Meeting Climate Change
Targets:
The Role of Nuclear Energy

NE A

Nuclear Technology Development and Economics

Meeting Climate Change Targets
The Role of Nuclear Energy© OECD 2022
NEA No. 7628
NUCLEAR ENERGY AGENCY
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NUCLEAR ENERGY AGENCYThe OECD Nuclear Energy Agency (NEA) was established on 1 February 1958. Current NEA membershipconsists of 34 countries: Argentina, Australia, Austria, Belgium, Bulgaria, Canada, the Czech Republic,
Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg,
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to assist its member countries in maintaining and further developing, through international
co-operation, the scientific, technological and legal bases required for a safe, environmentally soundand economical use of nuclear energy for peaceful purposes;–	to provide authoritative assessments and to forge common understandings on key issues as input togovernment decisions on nuclear energy policy and to broader OECD analyses in areas such as energy
and the sustainable development of low-carbon economies.
Specific areas of competence of the NEA include the safety and regulation of nuclear activities, radioactive
waste management and decommissioning, radiological protection, nuclear science, economic and technicalanalyses of the nuclear fuel cycle, nuclear law and liability, and public information. The NEA Data Bank
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Table of contents

List of abbreviations ...........................................................................................................................................................................

5

Executive summary ............................................................................................................................................................................

7

Meeting climate change targets: The role of nuclear energy ....................................................................................

13

Global action is urgently needed ................................................................................................................................................

13

The need to mobilise all low-carbon energy technologies ..........................................................................................

15

The role of nuclear energy ..............................................................................................................................................................

19

Full potential of nuclear contributions to net zero ..........................................................................................................

32

Challenges and opportunities .......................................................................................................................................................

38

References .................................................................................................................................................................................................

47

List of boxes
1.

Nuclear energy in pathways to net zero emissions by 2050 ...........................................................................

172.

Flexible nuclear energy .........................................................................................................................................................

21

3.

Generation IV reactors ...........................................................................................................................................................

28

4.

The availability of uranium to support nuclear contributions to net zero ............................................

33

5.

The System Costs of Electricity ........................................................................................................................................

34

6.

UN Climate Change Conference 2021 (COP 26) ......................................................................................................

45

List of figures
ES1. Full potential of nuclear contributions to net-zero .............................................................................................

81.

Temperature outcomes for various emissions futures ......................................................................................

13

2.

Global carbon budgets for 1.5°C and 2°C scenarios .............................................................................................

14

3.

Growth in electricity generation (2000-2018) ...........................................................................................................

16

4.

Global nuclear capacity by continent (2021) ............................................................................................................

19

5.

OECD and World Electricity Mixes (2018) ...................................................................................................................

20

6.

Example of power variations over 1 day, Golfech 2 nuclear power plant, 1 300 MW ......................

21

7.

Nuclear technologies and applications in future low-carbon energy systems ...................................

22

8.

Long-term operation – installed capacity and cumulative emissions avoided (2020-2050) ........

23

9.

Generation III new builds – installed capacity and cumulative emissions avoided (2020-2050) ..

24

10.

SMRs – ranges of sizes and temperatures for heat applications .................................................................

26

11.

SMR – installed capacity and cumulative emissions avoided (2020-2050) .............................................

27

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TABLE OF CONTENTS

12.

Generation IV systems ...........................................................................................................................................................

28

13.

Notional hybrid energy system ........................................................................................................................................

29

14.

Notional nuclear hybrid energy system ......................................................................................................................

30

15.

The hydrogen economy – energy sources, production processes and end-uses ...............................

31

16.

Carbon emissions avoided by nuclear power and non-power applications (2020-2050) ..............

32

17.

Full potential of nuclear contributions to net zero ..............................................................................................

33

18.

Understanding system costs of electricity ................................................................................................................

34

19.

Levelised cost of electricity (LCOE) for different sources of electricity ....................................................

35

20.

Total costs for different mixes of electricity (with a carbon constraint of 50 grams per kWh) .....

36

21.

Total costs for different mixes of electricity (driving to net-zero emissions) ......................................

37

22.

Driving to net zero with different mixes of generation capacity ................................................................

38

23.

Global installed nuclear capacity gap (2020-2050) ................................................................................................

39

24.

Average annual increase of low-carbon electricity per capita during decade of peakscale-up ...........................................................................................................................................................................................

41

25.

Critical minerals for different sources of electricity ...........................................................................................

42

26.

Land footprint for different sources of electricity ................................................................................................

43

27.

Levelised cost of nuclear power for a range of weighted-average costs of capital ...........................

44

List of tables
ES1. Projected contributions of nuclear energy to cumulative emissions reductions (2020-2050) ........

8

1.

Samples of ambitious and aspirational pathways to net zero ......................................................................

17

2.

Nuclear in emissions reduction pathways ................................................................................................................

18

3.

Global installed nuclear energy capacity by continent (2021) .......................................................................

19

4.

SMRs – definition .......................................................................................................................................................................

24

5.

SMRs – key technical features ...........................................................................................................................................

25

6.

SMRs – reactor types ...............................................................................................................................................................

25

7.

SMRs – range of applications .............................................................................................................................................

27

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List of abbreviations
CCUS		Carbon capture, utilisation and storage
ESG		Environmental Social and Governance
GFR		Gas-cooled fast reactor
GIF		Generation IV International Forum
IAEA		International Atomic Energy Agency
IEA		International Energy Agency
IPCC		Intergovernmental Panel on Climate Change
LCOE		Levelised cost of electricity
LFR		Lead-cooled fast reactor
LWR		Light water reactor
MMR 		Micro-modular reactor
MSR		Molten salt reactor
NEA		Nuclear Energy Agency
SFR		Sodium-cooled fast reactor
SMR		Small modular reactors
VHTR		Very high temperature reactor
VRE		Variable renewable energy

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Executive summary
Governments around the world have identified the climate crisis as one of the defining challenges
for this generation and an existential threat (US Department of Defense, 2021; UN, 2021a). Climate
experts have stated that climate change is widespread, rapid and intensifying and the strong, rapid,
and sustained reductions in greenhouse gas emissions required to meet Paris Agreement emissions
reductions targets are not on track (IPCC, 2021).
The magnitude of the challenge should not be underestimated. If the rise in mean global
temperatures is to be limited to 1.5°C over pre-industrial levels by the end of the century, the planet
has a “carbon budget” of 420 gigatonnes of carbon dioxide emissions (Raupach et al., 2014). However,rather than the steep reductions scientists had hoped for, global emissions are now expected to rise
16% by 2030 compared to 2010 (UN, 2021b). If net carbon emissions are to peak within the next few
years and be reduced to zero by 2100 (or sooner), policy changes around the world as well as massive
investments in innovation, infrastructure, and deployment of non-emitting energy resources will be
required. More specifically, electricity systems will need to be decarbonised; vehicle fleets must be
electrified or transitioned to non-emitting fuels; and a range of industrial sectors (e.g. off-grid mining,buildings, chemicals, iron and steel, cement, oil and gas) must all be transformed as well.
All credible models show that nuclear energy has an important role to play in global climate change
mitigation efforts (e.g. IEA, 2021; BNEF, 2021; IIASA, 2021). Despite clear analyses from many sources,
including the NEA, that point to the need for a massive, “all-the-above” approach that includes nuclear
energy, some multinational activities, financial institutions, and policy makers avoid discussion of
nuclear energy. This dynamic is deeply problematic to the cause of carbon reductions. All low-carbon
technologies, including nuclear energy must be included in relevant discussions about the energy
transition in order to maintain the integrity and evidence base of the policy dialogue. Without asignificant contribution from nuclear energy, the prospects for meeting Paris targets will be significantly
lower. The IEA, for example, estimates that it would cost the world an estimated USD 1.6 trillion more tomeet Paris targets without nuclear energy (IEA, 2019). Ultimately, even this estimate may prove optimistic.
Today, nuclear energy supplies approximately 10% of the world’s electricity from 444 nuclear powerreactors in operation worldwide providing 394 GWe of capacity. Nuclear energy is the largest source of
non-emitting electricity generation in OECD countries and the second largest source worldwide (afterhydroelectric power). There are around 50 more commercial nuclear reactors under construction,
which will provide an additional 55 gigawatts of capacity, and more than 100 additional reactors
planned. Existing nuclear capacity displaces 1.6 gigatonnes of carbon dioxide emissions annuallyand since 1971 has displaced 66 gigatonnes of carbon dioxide – the equivalent of two years of global
emissions (NEA, 2020a).
The nuclear energy sector can support future climate change mitigation efforts in a variety ofways. Existing global installed nuclear energy capacity is already playing a role and its long-term
operation can enable the existing fleet to continue making a contribution for decades to come. Thereis also significant potential for large-scale Generation III nuclear new builds to provide non-emitting
electricity in existing and embarking nuclear power jurisdictions, in particular to replace coal power.
Perhaps even more importantly, a wave of near-term and medium-term nuclear innovation has
the potential to open up new opportunities with advanced and small modular reactors (SMRs), someof which are expected to be on the market before the end of this decade. In addition to electricity
production, these technologies can support hybrid energy systems and applications including (but notnecessarily limited to) sector coupling, combined heat and power (cogeneration) for heavy industry andresource extraction, hydrogen and synthetic fuel production, desalination, and off-grid applications.
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EXECUTIVE SUMMARY

In 2018 the IPCC considered 90 pathways consistent with a 1.5°C scenario – i.e. pathways withemissions reductions sufficient to limit average global warming to less than 1.5°C. The IPCC found that,on average, the pathways for the 1.5°C scenario require nuclear to reach 1 160 gigawatts of electrical
capacity by 2050, up from 394 gigawatts in 2020 (IPCC, 2018).
This is an ambitious target for nuclear energy, but it is not beyond reach. It can be achieved througha combination of the long-term operation of existing plants and future deployment of Generation-III
new builds, and small modular and Generation IV reactors, as illustrated in Figure ES1.

Figure ES1. Full potential of nuclear contributions to net-zero
90

Installed capacity (GWe)

1 200

80
70

1 000

60
800

50

600

40
30

400

20
200

10
0
2020

2025

2030

2035

2040

2045

Cumulative CO2 emissions avoided (GtCO2)

100
1 400

2050

Cumulative emissions avoided
IPCC 1.5°C scenarios (2050 average) = 1 160 GW nuclear capacity (based on the average of IPCC 1.5°C scenarios)
Ambitious projections

Conservative projections

Small modular reactors (post-2035 market extrapolation)
Large-scale new builds (planned)Long-term operation (to 80 years)

Small modular reactors (2035 market outlook)
Large-scale new builds (under construction)
Long-term operation (planned)

New analysis by the NEA identifies the potential contribution of nuclear energy to clean energy
capacity and emissions reductions between 2020 and 2050, taking into consideration the potential
contributions from power and non-power applications of nuclear technologies.
Taken together, the contributions of long-term operation, new builds of Generation III nuclear
technologies, small modular reactors, Generation IV systems, nuclear hybrid energy and hydrogensystems begin to reveal the full extent of the potential for nuclear energy and nuclear innovations toplay a significant and growing role in pathways to net-zero by 2050.

Table ES1. Projected contributions of nuclear energy
to cumulative emissions reductions (2020-2050)
Cumulative emissions* avoided from…

…electricity…heat…hydrogenTotals…long-term operation

38.3

6.7

4.3

49.2

…new builds of large Generation III reactors

16.2

4.2

2.4

22.8

…small modular reactors (SMRs)

9.7

3.6

1.8

15.1

Totals

64.1

14.5

8.5

87.1

* All cumulative emissions from 2020 to 2050 are shown in gigatonnes of carbon dioxide (GtCO2).

