Opinion of the Advisory Committee of the Euratom Supply Agency(1) on the Commission Green Paper "Towards a European strategy for the security of energy supply"

(2001/C 330/05)

COM(2000) 769

The Committee welcomes in general the adoption by the Commission of its Green Paper on security of energy supply. It creates an opportunity to have a large and open debate on all sources of energy, including nuclear energy, and the Committee has therefore taken the opportunity to adopt an opinion on the issue.

The enlarged bureau of the Committee met on 16 February 2001 and the Committee was convened on 28 March 2001.

On 28 March 2001 the Committee adopted this opinion by a large majority.

1. ROLE OF NUCLEAR ENERGY

Role of nuclear energy as a sustainable source of electricity

(1) Together with environmental protection and economic efficiency, security of supply is one of the three fundamental objectives of energy policy. The Committee shares the Commission's concerns with regard to increased external dependence over the next few decades.

(2) The Committee is of the opinion that nuclear energy presently plays and can continue to play a vital role in the sustainable production of electricity. It has negligible emissions of greenhouse gases and so contributes to the achievement of the objectives set by the "Kyoto Protocol" of the United Nations Framework Convention on climate change (UNFCCC). Nuclear energy is the only industrially mature energy source with negligible greenhouse gas emissions, which can be expanded. It should therefore be recognised as such and not excluded from the different "flexibility mechanisms" as discussed in the Kyoto Protocol.

(3) The Committee recalls that at least two energy mix scenarios used by the Commission demonstrate that the most effective way of achieving the greenhouse gas emission limits of the Kyoto Protocol include, amongst other measures, the construction of several new nuclear power plants. The "Dilemma Study"(2) concluded that to maintain the share of nuclear capacity in the total installed capacity at 22 %, 100 GWe of new nuclear capacity are to be constructed by 2025 to replace existing reactors and cover new demand. In the "Nuclear Renaissance" sensitivity scenario of the "European Union energy outlook to 2020"(3) the lowest carbon cost (which means the lowest cost to society) is achieved with an installed nuclear capacity of 212 GWe and a production of approximately 1500 TWh in 2030.

(4) Beyond electricity production for today's application, the Committee further recalls that there are other potential peaceful uses for nuclear that could help to further reduce greenhouse gas emissions in the longer term, and reduce external dependence on fossil fuels. They concern hydrogen production, desalination and process heat (with new high-temperature reactors).

(5) In view of the delicate balancing of the three main energy policy objectives, the Committee believes that, without prejudice to the Member States' responsibilities for energy choices, all energy options must remain open. Nuclear energy should not be classified with fossil fuels as a less "desirable" source.

(6) Several viable technical solutions exist for the management of spent fuel. Facilities exist that allow reprocessing or safe storage of spent fuel for tens of years. Other facilities for processing and disposal of low level and intermediate level radioactive waste are already in operation in the European Union. Disposal facilities for high-level waste and conditioned spent fuel are under development in all countries that have nuclear power. They generally have reached a stage of advancement where the scientific and technical experts feel confident of their feasibility and ultimate safety. When their implementation time will come, the precise site selection and authorisation of these disposal facilities will be made with the assent of the public authorities of the respective Member States, and will involve public consultation in the decision-making process. This very diversity of processes demonstrates the existence of safe and reliable technology(4).

Nuclear energy as a competitive source of electricity which internalises all its cost components

(7) Nuclear energy is a competitive source of energy in a deregulated market. Only a very small portion of the total production cost of nuclear energy depends on the uranium price (5 to 7 % of the levelised forward cost)(5). The total nuclear fuel cycle cost, including the management of spent fuel and waste, is estimated to account for a modest share of the total cost (20 to 25 % of the levelised forward cost)(6). As a consequence the nuclear energy production cost is stable and competitive in comparison to fossil energy sources which depend more on the volatile oil and gas markets.

(8) Nuclear energy generation, including building plant and fuel supply operations, provides for a very high domestic European added value both in terms of sophisticated technical and intellectual input and in terms of highly qualified jobs.

