EUROPEAN COMMISSION Brussels, 12.5.2017 COM(2017) 237 final COMMUNICATION FROM THE COMMISSION Nuclear Illustrative Programme presented under Article 40 of the Euratom Treaty - Final (after opinion of EESC) {SWD(2017) 158 final}



1.Introduction This Communication on a Nuclear Illustrative Programme (PINC), a requirement under Article 40 of the Euratom Treaty, provides an overview of investments in the EU for all the steps of the nuclear lifecycle. It is the first presented by the Commission after the Fukushima Daiichi accident in March 2011. Nuclear energy is part of the energy mix of half of the EU Member States. In those countries that choose to use it, nuclear has a role to play in ensuring the security of electricity supply. In this context, the Energy Union Strategy and the European Energy Security Strategy stressed that Member States need to apply the highest standards of safety, security, waste management and non-proliferation as well as diversify nuclear fuel supplies. Doing so will help achieve the objectives of the 2030 climate and energy framework. The EU is currently one of the three major economies that generate more than half of their electricity from low-carbon energy sources (about 58% ). The PINC provides a basis for discussing how nuclear energy can help achieve the EU's energy objectives. As nuclear safety remains the Commission's absolute priority, it specifically includes investments related to post-Fukushima safety upgrades and those related to the long-term operation of existing nuclear power plants. In addition, with the EU nuclear industry moving into a new phase characterised by increased activities in the back-end of the lifecycle, it will contribute to an informed debate on the associated investment needs and the management of nuclear liabilities. The PINC also addresses the need for investment in research reactors and the associated fuel cycle, including the production of medical radioisotopes. 2.Nuclear energy 2.1.Recent nuclear policy developments There are 129 nuclear power reactors in operation in 14 Member States, with a total capacity of 120 GWe and an average age close to 30 years. New build projects are envisaged in 10 Member States, with four reactors already under construction in Finland, France and Slovakia. Other projects in Finland, Hungary and the United Kingdom, are under licensing process, while projects in other Member States (Bulgaria, the Czech Republic, Lithuania, Poland and Romania) are at a preparatory stage. The United Kingdom has recently announced its intention to close all coal-fired power plants by 2025 and to fill the capacity gap mainly with new gas and nuclear power plants. Many countries in Europe and in the rest of the world will rely on nuclear energy to produce part of their electricity for the coming decades. The EU has the most advanced legally binding and enforceable regional framework for nuclear safety in the world and, despite diverging views among Member States on nuclear electricity, there is a shared recognition of the need to ensure the highest possible standards for the safe and responsible use of nuclear power and to protect citizens from radiation. Since the previous PINC update in 2008, the EU nuclear landscape has undergone significant changes with the organisation of the comprehensive risk and safety assessments ('stress tests') of the EU nuclear power reactors after the Fukushima Daiichi accident and the adoption of landmark legislation on nuclear safety, radioactive waste and spent fuel management and radiation protection. While the stress tests found that the safety standards of nuclear power plants in the EU, Switzerland and the Ukraine were high, further improvements were recommended. Nuclear operators are implementing them in accordance with their national action plans. The Commission will continue to monitor the implementation of those plans through the European Nuclear Safety Regulators Group. The amended Nuclear Safety Directive5 brings the nuclear safety standards to a higher level. It sets an ambitious EU-wide objective of reducing the risk of accidents and avoiding large radioactive releases. It also introduces the requirement for a European system of peer reviews, with specific safety issues to be reviewed every six years. These requirements must always be taken into account when investing in new nuclear installations and wherever reasonably practicable when upgrading existing installations. In early 2015, Euratom played a key role in ensuring the adoption of the Vienna Declaration. This commits the contracting parties of the International Atomic Energy Agency Convention on Nuclear Safety to achieving standards of safety comparable to those laid down in the amended Nuclear Safety Directive. With the expansion of nuclear energy across all continents and with many vendors coming into play, it is important to ensure that high safety standards are applied worldwide and that these are not undermined by the use of cheaper or outdated technology. The EU legal framework requires increased transparency and public participation in nuclear issues as well as improved cooperation between all stakeholders. The directives on nuclear safety, radioactive waste and radiation protection referred to above all lay down requirements on the availability of information and public participation. The Commission is currently reviewing the implementation of these requirements in