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EXECUTIVE SUMMARY

Reaching the target of 1 160 gigawatts electrical capacity would avoid 87 gigatonnes of cumulativeemissions between 2020 and 2050, preserving 20% of the world’s carbon budget consistent in a 1.5°C
scenario. This would be equivalent to avoiding nearly three years of global carbon emissions at 2020
levels.
Sufficient uranium resources exist to support continued use of nuclear power and significant
growth in nuclear capacity for low-carbon electricity generation and other uses (e.g. heat, hydrogenproduction) in the long term. Identified recoverable resources, including reasonably assured resources
and inferred resources (at a cost <USD 260/kgU, equivalent to USD 100/lb U3O8) are sufficient for over
135 years. Considerable exploration, innovative techniques and timely investment will be required
to turn these resources into refined uranium ready for nuclear fuel production and to facilitate thedeployment of promising nuclear technologies.
While the potential exists for nuclear energy to play a much larger role in global climate change
mitigation efforts, various enabling conditions must be met. The above estimates are not forecasts but
represent what can be achieved with timely enabling decisions.
To seize the window of opportunity, the nuclear sector must move quickly to demonstrate anddeploy both near-term and medium-term innovations including Generation IV and small modular
reactors, as well as nuclear hybrid energy systems including hydrogen.
Additionally, there are key enabling conditions for success that the nuclear energy sector andpolicymakers more broadly should address in the areas of system costs, project timelines, publicconfidence and clean energy financing.
A systems approach is required to understand the full costs of electricity provision, and to ensurethat markets value desired outcomes: low carbon baseload, dispatchability, and reliability.
Rapid build-out of new nuclear energy is possible, but requires a clear vision and plan. Historicaland recent experience show that under the right policy frameworks and a robust programmatic
approach, nuclear energy can be a low-carbon technology with rapid delivery times. This was thecase historically for countries such as France and Sweden and jurisdictions such as Ontario in Canada
that have both decarbonised their electricity mix in less than two decades with nuclear energy andhydropower. Today, the Barakah project in the United Arab Emirates (UAE) demonstrates that such rateof deployment can also be achieved with large Generation III nuclear reactors. In China and Korea,
countries in more advanced stages of nuclear energy construction learning, construction lead-times
are around an average of 5-6 years, or even lower.
Building and maintaining public confidence is essential for all nuclear energy projects, from mining
to research and development, operations, and waste management. Building trust is central to building
public confidence and requires sustained investments in open and transparent engagement as well as
science communication. A common mistake, however, is to assume that public confidence is primarily
a communications issue, when in actuality, public confidence is much more complex, touching on
issues of trust, values, culture and benefits sharing, among others.
Governments have a role to play in all capital-intensive infrastructure projects – including but notlimited to nuclear energy projects. This role can include project financing, but also enabling policy
frameworks that allow an efficient allocation of risks and for nuclear energy projects to compete on an
equal footing with other non-emitting energy projects.

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EXECUTIVE SUMMARY

Policy recommendations
1. Act now• Governments and industry should work together on an urgent basis to demonstrate andcommercially deploy nuclear energy innovations before the window of opportunity closes to meetthe 1.5°C target.

2. Understand and reduce costs• The nuclear energy sector should implement recommendations from the NEA study Unlocking
Reductions in the Construction Costs of Nuclear: A Practical Guide for Stakeholders to ensure thatthe sector meets cost objectives (NEA, 2020).
• Governments should take a systems level perspective when developing electricity policies toensure that markets value desired outcomes, such as low carbon baseload, dispatchability andreliability.

3. Address timelines• Governments and industry should learn from successful examples of rapid deployment of nuclear
energy to decarbonise electricity grids, such as France, Sweden and Ontario (Canada) in the 1980s
and the UAE from 2010 to the present. These examples chart a path for rapid decarbonisation ofelectricity grids that are still heavily reliant on coal and other fossil fuels.
• Regulators should collaborate to harmonise licensing approaches to enable efficient fleet
deployment of nuclear innovations across international boundaries.

4. Build public confidence• Governments and industry should engage their citizenry to build trust and public confidence,
ensuring that public dialogue about energy options are evidence-based. This involves addressing
misinformation and ensuring that a realistic conversation about the pros and cons of various
options is facilitated.

5. Underpin investment• Governments should support a technology neutral approach that includes nuclear energy intaxonomies, climate finance, development finance, and ESG finance.
• Governments should make investments in nuclear energy, including:• Investments to keep the cost of capital low;
• Investments focused on accelerating commercialisation of nuclear innovation (focused on precommercial technology readiness levels 3-7);• Investments in nuclear regulators to ensure their readiness to regulate innovation; and• Equity investments as well as other forms of investment in near-term nuclear new build
projects.

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EXECUTIVE SUMMARY

6. Ensure full representation in policy discussions about clean energy and climate change• Governments should break the silence on nuclear energy in policy discussions about clean energy
and climate change, raising the profile of nuclear energy alongside other non-emitting energy
technologies and ensure that nuclear is included in discussions at climate change conferences.
Three key messages are of particular importance:• Nuclear energy already makes an important contribution to emissions reductions and it needs
to expand to meet Paris Agreement targets. Today, nuclear energy provides 10% of the world’s
electricity as the largest source of non-emitting electricity in OECD countries and second
largest source of non-emitting electricity around the world, displacing 1.6 gigatonnes of carbon
dioxide annually. The average IPCC 1.5°C scenario requires nuclear to reach 1 160 gigawattsof electricity by 2050, up from 394 in 2020.
• Near-term nuclear innovations are expected to make significant contributions to emissions
reductions targets. Nuclear innovation in the areas of advanced and small modular reactors(SMRs), as well as nuclear hybrid energy systems, including hydrogen, is advancing quickly,
with several designs expected to be commercially deployed within 5 to 10 years, which could
displace an additional 15 gigatonnes of carbon dioxide emissions by 2050.
• Policies should be technology-neutral, structured to incentivise desired outcomes such as
emissions reductions and security of energy supply. This includes taxonomies, as well as
criteria for access to climate finance (e.g. the Green Climate Fund), development finance(e.g. multilateral development banks such as the World Bank and others), and Environmental
Social and Governance (ESG) finance. Metrics should be applied consistently with similar levelsof scrutiny across technology options, to allow technologies to compete on equal footing. In thisway, efficiency is best achieved with technology-neutral policies and criteria.

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Meeting climate change targets:
The role of nuclear energy
Global action is urgently needed
Leaders and governments around the world have identified the climate crisis as one of the defining
challenges for this generation and an existential threat (US Department of Defense, 2021; 2021a).
International organisations have found climate change has the potential to threaten the peace andsecurity of people, as well as the environment, nature, and economy (UN, 2009; OECD, 2016; OECD,2017). The UN Intergovernmental Panel on Climate Change (IPCC) has further identified climate change
as a threat to food security, which could lead to scarcity-driven conflicts, in addition to migration andrefugee crises around the world (IPCC, 2018).
The latest United Nations Intergovernmental Panel on Climate Change (IPCC) report concludes
that climate change is widespread, rapid and intensifying and calls for strong, rapid, and sustained
reductions in greenhouse gas emissions (IPCC, 2021). Similarly, the International Energy Agency (IEA)
has reported that the path to net zero emissions is “narrow” and will require massive deployment of
all available clean energy technologies (IEA, 2020).

Figure 1. Temperature outcomes for various emissions futures
SSP5-8.5°C

SSP3-7.0°C

SSP4-6.0°C

SSP2-4.5°C

SSP1-2.6°C

SPP1-1.9°C

SSP5-3.4°C

Historical

SSP4-3.4°C

120

Gigatonnes CO2

100
80
60
40
20
0
-20
1980

2000

2020

2040

2060

2080

2100

Source: Carbon Brief (2019).

The magnitude of the challenge should not be underestimated. In order to limit climate change to
1.5°C by the end of the century, the planet has a “carbon budget” of 420 gigatonnes of carbon dioxide
emissions (Raupach et al., 2014), which represents the maximum quantity of carbon dioxide thatcan be emitted into the atmosphere while still keeping climate change to a maximum of 1.5°C. As
illustrated in Figure 1, there is an implicit trade off between peaking early and ramping down emissions
gradually; delaying peak emissions would necessitate increasingly rapid emissions reductions.
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MEETING CLIMATE CHANGE TARGETS: THE ROLE OF NUCLEAR ENERGY

Figure 2. Global carbon budgets for 1.5°C and 2°C scenarios
CO2 mitigation curves: 2oC

CO2 mitigation curves: 1.5oC
Constant emissions
for eight years will use
up the remaining
carbon budget

40

Constant emissions for ten
years leads to a required
mitigation rate of 10%/year
Starting mitigation in 2020
will require a mitigation
rate of about 6%/year

Gt CO230
Starting mitigation in 2020
will require monumental
mitigation rates

20

10

For a >66% chanceof staying below 1.5°C.
Remaining budget:
420 GtCO2
Mitigation curves after
Raupach et al., 2014.

0
1980

2000

2020

@robbie_andrew

Data: GCP

Starting mitigationin 2000 would haverequired a mitigation
rate of about 4%/year

2040

2060

2080

Starting mitigationin 2000 would haverequired a mitigation
rate of about 2%/year

For a >66% chance ofstaying below 2°C.
Remaining budget:
1 170 GtCO2
Mitigation curves after
Raupach et al., 2014.

2100 1980

2000

2020

2040

2060

2080

2100

Emissions budget from IPCC SR1.5

Source: Andrew (2020).

While there exists some flexibility to peak early and ramp down gradual or peak later and ramp
down more aggressively, it is generally understood that carbon dioxide emissions in 2030 will needto decline by approximately 45% compared to 2010 levels, before reaching net zero around 2050. In
practical terms, and considering that overall carbon dioxide emissions increased between 2010 and2020 by more than 5%, emissions would need to decline by more than 6% per annum in the current
decade. Nevertheless, global carbon dioxide emissions are expected to grow to an all-time high in
2022‑23 as economies recover from the COVID-19 pandemic. However, as highlighted by the synthesis
report from UN Climate Change, the world is clearly not on track. Based on the plans issued bygovernments under the auspices of the Paris Agreement, emission will rise 16% by 2030. The window
for action is rapidly narrowing. If carbon were emissions only remain constant, the entire carbon
budget would be consumed within eight years.
Electrification of various sectors, including transportation and heavy industry, is expected to be a
key strategy in global decarbonisation, which will create significant growth in demand for electricity
generation and bring transformative changes to our economies. Even with improvements to demandside management and energy efficiency, the demand for electricity demand will increase at an everfaster rate in the coming decades. The power sector is the largest carbon dioxide emitter making up
more than 40% of the global emissions, followed by transport and industry sectors representing eacharound 25% (IEA, 2021a). Some models forecast total final electricity demand will increase by a factorof 2.5 between 2020 and 2050 while energy efficiency improves at a rate of 4% per year (IEA, 2021c).
At its core, the Paris Agreement is an agreement about transforming the world’s energy mix. Having
come into force 4 November 2016, the historic Paris Agreement has three aims:
1. Limiting the increase in global average temperature well below 2°C with additional efforts to limit
warming to 1.5°C above pre-industrial levels;
2. Fostering adaptation and resilience efforts; and3. Ensuring climate financing.
It is noteworthy that, despite its status as an historic agreement moving the world in the right
direction vis-à-vis climate change mitigation and adaptation, the Paris Agreement and its associatednational determined contributions are insufficient; humanity must do much more to achieve thestated objective of the 2°C scenario.

