All global powers bet on nuclear energy. Will the European Union jump on the train?
Historically, the United States, Europe and Japan have been leaders in nuclear power generation technology, but their leading position and the commercial competitiveness of their industries have deteriorated over the past two decades.
The Fukushima accident in 2011 put an abrupt halt on the “nuclear renaissance” that was starting to emerge in the first decade of the 21st century, with an increasing number of countries worldwide advancing plans to embark on or pursue the development of nuclear power. Amalgamating the disaster of the tsunami with the Fukushima accident, media largely exaggerated the consequences of the accident , resulting in growing public opposition to nuclear power and pushing many governments to put a ban on nuclear power. At the same moment, wind turbines and photovoltaic technologies were reaching maturity and the growing scale of their deployment resulted in a continuous decrease in their costs. The two trends combined and created an illusion that an energy transition from fossil fuels to renewables – the energy of tomorrow - was not only possible but relatively easy to achieve, getting rid at the same time of what was termed as the energy of yesterday – nuclear.
Nuclear development plans were slowed down, delayed or abandoned, in places like the EU, with its 103 operating reactors, nuclear energy was put under unprecedented scrutiny and continued to be tolerated simply because many countries could not do without it, but it was excluded from all policy support, becoming increasingly politically sensitive with totally divergent positions of different member states. In Japan, all nuclear power plants were shut down for many years, resulting in massive fossil fuels imports and increased CO2 emissions. In the US, the post-Fukushima attitude to nuclear power was not very different, further exacerbated by the very low gas prices (the shale gas boom occurring more or less at the same time) which pushed nuclear power out of the market in states with deregulated electricity markets.
Despite all this, the Fukushima accident, just like the Three Miles Island and the Chernobyl accidents in the past, contributed to further improvements in the safety of nuclear power plants worldwide. The industry learns from its mistakes, similarly as the aviation industry as a whole progresses after each airline catastrophe. The track record of nuclear power remains excellent, it continues to accumulate reactor-years of safe operation, reaching 19,000 reactor-years in 2021, with only 3 major accidents on its record (taking into consideration that the Chernobyl accident occurred on a reactor design non-existent outside the ex-Soviet Union and was largely due to incompetent bureaucratic management, and that the other two had no radiological consequences on the population). No other industry and no other electricity generation technology can boast such a track record in terms of safety. Using the terminology of Nassim Taleb, the nuclear industry is “antifragile”, just like the aviation industry: accidents are extremely rare, often catastrophic, and each of them serves as a learning lesson to the whole industry, which steadily improves.
Unfortunately, media, people and governments are more sensitive to emotional arguments rather than rational facts.
Only China and Russia continued without perturbation their efforts to develop nuclear power, combining the deployment of current generation reactors with the development of innovative and advanced designs as well as SMRs.
It took a lot of additional evidence, sustained efforts of many reputed international and national organizations and the looming climate threat to bring nuclear power back to the public debate. The process was accelerated in recent years by the growing tensions in fossil fuels markets and the failures of “100% renewable” policies and scenarios, exemplified by the German Energiewende.
Today, the facts have been clearly established and demonstrated: nuclear power has an essential role to play – alongside renewables, energy efficiency, energy savings, changes of lifestyle etc. – in the indispensable transition from fossil fuels. This does not mean that there is no more resistance, but it is now limited to the realm of ideology.
Nuclear energy development increasingly playing a dominant role in global geopolitical competition
The shifts in favour of nuclear energy have been quite spectacular in the last few years among all the global powers, with a notable exception of the European Union. Let us briefly review this evolution.
In the United States, nuclear power gradually fell out of favor after its initial development in the 1960s and rapid acceleration after the first oil shock, for a number of reasons: loss of control of costs and construction schedules, technological breakthroughs in coal and gas power technologies bringing significant gains in efficiency and competitiveness. Combined with the lack of new orders in the country and abroad, the domestic supply chain and associated expertise have eroded. The situation was exacerbated by sustained low prices of natural gas and decreasing costs of renewables, making nuclear power uncompetitive in states with merchant electricity markets, but also by the significant schedule and cost overruns of the only two new nuclear projects launched after the year 2000 - the V.C. Summer project (SC) and the Vogtle project (GA). The V.C. Summer project was abandoned.