the directives already transposed, and aims to promote best practices. These will also apply to the directives still to be transposed. The Commission aims to ensure that the public has access to reliable information and can participate where appropriate in a transparent decision-making process. Cooperation among the nuclear safety authorities of EU Member States is now well established thanks to the European Nuclear Safety Regulators Group. In addition, the Commission will continue to promote the dialogue between stakeholders – including civil society – through, albeit not exclusively, the European Nuclear Energy Forum. Dialogue with stakeholders and civil society over the last two years covered issues such as emergency preparedness and response, the role of nuclear in the Energy Union and security of supply, the EU as a world leader in nuclear safety, the creation of a market for decommissioning in Europe, and the crucial involvement of civil society. Together with the forthcoming report to the Council and the European Parliament on the Radioactive Waste Directive, they create a sound basis for increased transparency and debate. Moreover, more effort is necessary to enhance communication and engagement in order both to better understand civil society concerns and to better communicate and explain to the public the risk and safety aspects of all forms of nuclear technology. In addition, greater attention will continue to be paid to nuclear security. As highlighted in the conclusions of the 2016 Nuclear Security Summit, countering malevolent acts of a nuclear and radiological nature calls for international cooperation. This includes sharing information in accordance with States’ national laws and procedures. 2.2.EU nuclear market and main developments

The EU nuclear energy market needs to be examined in the global context, given the potential impact of developments in other regions on the EU nuclear industry, global safety, security, health and on public opinion. Cooperation should be further strengthened with the EU candidate countries and neighbourhood countries, in particular Ukraine, Belarus, Turkey and Armenia. Safety stress tests have already been conducted in Ukraine, are set to be completed in Armenia in 2016 and are planned in Belarus and Turkey. The EU nuclear industry has developed into a global technology leader in all nuclear industry segments and directly employs between 400 000 and 500 000 people, while creating around 400 000 additional jobs. Such leadership can be an important asset worldwide. Nuclear-related investment needs in the global market are estimated at around EUR 3 trillion by 2050 , with the majority expected in Asia. The number of countries operating nuclear power reactors and the global nuclear installed capacity are expected to increase by 2040. China's nuclear installed capacity alone is projected to increase by 125 GWe, a value higher than the current capacity of the EU (120 GWe), the United States (104 GWe) and Russia (25 GWe). The Commission predicts a decline in nuclear generation capacity at EU level up to 2025, taking into account the decisions of some Member States to phase out nuclear energy or to reduce its share in their energy mix. This trend would be reversed by 2030 as new reactors are predicted to be connected to the grid and the lifetime of others will be extended. Nuclear capacity would increase slightly and remain stable at between 95 and 105 GWe by 2050 (Figure 1). Since electricity demand is expected to increase over the same period, the share of nuclear electricity in the EU would fall from its current level of 27% to around 20%.



Figure 1 - Total EU nuclear capacity (GWe) Capacity replacement investment up to 2050 will most likely be in the most advanced reactors, such as EPR, AP 1000, VVER 1200, ACR 1000 and ABWR. 3.Nuclear investment needs towards 2050 Significant investments will be needed to support the transformation of the energy system in line with the Energy Union Strategy. Between EUR 3.2 and EUR 4.2 trillion will need to be invested in the EU energy supply between 2015 and 2050. Investments in the nuclear sector are a small part of the overall effort and must be made within the framework established in EU legislation. Under Article 41 of the Euratom Treaty, the Commission must be notified of new nuclear investment projects. Since 2008, a total of 48 projects have been notified. Nine were for facilities dedicated to front-end activities, 20 for major modifications or upgrades in nuclear power plants related to long-term operations or to post-Fukushima improvements, seven for new commercial or research reactors and 12 for back-end installations. All projects received a non-binding Commission opinion, providing the Member State with comments and/or suggestions for improvements to be taken into account when authorising the projects. Particular attention was paid to safety, waste management, safeguards and security of supply issues. Later this year, the Commission will propose an update and better definition of the requirements for these notifications which, together with the Recommendation on the application of Article 103 of the Euratom Treaty, will strengthen the Commission's ability to ensure that new investments and bilateral agreements with third countries in the field of nuclear energy comply with the Euratom Treaty and reflect the most recent security of supply considerations.