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MEETING CLIMATE CHANGE TARGETS: THE ROLE OF NUCLEAR ENERGY

The need to mobilise all low-carbon energy technologies
Fundamentally, there is no sustainable level of emissions if the 2°C scenario is to be realised.
Constrained by the world’s carbon budget, carbon emissions must peak within the next few years and
go to zero by 2100 (or sooner). This will require policy changes around the world as well as massive
investments in innovation, infrastructure, and deployment of non-emitting energy resources. Morespecifically, electricity grids must be decarbonised; vehicle fleets must be electrified or transitioned to
non-emitting fuels; and a range of industrial sectors (e.g. off-grid mining, buildings, chemicals, ironand steel, cement, oil and gas) must be transformed as well.
Whatever else might be said about the efforts undertaken thus far, they are on track to far exceed
the targets arising from the 2°C scenario. It is clear that a shift in direction will be required if countries’
stated objectives are to be met.
As highlighted by NEA studies such as The Costs of Decarbonisation: System Costs with High Sharesof Nuclear and Renewables, countries face unique and distinct options and challenges in their efforts
to achieve optimum energy portfolios (NEA, 2019). There is no commonly applicable solution for
all countries. The best energy mix and energy strategy depends on, inter alia, a country’s natural
endowments, state of economic development, technological capabilities, human capital, stability, legal
and regulatory frameworks, as well as culture, values, and priorities.
Many countries are committing to reach net zero emissions by 2050. It has yet to be seen, however,whether countries have the technologies and political will to achieve this ambitious target of net zeroby 2050. It is clear that a serious effort to do so would require massive investments in and deploymentof all non-emitting energy solutions, including renewable energy, nuclear energy, and carbon capture,utilisation and storage (CCUS), in addition to energy storage, energy efficiency, and demand-side
management, among other measures.
There is no “silver bullet”, no perfect solution to the complex and urgent challenge of climatechange mitigation. All non-emitting energy options offer benefits but face limitations and challenges.
While hydroelectricity and nuclear energy currently account for approximately 16% and 10% of
the world’s electricity supply, respectively, variable renewables (e.g. wind and solar) are the fastest
growing segment of the clean energy market. Hydroelectricity is expected to continue to play animportant role in providing baseload power; however, it is not a solution in many parts of the worldthat lack hydro potential. In theory, other non-emitting technologies, such as variable renewables,
nuclear power, and CCUS, can be transferred and deployed in most jurisdictions around the world.
In practice, the effectiveness and efficiency of variable renewable technologies (e.g. wind and solar)
also varies by jurisdiction, but has great potential in many energy poor parts of the world (e.g. near to
the equator for solar potential). Embarking nuclear nations face some barriers to entry, including theneed to implement effective regulatory frameworks as nuclear is a strictly controlled sector; however,engagement with the international community – through the International Atomic Energy Agency(IAEA) with its milestones approach or bilaterally with experienced nuclear nations for capacity
building – can facilitate successful outcomes.
Variable renewables generally benefit from strong public confidence in many parts of the world;
however, the sun does not always shine and the wind does not always blow, and the variable (and
often unpredictable) nature of these forms of power generation can create systems level challenges
and grid instability, that translate into higher systems costs. Higher levels of variable renewables
could be deployed more aggressively if they could be coupled with adequate energy storage capacities,
dispatchable power, and baseload power. Storage and batteries, however, are not yet available at thescale that would be required to replace fossil energy with variable renewables and achieve zero global
emissions by 2050.
Despite the massive capacity additions of variable renewables (mainly wind and solar power) overthe last two decades, the relative share of fossil fuels in the electricity generation mix has barelychanged (see Figure 3 below). In fact, the surge in variable renewable generation has primarily served
to compensate for the decline of nuclear power output. In absolute terms, electricity generation fromfossil fuels has also increased globally, driven in large part by increasing electricity demand in nonOECD countries.
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As a result, global carbon emissions are far from being on track with the Paris Agreement. After two
years of consecutive increases, carbon emission flattened at 33 gigatonnes of carbon dioxide in 2019. In
2020, carbon dioxide emissions experienced a major fall of 5% mainly due to a major global economic
downturn during the COVID-19 pandemic. The fall in emissions in 2020 was not based on any structuralchanges in emission patterns. Accordingly, driven by post COVID-19 economic recovery, carbon emissions
are expected to increase by 5% in 2021, regressing to levels prior to the pandemic (IEA, 2021b).

Figure 3. Growth in electricity generation (2000-2018)

Electricity generation per year (in TWh)

25 000
20 00080%
Percentage of fossil fuels in electricity mix

60%
15 00040%
10 000
20%

5 000
0

Percentage of fossil fuel in electricity mix

100%

30 000

0%
2000

2005
FossilOther

2010
Nuclear

2015
Hydro

Other renewables

Source: IEA (2021a).

CCUS may have a role to play, not only in reaching net zero emissions, but in exceeding this target
to reach net negative emissions. There are several potential scenarios that could unfold, with countries
taking steps to reach net zero emissions by 2050. In some possible scenarios, if countries do not reachpeak emissions early enough, the world could exceed its carbon budget even if it reaches net zero by
2050. In this scenario, CCUS would be required to extract carbon from the atmosphere after it has been
emitted (a model that is often referred to as negative emissions), reversing and mitigating some of theworst effects of climate change.
There is considerable uncertainty however in the readiness of CCUS technologies. CCUS technology
readiness levels are low, with several projects presently ongoing to demonstrate the viability andscalability of CCUS. The IEA (2021c) has identified CCUS as one of the three key uncertainties in thepathway to net zero by 2050, along with behavioural changes and bioenergy.
Natural gas, as the least carbon intensive fossil fuel, may be a good fit in many jurisdictions inthe short term, for gradually decarbonising the global energy mix; however, in order to go to zero
emissions by 2100, natural gas will likely also need to be phased out (unless it can be paired with
CCUS). Breakthroughs in renewables, energy storage, energy efficiency, as well as CCUS are needed.
Equally importantly, however, the IEA anticipates that, in order to achieve the 2°C scenario, global
installed nuclear energy capacity will need to double by 2050. This will require significant investments
in life extension and refurbishment of existing nuclear reactors, as well as new builds of existinglarge-scale nuclear power technologies, as well as investments in small modular reactors (SMRs) and
Generation IV technologies.
All credible models show that nuclear energy has an important role to play in global climatechange mitigation efforts. In its 2019 report on nuclear energy – its first report on nuclear energy
in over 20 years – the IEA found that nuclear has an important role to play in global efforts to meet
Paris Agreement targets (IEA, 2019). Nuclear power plant retirements would significantly constrain

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global climate change mitigation efforts. Conversely, investments in nuclear energy life extensions
and refurbishments of existing reactors, as well as new builds, would make it less expensive and morefeasible to meet Paris Agreement targets.
Despite clear analyses from many sources, including the NEA, that point to the need for a
massive, “all-the-above” approach that includes nuclear energy, many multinational efforts, financial
institutions, and policy positions avoid nuclear energy. However, if countries do not invest in nuclear
energy, the risks of failure to meet Paris targets will be significantly greater. The IEA, for example,
estimates that it would cost the world an estimated USD 1.6 trillion more to meet Paris targets without
nuclear energy (IEA, 2019). Ultimately, even this estimate may prove optimistic.
As countries work to optimise their energy mixes and strategies for reaching climate change
mitigation targets, some opportunities and challenges will emerge for nuclear energy around the world.

Box 1: Nuclear energy in pathways to net zero emissions by 2050
As more and more countries commit to dramatically reduce emissions, many are seeking to understand thepathways that could lead the world from where it is today to net zero by 2050.
Pathways based on the world’s carbon budget, emissions reductions targets and timelines, have been modelled
and published by various organisations, such as the United Nations Economic Commission for Europe (UNECE)
and the International Energy Agency (IEA), as well as other organisations, including the International Institute forApplied Systems Analysis (IIASA), Bloomberg New Energy Finance (BNEF), Shell and BP, among others, and manyof these scenarios are taken into account in assessments by the United Nations Intergovernmental Panel on
Climate Change (IPCC). In a special report published in 2018, the IPCC considered 90 pathways consistent witha 1.5°C scenario and 200 pathways consistent with a 2°C scenario – i.e. pathways with emissions reductions
sufficient to limit average global warming to less than 1.5°C and 2°C respectively.
Despite the large numbers of published pathways, there continues to exist considerable uncertainty withrespect to the feasibility – and the costs – of reaching net zero by 2050. In particular, many published pathways
depend on energy technology innovations that have not yet been commercialised (or even demonstrated insome cases), such as widespread deployment of CCUS technologies and an integrated hydrogen economy.

Table 1. Samples of ambitious and aspirational pathways to net zero
Organisation

Scenario

IIASA (2021)

Divergent Net
Zero Scenario(1.5°C)IEA (2021c)

Net Zero
Scenario (1.5°C)

Bloomberg
NEF (2021)

New Energy
OutlookGreen Scenario(1.5°C)Parameter
Cost of carbon (USD per tCO2)

2020

2050

Growth rate (2020-50)

0

1 647

-

Wind (in GWe)

600

9 371

1 461%

Solar (in GWe)

620

11 428

1 743%

90

530

490%

<0.1

7.6

-

Hydrogen (MtH2)
CCUS (GtCO2)
Energy intensity (MJ per USD)

4.6

1.7

-63%

Wind (in GWe)

603

25 0004 045%

Solar (in GWe)

623

20 0003 110%

Batteries (in TWh)

<0.1

7.7

-

It is notable, however, that none of the pathways project particularly aspirational scenarios for nuclear
innovation. In other words, all published pathways include levels of nuclear energy deployment based on
currently available commercial technologies. Some are ambitious in the extent of the deployment – forexample, BNEF envisages up to 7 400 gigawatts of installed capacity by 2050 – but none depend on nuclear
innovation that has not yet been realised. This represents a significant gap in current pathways publications,as the potential exists for near-term and medium-term nuclear energy innovation to play a significantly largerrole in decarbonisation strategies.

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Table 2. Nuclear in emissions reduction pathways
Role of nuclear
energy by 2050

Role of nuclear technologies
Organisation

Scenario

Publication Climateyear
targetLarge
Generation
III

NuclearInnovation

IAEA (2021b) HighScenario

2021

2°C

Included

Not included

IEA (2021c)

Net Zero
Scenario
(NZE)

2021

1.5°C

Included

Shell (2021)

Sky 1.5
Scenario

2021

1.5°C

Included

Not included in
the quantitativemodel, although
the potentialof HTGR andnuclear heat are
acknowledgedin the reportnarrative
Not specified

IIASA (2021)

Divergent
Net Zero
Scenario

2021

1.5°C

Included

Not specified

Bloomberg
NEF (2021)

New
EnergyOutlookRed
Scenario

2021

1.5°C

Included

Explicit focus on
SMRs and nuclearhydrogenDescription

Conservative
projections basedon current plans
and industry
announcements.
Conservative
nuclear capacity
estimates.
NZE projects
100 gigawatts more
nuclear energy thanthe IEA sustainable
development
scenario.
Ambitious estimates
based on massive
investments toboost economic
recovery and build
resilient energy
systems.
Ambitious
projections required
to compensate fordelayed actions anddivergent climate
policies.
Highly ambitious
nuclear pathway
with large-scale
deployment of
nuclear innovation.

Capacity(GW)

Nucleargrowth(2020-50)

792

98%

812

103%

1 043

160%

1 232

208%

7 080

1670%

Through discussions with the organisations publishing pathways and their modelling teams, it is clear thatthe reasons nuclear innovation does not feature more prominently alongside other energy innovations areunrelated to the potential of nuclear innovation. Many pathways have shied away from including nuclear
innovation because of a lack of specialised expertise in nuclear technologies among the modelling teams. This
represents a significant gap where the NEA could play a role in raising awareness and providing authoritative
quantitative assessments of the potential of future nuclear innovation to contribute to ambitious climatechange pathways.
Despite the uncertainties about energy innovations and costs, some key conclusions from analysis of themultitude of pathways are clear:• Firstly, all pathways present significant challenges for the energy sector from a technological, economic
and policy perspective. Reaching net zero will require a rapid and far-reaching transformation of theenergy sector, which will require massive investments in energy innovation and progress in a number ofenergy technologies under development.
• Secondly, all pathways require global installed nuclear capacity to grow significantly, often more thandoubling from current levels by 2050. Four IPCC illustrative pathways (IPCC, 2018) depict global installed
nuclear capacity growing by a factor between 2 and 6 between 2010 and 2050, reaching as much as
13 176 TWh by 2050, up from 2 630 TWh in 2010.

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The role of nuclear energy
Nuclear energy today
There are 444 nuclear power reactors currently in operation worldwide providing 394 gigawattsof electricity capacity, plus approximately 50 more under construction to provide an additional
55 gigawatts of capacity. More than 100 additional reactors are planned. In 2018, nuclear energy
supplied approximately 2 563 TWh of electricity worldwide, 2 101 TWh in NEA member countries (NEA,
2021; WNA, 2020).

Figure 4. Global nuclear capacity by continent (2021)

EuropeNorth America

16.2 GWe
159.2 GWe

2.2 GWe
111.8 GWe

Asia
35.2 GWe
116 GWe

Nuclear Capacity(in GWe)
173.4
100.0
50.0

South America

1.9

3.5 GWe
1.4 GWe

Africa0 GWe
1.9 GWe

Operational reactors
Reactors under construction

Existing nuclear capacity displaces 1.6 gigatonnes of carbon dioxide emissions annually and has
prevented displaced 66 gigatonnes of carbon dioxide since 1971, the equivalent of two years of global
emissions (NEA, 2021d).