A structural shift on the demand side occurred as well: while energy demand growth in developed economies slowed down at the turn of the century and stagnated since the 2008 financial crisis, the demand in the developing world grew significantly during this period. However, the aspiring nuclear newcomer countries today are typically smaller economies with weaker financial capacity and less political stability, making it difficult if not impossible to develop capital-intensive nuclear new build projects on market-based principles.
Moreover, the U.S. government remained for a long time in the back seat. Nuclear export is largely a private-sector endeavour in the United States, where private enterprises initiate, advance, and finalize nuclear export deals. The role of government is primarily to mitigate the proliferation risks that a commercial nuclear transaction could raise by finalising government-to-government agreements that set the terms of reference and authorise nuclear cooperation that meets non-proliferation criteria (“the 123 Agreement”).
As a result, by the end of the decade 2010-2020, the United States found itself in a difficult position to re-establish its leadership in the dynamic dominant landscape, especially since many of the former flagships of the U.S. nuclear industry have come under foreign control.
The U.S. government seemed to realize only recently the progressive loss of its dominant position and the role of nuclear power as an important geopolitical arm, while the Russian and Chinese state-owned monopolies were openly and aggressively pursuing their governments’ geostrategic interests.
The increasing awareness of the role nuclear power can play in reducing carbon emissions, the new dynamics in the domain of small modular reactors and R&D efforts to develop advanced safer nuclear technologies (fission and fusion) and their ability to decarbonize other hard-to-abate sectors of the economy, together with the determination of western democracies to play a leading role in the ecological transition has no doubt contributed to a radical shift.
Under the Trump administration the government became more proactive in introducing certain measures to support the domestic nuclear industry. However, the radical change occurred with the Biden administration. The DOE new strategy document “Restoring America’s Competitive Nuclear Energy Advantage”, starting with the statement that “Nuclear power is intrinsically tied to National Security”, is quite blunt and straightforward:
... in assessing the current situation:
America has lost its competitive global position as the world leader in nuclear energy to state-owned enterprises, notably Russia and China, with other competitor nations also aggressively moving to surpass the United States (U.S.).
The Strategy to Restore American Nuclear Energy Leadership is designed to restore America’s competitive nuclear advantages.
… in setting its goals to protect the US and international security interests through expanding nuclear generation, minimizing commercial fleet fiscal vulnerabilities, assuring defence needs for uranium, and levelling the playing field against foreign state-owned enterprises, and in defining the means through which the US government will achieve these goals:
take bold action to revive and strengthen the uranium mining industry, support uranium conversion services, end reliance on foreign uranium enrichment capabilities, and sustain the current fleet, removing strategic vulnerabilities across the nuclear fuel cycle and restoring a world-class workforce to provide benefits to the U.S. and to compete in the international market;
leverage American technological innovation and advanced nuclear Research, Development, and Demonstration (RD&D) investments to accelerate technical advances and regain American nuclear energy leadership;
move into markets currently dominated by Russian and Chinese state-owned enterprises and recover our position as the world leader in exporting best-in-class nuclear energy technology, and with it, strong non-proliferation standards. We will restore American nuclear credibility and demonstrate American commitment to competing in contested markets and repositioning America as the responsible nuclear energy partner of choice.
Multiple initiatives were launched at a stunning pace following this radical strategic move. The Advanced Reactor Demonstration Program (ARDP) will speed the demonstration of advanced reactors through cost-shared partnerships with U.S. industry. The Gateway for Accelerated Innovation in Nuclear (GAIN) will provide the nuclear community with access to the technical, regulatory, and financial support necessary to move innovative nuclear energy technologies toward commercialization while ensuring the continued safe, reliable, and economic operation of the existing nuclear fleet. The funding of these programs, started in fiscal year 2020, were boosted through Biden’s Infrastructure Bill signed into law in November 2021. The bill includes $6 billion for the civil nuclear credit program, $3.2 billion for the ARDP demonstration projects, for risk reduction for future demonstrations and for innovative designs in their early stages.
One of the latest initiatives to support American technology internationally is the proposed bipartisan International Nuclear Energy Act submitted last April by senators Jim Risch (R) and Joe Manchin (D) in the wake of the Russian aggression in Ukraine. The proposed legislation establishes an Executive Office for Nuclear Energy Policy to “promote engagement with allied and partner nations to develop a civil nuclear export strategy and offset China and Russia’s growing influence on international nuclear energy development”.