(9) The figures given in footnote 61 on page 67 of the Green Paper (footnote 60 in the French version) are just one of several cost estimates and could be misleading. Compared to other electricity production sources, existing nuclear energy is without question generally the most competitive source, because the capital investment is most often largely amortised. For future capacity, according to studies taking into account the low fossil fuel cost observed before recent increases, nuclear energy is the most competitive in several countries and almost the most competitive in several other countries(7). As nuclear energy is less sensitive to fuel cost than fossil energy, the recent price increase of fossil fuel improves even more the competitiveness of future nuclear energy capacity. Furthermore nuclear energy is much less subject to economic risks to security of supply as caused by the "erratic fluctuations" of fossil fuel prices. Finally the decision of a power company in Finland to seek authorisation for a new nuclear power plant and studies demonstrate that nuclear electricity production costs are competitive in comparison to other options(8).

(10) Unlike most other energy sources, all cost components (capital investment including decommissioning, fuel including waste management, operation and maintenance including radiological protection) are included in the nuclear energy cost. Therefore a comparison of total cost should include all cost components, including those which are so far not internalised in fossil energy sources, as greenhouse gas emissions.

Taxation

(11) The Committee believes that additional taxation on nuclear energy to support renewable energy would disregard a basic reason why renewable energy sources are supported, namely the avoidance of greenhouse gas emissions. In order to maximise the effect of avoiding greenhouse gas emissions or other environmental damage, nuclear energy should not be subject to any additional burden that is not related to the environmental characteristics of nuclear power.

Leading role of Community industry

(12) The Community industry has played a leading role in the global development of nuclear energy in the past, and is capable, if public acceptance improves and new nuclear capacity is required, of being part of future efforts. In the meantime expertise should be preserved in order to keep open the option of developing new nuclear generation capacity.

(13) The Community industry, with the active involvement of Member States and Community institutions is also active in the development of advanced nuclear reactor types (e.g. the "European pressurised water reactor" EPR or high-temperature reactors), advanced nuclear fission technologies (e.g. the Myhrra project) and, much further into the future, the development of nuclear fusion technology (e.g. the ITER programme), which could pave the way for a better acceptance of nuclear energy in the future.

(14) With over 3500 reactor years of safe operation experience in the EU and with an advanced regulatory system, it has been demonstrated that nuclear energy production in the EU is a safe and reliable process. Presently the IAEA has an established set of adequate safety standards for all relevant areas of the nuclear power cycle and EU Member States who have concluded the IAEA Convention on nuclear safety, have opened up to international scrutiny and peer review. This is a good basis for continuing to operate a safe nuclear industry in Europe.

Role of the European institutions

(15) The Euratom Treaty recognised the need to promote the development of nuclear energy in order to improve security of energy supply. The Green Paper demonstrates that there are still concerns with security of supply. The EU institutions should play a constructive role and should therefore not enact legislation which would impede the choice of existing or future Member States to opt for nuclear, as such obstacles would be contrary to the desired security of supply of the Union.

(16) Following open debate, European institutions should, without prejudice to the choice of Member States to use nuclear energy, play a more active role in fostering public acceptance. They should explain to the public the role of the EU energy policy, including the use of nuclear energy, in the avoidance of greenhouse gas emissions. The Green Paper can be a part of such an effort.

(17) The Euratom Treaty constitutes the relevant legal framework at Community level, and within this framework the Commission and the Euratom Supply Agency ensure a more structured situation with respect to nuclear fuel supply security than is the case with other energy sources.

2. SUPPLY OF NUCLEAR FUEL

Availability of sustainable uranium resources

(18) Uranium resources are available in sufficient amounts to continue for an extremely long time and at a stable cost, the production of nuclear energy. This could save for future generations valuable but limited fossil resources. To assess the long-term resources not only the known conventional resources at a low production cost have to be taken into account, but also possible conventional resources at a somewhat higher cost and unconventional resources, some of which have been exploited in the past, as well as alternative reactor types (fast breeder reactors) which could use more intensively the energy potential of uranium.

(19) At today's annual global consumption rate of 60000 tonnes of natural uranium, the coverage(9) of long term operation of nuclear power is well assured:

- known conventional resources at a cost below USD 80: 3 million tU or 50 years,

- possible conventional resources at a cost of up to USD 130: 9 million tU or 150 years,

- possible conventional resources without specified cost: 16 million tU or 260 years,

- unconventional resources in phosphates: 22 million tU or 370 years (exploited in the past),

- unconventional resources in seawater: 4000 million tU or 66000 years (never exploited).