Table 3. Global installed nuclear energy capacity by continent (2021)

444

30

394

66

nuclear reactors inoperation globallycountries with nuclear
reactors

gigawatts global installed
nuclear capacity

gigatonnes of CO2
cumulative emissions
avoided since 1971

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Nuclear energy supplies approximately 10% of the world’s electricity and is the world’s fourth largest
source of electricity, following coal, gas and hydroelectricity, which supply approximately 38%, 23%, and
16% of the world’s electricity, respectively (WNA 2020). Nuclear energy, therefore, is the world’s second
largest source of non-emitting electricity, following hydroelectricity, and the largest source of nonemitting electricity in the group of OECD countries (Figure 5). In regions that are not rich in hydroelectric
potential, nuclear is generally the most significant non-emitting option for electricity generation.

Figure 5. OECD and World Electricity Mixes (2018)

OECD

54%

World

1%

14%

64%

0%

10%

20%

Fossil

30%
Other

13%

1% 9%

40%

50%

60%

Non-hydro renewables

18%

16%

70%
Hydro

80%

10%

90%

100%

Nuclear

Source: Based on IEA (2021a).

The United States Energy Information Administration’s International Energy Outlook projects that
global nuclear capacity will continue to grow at a rate of 1.5% per year through 2040 (EIA, 2017). The
geopolitical landscape for nuclear energy is transforming in important ways. While some NEA countries
do not include nuclear in their future plans (e.g. Germany) or face questions about the future of current
installed nuclear capacity (e.g. Japan, United States), growth in nuclear energy is driven principally by
non-NEA countries (e.g. China and India). Accordingly, whereas over 80% of global installed nuclear
capacity has been within OECD countries, by mid-century, this percentage could fall below 50% (EIA
2017), with significant geopolitical implications, including global shifts in high-value, strategic industrial
capacity, human resource capabilities, policy influence, and the development of vital technologies.
While conditions exist to support growth in global nuclear energy development and deployment,
the nuclear energy sector faces many challenges. Global energy demand is expected to continue
growing, driven primarily by China, India, and South East Asia. Concerns over climate change are rising
and will drive demand for non-emitting energy. However, uncertainties in global resource markets, aswell as increases in resource nationalism and protectionism, are having chilling effects on global tradein uranium and nuclear technologies, and geopolitical instability is giving rise to non-proliferation
concerns. Moreover, lack of key infrastructure and enabling frameworks creates barriers to access in
key markets for new nuclear energy.
An increasingly networked global civil society has high expectations for transparency,
accountability, social engagement, environmental protection, safety (post-Fukushima), and benefits
sharing. Civil society also has high expectations for the potential of renewables, storage, and demandside management to fully address climate change and energy security concerns.
Nuclear energy is often excluded from public and political discourse, creating significant challenges
for the nuclear sector. Even countries that include nuclear in their existing and future energy plans
often remain silent on the role of nuclear in international clean energy and climate change fora.
This dynamic is deeply problematic. Nuclear energy must be included alongside other options in
discussions about energy transition in order to maintain the integrity and evidence base of the policy
dialogue. While energy policy makers may take different values-based decisions on the role of nuclear
energy in their respective national contexts, the analyses and assessments that inform policy debates
must be complete and evidence-based. Including all options in the analyses is necessary to ensurethat the complex trade offs between options can be accurately understood and contemplated.

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Box 2: Flexible nuclear energy
Markets are signalling demand for flexible power generating options to support the low-carbon energy transition.
A recent report under the Clean Energy Ministerial’s nuclear energy initiative considered the potential of
nuclear power to provide much needed flexibility. The key findings of that report are presented in this box.
The NICE Future Initiative was launched during the 9th Clean Energy Ministerial (CEM9) in 2018. The main
purpose of NICE Future Initiative is to explore innovative applications of existing and advanced nuclear powerwith a strong focus of nuclear flexibility. More recently, the Flexible Nuclear Campaign has been initiated toanalyse in more detail the value of nuclear flexibility in electricity systems with high shares of VRE.
One of the first deliverables of the Flexible Nuclear Campaign was the publication of Flexible Nuclear Energy
for Clean Energy Systems, released in September 2020 (NREL, 2020). The study gathers extensive technoeconomic evidence on the current and potential future roles of nuclear power in providing flexibility to meetenergy demands.
In the study, nuclear flexibility is defined as:“The ability of nuclear energy generation to economically provide energy services at the timeand location they are needed by end-users. These energy services can include both electricand nonelectric applications utilizing both traditional and advanced nuclear power plants andintegrated systems” (NREL, 2020).
While nuclear flexibility will be ultimately bounded by the characteristics of the electricity system and its
technologies, three high-level trends can be identified:• There is already an established body of knowledge surrounding flexible operation of existing nuclear
power plants: In most regions, especially where the share of nuclear in the electricity mix is low, nuclear
reactor are operated in baseload mode. However, countries like France and Germany, have extensive
experience in operating nuclear reactors in load-following mode varying their power up to 80% twice perday (Figure 6). Nuclear reactors also provide key services for the stability of the electricity system suchas inertia, short-circuit power and frequency control.
• Innovation could increase the flexibility of nuclear systems with advanced systems opening the door tonovel applications: Existing nuclear systems can be retrofitted to accommodate higher manoeuvrability
levels but also to diversify their energy products. The latter allows for nuclear reactor to be operated
continuously at full rated power while switching to heat or electricity depending on market conditions.
Demonstration projects are planned in several NEA countries to use the part of the electricity output tofeed electrolysers for hydrogen production.
• Nuclear flexibility enables the integration of higher shares of VRE and fosters nuclear development:
to be technically and economically feasible electricity systems with high shares of variable renewables
require a residual system sufficiently flexible to accommodate the variable out at a reasonable cost
while limiting the decline in market value. Hybrid/integrated energy systems emerge as an opportunity
to provide high levels of system flexibility while fostering decarbonisation across sectors.

Figure 6. Example of power variations over 1 day,
Golfech 2 nuclear power plant, 1 300 MW
1 300
1 100

MW

900
700
500
300

0:00
1:00
2:00
3:00
4:00
5:00
6:00
7:00
8:00
9:00
10:00
11:00
12:00
13:00
14:00
15:00
16:00
17:00
18:00
19:00
20:00
21:00
22:00
23:00

100

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In order to take advantage of the full potential of nuclear flexibility, innovation and demonstration projects are
required in the current decade. For power plants that are otherwise used in baseload, flexibility lowers theload factor and increases average plant level costs. Accordingly, the economic implications also need to be
attractive, requiring in particular market frameworks that adequately reward the value of flexible nuclear energy.

The future of nuclear energy
The nuclear sector can support climate change mitigation efforts in a variety of ways. Existing global
installed nuclear capacity is already playing a role and long-term operation can enable the existing
fleet to continue making a contribution for decades to come. There is also significant potential forlarge-scale Generation III nuclear new builds to provide non-emitting electricity in existing andembarking nuclear power jurisdictions. In particular, these projects could replace coal power aroundthe world. A wave of near-term and medium-term nuclear innovation has the potential to open up
new opportunities with Generation IV and small modular reactors (SMRs), as well as nuclear hybrid
energy systems, reaching into new markets and applications including (but not necessarily limited to)sector coupling, combined heat and power (cogeneration) for heavy industry and resource extraction,hydrogen and synthetic fuel production, desalination, and off-grid applications.

Figure 7. Nuclear technologies and applications in future low-carbon energy systems

Hydro

Batteries

Long-term storage

Smart grids

Wind

Nuclearlong-term
operation (LTO)

Hybridnuclear –energysystems

Demandside management

Solar PV

Large-scale
Generation III
nuclear

Small Modular
Reactors(SMRs)

Energyefficiency

Biomass

Nuclearhydrogen

Nuclearheat

Behaviouralchanges

Synthetic fuelsZeroemissiontransport

Clean heat

CarbonCaptureUtilisationand Storage(CCUS)

Long-term operation of nuclear power plants
As the name implies, long-term operation of nuclear power plants is generally defined as operation,
justified by a comprehensive safety assessment that goes beyond a previously conceived time frame,
which typically corresponded to so-called “initial design assumptions”. These initial design assumptions,

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however, do not represent a technical constraint inhibiting longer operating times and should not be
confounded with the remaining, useful life of the facilities, which can be periodically re-evaluated taking
into account the actual plant conditions and the latest available knowledge. In almost all cases, theuseful life of facilities is significantly longer than the originally assumed time frame. In the UnitedStates, for example, nuclear plants have been approved for operations up to 80 years.
Presently, the average age of nuclear power plants in OECD countries is 36 years. The technicalpotential exists in most cases for long-term operation for several more decades, subject torefurbishments and licence extensions as required. Most component parts of nuclear power plants canbe maintained, refurbished or replaced, with the notable exceptions of pressure vessels and concrete
containment buildings that are already long-lasting and can support long-term operation, supported
by appropriate ageing management programmes.
The potential and limitations of long-term operation are considered in greater detail in the 2021
NEA report Long-Term Operation of Nuclear Power Plants and Decarbonisation Strategies. The report builds onthe earlier finding by the NEA and IEA that long-term operation are one of the most cost-competitive
sources of low-carbon electricity (IEA/NEA, 2020). Decisions to pursue licence extensions and longterm operation are often characterised by less uncertainty and less risk than decisions regarding newbuilds (NEA, 2021b).
While there exists significant potential for long-term operation to contribute to climate mitigation
efforts, some countries are facing policy challenges and early closures of nuclear reactors are taking
place. Beyond technical feasibility, there are several other enabling conditions required for long-term
operation, including policy and market conditions. Some OECD countries are retiring nuclear power
plants that could otherwise be strong candidates for long-term operation, due to policy decisions suchas phase-out mandates or electricity market measures that promote variable renewables and often
also under-value dispatchability, capacity, and other system-level benefits of nuclear power plants.
With enabling policies that allow nuclear power plants to compete on a level playing field withother non-emitting power generation options, long-term operation could play a growing role in the
coming decades as a key pillar of decarbonisation strategies. The long-term operation of existing
reactors could save up to 49 gigatonnes of cumulative carbon emissions between 2020 and 2050.

Figure 8. Long-term operation – installed capacity andcumulative emissions avoided (2020-2050)

Installed capacity (GWe)Long-term operation to 80 years

50

400

45

350

40
35

300

30

250

25

200

20

150

15

100

10

50

5

Cumulative emissions avoided (GtCO2)

Planned long-term operation
Cumulative emissions avoided

450

0

0
2020

2025

2030

2035

2040

2045

2050

Note: It is assumed that nuclear power (12 gCO2eq/kWh) is displaced by gas with a carbon footprint of 490 gCO2eq/kWh(Bruckner, 2014). By 2050, 25% of nuclear reactors are used for nuclear heat applications, also displacing gas. By 2050,
nuclear reactors operate with a 90% availability factors with 60% of the power used to supply electricity and 30% to supply
hydrogen. Hydrogen produced with nuclear power will displace steam methane reforming (10 kg CO2 per kg of H2).

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New builds of large Generation III nuclear technologies
At the end of 2020, 55 gigawatts of new nuclear capacity in the form of large-scale Generation III reactors
were under construction around the world (IAEA, 2021) driven largely by new builds outside the current
OECD membership. Approximately 25% of nuclear new builds are in China, followed by 13% in India.
Taken together, large-scale Generation III reactors that are under construction and planned
are expected to reach over 300 gigawatts of installed capacity by 2050, avoiding 23 gigatonnes ofcumulative carbon emissions between 2020 and 2050.