The International Nuclear Energy Act, if passed into law, would:
Establish an office to coordinate civil nuclear exports strategy; establish financing relationships; promote regulatory harmonization; enhance safeguards and security; promote standardization of licensing framework; and create an export working group.
Create programs to facilitate international nuclear energy cooperation to develop financing relationships, training, education, market analysis, safety, security, safeguards and nuclear governance required for a civil nuclear program.
Establish a Strategic Infrastructure Fund Working Group to determine how to best structure a Fund to finance projects critical to national security.
Create fast-track procedures for deemed civil nuclear exports for countries defined by the Secretary of Energy.
Expand the Export-Import Bank program on Transformational Exports to include civil nuclear facilities and related goods.
Create the U.S. Nuclear Fuels Security Initiative to reduce and eventually eliminate reliance on Chinese and Russian nuclear fuels.
This short overview of the priority given to nuclear power in the US clearly demonstrates that nuclear power is again at the forefront of US strategy aiming at regaining global nuclear power leadership, reinforce American national security and energy independence and reaching the country’s decarbonisation objectives.
The offensive international strategy of Russia over the last two decades in nuclear power is well known and has been mentioned above. The rise of Rosatom was sparked by the consolidation of Russia’s nuclear industry after 15 years of devastation following the disintegration of USSR. In December 2007, State Atomic Energy Corporation Rosatom was created. It melded 360 enterprises, including scientific research, nuclear weapons development, civilian nuclear power, research reactors and the world’s only nuclear icebreaker fleet. Rosatom is both vertically and horizontally integrated, providing reactor technology, plant construction under an EPC contract, fuel, operational capability (including training), maintenance services, decommissioning, spent nuclear fuel reprocessing, and regulatory support. With the support of the government and state-controlled banks, Rosatom can offer generous financing (debt and equity) to both established markets and newcomer countries, including attractive contractual structures like BOOT. The integrated structure allows Rosatom to offer to its foreign clients a single point of contact for contractual engagements. The one-stop-shop approach has a particular appeal to newcomer countries with limited experience to develop and deliver a project as complex as nuclear new build. By providing a single point of entry for negotiation combined with attractive financing, the Rosatom approach is very attractive for countries embarking on nuclear new build projects. And while for a long time the West was looking elsewhere, for Russia nuclear exports always were a tool for projecting influence overseas. In 2021, Rosatom had the largest foreign nuclear new build project portfolio in the world with 35 power units at different stages of implementation in 12 countries and it oversees 16% of the global nuclear fuel market.
The war in Ukraine will no doubt have a negative effect on Rosatom’s conquest of global nuclear markets. Recently, the Hanhikivi-1 nuclear new build project in Finland was cancelled, the project in Hungary will face strong headwinds even though Hungary and Rosatom wish to pursue the project and nuclear energy is currently not subject to EU sanctions.
Projects in emerging countries will likely not be cancelled but the western sanctions and a certain dependence on imported western technologies (turbines, I&C systems, certain specialized equipment etc.) will make their delivery much more difficult.
The determination of China to become a global leader in nuclear power and advanced nuclear technologies is beyond any doubt. The pace of Chinese technological advancement is all but remarkable. Today, China is the country with the highest number of reactors under construction, its fleet will soon overtake in size the fleet of France. If successful, China’s ambition to build 150 new reactors in the next 15 years (10 per year!) will make it the leading nuclear generator in the world by 2030. China is already operating advanced high-temperature reactors, a fast breeder reactor, is working on multiple other advanced designs.
China’s willingness to strengthen its role in the international economy drives the interest in nuclear exports. It is hard to predict the landscape of competition in the global nuclear markets in the future. While the demand will likely grow, with the new aggressive strategy of the US and the headwinds Russia will be facing in the coming years, China will strive to reach full technological independence (100% localization) and continue offering advantageous financing packages to friendly emerging countries. The geopolitical context makes it increasingly difficult for China to export its technologies to the West (difficulties in the UK, rejected alongside Russia from the new build tender in the Czech Republic, excluded from consideration in the Netherlands).
