April 10, 2017
BRUSSELS INSIDER #1 by Sonja van Renssen
Why Brexatom is bad news for nuclear power
April 10, 2017
The UK’s withdrawal from the European Atomic Energy Community (Euratom Treaty) – announced on 29 March alongside its withdrawal from the EU – jeopardises the supply chain for new and existing nuclear plants in the UK and raises funding questions for European nuclear fusion research, experts say. The UK will need to replicate Euratom’s anti-proliferation inspections before it can contemplate nuclear cooperation deals with third countries. And the EU faces a historic shift in the balance of pro- and anti-nuclear states.
Nuclear experts and industry insiders from both sides of the Channel believe that the UK’s exit from the European Atomic Energy Community (Euratom Treaty) is a bad idea. If it has to happen however, they say that it can, should and probably will be negotiated separately to the wider Brexit deal. The EU is withdrawing from two separate communities, governed by separate treaties, after all.
“These are two legal instruments,” says Berta Picamal, Executive Advisor to the Director General of Foratom, which represents the European nuclear industry (including the UK), in an interview with Energy Post. “They have different legal provisions. I do not think they will be negotiated together.”
The Euratom Treaty, one of the EU’s three founding treaties, created the European Atomic Energy Community in 1957. Every EU member is (by default) also a member of Euratom. Its goal is to help shape and develop Europe’s nuclear industry. The treaty governs the movement of nuclear fuels, components, waste and expertise across the EU, sets health and safety standards for the public and workers, and provides a framework and funds for nuclear R&D. It underpins nuclear cooperation between EU and non-EU countries.
At present the UK operates 15 nuclear reactors which produce approximately a fifth (10GW) of the country’s electricity. Since all-but-one of the existing reactors are scheduled to be retired by 2030, it also has plans for 16GW of new nuclear capacity. The most famous new-build project is the 3.2GW Hinkley Point C plant in Somerset, which is being built by French national energy champion EDF (through its UK arm, EDF Energy).
The immediate challenge of Brexatom could be the ability to move fuel and components to new and existing nuclear plants in the UK. One-third of Hinkley Point C’s construction supply chain is in the hands of non-UK based firms, most of them in France. It needs highly skilled (probably French) engineers to build it (just as decommissioning, due to start in the early 2020s, will need highly skilled engineers to take plants apart).
Meanwhile, existing reactors sometimes need replacement parts, not to mention fuel. All reactors normally have enough fuel stockpiled to run for several months – and some use UK-sourced fuel rods – but they ultimately depend on imported uranium.
Unlike for other sectors, there are no World Trade Organisation (WTO) rules to fall back on here – if the UK exits Euratom, its nuclear trade with other countries stops. This is true beyond Europe’s borders, since most of the UK’s bilateral nuclear cooperation agreements with non-EU countries rely on its participation in Euratom (this is true for over 30 out of about 50).
What these agreements specifically refer to is UK participation in Euratom safeguards. These are regular inspections of nuclear material to guard against non-proliferation. They are required by the International Atomic Energy Agency (IAEA), but in Europe, largely carried out by Euratom. In practice, Brexatom means “the UK would need a parallel system”, says Picamal. “It would need to invest.”
Foratom is calling for “an extension of Euratom provisions” until “new agreements” are concluded. What these “new agreements” might be is impossible to say at this stage, Picamal admits. It could be an agreement between the UK and the EU-27 (i.e. the remaining Euratom community), or a series of bilateral agreements, for example between the UK and France.
“It shouldn’t be too controversial,” says Matt Hinde, who helps leads the energy department at consultancy Fleishman Hillard in Brussels. Hinde previously worked for the UK government on energy and in particular Euratom. “Unlike for trade, these are not competitive negotiations. This is about ensuring a safe international environment.”
For this reason, Hinde also believes that the EU’s general Brexit stance that the UK cannot negotiate separately with member states until the terms of its exit are decided, could potentially not apply to nuclear issues.