Figure 9. Generation III new builds – installed capacity and cumulative emissions avoided (2020-2050)
Generation III under construction

400

50

Generation III planned

45

Cumulative emissions avoided

40

Installed capacity (GWe)

350

35

300

30

250

25

200

20

150

15

100

10

50

5
0

0
2020

2025

2030

2035

2040

2045

Cumulative emissions avoided (GtCO2)

450

2050

Note: It is assumed that nuclear power (12 gCO2eq/kWh) is displaced by gas with a carbon footprint of 490 gCO2eq/kWh(Bruckner, 2014). Planned construction based on NEA/IEA Tracking Clean Energy Progress 2021 – nuclear chapter. By 2050,
25% of nuclear reactors are used for nuclear heat applications, also displacing gas. By 2050, nuclear reactors operate with
a 90% availability factors with 60% of the power used to supply electricity and 30% to supply hydrogen. Hydrogen producedwith nuclear power will displace steam methane reforming (10 kg CO2 per kg of H2).

Small modular reactors (SMRs)
Considering the magnitude of global emissions reduction targets, both long-term operation of existing
nuclear power plants as well as new builds of Generation III gigawatt-scale reactors have importantroles to play. In addition, a wave of innovation in small modular reactors (SMRs) could unlock evenfurther emissions reductions by reaching into hard-to-abate parts of the economy, providing off-grid
options, and options for sites that do not require (or cannot support) gigawatt-scale power generation.
SMRs are generally defined as nuclear reactors with power output less than 300 megawatts electric(MWe), with some SMRs as small as 1-10 MWe that are often referred to as micro-SMRs (or MMRs).

Table 4. SMRs – definition
Small

Smaller power output and smaller physical size than conventional gigawatt-scale nuclear reactors. SMRs are
smaller than 300 megawatts electric.

ModularModular manufacturing, factory production, portable, scalable deployment.

Reactor

Nuclear fission reaction creates heat that can be used directly or to generate electricity.

As a class of reactors, SMRs are defined by their smaller size, but there exists considerable variety
within this class of reactors; they vary by power output, temperature output, technology, and fuel cycle.
Accordingly, they also vary in technology readiness level (TRL) and regulatory readiness level (RRL).
Some SMR technologies are already demonstrated (at lab and commercial scales), while others arestill in research and development. Timelines for deployment vary based on technology and regulatory
readiness levels, with some designs expected to be demonstrated and commercialised before 2030 andothers to follow later in the 2030s.

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Table 5. SMRs – key technical features
Power

SMRs vary in size from 1 to 300 megawatts electric.

Temperature

Near-term and medium-term SMRs generate a range of temperatures from 285°C to 850°C. Some designs may
generate higher temperatures, up to or over 1 000°C in the future.

Technology

Some SMRs are based on Generation III and light water reactor technologies; others are based on Generation IV andadvanced reactor technologies.

Fuel Cycle

Some SMRs are based on a once-through fuel cycle; others seek to close the fuel cycle by recycling waste streams to
produce new useful fuel and minimise waste streams requiring long-term management and disposal.

The 2021 NEA report Small Modular Reactors: Challenges and Opportunities offers an overview of recent
progress with the development and deployment of SMRs. The report discusses the key economic
drivers of this innovative nuclear technology and highlights market opportunities for SMRs to support
decarbonisation strategies, complement variable renewables as well as facilitate access to nuclear
energy in new sectors and regions. The report also emphasises the need to review regulatory and legal
frameworks and suggests grouping SMRs into different categories to support these policy changes.
Finally, the report stresses the role of government support and international collaboration to enablelarge-scale SMR deployment.
SMR designs can be classified in a number of ways. The NEA suggests five categories: single-unit
light water reactor (LWR) SMRs; multi-modular LWR-SMRs; mobile and transportable SMRs (including
floating SMRs); Generation IV SMRs; and micro-modular reactors (less than 10 MWe) (NEA, 2021a).

Table 6. SMRs – reactor types
Single-unit LWR-SMRs

LWR-SMRs use of well-established LWR technology and fuels to provide stand-alone units that may replacesmall fossil-fuel units or be deployed as distributed generation.

Multi-module
LWR-SMRs

Multi-module LWR-SMRs also use LWR technology, and may be either operated as a replacement for midsize baseload capacity or in a distributed generation framework, depending upon generating capacity.

Mobile andtransportable SMRs

Mobile and transportable SMRs currently apply LWR technology and are intended to be easily moved fromlocation to location. Floating reactors are included in this category.

Generation IV SMRs

Generation IV SMRs apply advanced, non-LWR technologies and include many of the concepts that havebeen investigated by the Generation IV International Forum (GIF).

Micro-modular
reactors (MMRs)

MMRs represent designs of less than 10 MWe of capacity, often capable of semi-autonomous operation
and with improved transportability relative to the larger SMRs. These technologies are typically not
LWR-based and apply a wide range of technological approaches, including Generation IV technologies.
MMRs are principally intended for off-grid operation in remote locations where they are expected to becompetitive with prevalent sources of electricity.

Source: NEA, 2021.

SMRs bring a number of unique design features that support both the safety case and economicsof these innovative reactors. This includes integral designs that contribute to a robust inherent safetycase, low core inventories to reduce the need for emergency planning zones, improved modularisationand manufacturability that would transform nuclear new builds delivery models, and enhanced
flexibility for nuclear energy to further support variable renewables integration in the electricity mix.
Dozens of SMR designs are under development in countries around the world. The designs underdevelopment seek to provide different value propositions, with a variety of sizes and temperaturesintended for different applications, as well as other features and benefits including, for example,
simplified and enhanced safety, proliferation resistance, modular manufacturing, scalability, and evenportability in some cases.
The variety of sizes and temperatures creates opportunities for SMRs to be deployed for a wide
range of new applications, but competition is fierce as the global market is not expected to support allof the designs presently under development. A small number of different types of reactor concepts,
providing different features (e.g. different sizes, temperatures, fuel cycles) could provide the flexibility
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to meet global requirements across a range of applications. Fleet deployment is expected with somepotential for blended fleets that incorporate complementary types of reactor concepts. Various market
and non-market forces will continue to advance winning technologies while others will fall behind.
Beyond technical feasibility, winning SMR technologies will require regulatory approvals, financing,sites, operators, supply chains, customers, and public confidence.
Cost competitiveness of SMRs will depend on several factors. Modularisation is planned to drive
new delivery models, with factory production expected to drive down unit costs through economies
of series. The price of carbon and regulatory costs will also be key drivers of the economics of SMRs.

Figure 10. SMRs – ranges of sizes and temperatures for heat applications
1 600

Steel, glass, ceramic, cement
1 400

1 200

Output temperature (o C)

1 000
EM2
800
U-battery

Kairos

USNC

600

Aluminium, steam methane reforming

HTR-PM
IMSR

Xe-100Westinghouse
lead fast reactor

MoltexChemicals, ammonia, refineries
ARC-100
400

NuScaleUK SMR
Soda ashNuwardAkademik Lomonosov

BWRX-300

200

Paper
0
0

50

100

150

200

250

300

350

400

450

500

Power output (MWe)High temperature reactors

Liquid metal fast reactors

Molten salt reactors

Gas fast reactors

Floating light water reactors

Light water reactors-SMRs

Source: Analysis based on IAEA (2020).

While the pace of SMRs deployment is still subject to a number of uncertainties, it is clear fromexisting market outlook studies (e.g. NEA, Canada’s SMR Roadmap, NNL, McKinsey & Company) thatthese reactors could see a rapidly increasing rate of construction in net zero pathways, with several

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SMR designs expected to be commercially deployed within 5 to 10 years and ready to contribute tonear-term and medium-term emissions reductions.
Up to 2035, the NEA estimates that the global SMR market could reach 21 gigawatts (NEA, 2016).
Afterwards, a rapid increase in build rate can be envisaged with construction between 50 and
150 gigawatts per year considered by McKinsey & Company (2018). Assuming a build rate that reaches
75 gigawatts per year by 2050, up to 375 gigawatts of installed capacity would be built over the next
three decades. This would translate into 15 gigatonnes of cumulative CO2 emissions avoided.

Table 7. SMRs – range of applications
On-grid

Larger SMRs, in the range of 200-300 megawatts electric, are designed primarily for on-grid power generation, suitable
for smaller grids that cannot support gigawatt-scale reactors, or in contexts where near-term growth in demand is notexpected to warrant deployment of gigawatt-scale reactors. This size of SMRs is also especially well-suited to coal power
plant replacement, where existing balance of plant and local infrastructure can be leveraged and reused to drive downplant replacement costs.

Off-grid

Several smaller SMRs, including micro-SMRs as small as 1 to 10 megawatts electric, are under development for off-grid
applications, including as an alternative to diesel generators in remote communities and at resource extraction sites.
In these contexts, SMRs may be used to provide power as well as heat for various purposes such as district heating,greenhouse heating, and mine-shaft heating, among other low heat applications. Micro-SMRs, in particular, create
opportunities for distributed generation and site energy independence with potential applications for various types ofsites that require greater energy security than the local grid offers including, for example, military bases, critical research
campuses, and edge-of-grid or end-of-pipeline industrial sites, among others.

Heat

Many SMR designs, both small and large, will operate at higher temperatures, creating opportunities for deep
decarbonisation of hard-to-abate portions of the economy. High temperature SMRs, or high temperature nuclear energy
more broadly, could create the first real non-emitting alternative to fossil fuel cogeneration by offering combined heatand power solutions for industrial customers. Interest in this application is high, but success will require more than justtechnical feasibility. The size of the market for high temperature SMRs will depend on cost competitiveness (albeit in
the presence of carbon prices and other policies to curb emissions), which will need to be proven, as well as alignmentof other requirements, such as synchronicity of industrial project planning timelines with SMR deployment timelines.

Marinemerchant
shipping

Some SMRs are under development with the aim of providing a non-emitting alternative for marine merchant shipping
propulsion representing, in effect, a civilian version of nuclear submarines and nuclear ice breakers that have been
operating for several decades. Successful deployment of SMRs for marine merchant shipping could yield significant
emissions reductions as shipping remains a very hard-to-abate industrial sector.

Figure 11. SMR – installed capacity andcumulative emissions avoided (2020-2050)
Small modular reactor market outlook up to 2035
Small modular reactor market extrapolation post-2035
Cumulative emissions avoided

Installed capacity (GWe)

400
350

45
40
35

300

30

250

25

200

20

150

15

100

10

50

5

0

Cumulative emissions avoided (GtCO2)

50

450

0
2020

2025

2030

2035

2040

2045

2050

Note: It is assumed that nuclear power (12 g CO2eq/kWh) is displaced by gas with a carbon footprint of 490 g CO2eq/
kWh (Bruckner, 2014). SMR 2035 market outlook based on NEA (2016). Extrapolation post-2035 based on SMR build rateenvisaged by McKinsey & Company (2018) “Nuclear deep decarbonization scenario”. By 2050, 25% of nuclear reactors
are used for nuclear heat applications, also displacing gas. By 2050, nuclear reactors operate with a 90% availability
factors with 60% of the power used to supply electricity and 30% to supply hydrogen. Hydrogen produced with nuclear
power will displace steam methane reforming (10 kg CO2 per kg of H2).

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Box 3: Generation IV reactors
Generation IV reactors are advanced reactors that aim to take advantage of high-temperature coolants suchas helium, liquid metals, liquid salts, or supercritical water. This additional design flexibility allows for up to
a 40% increase in thermal efficiency, while also opening the option of industrial heat applications that candisplace substantial fossil fuel use.
When used with an advanced fuel cycle, Generation IV reactors can produce up to a one hundred-foldimprovement in uranium utilisation. Additionally, advanced fuel recycling options enable the reduction of thevolume and radiotoxicity of the ultimate waste to be stored in deep geological repositories.
Generation IV reactors can be built with a range of sizes, including as SMRs. In fact, most of the near termcommercial prospects for Generation IV reactors have the capacity range of SMRs (up to 300 MWe). Larger
Generation IV reactors are also in operation or under construction in China, India and Russia. With several
innovative concepts that have been under development for decades, commercial deployment is now expected
as early as the early 2030s for the most mature Generation IV SMRs.
Thirteen countries and the European Union are advancing the development of Generation IV reactors
through multilateral collaboration under the aegis of the Generation IV International Forum (GIF). GIF isa multinational co-operative endeavour organised to carry out the research and development needed toestablish the feasibility and performance capabilities of the next generation nuclear systems. Six systems
are under consideration: very high temperature reactors (VHTRs), molten salt reactors (MSRs), sodium-cooled
fast reactors (SFRs), supercritical water-cooled reactors (SCWRs), gas-cooled fast reactors (GFRs) and leadcooled fast reactors (LFRs).

