Renew On Line (UK) 28

Extracts from the Sept-Oct 2000 edition of Renew
These extracts only represent about 25% of it

Nuclear News  CDM - a new nuclear subsidy?

"Nuclear may need climate change more than climate change needs nuclear."   Nucleonics Week, 22, October 1998.

NIRS, the US based Nuclear Information and Resource Service, has produced a briefing note on nuclear power and the Clean Development Mechanism. Below we reprint an edited version. The full text can be found on the the NIRS web site at: http://www.nirs.org or direct at: http://www.nirs.org/cdmbriefing.htm

‘In November, the Parties to the Climate Change Convention will meet in The Hague for further negotiations on the shape of the Kyoto Protocol. Among the most important decisions that will be made is that on the rules and structure of the Clean Development Mechanism (CDM). The CDM is intended to allow industrialised countries to offset their greenhouse gas reduction targets by funding projects in developing countries that lead to reduced emissions.

One of the most important issues, is what technologies and practices should be eligible for the CDM, and in particular whether nuclear power should be eligible. At the last meeting of the Conference of Parties (COP-5) in Bonn last November, a majority of European Union (EU) members, and key developing countries such as Indonesia, ruled out nuclear power .

Among the notable exceptions were Britain and France from the EU, and developing countries such as India and China. Recent reports have said that China is waiting to see if it will receive CDM credits for new nuclear plants before deciding how many to build, and that China and India have made the inclusion of nuclear in the CDM non-negotiable. This will clearly be one of, if not the most controversial issue under negotiation in The Hague. In contrast to its high profile lobbying of recent years, the industry is currently pursuing a softly-softly approach to getting nuclear into the CDM. In the lead-up to COP-5, the industry urged supportive governments not to openly endorse nuclear for fear of a backlash, especially just after the Tokaimura accident in Japan. Their new tactic is to shape the rules of the CDM so that no technology or practice is excluded, thus allowing nuclear to gain eligibility for the mechanisms by default.

CDM: a new nuclear subsidy

Developing countries are the key to the nuclear industry's future, yet to date orders for new reactors have been scarce. The main barrier is economic. The huge capital cost of a new reactor and the long repayment period are significant deterrents. But if CDM credits were factored in, this could change. For example, a 700MW coal fired power station emits about 4.5 million tonnes of CO2 a year. If a nuclear reactor was built instead, it could be claimed that it offsets this amount of CO2.

Estimates of the value of CO2 per tonne vary but, for a CDM project an amount of approximately $10-30 a tonne is likely. Thus, the carbon offset by this nuclear reactor over a 10 year period would be valued at between $450 million and $1.35 billion (less when future credits are discounted).

An agreement between the western supplier of the reactor and the developing country in which it was being built to subtract the value of the carbon credits from the initial capital cost of the reactor would greatly improve the economics. A 700MW nuclear reactor costs approximately $2.5-$3 billion. The CDM credits it generates could cut the capital cost by 10-40%.

Aside from the economic implications there is also great potential for nuclear plants to undermine domestic action to reduce greenhouse gas emissions. If, for example, Canada were to secure another contract to build two 700MW reactors in China it could potentially claim 9 million tonnes of carbon reduction credits per annum- equivalent to approximately 6% of its 1998 carbon dioxide emissions.

The case of China

China's nuclear plans graphically demonstrate the potential threat of a CDM which includes nuclear power. Its 10th five-year plan is currently being finalised by Beijing, and may include plans for up to 6 new nuclear reactors. According to a report in the industry journal Nucleonics Week, China is waiting to see if it will get CDM credits for new nuclear plant before it finalises a decision on how many additional units to build. The final decision will be made within six months of COP-6. A decision to allow nuclear power to be eligible for CDM credits at The Hague could rapidly see the mechanism become a subsidy for nuclear power in China.

Not surprisingly, the industrialised countries who are most firmly in favour of nuclear being eligible for the CDM are also those who stand to gain most from China ordering new nuclear plant. With its growing economy and rocketing energy demand, China has long been the great hope of the western nuclear industry. The French

Government's nuclear company Framatome has already built two reactors in China, at Daya Bay, and is now building two more at Yangjiang. Atomic Energy of Canada Ltd (AECL) is building two reactors - Quinshan 4 and 5.

