, is no bad thing.

Dr Paul Dorfman of the Energy Institute at University College London, is member of Nuclear Transparency Watch. He founded the Nuclear Consulting Group and is Nuclear Policy Research Fellow. He is Executive Board member of the International Nuclear Risk Assessment Group (INRAG), member of the European Network of Scientists for Social and Environmental Responsibility (ENSSER) and Advisory Group Member of the UK Ministry of Defence (MoD) nuclear Submarine Dismantling Project (SDP). He served as Secretary to the UK government scientific advisory Committee Examining Radiation Risks from Internal Emitters (CERRIE) and led the European Environment Agency (EEA) response to Fukushima in ‘Late Lessons from Early Warnings’ Vol 2.

Opinion: Spent fuel transported from Hungary to Russia

5 September 2014

Hungary transports spent fuel from accident to Russia – through Ukraine

by Jan Haverkamp

Last August, Hungary transported spent nuclear fuel by train to the nuclear reprocessing complex at Mayak in the Southern Urals, Russia. The transport went through Ukraine. It was agreed between the governments of Hungary, Russia and Ukraine, overseen by their nuclear regulatory authorities and tacitly or openly approved by the IAEA and European Commission (under Euratom). [1]

I for one am shocked. Shocked because Hungary is dumping radioactive waste outside of its country. But even more shocked because of the irresponsible risk taken with this transport through a war-torn country and because of the fact that the interested public has been led by the nose.

First some background. The spent nuclear fuel originates from an INES 3 accident in 2003 in the fuel pool of the Paks 2 nuclear reactor in Hungary. Workers of Framatom had tried to clean the fuel elements with too cold water, they broke and the following clean-up operation was only finished in 2011. The broken fuel was packed in special containers and then stored in the pool awaiting further management. The logical option would be to let the spent fuel cool and then store it in existing dry storage for spent fuel on-site until some final disposal solution is found. Leaving the material at Paks, however, could impact the basis for life-time extension of the Paks 2 unit from 30 to 40 years. This life-time extension is to be approved by the Hungarian nuclear regulator HAEA in Autumn of this year.

In order to get this spent fuel out of the way, Hungary has set up an agreement with Russia and the Russian Rosatom fuel daughter TVEL to move it to Mayak in Russia. The basic agreement was signed two days before EU accession of Hungary in 2004, because the Hungarian government feared that it might be difficult for an EU / Euratom member state to dump its radioactive waste in another country. The factual contract was much more recently signed – as far as my information goes well after the new Euratom Radioactive Waste Directive 2011/70/Euratom became valid. This directive forbids in art. 4.4.c that radioactive waste is shipped to a third state that cannot prove it has an operational disposal facility. Shipping spent fuel to a third country for reprocessing is possible, but then the resulting waste has to be returned or has to fall also under the conditions of art. 4.4.c – needing a functioning disposal facility. Russia has no such facility – nobody has. Nuclear Transparency Watch and several MEPs and Hungarian MPs are still waiting on a satisfactory answer on whether the fuel and its resulting waste are to stay in Russia or will remain in ownership of Paks and will be returned at some time to Hungary – and if, when. If they will not be returned, it is an illegal transport. If they will be returned, it would be good to know when and what will happen with the resulting vitrified high-level waste, as Hungary has no functioning disposal programme for that either.

Now my concerns. Because of the complex legal situation of this transport and because of the hard stance of Energy Commissioner Oettinger against export of nuclear waste [2], Nuclear Transparency Watch was in contact with the European Commission for over a year. The European Commission had promised NTW to actively keep it updated about the situation and in July still confirmed that no decisions were taken. Since then, NTW did not receive any information from the Commission. Hungarian MEPs, MPs and citizens were in August confronted with a complete fait accompli when the media informed them that the transport had taken place. So far for transparency, so far for the rule of law.

Then the transport itself. Spent nuclear fuel and nuclear waste transports are highly risky. For that reason they happen as much as possible in secret and under high levels of security. The transport in Hungary rolled through the centre of towns like Kesckemet and Debrecen before it left the country in Zahony to Chop in Ukraine. It passed numerous unprotected rail crossings, LPG tanks along the tracks and the high bridges at Baja and Szolnok. Then it went into Ukraine and the rest of the route is unknown. There are several possibilities – the most direct ones leading through separatist-held Donetsk, but it could also have been transported along a more Northern route. In August, Ukraine was facing a full-out civil war. The passenger flight MH17 was shot down on 17 July. The fronts were unclear and there was always the possibility of unexpected attacks outside the war zone. We know that in August, the pro-Russian separatist forces had the availability of BUK missiles and heavy artillery as well as smaller but hardly less destructive mobile weaponry. The chance on a malevolent attack on the nuclear transport was many factors higher than in peace time. Still it went ahead. The question is, of course, who would attack a nuclear rail transport? But the question is also who would shoot a passenger airliner with over 300 passenger out of the air. From nuclear safety perspective, this transport should never have passed a country in a civil war situation.

Place where the transport left Hungary for Ukraine.