Figure 12. Generation IV systems
Very high temperature reactors

Molten salt reactors

Sodium-cooled fast reactors

Supercritical water-cooled reactors

Gas-cooled fast reactor

Lead-cooled fast reactor

Source: GIF (2021).

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Nuclear hybrid energy systems including hydrogen
To understand the full potential of nuclear energy to contribute to global decarbonisation, it is helpful
to take a system level view, to consider how nuclear energy can be integrated within broader energy
systems, and how energy systems can be coupled with other industrial sectors to achieve maximum
efficiencies and emissions reductions.
The term “hybrid energy systems” can be used to refer to several approaches:• Scenarios where one energy source provides multiple useful outputs (such as combined heatand power);• Scenarios where multiple energy sources are integrated to provide reliable power (such as variable

renewables coupled with batteries and diesel backup to provide electricity to a remote micro-grid);• Scenarios where multiple energy sources are integrated to provide multiple outputs (such as

variable renewables and nuclear energy integrated to provide power to a grid and to producehydrogen).

Hybrid energy systems are tightly coupled systems designed to maximise fuel utilisation andprofitability across sectors as well as the overall system reliability (Arent et al., 2021). These types ofsystems are more complex, involving dynamic and multi-scale interactions. Nuclear hybrid energy
systems are hybrid energy systems that include nuclear energy, for power or non-power applications.
Nuclear power could play a key role in hybrid energy systems as a source of both low-carbon heatand electricity. In hybrid systems, nuclear generators could shift from electricity to heat generation
depending on price signals and other demand patterns and system constraints. The possibility to
produce either electricity or heat for multiple applications can enhance flexible operations while
maintaining high capacity factors. Such operational modes can therefore have a positive impact on
the economics of nuclear power.

Figure 13. Notional hybrid energy system
Value added
applications
Hydrogen/natural gas
infrastructure

Electricity
grid
Wind

HydrogenvehiclePower
generation

Synthetic
fuels
Hydrogenstorage/
distribution

Solar PV

Upgradingoil/biomass

Battery
Thermal(nuclear,geothermaland CSP)

NH3

Hydrogengeneration

Other
end useMetalsrefining

Chemical(fossil, biomass)
Source: Bragg-Sitton and Boardman (2017). Graphic created by Dr Bryan Pivovar, NREL.

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Nuclear reactors could serve a wide range of applications and demands: electricity for the grid,electricity for hydrogen production from electrolysis, heat to be stored in thermal storage facilities,
and process heat for multiple industrial applications.

Figure 14. Notional nuclear hybrid energy system

Process heat(without augmented)
Processheat
production

NuclearreactorPossiblethermalenergystorageHeat
augmentation

Augmented
heat

Petroleumrefining
Chemicals
manufacturing
Cement and lime
production
Primary metals
manufacturing
Food production

Electricity

Electricity
production
Electricity
Hydrogenproduction

HydrogenTransportation (hydrogen, synfuels, elec.)
MiningHydrogenSynfuels
production

Pulp and paper
manufacturing

Synfuels

Ammonia Ammonia
production
Hydrogen
Possible methanol andsynthetic methane as well

Carbon conversion
Desalination
Electricity and otherenergy systems

Note: The “nuclear reactor” box represents, existing reactors, large Generation III new build, and SMRs, both light water
reactors and advanced technologies
Source: Foss et al. (2021).

The extent of emissions reductions enabled by the integration – or hybridisation – of energy systems
depends on the magnitude of non-emitting energy sources deployed in the system, but it is the systems
level integration that enables more extensive, more rapid, and more cost-effective deployment of various
non-emitting technologies by coupling them with other enabling non-emitting technologies. Notably,
integration of nuclear with variable renewables provides much needed grid flexibility and enables deeper
penetration of variable renewables on the grid. Nuclear energy also provides cost-effective and largescale options for low-carbon hydrogen production from existing and available nuclear technologies.
Future nuclear innovation may offer increased efficiencies, but existing nuclear technologies are alreadyavailable at the scale required to enable variable renewables and low-carbon hydrogen production tomeet near-term growing demand and aggressive emissions reductions targets.
There is momentous interest around the world in hydrogen as a potential part of the solutions toclimate change. Hydrogen has the potential to contribute to decarbonisation strategies if it is producedwith low-carbon sources and its production does not crowd out decarbonisation of other parts of theenergy system, for example, by competing for low-carbon electricity where supply is limited.
The hydrogen economy, along with hybrid energy systems more broadly, is a complex conceptcharacterised by complex and dynamic interactions across energy sub-systems. Hydrogen cannot bemodelled as simply another source of demand for the electricity system. Since hydrogen can also be atool for long-term storage and a vector for sector coupling, it can be both a source of supply as well as
demand, changing the energy system dynamics.
It is useful to think of the hydrogen economy in terms of hydrogen production process, hydrogentransportation, distribution and storage, and hydrogen applications or end-uses (Figure 15).

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Heat

FossilBiomass

Nuclear

Grid

Renewables

Nuclear

Grid

Renewables

Nuclear

Solar CSP

NuclearChemicalreformingHigh
temperatureelectrolysis

Lowtemperatureelectrolysis

Thermochemical
cyclesPROCESS

Hydrogen as by-product of industrial processes

Heat & power

Power

Heat

ENERGY SOURCE

Tanks,
geologicalstorage

Storage

Industry
feedstock& reagent

Buildings

Heat and power
fuel cells
Hydrogen boilers

Methanation Blendingin gasnetworkGas

Fuel-cell

H2
turbinePower

Hydrogen transport and distribution

Industry

High-grade
heat(>400°C)

END-USER SECTOR

Figure 15. The hydrogen economy – energy sources, production processes and end-uses

Fuel-cellelectric vehicle

Fuel-cell trains

Heavy transport(fuel-cell, e-fuel)Shipping (e-fuel)Aviation (e-fuel)Transport

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Since hydrogen occurs naturally only in compound forms with other elements – for example aswater (H20) or as hydrocarbons (containing both hydrogen and carbon) such as natural gas, coal, andpetroleum – hydrogen for the energy transition (H2) must be produced. It can be produced from avariety of technologies and feedstocks (i.e. material inputs), each with different carbon intensities.
Some of the most promising near-term large-scale hydrogen flows start with electrolysis, to producehydrogen for industry (e.g. refining, ammonia) and transport. Demand for electricity to produce hydrogenfrom electrolysis expected to reach as much as 15 000 terrawatt-hours by 2050, with significant emissions
implications depending on whether the electricity is non-emitting of fossil generated.
Irrespective of the carbon intensities of hydrogen production methods, once it has been produced,hydrogen can be stored and transported for a range of end-uses including fuel cells for transport orbuildings, as well as a range of additional industry applications (e.g. iron and steel making). Hydrogencan also be used to produce synthetic fuels (e-fuels) that can be used in particular for transport(e.g. haulage, shipping, aviation). Hydrogen research and development is active in every area of thehydrogen economy, across production methods, storage and transportation methods, and end-uses.
More than 50% of hydrogen demand by 2030 is projected to be driven by new applications, forexample hydrogen blended into gas networks and hydrogen for power generation. Beyond 2030,
growth in hydrogen demand is expected to be driven primarily by the transport sector, roughly halffrom road and half from aviation and shipping (IEA, 2021).
Taken together, nuclear hybrid systems with non-electric applications including hydrogencan contribute to avoiding nearly 23 gigatonnes of cumulative emissions between 2020-50 (withrespectively 15 gigatonnes of emissions for nuclear heat and 8 gigatonnes of emissions for nuclearhydrogen). This represents more than one third of the overall contribution of nuclear energy to climatechange mitigation, with the other two thirds being delivered by nuclear power. In addition, the full roleof nuclear will not be limited to these directly emissions avoided. Through nuclear hybrid systems,
nuclear energy will be a source of flexibility to support variable renewables integration, enabling themto contribute to emissions reductions.

Figure 16. Carbon emissions avoided by nuclear power and non-power applications (2020-2050)
Nuclear electricity

Nuclear heat

90

Nuclear hydrogen

80

CO2 avoided per year (GtCO2/year)

Cumulative emissions avoided
4

70
60

3

50
40

2

30
20

1

10

Cumulative CO2 emissions avoided (GtCO2)

5

0

0
2020

2025

2030

2035

2040

2045

2050

Full potential of nuclear contributions to net zeroTaken together, the contributions of long-term operation, new builds of large-scale Generation III
nuclear technologies, small modular reactors, nuclear hybrid energy and hydrogen systems begins toreveal the full extent of the potential for nuclear energy and nuclear innovations to play a significant
and growing role in pathways to net zero by 2050.

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The average IPCC 1.5°C scenario requires nuclear energy to reach 1 160 gigwatts of electricity by
2050. This is an aspirational target but it is not beyond reach. It can be achieved through a combinationof long-term operation, large-scale Generation-III new builds and small modular reactors, as illustrated
in Figure 17. Reaching this target would avoid 87 gigatonnes of cumulative emissions between 2020
and 2050, positioning nuclear energy’s contribution to preserve 20% of the world’s carbon budget
consistent with a 1.5°C scenario. This would be equivalent to avoiding nearly three years of global
carbon emissions at 2020 levels.

Figure 17. Full potential of nuclear contributions to net zero90

Installed capacity (GWe)

1 200

80
70

1 000

60
800

50
40

600

30

400

20
200

10
0
2020

2025

2030

2035

2040

2045

Cumulative CO2 emissions avoided (GtCO2)

100
1 400

2050

Cumulative emissions avoided
IPCC 1.5°C scenarios (2050 average) = 1 160 GW nuclear capacity (based on the average of IPCC 1.5°C scenarios)
Conservative projections
Small modular reactors (2035 market outlook)
Large-scale new builds (under construction)
Long-term operation (planned)

Ambitious projections
Small modular reactors (post-2035 market extrapolation)
Large-scale new builds (planned)Long-term operation (to 80 years)

These estimates are not forecasts but represent what could be achieved with timely enabling policy
decisions.

Box 4: The availability of uranium to support nuclear contributions to net zero
Excerpt from NEA/IAEA Uranium 2020: Resources, Production and Demand (Red Book):“Sufficient uranium resources exist to support continued use of nuclear power and significant growthin nuclear capacity for low-carbon electricity generation and other uses (e.g. heat, hydrogen production)in the long term. Identified recoverable resources, including reasonably assured resources and inferredresources (at a cost <USD 260/kgU, equivalent to USD 100/lb U3O8) are sufficient for over 135 years,
considering uranium requirements as of 1 January 2019. However, considerable exploration, innovativetechniques and timely investment will be required to turn these resources into refined uranium readyfor nuclear fuel production and to facilitate the deployment of promising nuclear technologies.
In the wake of recent significant reductions in uranium production and the effects of COVID-19 pandemic,
the coming challenges are likely to be those associated with constrained investment capabilities, as aresult of depressed market conditions that will push the industry to optimise its activities still further.”

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Box 5: The System Costs of Electricity
To understand the costs of electricity provision requires systems level thinking.

Figure 18. Understanding system costs of electricity

Plant-level production costs
at market prices

Social andenvironmental
costs
Grid-level costsofemissions,land-use,of the electricity
climate change, security
systemof supply, etc.

Source: Adapted from NEA (2012).