What is needed however, is time. Hinde believes it could take a relatively long time, perhaps at least until 2025. This is due to several factors, including the need to find new UK inspectors to replace Euratom’s, the sheer size of the task of separating out UK and Euratom law, and the need for the UK to renegotiate nuclear cooperation agreements with third countries. In the past, these took 3-4 years each, Hinde says. The challenge is compounded by a lack of political bandwidth as this will be negotiated alongside the wider Brexit deal.
On Friday 31 March, two days after the UK officially informed the EU that it was leaving both the EU and Euratom, an EU official said that everything, including the Euratom withdrawal, would be negotiated as a “single package”. In its draft negotiating position, the EU explicitly rejects a “sector-by-sector approach”.
Nuclear industry representatives and experts say it is more likely the EU just hasn’t had time to think about Euratom just yet. The UK government has reportedly given the sector assurances that it will treat this as a priority and look for a pragmatic solution.
The UK nuclear industry did not believe that the UK had to leave Euratom when it left the EU. Picamal says the only silver lining to it is that it avoids a precedent for a country being part of one entity and not the other.
Anti-nuclear voices have lost no time in suggesting that the UK departure is an opportunity to dissolve Euratom completely since it demonstrates that countries can unilaterally leave (although the treaty contains no withdrawal clause – the UK declared its departure under the EU Treaty’s article 50 on leaving the EU). The nuclear industry does not expect the Euratom Treaty to be revisited any time soon.
Picamal identifies two types of worry that Brexit could bring with it for the nuclear industry. One is true for this sector just as it is for others: restrictions on the movement of goods, people and skills. The second is issues specific to the industry, notably how to replace the Euratom inspection regime to safeguard nuclear materials. This is an absolute priority to underpin new UK nuclear cooperation agreements.
A quarter of all the time spent on nuclear inspections in the EU is carried out in the UK, according to the European Commission. This is because of the scale of nuclear fabrication and waste management facilities there, such as Sellafield. When it leaves Euratom, the UK’s Office for Nuclear Regulations (ONR) will have to take on many of these inspections to comply with IAEA requirements.
Antony Froggatt, a Senior Research Fellow at Chatham House in the UK, points out that this will require a substantial increase in the ONR’s inspections budget (around £1 million in 2015; one estimate is that it could double). The greater challenge, he adds, may be finding the staff to do it and how quickly this can be done. Froggatt is currently preparing a paper exploring the possible consequences of Brexit, with a chapter dedicated to Euratom. It is due to be published around 29 April, to coincide with a summit of European leaders on Brexit.
Brexatom means that ownership of all of the UK’s nuclear material has to be legally transferred from Euratom to the UK. But the UK enriches and fabricates fuel, and reprocesses spent fuel on behalf of many EU member states too – the legal, financial and red-tape implications for these activities remain unclear, Froggatt says.
Some form of agreement between the UK and France will be critical to keep Hinkley Point C on track. The biggest risk to the project is extra uncertainty and cost – if the UK is out of the Customs Union, getting hold of components could become more cumbersome and expensive. Nevertheless, Picamal says: “We cannot say now there will be delays for something that will only be delivered in years to come.”
Finally, safety is “not an issue”, Picamal concludes. Safety standards are “always” set and implemented at national level through national regulations. Yes, the overarching IAEA standards on which they are based are voluntary and cannot be enforced the way Euratom can, but “we are not talking about a rogue state”.
Brexatom will be problematic for European nuclear fusion research. The £2.5 billion (€2.9 billion) Joint European Torus (JET) facility in the UK gets €60 million a year via Euratom for its work on nuclear fusion. The experimental work at JET feeds into the flagship International Thermonuclear Experiment Reactor (ITER) project in France. JET’s Euratom funding is due to expire in 2018. Who will fund this in future? Who will work there?
Froggatt adds that if the UK wanted to become an independent partner of ITER, it would have to fund at least 9% of the total project (construction plus operating) cost, which is estimated in the order of €20 billion.