3.1.Investments in the front end of the fuel cycle The process of fabricating fuel (front end of the fuel cycle) includes different steps from uranium ore exploration and mining to fabrication of fuel assemblies. While uranium mining activities are limited in the EU, abundant uranium resources are available worldwide. European companies rank among the world's major producers of nuclear fuel. EU demand for natural uranium represents approximately one third of global demand and is obtained from a diverse range of suppliers. Kazakhstan (27%) was the main supplier in 2014, followed by Russia (18 %), and Niger (15 %). Australia and Canada accounted for 14 % and 13 % respectively. In accordance with the European Energy Security Strategy, the Commission is taking action to ensure a well-functioning internal market for nuclear fuels and to further enhance security of supply. The Euratom Supply Agency assesses these matters continuously in its decisions on supply contracts, with particular attention paid to new-build projects. While some companies offer integrated packages with services that span the nuclear fuel cycle, the Commission will ensure that this capacity will not act as a barrier to other companies that operate in a single segment of the nuclear cycle, as this would limit competition in the market. Major investments have been made in the past in conversion and enrichment capabilities, and the focus in the coming years will be on modernising them in order to maintain EU technological leadership. Regarding the fabrication of nuclear fuel, the EU-based capacity would be able to cover all its needs for western-design reactors, whereas developing and licensing fuel assemblies for Russian-design reactors would take a few years (provided that a sufficient market is available to make the investment attractive for the industry). The Commission will continue to monitor the front end of the fuel cycle and use all instruments available at its disposal to ensure security of supply in the EU, diversification and global competition. 3.2.Investments and business environment for new nuclear power plants

All Member States operating nuclear power plants are investing in safety improvements. Due to the average age of the EU nuclear fleet, several Member States are also faced with policy decisions on the replacement or long-term operation of their nuclear power plants. Figure 1 shows that without long-term operation programmes, around 90% of the existing reactors would be shut down by 2030, resulting in the need to replace large amounts of capacity. When Member States decide to proceed with the long-term operation of reactors, national regulatory approval and safety upgrades will be needed to ensure compliance with the Nuclear Safety Directive. Whichever options Member States choose, 90% of the existing nuclear electricity production capacity will need to be replaced by 2050. Maintaining a nuclear generation capacity of between 95 and 105 GWe in the EU until 2050 and beyond would require further investments over the next 35 years. Between EUR 350 and 450 billion would have to be invested in new plants to replace most of the existing nuclear power capacity. Since new nuclear power plants are designed to operate for at least 60 years, these new plants would generate electricity until the end of the century. A number of factors influence the availability of finance for investments in new nuclear capacity. For the two main cost components, overnight cost and financing cost, the expected construction time and project discount rate play a significant role. Different financing models are being examined or used in several EU Member States, such as the Contract for Difference scheme proposed for the Hinkley Point C project in the UK or the Mankala model proposed for the Hanhikivi project in Finland. Some new, first-of-a-kind projects in the EU have experienced delays and cost overruns. Future projects using the same technology should benefit from the experience gained and should exploit cost-reduction opportunities, provided that an appropriate policy is established. This policy should focus on improving cooperation between regulators when licensing new reactors and on encouraging industry to standardise nuclear reactor designs. In addition to improving cost efficiency, this would help make new nuclear power plants safer. The licensing process, while falling under the exclusive competence of national safety regulators, presents opportunities for enhanced cooperation, for example in the pre-licensing steps or in design certification. The aim of collaboration on licensing requirements should be to ensure that a design that is considered safe in one country does not have to be substantially modified to meet licensing requirements elsewhere, therefore reducing both time and costs. In this area the Commission intends to consult the European Nuclear Safety Regulators Group and the European Technical Safety Organisations Network. On standardisation, construction codes are used as a common reference by all actors involved in the design and construction of power plants and other nuclear facilities. Given the emergence of potential new vendors and the need to ensure control of any new model/technology, it would be beneficial to encourage vendors and suppliers to engage in an initiative to increase standardisation of their components and codes in order to ensure: (a) a faster procurement process; (b) greater comparability and more transparent and higher safety standards; (c) increased capacity of operators to control technology and knowledge management. Given the emphasis on optimising the use of existing resources and on mutual recognition to open up more opportunities, the Commission is closely following the work of the European Committee for Standardisation to see what potential policy options are needed at EU level. 3.3.Investments and business environment related to safety upgrades and the long term operation of existing nuclear power plants In order to continuously improve nuclear safety, which is a key responsibility of the nuclear operators under the supervision of the competent national regulatory authorities, regular efforts are made to increase the robustness of nuclear power plants, in particular following specific reviews, periodic safety reviews or peer reviews such as the EU stress tests. Many operators in Europe have expressed the intention to operate their nuclear power plants for longer than envisaged by their original design. From a nuclear safety point of view, continuing to operate a nuclear power plant requires two things: demonstrating and maintaining plant conformity to the applicable regulatory requirements; and enhancing plant safety as far as reasonably practicable. In the light of information provided by Member States, an estimated EUR 45-50 billion will have to be invested in the long-term operation of existing reactors by 2050. The related investment projects will need to be communicated to the Commission, which will then issue its views on them in accordance with Article 41 of the Euratom Treaty. Depending on the model and age of the reactor, national regulators assume that granting long-term operation programmes will mean extending their lifetime by 10 to 20 years on average.