The first level of analysis is plant-level costs of generation, which include, amongst other costs, the costs ofactual concrete and steel used to build the plant, as well as fuel and human resources to operate the plant.
These plant-level costs are typically referred to as the levelised cost of electricity (LCOE), and they may include
some costs that were previously considered as externalities, for example if there is a price on carbon or alegislated requirement to internalise the end of life cycle costs into plant-level costs.
The next level of analysis takes into account grid-level system costs. These are the costs that generating
units impose on the broader electricity system – including the costs of maintaining a high level of securityof supply at all times as well as delivering electricity from generating plants to customers – in other words
in addition to production, they include connection, distribution, and transmission costs. Most importantly,
grid-level costs include the costs associated with compensating for the variability and uncertainty in the
supply from generating plants. This includes the costs of additional dispatchable capacity to account for thevariability of certain renewables such as wind and solar PV and for maintaining spinning reserves that can beramped up when the production of variable sources falls short of forecasts.
The final level of analysis addresses the full costs, including the social and environmental costs that different
technologies impose on the well-being of people and communities, including negative externalities likeatmospheric pollution, impacts on land-use and biodiversity, as well as, in certain cases, positive externalities
such as impacts on employment and economic development, or spin-off benefits from technology innovation.
These are the externalities that are not accounted for in plant-level costs or grid-level system costs.
The combination of plant-level costs, grid-level systems costs, and full social and environmental costs createsa framework that allows policymakers to compare the costs of different generating options – comparing
apples to apples, not apples to oranges. To do so requires a systems level perspective.
Total economic system costs, then, are defined as plant-level generating costs plus grid-level systemcosts. Taking this systems level perspective includes:• Profile costs – the grid-level costs imposed by variability or intermittency.
• Balancing costs – the grid-level costs imposed by uncertainty in generation.
• Connection, distribution, and transmission costs – the costs of delivering electricity from distributed
power generation to customers.

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To be clear: while all technologies impose some system costs, variable, intermittent, and uncertain sourcesof power generation impose far greater grid-level system costs, which is why it is so important to take asystems level perspective when comparing costs of variable renewables with nuclear, baseload hydro, andfossil generation.

Figure 19. Levelised cost of electricity (LCOE)
for different sources of electricity
250

LCOE (USD/MWh)

200
150
100
50

Fossil fueltechnologies

Gas (CCGT, CCUS)

Coal (CCUS)

Lignite (CCUS)

Biomass

Geothermal

Hydro (run of river, >= 5MW)

Hydro (reservoir, >= 5 MW)

Solar thermal (CSP)

Solar PV (residential)

Solar PV (commercial)

Solar PV (utility scale)

Offshore wind

Onshore wind (>= 1 MW)

Nuclear (LTO)

NuclearGas (CCGT)

Coal

Lignite0

Low-carbon technologies

Source: IEA/NEA (2020).

The first step for cost comparisons remains LCOE analysis. Presented in Figure 19, an analysis of systemcosts from more than 20 IEA and NEA member countries concluded that the lowest cost option for generating
electricity is long-term operation of nuclear power plants (IEA/NEA, 2020). Equally notable was the finding
about the range of costs for solar and wind generation, which depend heavily on regional endowments andconditions. These results can be reproduced, and tested with different input parameters, with the IEA-NEA
online LCOE calculator at: www.oecd-nea.org/lcoe.
LCOE analysis, considering technologies one by one, only tells part of the story though. It is crucial also
to assess the interaction of different technologies in a mix of generating sources with different shares inthe electricity supply. In order to analyse this, a recent NEA study compared a range of scenarios, startingwith a base case with 0% variable renewables, then considering mixes with increasing shares of variable
renewables, up to 75% variable renewables in the mix.

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MEETING CLIMATE CHANGE TARGETS: THE ROLE OF NUCLEAR ENERGYAs shown in Figure 20, total costs rise as the share of variable renewables increases. This is due, in part to
the rise in average plant-level costs, which in reality depends on the regional endowments and meteorologicalconditions in different countries. Under all circumstance, however, the system costs will rise as the growing
share of variable renewables imposes greater costs on the grid for stability and flexibility.

Figure 20. Total costs for different mixes of electricity(with a carbon constraint of 50 grams per kWh)
Total costs

Total costs of electricity provision(USD billion/year)

Plant-level costs

Profile costs

Connection costs

Balancing costs

Grid costs

70
60
50
40
30
20
10
0
Main
scenario
Base case

10% VRE

30% VRENo IC

No IC,
no flexiblehydro

50% VRE

75% VRE

Low-cost
VRE

Breakdown of system costs
Profile costs

60

Connection costs

Balancing costs

Grid costs

System costs (USD/MWh VRE)

50
40
30
20
10
0
Main scenario
10% VRE

30% VRE

No IC
50% VRENo IC, noflexible hydro75% VRE

Source: NEA (2019).

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Figure 20 shows the break-down of system costs as the share of variable renewables grows from 10% to 75%of the mix, including profile costs (to compensate for variability and intermittency), connection, distribution,and transmission costs, and balancing costs (to compensate for uncertainty). A key finding is that profile
costs (to compensate for variability and intermittency) are the dominant driver of increasing total costs as theshare of variable renewables grows.

Figure 21. Total costs for different mixes of electricity(driving to net-zero emissions)300-320275-300
250-275
225-250200-225
175-200
150-175
125-150
100-12575-100
50-75

300

1
15
Car
b

on

VRE

50
em

issi

on

100
con
s

200

trai

nt (
gr/
kW
h)

Nucl

RE

nd V

ear a

300

tion
nisa

250
225
200
175
150
125
100
75
50
25
0

SD/MWh)275

Electricity price (UNet zero

s

ario

scen

arbo

Dec

400

Source: Based on Sepulveda (2016).

System costs are also a function of overall carbon constraints. Figure 21 shows the total costs (the sum ofplant-level and grid-level system costs) as a function of carbon constraints (on the horizontal axis pointingleft) and share of variable renewables (on the horizontal axis pointing right). The previous 2-dimensional graph(shown in Figure 20 above) illustrated how total costs increased significantly in scenarios with high shares ofvariable renewables. On the three-dimensional graph (shown in Figure 21), this is represented by the blue line,
which cuts the three-dimensional image at a carbon constraint of 50 grams per kilowatt hour.
The 3-dimensional graph shows the effects on total costs as carbon emissions are increasingly constrained.
The red line shows what happens to total costs when carbon constraints reach net-zero emissions. The
relationship between the share of variable renewables and systems costs, driven by profile costs to compensate
for variability, is even more pronounced when carbon constraints become more stringent.
The policy implications of these systems costs findings are significant. It may be possible to reduce emissions
to meet 2030 targets by growing the share of variable renewables in the mix. However, the costs of reaching
net zero with high shares of variable renewables are likely prohibitive. Why? In part, because initially, asvariable renewables are introduced, they can be backed up with a low cost option, which in the absence of aserious carbon constraint is likely to be natural gas. But eventually, in a carbon constrained world, the options
for backing up variable renewables become increasingly expensive. Dispatchable hydro power and nuclear
energy are the only economic options while batteries remain prohibitively expensive for anything other thanvery short-term storage.

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Put another way, policies to achieve 2030 targets may first appear like progress towards 2050 net zerotargets, but they may be deceiving. Taking coal offline and replacing it with a mix of variable renewables andnatural gas may enable countries to reach 2030 emissions reduction targets. However, to get to net zero,
countries will likely also need to take natural gas offline. If there has already been a significant build-out ofvariable renewables to reach 2030 targets, replacing natural gas becomes increasingly difficult and costly.
This is illustrated in Figure 22 (left side). To reach net-zero with high shares of variable renewables, natural
gas is replaced with a mix of battery storage and hydro storage. Owing to the variability of solar and wind
power, greater and greater generating capacity (in the form of variable renewables plus batteries and storage)
is required, which also contributes to growing total costs. Meeting demand with a mix of variable renewables
plus batteries and storage requires much more built capacity than a grid based on baseload and dispatchable
sources of power, like nuclear energy.

Figure 22. Driving to net zero with different mixes of generation capacity
OCGT
CCGT

Onshore wind
Solar PV

Hydro storage
NuclearBattery storage

Generation capacity (GW)

300
250
200
150
100
50
0
400

300

200

100
Only VRE

50

15

1

400

300

200

100

50

15

1

Nuclear power and VRE

Decarbonisation scenario and carbon emission target (gr/kWh)
Source: Based on Sepulveda (2016).

Figure 22 (right side) also sets out the results of an optimisation model, which concludes that the most costeffective replacement for natural gas as countries drive to a net-zero future is nuclear energy (in orange). The
more stringent the carbon constraint, the more indispensable becomes nuclear energy.

Challenges and opportunities
While the potential exists for nuclear energy to play a much larger role in global climate change
mitigation efforts, various enabling conditions must be met for this technology to fulfil its potential.
Every year, the IEA Tracking Clean Energy Progress reports stress that efforts to grow and decarbonise
the power sector broadly, including growing the nuclear power, are not on track to meet climate targets.
According to current policy trends, nuclear capacity in 2050 will amount to 479 gigawatts – well below
the target of 1 160 gigawatts of electricity set out above. As Figure 23 below shows, addressing this policy
gap with nuclear new builds – whether large Generation III, Generation IV, or small modular reactors –will require near-term policy decisions to enable their deployment over the next three decades.

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Figure 23. Global installed nuclear capacity gap (2020-2050)
1 200

Installed capacity (GWe)

1 000
R&D (7-10 years)  licensing (2-4 years)  demo (5-7 years)

800

Global nuclear
capacity gap

Availabilityof LWR SMRs

600

Licensing (2-4 years)  demo (5-7 years)

400

200

Availability
non-LWR SMRs

Policydecisions0
2020

Availability of largescale generation III

2025

2030

Planned long-term operation

2035

2040

Planned large-scale generation III

2045

2050

Global nuclear capacity gap

IPCC 1.5°C scenarios (2050 average) = 1 160 GW nuclear capacity(based on the average of IPCC 1.5°C scenarios)
Source: IEA (forthcoming).

The existing nuclear fleet, with long-term operation, will continue to make an important
contribution past 2050 (shown in yellow in Figure 23). Planned nuclear new builds of Generation III
reactors will also play a role (shown in green in Figure 22). Even with these important contributions,
there is a projected gap between the minimum required global installed nuclear capacity and planned global
nuclear capacity. This global nuclear capacity gap is shown in red on Figure 22, and reaches nearly
300 gigawatts by 2050.
Even though the global nuclear capacity gap does not become apparent until 2030-2050, there
is an urgency to action. Owing to the timelines for nuclear projects, decisions must be taken years
in advance to ensure adequate global installed nuclear capacity for the net zero scenario. Targeted
policies, sustained investment and international co-operation are needed to reduce project costs,
improve deployment timelines, build public confidence, and address financial barriers.

Recommendation 1: Acting now
Governments and industry should work together on an urgent basis to demonstrate and commerciallydeploy nuclear energy innovations before the window of opportunity closes to meet the 1.5°C target.

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MEETING CLIMATE CHANGE TARGETS: THE ROLE OF NUCLEAR ENERGYReducing project costs
Nuclear projects are capital intensive, with the cost of capital often representing up to 75% ofproduction costs. The nuclear sector also has a negative reputation among financiers and policy
makers for project delays and cost overruns. Nuclear energy projects face challenges competing withfossil energy in the absence of a price on carbon, as well as challenges competing with wind and solar
power in markets that fail to value dispatchability.
While NEA analyses have demonstrated that nuclear energy is highly competitive with other lowcarbon technologies when costs are considered at the level of electricity systems, potential customersof nuclear designs have concerns about project costs. At the plant level, while long-term operation
remains one of the lowest cost options for low-carbon electricity in OECD countries, nuclear newbuilds are often considered as a high cost option, in large part due to a legacy of cost overruns overthe last decade. The ability of the nuclear sector to demonstrate that it can meet its cost reduction
objectives – be it for large Generation III, Generation IV, or small modular reactors – will play in key rolein addressing the perception of nuclear construction risks.
Structural market reforms are needed to address the impacts of greater integration of variable
renewables and their associated system costs. More generally, decarbonising the electricity sector
in a cost-effective manner while maintaining high levels of electricity security requires policy
makers to recognise and equitably allocate system costs to the responsible technologies (NEA, 2019).
Fostering competitive short-term markets and ensuring adequate capacity and flexibility, as well astransmission and distribution infrastructures, are key policy measures to support the internalisationof system costs by market participants.
Last but not least, new business models will also be required to support the emergence of integrated
energy systems where nuclear would play on different energy markets, potentially providing both lowcarbon electricity and heat to a range of different customers.

Recommendation 2: Understanding and reducing costs
The nuclear sector should implement recommendations from the NEA (2020) study Unlocking
Reductions in the Construction Costs of Nuclear: A Practical Guide for Stakeholders to ensure that thesector meets cost objectives.
Governments should take a systems level perspective when developing electricity policies to ensurethat markets value desired outcomes, such as low carbon baseload, dispatchability, and reliability.