In the longer term, the UK’s departure from Euratom fundamentally changes the balance of pro- and anti-nuclear states in the EU. In a press release the day after the Brexit vote, Foratom warned: “It is clear that if the UK leaves Euratom, the nuclear industry will lose a crucial advocate in the [EU] Council. The UK’s departure will tilt the balance in favour of anti-nuclear countries.” The ratio is currently 14 for and 14 against.
These are the kinds of shifts whose effects will only become apparent over time. Certainly Picamal today puts on a brave face: “The balance of power will shift, but because the UK will continue to be a close partner, we believe that we will be able to maintain an equilibrium.” Others worry (or rejoice) that Austria’s legal challenge against Hinkley Point C in the European Court of Justice – another pending issue – is a harbinger of changing times.
Hinde warns that the potential consequences of Brexatom are far from clear today. “The UK exit from Euratom could disrupt an interdependent global system,” he says.
What is clear is that the UK will want to maintain a close relationship with Euratom, possibly including an associate agreement or a nuclear cooperation agreement, that keeps as much of the status quo as possible. Such agreements will require the approval of all members of Euratom however, cautions Froggatt and according to the EU at least, negotiations cannot start until the exit deal is done. For now, Foratom says its main job is raising awareness that Euratom exists and that it deserves its own negotiation.
BRUSSELS INSIDER #2 by Sonja van Renssen
What Eurelectric’s promise of “no new coal after 2020” really means
April 10, 2017
The national member associations of Eurelectric, except Poland and Greece, have pledged they will not build new coal power plants after 2020. The problem is that the only new coal projects planned in the EU after 2020 are in Poland and Greece. Nevertheless, the promise does mean that countries like the Czech Republic, Romania, Bulgaria and Hungary, which have been contemplating new-build coal plants, are now committed to pursuing alternatives. The decision is a victory for Eurelectric’s new Secretary General Kristian Ruby, who came over recently from the wind power sector.
On 5 April, the European electricity association Eurelectric invited journalists to a press conference in Brussels where new Secretary General Kristian Ruby announced “its intention not to invest in new-build coal-fired power plants after 2020”. “This sends a very clear signal to the market”, he said. “Big utilities are keeping this [energy] transition on track.” “Coal” means hard coal and lignite in this context.
Ruby joined Eurelectric three months ago from WindEurope, the Brussels trade association for wind, and previously worked for former EU Commissioner for Climate Action, Connie Hedegaard. He brings a clean energy face to an association that already back in March 2009 pledged to deliver a “carbon-neutral power supply by 2050”, but continues to struggle with fossil fuel interests within its own membership.
Last Wednesday’s announcement crystallises this internal battle: in fine print at the bottom of the statement adopted by Eurelectric’s Board on 23 March, its first meeting under Ruby’s leadership, a footnote says that the intention to get out of coal “is not supported by the Polish and Greek member associations”. Eurelectric represents some 3,500 companies with €200 billion in turnover, but its actual members are national electricity associations.
The big question for journalists at the press conference was: how significant is the announcement if two of Europe’s main coal enthusiasts are not on board? Will any existing coal plans be scrapped? These questions proved hard to answer. “Predicting who would have done what when is not the point,” Ruby responded. “We are confident it will make a difference.”
He explained that for Poland and Greece, coal remains a “strategic resource”. Poland produced 80% and Greece 50% of its electricity from coal in 2015, according to Eurostat (see EUenergy app). That puts both well above the EU average of a quarter.
Dave Jones, the Carbon and Power Analyst leading work on a coal phase-out at NGO Sandbag, says: “Europe wasn’t building any new coal power plants except for in Poland and Greece.” In an interview with Energy Post, the analyst points to CoalSwarm, a network of researchers collecting data on coal around the world, as the best source of information on proposed and current projects. A spokesperson at Eurelectric suggests the same source.
It’s not that simple however. CoalSwarm’s Global Coal Plant Tracker also shows a post-2020 coal project planned in Germany, for example: the 1100MW RWE plant at Niederaussem. Joanna Flisowska, Coal Policy Coordinator at Climate Action Network (CAN) Europe, cites the German project, the 600MW Rovinari project in Romania and the 500MW Matra project in Hungary as the only three coal plants due to be commissioned after 2020 in the EU outside of Poland and Greece.