Both will be front runners if any new units are ordered. Recent reports have also suggested that China is now seeking to develop a standardised reactor design in conjunction with western nuclear vendors, a decision which will favour Westinghouse (UK owned through British Nuclear Fuels Ltd), Japan's Mitsubishi, and Framatome. The UK and France are blocking attempts within the European Union to exclude nuclear from the CDM, while Japan and Canada are among the strongest supporters of the nuclear case.

Nuclear wins, the environment looses

If nuclear power becomes eligible for the CDM, these countries and their nuclear industries stand to gain considerably. Indeed, for them it will be a win-win situation. The CDM will provide a new subsidy for their ailing nuclear industries, while the carbon reduction credits from new nuclear plants will help them meet their emission reduction targets.

But it will be a lose-lose for the environment. Not only will there be an expanded nuclear industry, with increased production of radioactive waste and the constant risk of catastrophic accidents, but every dollar spent on nuclear power will be diverted from the development of sustainable energy systems and effective measures to combat climate change. As Denmark's environment minister, Svend Auken, said at COP-5: "the CDM is about Clean Development and nuclear energy has no place here".

Moreover, if the CDM supports nuclear power it will inevitably be contributing to the threat of nuclear proliferation. All nuclear power plants produce weapons-usable plutonium. Two of the developing countries lobbying most aggressively for CDM credits for nuclear projects are China and India, both of whom have active nuclear weapons programmes.

Many developing countries, particularly those in the Pacific and Africa, are concerned that investment in CDM projects will mirror current investment flows and be biased towards high-growth countries like China and South Korea. They are seeking an assurance that the CDM will be structured to ensure an equitable distribution of resources among all developing countries. Allowing nuclear power in the CDM will undermine their efforts. It will see CDM credits sucked in by nuclear mega-projects in countries like China, India and South Korea, further reducing the resources available for sustainable projects in non-nuclear developing countries.

Finally, allowing CDM credits for nuclear power will be seen as an endorsement of the nuclear industry's argument that it has a role to play in combating climate change. It will be, in effect, the 'Kyoto stamp of approval'. This could encourage developing countries to go down the nuclear road, and help those developed countries who cling to the nuclear dream justify further subsidies for their domestic nuclear power programs, extension of reactor operating lives, and even new build.

The legitimacy it would give to the nuclear industry could also jeopardize phase-out plans, legislated or de facto, in a number of countries. As a Swedish delegate at COP5 said: "If Sweden were to allow nuclear in the CDM, that would make political trouble for the nuclear phase-out at home". In short, CDM credits would help legitimise a dying industry which has no other arguments left.

The alternative?

The Association of Small Island States (AOSIS), whose members have perhaps the most to lose from climate change, says that the Kyoto agreement should say clearly that CDM projects should ‘not support the use of nuclear power’. If the CDM is to be an effective instrument for sustainable development, and advance the goal of greenhouse gas reductions, then support for this position from all parties to the Climate Change Convention is essential. Otherwise, a key mechanism of the Kyoto Protocol will become just another nuclear subsidy.

Wise, the World Information Service on Energy has launched a Petition on CDM and nuclear power: see http://www.antenna.nl/wise/cop6//index.html

They argue that, ‘to allow this would be a disaster. It would risk not only a new dawn for this polluting and dangerous industry, but undermine efforts to combat climate change. It would mean replacing one environmental threat with another’.

Wise notes that Vietnam is also keen to launch a nuclear programme, using carbon credits to meet some of the costs. They do however also report that the Japanese nuclear programme looks like being scaled down following the recent spate of accidents- perhaps from the earlier proposal of up to 20 new plants down to only 10-13. See WISE News Communique 526.

SERA, the Labour Party affiliated Socialist Environment and Resources Association, has also been lobbying on this issue, but has come up against the view that decisions on nuclear must be left up to each individual country. As Michael Meacher put it , ' A decision to exclude nuclear may antagonise key developing countries- such as India and China- with whom we have been working to develop constructive relationships on climate change. They may wonder why it is acceptable for certain developed countries to use nuclear energy to mitigate climate change under the Climate Change Convention, whilst they cannot.'

One tactical compromise, as has evidently been suggested by the Worldwide Fund for Nature (WWF), is to develop a 'positive' list of 'prompt start' projects in the hope that projects such as renewable energy are prioritised.