Other nuclear power strongholds
To complete the picture, we cannot omit noting, albeit very briefly, that other historically strong nuclear countries, United Kingdom, Japan and South Korea, have also adopted a clear pro-nuclear attitude in recent months and years, mainly driven by climate concerns, energy security and energy independence concerns, by the willingness to maintain and develop historically strong domestic nuclear industries and by new export opportunities. We should add France to this list with its program to build 6 EPR2 reactors with an option of 8 additional reactors. A belated but essential decision to guarantee the security of electricity supply in France in the long term.
European Union is the only global economic power lacking an ambitious nuclear development strategy
Having made the overview of nuclear strategies of the key powers of the current multipolar world, we would expect that the EU be actively developing its own nuclear ambitions and strategies, based on the understanding of the role of nuclear power in EU’s energy autonomy, its role as the only large-scale dispatchable low carbon source of electricity, its potential to decarbonize other hard-to-abate sectors of the economy, and, finally, its role as an effective element of geopolitical soft power. This understanding should push the EU, wishing to count as one of the powers in this multipolar world, to develop an ambitious strategy to protect, support and develop its nuclear industry, its research and innovation, to participate and keep pace with the new global competition. Regrettably, this is not happening. The EU has cut the nuclear research and innovation budget of the Joint Research Centre, the scientific service of the European Commission, by 20 % for the next 7 years. And while there is some light EU support for nuclear R&D (SNETP) and for safety improvements, and a more significant one for ITER fusion project, this is far from the massive strategic support that nuclear energy deserves given the role it could play in achieving the objectives of energy self-reliance, security and climate objectives, in the European context in particular. Instead of that we see endless petty quarrels for and against nuclear power, largely based on ideology and naïve hope in miraculous or utopian solutions, forgetting that it is thanks to the 103 operating reactors on its territory that the EU has a relatively low carbon footprint of its electricity mix, with nuclear generation representing one quarter of the electricity produced (solar and wind combined amount to 19%). The endless and often surrealist discussions and negotiations around the inclusion of nuclear power into the EU taxonomy makes the EU stand apart from all the other global powers, for whom the role of nuclear energy for their energy security and independence, and as one of the essential tools to combat climate change, is beyond doubt. The strong anti-nuclear positions of certain Member States, with some of them, like Germany, very influential, makes promoting nuclear power very difficult at the EU level, in the Commission and the European Parliament, despite all available scientific arguments, measurable facts and data, sustained efforts of the pro-nuclear EU Member States, of the EU nuclear industry, R&D institutions and multiple non-governmental organisations and think-tanks. We cannot deny that the nuclear industry’s poor track record combined with the very high investment and long construction times of nuclear new build projects is partly responsible for the low attractiveness of the industry for investors, lenders and the general public. On the other hand, with the right policies, institutional support and level-playing field reflecting the specific nature of nuclear power (very high upfront investment with low and predictable long-term operating costs), nuclear power could become a major contributor to increasing energy security and reaching EU’s net zero targets.
Where there is a will, there is a way, the saying goes. Unfortunately, there is no shared will among the EU Member States, relegating Europe to be a spectator in the global shift in favour of nuclear power and aggravating its dependence on foreign energy and materials supplies.
The EU plan “RePowerU”, unveiled a few weeks ago as a response to the Russian aggression of Ukraine, mentions many solutions to ensure the continent's energy autonomy: wind, solar photovoltaic, heat pumps, energy savings, diversification of supplies via liquefied natural gas, biogas, massive – almost utopian - development of green hydrogen, half of it through imports from countries of the Middle East and North Africa with abundant renewable resources. The fate of nuclear, a mature home-grown technology producing non-intermittent low-carbon electricity, is not even mentioned, even though the Article 40 of the Euratom Treaty allows in theory to support a joint investment program in nuclear power. The official version of the plan published on May 18 foresees – under the weight of reality – a role for nuclear power to reduce dependence on Russian gas more quickly and as a possible source of carbon-free hydrogen, but in no way makes it a priority axis.
Just a few days after the Russian invasion of Ukraine, the EU energy commissioner Kadri Simson made the following statement: “The war against Ukraine is not only a watershed moment for the security architecture in Europe, but for our energy system as well. It has made our vulnerability painfully clear. We cannot let any third country destabilise our energy markets or influence our energy choices.”