But Jones says the Niederaussem plant has been a non-starter from the beginning (he does not believe it will ever get a permit in Germany) and majority shareholder RWE may well sell its share in Matra, throwing that project back up in the air. The Rovinari project doesn’t appear in CoalSwarm’s latest data as an up-and-coming project. All this to show that it is far from clear which projects could be affected by Eurelectric’s announcement.
What is clear is that Uniper’s 1100MW Datteln 4 plant in Germany is due to start up before 2020 and there is plenty under construction in Poland before 2020 and more planned for after (ditto to a lesser extent for Greece).
A spokesperson for Eurelectric clarified two important points about its announcement for Energy Post. One, “whatever is in the pipeline until now will go through”. In other words, projects already planned today for after 2020 will not be cancelled. As the spokesperson rightly pointed out however, such projects appear to be “very few” (if any, indeed).
Second, perhaps more significantly, Eurelectric confirmed that the statement only applies to the EU-28. The question arises because the electricity associations of several non-EU countries with big plans for coal are also Eurelectric members, such as Turkey (full member), Serbia, and Bosnia and Herzegowina (affiliate members).
This isrelevant because in its latest report, “Boom and Bust 2017”, CoalSwarm lists Turkey as the third biggest coal power pipeline in the world, after China and India, with 69GW under active development. Serbia, and Bosnia and Herzegowina are also in the top 30, while Poland is 13th, with 10GW under development. Flisowska says: “Greece, Poland, Turkey and the Western Balkans… were always the biggest new coal threat in Europe.”
Does all this render the Eurelectric announcement meaningless? No. “It confirms a direction of travel,” says Jones. “It helps with the rhetoric.” More specifically, he suggests that it commits those countries that have persisted in toying with coal – notably the Czech Republic, Romania, Bulgaria and Hungary – to pursue alternatives. “It shows that Poland and Greece are increasingly isolated,” he says.
Indeed, the Secretary General of Euracoal, representing the European coal industry, told Energy Post that “as a minimum, Bulgaria, Croatia, Hungary and Romania seem to be missing from the “short list” of Poland and Greece”. “I can only imagine that a mistake was made during internal review,” Brian Ricketts said.
Flisowska from CAN Europe said the statement has “more of a symbolic value” in that it shows “electricity producers now accept the reality”. Yan Qin, an analyst on the carbon team at Thomson Reuters, told Energy Post that Eurelectric’s statement was “mostly in line with expectations”. “We have been assuming no new coal-fired power plants will be built in the EU-28 after 2020,” she said. But the announcement “is still quite significant” because it should “lead to growing momentum for coal phase out in Eastern European countries”.
At the end of last Wednesday’s press conference, in response to a question over whether he worries that his Polish member might leave Eurelectric, Ruby said he “can’t imagine that” because they “support the rest” of what Eurelectric does. And herein lies the precisely the internal contradiction.
Jones argues that despite its bold rhetoric, Eurelectric’s on-the-ground lobbying is still far too fossil fuel friendly. For example, it continues to support the EU Emissions Trading System (ETS) as the sole decarbonisation policy Europe needs. In other words, no “command and control” tools such as an emission performance standard. Indeed Eurelectric rejects the European Commission’s proposal for a emission performance standard for capacity markets.
To put this in context, Euracaol also hopes that “the EU ETS will continue to be a truly market-based mechanism that can deliver GHG emission reductions across Europe at the lowest possible cost”.
Eurelectric is pushing hard for the electrification of other sectors on the grounds that it has the potential “to decarbonise much faster” and in a “cost-effective” way. In its enthusiasm for the future however, it must not forget that this decarbonisation still needs to happen. Ruby said his announcement was a “very clear message that speaks for itself”. He also said “history will judge” whether this is the beginning of the end of coal in Europe. That is hard to dispute.