Utilities and regulatory bodies need to prepare, review and approve the safety cases associated with these plans in accordance with the amended Nuclear Safety Directive. Enhancing cooperation among the regulators in the licensing processes, for example by setting common criteria, will help ensure an adequate and timely response to the challenge. 3.4.Increased activities in the back-end of the fuel cycle: challenges and opportunities The back-end of the fuel cycle will need increasing levels of attention. It is estimated that more than 50 of the 129 reactors currently in operation in the EU are to be shut down by 2025. Careful planning and enhanced cooperation among Member States will be needed. All EU Member States operating nuclear power plants will have to take politically sensitive decisions on geological disposal and the long-term management of radioactive waste. It is important not to postpone actions and investment decisions on these issues as the acceptance of nuclear energy by civil society is closely linked to the ability to demonstrate responsible, safe and sustainable solutions for waste management. 3.4.1.Spent fuel and radioactive waste management The Spent Fuel and Radioactive Waste Directive establishes legally binding requirements for the safe and responsible long-term management of radioactive waste and spent fuel, with the objective of avoiding undue burdens on future generations. Member States have made significant efforts towards implementing the Directive. Each Member State is free to define its own fuel cycle policy. The spent fuel can be regarded either as a valuable resource to be reprocessed or as radioactive waste that is destined for direct disposal. Whatever option is chosen, the disposal of high-level waste, separated during reprocessing, or of spent fuel regarded as waste should be addressed. France and the United Kingdom have reprocessing facilities in operation, although the UK has decided to shut its facilities down by 2018. A number of reactors in Germany, France and the Netherlands used mixed oxide (MOX) fuel in 2014. Disposal facilities for low-level and intermediate-level radioactive waste are already in place in most Member States. Operators are moving from research to action with the construction of the world's first geological disposal facilities for high-level waste and spent fuel. These facilities are expected to become operational in Finland, Sweden and France between 2020 and 2030. Other European companies should take advantage of this expertise in order to consolidate the required skills and know-how and develop commercial opportunities at global level. There is scope for cooperation between Member States, including the sharing of best practices or even through shared repositories. Whereas shared repositories are legally possible under the Directive, several issues still need to be resolved, in particular communicating with the public and building public acceptance. Another crucial step is to determine, who is ultimately responsible for the radioactive waste that needs to be disposed of as part of a multinational approach. Member States operating nuclear power plants currently use facilities for storing waste for between 40 and 100 years. However, the storage of radioactive waste, including long-term storage, is an interim solution and not an alternative to disposal. 3.4.2.Decommissioning Worldwide there is little experience in decommissioning power reactors. 90 nuclear power reactors have been shut down permanently in Europe as at January 2016. However, only 3 reactors have been completely decommissioned so far (all in Germany). European companies have the opportunity to become global leaders by developing the required skills in the domestic market, which includes measures to encourage the participation of SMEs. The use of best practice in the various stages of the decommissioning process, including through a staged approach that would allow benefit from the continuous reduction in the radiological hazard, would bring efficiency and safety improvements. Best practices could be promoted by creating a European centre of excellence, that brings together public and private actors, or by establishing it under the Decommissioning Funding Group. 3.4.3.Funding requirements for spent fuel, radioactive waste management and decommissioning The Spent Fuel and Radioactive Waste Directive recognises that operators are fully responsible for the management of radioactive waste from generation through to final disposal. Funding has to be accumulated by the operators from the early years of operation and be ring-fenced to mitigate the risk of financial liabilities for governments to the extent possible. Member States guarantee this principle by establishing and maintaining national programmes that include an assessment of the costs and the applicable financing scheme. Based on the latest information provided by Member States, European nuclear operators estimated in December 2014 that EUR 263 billion will be needed for nuclear decommissioning and radioactive waste management until 2050, with EUR 123 billion for decommissioning and EUR 140 billion for spent fuel and radioactive waste management as well as deep geological disposal. Member States have also provided data on assets backing these expected investments, which amounted to approximately EUR 133 billion. Typically, these assets are collected in dedicated funds, often combined for decommissioning and radioactive waste management. The most frequently used method to collect funds is a fixed contribution based on the electricity produced by the relevant nuclear power plants. Member States apply different methods to estimate the costs of completing the back-end activities of the nuclear fuel cycle. The Commission will continue collecting additional data with the help of the Decommissioning Funding Group, and has drawn up a report on the implementation of the Radioactive Waste and Spent Fuel Directive. 4.Non-power applications Nuclear and radiation technologies have many applications in the medical sector, industry, agriculture and research, with substantial benefits to society in all Member States.