The EU energy policy is based on three main pillars: European energy must be sustainable, affordable, and secure. Let us look at where we stand today with respect to these three key objectives.
Sustainability: the EU struggles to reduce its carbon footprint. The bulk of the reduction was achieved through deindustrialization of the EU. The Emission Trading scheme kept CO2 prices too low for many years to produce any real incentive to reduce carbon emissions. And even with very high CO2 prices recently (around 90 €/ton of CO2), it is still inefficient since the did not discourage producers to switch from gas to coal due to the gas prices going through the roof. The EU remains dependent on fossil energy imports for three quarters of its consumption.
Affordability: the promise of the EU energy markets was to create competition, give consumers a choice and drive the prices down. This has obviously not happened, prices are excessively high both for residential and industrial consumers, their volatility makes long term industrial plans and investment virtually impossible, the EU industry loses its competitiveness compared to US and Asian markets where energy costs are lower. In total contradiction with repeated statements about ever-decreasing prices of wind and solar, retail electricity prices are the highest in countries with the highest share of wind and solar in their electricity mix.
Security: the energy security and autonomy of the EU is threatened in the short term by the excessive dependence on Russian gas, oil and coal, in the long term by an unconsidered rush towards intermittent solar and wind renewable energies and batteries for EVs, where Europe remains almost totally dependent on the import of strategic raw materials like copper, lithium, nickel, cobalt, rare earths etc., replacing one dependence by another one.
The EU energy policy did not deliver on its promise on all three objectives and the war in Ukraine made its “vulnerability painfully clear”, as declared by Ms Simson. It is important to recognise that nuclear power ticks the boxes for all three aspects of the energy trilemma: it is affordable, sustainable and contributes to maintaining EU’s energy independence and security better than any other source of electricity.
Energy is the blood of our modern societies. The unfolding energy crisis exacerbated by the Russian invasion of Ukraine has once again demonstrated that our societies will collapse without access to reliable sources of energy. Energy is a common good and it is the first and utmost responsibility of any state to ensure access to affordable and sustainable energy to its citizens. Reducing EU’s dependence on fossil fuels will require substantial increase of low-carbon electricity generation. There are not many options available to this at a large scale, economically, while minimizing the environmental impact and without falling into new dependencies. Nuclear power is one of the options, perhaps one of the most important ones. The elephant in the room.
Europe has all the industrial and human infrastructure to launch a large-scale program to build new nuclear capacities. Within the EU, we have one of the most advanced nuclear industry ecosystems with world leaders in many areas of nuclear engineering, design, construction, and operation.
If the EU as a whole is not ready to reach a consensus on the importance of nuclear energy for its future and embark united on its development, it should, following the principle of subsidiarity, allow, support and encourage Member States that share the conviction of the role of nuclear power in their efforts to phase out fossil fuels in their specific geographical, historical and industrial contexts. EU Member States favourable to nuclear power should team together and promote the development of nuclear power and nuclear industry in Europe. The EU institutions should fully support such dynamic flexibility that would allow Member States to work together on this topic of key importance, without making ideologically based value judgments but following scientific facts and evidence. If EU becomes a leader in nuclear technology, the benefit for the EU, economically and geopolitically, will be tremendous. The success is in the hands of the Member States and requires support from EU institutions.
Allowing EU’s world-class nuclear industrial assets to gradually unravel and leaving the initiative of nuclear energy development to other world powers will inevitably result in the loss of competitiveness of the European industry and the impossibility to maintain and develop a modern competitive industrial ecosystem, in the failure to secure sufficient energy for EU citizens, in putting in jeopardy our decarbonisation objectives, with the obvious economic and social consequences, and, in the end, with the risk disintegration of the EU.
We remain confident that this will not happen, seeing increasing mobilisation and initiatives of the pro-nuclear Member States and political parties within the European Parliament, of the European industry, research and development organisations and the academic world in favour of nuclear power. There is no doubt that the EU industrial ecosystem is ready to face the challenge of increasing Europe’s energy security and making it a global leader on the path to net zero: let us not forget that 80% of the global energy consumptions still comes from fossil fuels. All available solutions are needed to reduce this dependency. NucAdvisor, modest in numbers but rich in expertise in nuclear energy for power and non-power applications, is excited to contribute to this challenging objective.
J. Bartak, May 2022.