The urgency for the transport was driven by the wish to approve Paks 2’s periodic safety reviewand 10 further years of operation, that is, by the opportunity to create income for its operator, the giant 100% state utility MVM. There was no overriding safety argument to have this spent fuel removed from Paks now. Even if the legality of this transport could be argued, about which I am still in sincere doubt, MVM could have waited easily until Ukraine would be a peaceful country again. This is a clear violation of the principle that nuclear safety should have priority over everything else.

Operator MVM, nuclear regulator HAEA, the Hungarian government, the European Commission and the IAEA, all elements of a system that is supposed to prevent these kind of risks, should have stopped the transport. The system we rely upon for nuclear safety has fundamentally failed in all its links.

Nothing happened during the transport. We have been lucky once again. But without a credible safety system in place, a next time it might well go wrong.

Ir. Jan Haverkamp (1959) is board member of Nuclear Transparency Watch and expert consultant on nuclear energy and energy strategy for Greenpeace Central and Eastern Europe and the World Information Service on Energy (WISE). He investigated the nuclear transport route from Paks to Ukraine on potential risks in 2004 and was involved in Nuclear Transparency Watch’s attempts to get clarity about this transport for Hungarian and European citizens and NGOs in 2013 and 2014.

[1] http://www.world-nuclear-news.org/ENF-Damaged-Paks-fuel-sent-to-Russia-2008145.html

[2] http://euobserver.com/news/29644

Nuclear Transparency in Sweden – Johan Swahn, Director of MKG

21 May 2014

Opinion column of Johan Swahn, Director of The Swedish NGO Office for Nuclear Waste Review, MKG and member of the Management Board of NTW :

“Nuclear Transparency in Sweden

There is a saying – or perhaps one should consider it a joke –about how Swedes used to behave at meetings in Brussels when we had just joined the EU. Apparently there would always come a time when the Swede in the group would stand up and says ”This is how we do it in Sweden…”. Implying that this is the best and only way to do it – and that everyone should follow.

I think, or hope, that Swedes in Brussels nowadays have learned to be a bit more humble. And are perceived as being so. There are of course good practices in Sweden that the rest of Europe could learn from. But all countries have their own good ways of doing things. Sweden is certainly learning from Europe. I am sure my home city of Göteborg – so far from the centre of Europe – would not feel as continental as it now does, if Sweden had not joined the EU.

That being said I think there is one thing that is especially worth mentioning as “This is how we do it in Sweden…”. Something that is very relevant to nuclear transparency. Working for an environment NGO with nuclear waste issues as I do would be very much more difficult without the access to information that is part of the governmental Swedish bureaucratic system.

The Swedish “Principle of access to official information” – offentlighetsprincipen – comes from as far back as 1766 and is part of the Swedish constitution. Many countries have what is often called “freedom of information”, but in Sweden almost everything that is part of an issue being expedited by a state authority is free for anyone to ask for.

This means that not only official reports are available. Also any memoranda, minutes from meetings or correspondence by letter or e-mail are in the public domain. A civil servant is even required to register notes taken while having a telephone conversation with the registry if there could be a public interest in them.

The registry? Well, all Swedish governmental authorities have a special department – the Diarium – to make sure that everything that is supposed to be openly available is so. And that documents can be found when searched for. Thus every issue handled by an authority is given a “diarie number” and under that number documents, correspondence, etc. are filed. Nowadays most often electronically.

For someone like me working with nuclear issues it is quite fantastic that the authority that perhaps has the most open culture in Sweden is the Swedish Radiation Safety Authority, SSM. The Swedish nuclear regulator is one of the few Swedish authorities that have an E-diarium. This means that all the documents, correspondence, etc. are searchable on the SSM web site.

Even though it is all in Swedish I would invite anyone interested in nuclear transparency to go to the Swedish part of the SSM web site http://www.stralsakerhetsmyndigheten.se and press the link “E-diarium”. Then put for example the acronym of the Swedish nuclear waste company SKB in one of the search positions and see what happens. See something you would like to have as a PDF? Just e-mail the registrar and you will most likely have the document within a day.

So all correspondence between the Swedish nuclear regulator and the Swedish nuclear industry is openly available. Some things are regarded as restricted for commercial reasons and sometimes safeguard issues mean that SSM will not give access to a document or parts of it. But the regulator is not keen on keeping things secret. And if you think that SSM is trying to hide something you can appeal the decision to the court system.

So is this a success story of “This is how we do it in Sweden…”? Well, to a certain extent. Maybe even a large extent. But for someone like me working with nuclear waste issues there is one big problem. The Swedish division of responsibilities with regard to management of nuclear waste means that the nuclear industry, with its nuclear waste company SKB, is responsible for all research and development on nuclear waste.

And the Swedish access to information does not apply to private companies. No matter how much the work of the nuclear waste company SKB would be in the public interest to know more about. So, I can follow all the interchange between SKB and SSM through the SSM diarium. And all the details of research projects SSM carries out I can get as they come out. Even interim reports.

But if I want to information about research SKB is carrying out it is up to the company to give me what they think I should have. Which is usually not much. Which can be a problem.

But that is another transparency story.”

Johan Swahn

Opinion Columns

Opinion column of Johan Swahn, Director of The Swedish NGO Office for Nuclear Waste Review, MKG and member of the Management Board of NTW :

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