Improving deployment timelines
Over the last decade, delays with nuclear new build projects have brought into question the relevanceof nuclear power to provide a timely contribution towards decarbonisation efforts. Compared tovariable renewables whose construction can take 1 or 2 years, nuclear power plants construction takes
several more years and can easily expend beyond a decade once planning and licensing processes aretaken into account.
Conversely, historical and recent experience show that under the right policy frameworks and arobust programmatic approach, nuclear power can be a low-carbon technology with rapid delivery
times and with the highest rate of annual increase of electricity generation per capita. This was thecase historically for countries such as France and jurisdictions such as Ontario in Canada that haveboth decarbonised their electricity mix in less than two decades with nuclear energy and hydropower.

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Today, the Barakah project in the United Arab Emirates (UAE) demonstrates that such rate of
deployment can also be achieved with large Generation III nuclear reactors. In China and Korea,
countries in more advanced stages of nuclear construction learning, construction lead-time are aroundin average of 5-6 years, or even lower.

Figure 24. Average annual increase of low-carbon electricity per capita
during decade of peak scale-up
Solar PV
Wind
Nuclear

United States, 2010-2020
EU-27, 2010-2020
Germany, 2010-2020
United States, 1981-1991
Germany, 1975-1985
Korea, 1995-2005
Barakah, 2012-2022 (projection)
France, 1979-1989
0

100

200

300

400

500

kWh per capita per year

Harmonising codes and standards and regulatory approaches can also be a key enabler for the
deployment of nuclear power, in particular for new technologies such as SMRs. However, the advances
introduced by innovative nuclear technologies and reactor designs such as SMRs and advanced
reactors may deviate from current licensing regimes and practices. The limited regulatory experience
with novel designs poses a significant challenge in demonstrating and approving their safety case.
SMRs and advanced reactors could be viewed as an opportunity for the early development ofinternational collaborative approaches for the harmonisation of licensing frameworks and codesand standards (NEA, 2021a). These topics have already been extensively discussed for large reactors
and the experience gained could be applied to these innovative reactors. For instance, at the level ofindustrial codes and standards harmonisation, the WNA CORDEL working group has made progress
inspired by the example of the aircraft industry. More generally, these issues are currently discussed by
the NEA and the IAEA. Further, the Multinational Design Evaluation Programme (MDEP) administeredby the NEA encourages multinational convergence of codes, standards and safety goals.

Recommendation 3: Addressing timelines
Governments and industry should learn from successful examples of rapid deployment of nuclear
to decarbonise electricity grids, such as France and Ontario (Canada) in the 1980s and the UAE in2010-present. These examples chart a path for rapid decarbonisation of electricity grids that are still
heavily reliant on coal and fossil energy.
Regulators should collaborate to harmonise licensing approaches to enable efficient fleet deployment of
nuclear innovations across international boundaries.

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Building public confidence
Public confidence in nuclear energy is mixed and varies greatly by region and demographic. Commonly
cited concerns include questions about long-term waste management, safety and security. Building
and maintaining public confidence is essential for all nuclear projects, from mining to research anddevelopment, operations, and waste management.
Building trust is central to building public confidence, and requires sustained investments inopen and transparent engagement as well as science communication. A common mistake, however,is to assume that public confidence is primarily a communications issue, when in actuality, publicconfidence is much more complex, touching on issues of trust, values, culture, and benefits sharing,
among others.
Public opinion research, although not uniform, suggests that in some areas proximity andfamiliarity with nuclear power operations tend to be correlated with openness to nuclear energy(Wang and Kim, 2018). In addition, concern about climate change also tends to be associated withgreater openness to nuclear energy (Anderson and Coletto, 2019, Bisconti, 2021).
While energy technological choices are increasingly driven by climate change considerations,other environmental factors are also expected to play a growing role, either as limiting factors for thedevelopment of some technologies, or because of heightened emphasis on impacts for biodiversity
and other sustainable development goals. These considerations include in particular factors suchas land footprint and critical minerals requirements. The significant increase in critical mineral
requirements in low-carbon scenarios means that the energy sector is emerging as a major source ofdemand in critical mineral markets (IEA, 2021d). As shown in Figure 25 and Figure 26 below, nuclear
power is the low-carbon source of electricity that scores best for both requirements in terms of criticalminerals1 and land footprint. Shining a light on these comparisons could have important effects on
public confidence in nuclear energy projects.

Figure 25. Critical minerals for different sources of electricity
Onshore wind
Solar PV
Offshore wind
Nuclear
Coal
Natural gas
0

50

100

150

200

CobaltSilicon

Chromium
OthersResource requirement (kg/MWh)
CopperMolybdenum

NickelZinc

Manganese
Rare earths

Source: Analysis based on IEA (2021) data.

1.
Uranium is not within the scope of the IEA analysis that focuses on mineral requirements for production of equipment, andnot for operations. Uranium long-term supply-demand adequacy is assessed periodically in the NEA/IAEA “Red Book” (NEA/IAEA,2021).

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Figure 26. Land footprint for different sources of electricity
400
Land footprint (m²/MWh)

350
300
250
200
150
100
50
0
Coal

Natural gas

Nuclear

Solar

Wind

Hydro

Source: Analysis based on Strata (2017).

Recommendation 4: Building public confidence
Governments and industry should engage the citizenry to build trust and public confidence, ensuring thatpublic dialogues about energy options are evidence-based. This involves addressing misinformation andensuring that a realistic conversation about the pros and cons of various options is facilitated.

Addressing financial barriers
The cost of capital is one of the main drivers of the levelised cost of nuclear power. As shown in
Figure 20, an increase from 6 to 9% on the nominal weighted average cost of capital (WACC) effects anincrease of approximately 50% of the levelised cost2.
All capital-intensive infrastructure projects – including but not limited to nuclear energy
projects – depend to some extent on direct or indirect support and risk-sharing from governments
and international financial institutions. This can include direct funding, but also enabling policy
frameworks that allow an efficient allocation of risks and for nuclear energy projects to compete on
their merits on equal footing with other non-emitting energy projects.
The right policy frameworks can help to address construction and market risks. Depending on
national context and project characteristics, several financing models can be considered for nuclear
new build projects with governments actively helping to mitigate risks and supporting financing.
Governments are uniquely positioned to play this role, leveraging historically low interest rates andrelatively abundant private capital in OECD countries, to lower the cost of capital for capital intensive
nuclear energy projects.

2.

With the assumption of an overnight cost of USD 4 500/KWe and a lead-time of 7 years.

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Figure 27. Levelised cost of nuclear power for a range of weighted-average costs of capital

Levelised cost of electricity (USD/MWh)

160
140
120
100
80
60
40
20
0
0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

Weighted-average cost of capital
Fuel cycle costs

Operation and maintenance costs

Overnight construction costs

Cost of capital

Source: NEA (2020).

Governments should also consider taking a direct equity stake in new nuclear construction
projects, as the public sector has the lowest cost of capital in most OECD countries. Doing so could
enable governments to be more proactively involved in project governance, including in activating its
social benefits.
Multilateral development banks and international financial institutions also have role to play, in
addition to national governments. Energy innovation, development and deployment policies shouldbe technology-neutral and structured to incentivise desired outcomes, such as emissions reductions
and security of energy supply. This includes taxonomies, as well as criteria for access to climate
finance, development finance, and Environmental Social and Governance (ESG) finance. Labels andcategorisation matter, as they are expected to influence and direct the flow of financing for years
to come. Metrics should be applied consistently with similar levels of scrutiny across technology
options, to allow technologies to compete on equal footing. In this way, efficiency is best achieved withtechnology-neutral policies and criteria.

Recommendation 5: Financing and investing
Governments should support a technology neutral approach that includes nuclear energy in taxonomies,
climate finance, development finance, and ESG finance.
Governments should make investments in nuclear energy, including:i.

Investments to keep the cost of capital low;ii.

Investments focused on accelerating commercialisation of nuclear innovation (focused on precommercial technology readiness levels 3-7);

iii. Investments in nuclear regulators to ensure their readiness to regulate innovation; andiv. Equity investments as well as other forms of investment in near-term nuclear new build projects.

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Box 6: UN Climate Change Conference 2021 (COP 26)
COP 26 will take place in Glasgow between 31 October and 14 November 2021. This will be the first COP totake place after the Paris Agreement takes effect and the first opportunity for countries to review commitments
and strengthen climate ambitions.
The UK Presidency has selected five key themes to structure the 2021 climate negotiations. Nuclear energy
can support priorities across all five themes.
I.

Clean energy: Accelerating the global transition to clean energy• The role of nuclear energy: As the largest source of low-carbon electricity in OECD countries andthe second largest source of low-carbon electricity around the world after hydropower, nuclear
energy is a key pillar in reaching net zero by 2050. All credible climate scenarios show a growingrole for nuclear to meet the objectives of the Paris Agreement.

II.

Clean transport: Driving the global transition to zero emission transport• The role of nuclear energy: Nuclear has a role to play as part of the clean electrification strategies
that will underlie electric vehicles and electric transport, and as a means to produce low-carbonhydrogen and other synthetic fuels and ammonia.

III. Nature-based solutions: Actions that protect, manage and restore ecosystems to address societal
challenges (e.g. climate change) while enhancing human wellbeing.
• The role of nuclear energy: Among low-carbon sources of electricity, nuclear has one of thesmallest environmental footprints, in particular with respect to critical minerals intensity and landuse, and consequentially impacts on biodiversity.
IV. Adaptation and resilience: Improving the ability of natural and human systems to respond to climatechange impacts before or after they have occurred (adaptation), or improving their inherent ability toabsorb and withstand after an adverse event (resilience).
• The role of nuclear energy: Adaptation will require reliable electricity grids. Nuclear power is areliable, dispatchable, and resilient source of clean energy, owing to a combination safety culture,operational flexibility and continuous learning.
V.

Climate finance: Investment in all of the above, as well as disinvestment from high-carbon industries.
• The role of nuclear energy: For all the reasons set out in this report, nuclear energy shouldbe front and centre in discussions about taxonomies, climate finance, development finance,and Environmental Social and Governance (or ESG) finance. But there is work to do on thisfront. Decisions taken by governments in the coming months and years will determine whether
nuclear is included in taxonomies and key finance frameworks. These decisions will guide public
and private financing decisions for years to come with long-lasting impacts. The most efficientsolutions to climate objectives will be best enabled by technology neutral taxonomies, climate
finance, development finance, and ESG criteria.

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Recommendation 6: Ensuring full representation in policy discussions about clean
energy and climate change
Governments should break the silence on nuclear energy in policy discussions about clean energy andclimate change, raising the profile of nuclear energy alongside other non-emitting energy technologies
and ensure that nuclear is included in discussions at climate change conferences. Three key messages
are of particular importance:

46

(1)

Nuclear energy already makes an important contribution to emissions reductions and it needs
to expand to meet Paris Agreement targets. Today, nuclear energy provides 10% of the world’s
electricity as the largest source of non-emitting electricity in OECD countries and second
largest source of non-emitting electricity around the world, displacing 1.6 gigatonnes of carbon
dioxide annually. The average IPCC 1.5°C scenario requires nuclear to reach 1 160 gigawatts ofelectricity by 2050, up from 394 in 2020.

(2)

Near-term nuclear innovations are expected to make significant contributions to emissions
reductions targets. Nuclear innovation in the areas of advanced and small modular reactors(SMRs), as well as nuclear hybrid energy systems, including hydrogen, is advancing quickly, withseveral SMR designs expected to be commercially deployed within 5 to 10 years, which could
displace an additional 15 gigatonnes of carbon dioxide emissions by 2050.

(3)

Policies should be technology-neutral, structured to incentivize desired outcomes such as
emissions reductions and security of energy supply. This includes taxonomies, as well as
criteria for access to climate finance (e.g. the Green Climate Fund), development finance(e.g. multilateral development banks such as the World Bank and others), and Environmental
Social and Governance (ESG) finance. Metrics should be applied consistently with similar levelsof scrutiny across technology options, to allow technologies to compete on equal footing. In thisway, efficiency is best achieved with technology-neutral policies and criteria.

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MEETING CLIMATE CHANGE TARGETS: THE ROLE OF NUCLEAR ENERGY, NEA No. 7628, © OECD 2022

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