(20) The Committee agrees with the Commission that the uranium sources are located in geographically diversified areas, in most cases in politically stable countries. Uranium supply to the European Union is supervised by the Euratom Supply Agency with a policy of stimulating geographical diversification of supply, a policy which is generally shared by nuclear power operators.

Nuclear fuel cycle supplies

(21) The Community industry also masters the whole nuclear fuel cycle and plays a leading role from uranium mining, conversion, enrichment, fabrication (the "front end" of the fuel cycle), to reprocessing, interim spent fuel or waste storage and spent fuel or waste conditioning in preparation for final disposal (the "back end" of the fuel cycle). Nuclear energy can therefore contribute, as an essentially domestic source, to the long-term security of energy supply of the European Union, and is less susceptible to disruption than fossil energy sources heavily dependent upon fuel imports.

Security of nuclear fuel supply

(22) The nuclear industry in the European Union has historically been reliably supplied with uranium from external sources during its entire history. An important contribution to this stability has come from the Euratom Treaty(10), which charges the Community with the task of ensuring that all users receive a regular and equitable supply. The Euratom Supply Agency plays a central role in performing this task in cooperation with the industry.

(23) The European Union has available within its borders the complete strategic technology and capacity to provide for new nuclear fuel and the processing and disposal of spent fuel. Most of the uranium mined and imported comes from sources controlled by EU industry.

(24) Several countries and nuclear power operators keep nuclear fuel strategic inventory in various forms to further enhance security of supply. Inventory of nuclear fuel is not only much easier to maintain but is also significantly less financially burdensome on society than keeping inventories of oil or gas. Inventory of nuclear material may amount to several years' requirements unlike inventories of oil and gas which are only feasible for a few months of requirements.

3. REPLIES TO THE QUESTIONS OF GREEN PAPER

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4. CONCLUSION

(25) The Committee is of the opinion that nuclear energy is a long-term sustainable energy source, and concludes that therefore:

(a) From the point of view of security of supply, nuclear energy has evident advantages in comparison to other energy sources, particularly at Community level, and could be considered either as an essentially domestic source or as a strategic Community reserve of the European Union.

- Uranium resources are sufficient to sustain long-term nuclear energy production and thus to save for future generations valuable limited fossil resources.

- Inventories of uranium are easier and cheaper to maintain when compared to other energy sources.

- Within the framework of the Euratom Treaty, the Commission and the Euratom Supply Agency ensure a more structured situation with respect to nuclear fuel supply security than is the case with other energy sources.

- European industry has played a leading role in the development of nuclear energy and is capable of future efforts.

- Nuclear energy can contribute, as an essentially domestic source, to the long-term security of energy supply of the European Union.

(b) From the point of view of environmental protection, and particularly the Kyoto Protocol goal to reduce greenhouse gas emissions, nuclear energy is now and for the foreseeable future, a major large-scale reliable technology that can help achieve the EU committed targets.

- Nuclear energy can play a crucial role, among other energy sources, in achieving the emission levels set by the Kyoto Protocol.

- For the management of spent fuel and the disposal of nuclear waste technical solutions exist, but they need to be complemented by political decisions to confirm strategic choices and select storage sites,

(c) From the point of view of economic efficiency, nuclear energy can be competitive, even in the prevailing conditions of a deregulated and liberalised EU internal energy market, and particularly existing nuclear capacity.

- Long-term production costs of nuclear energy are predictable and competitive with fossil and renewable energy sources.

- Nuclear energy should not be made subject to additional taxation designed to support renewable energy sources.

- Unlike most other energy sources, nuclear energy costs include all nuclear cost components.

(d) A Community strategy proposed by the Commission to integrate these energy policy objectives and to achieve the Kyoto objectives in the most economic way, should be realistic and take into account long term and short term needs and has to recognise that nuclear energy can play a crucial role in the EU's future energy mix.

The Committee requests the Director-General of the Supply Agency to transmit this opinion to the Commission of the European Communities, as a contribution to the debate on the Commission Green Paper "Towards a European strategy for the security of energy supply" COM(2000) 769 final, and recommends its publication.

(1) Members of this Committee act as expert advisors to the Supply Agency and do not formally represent or legally commit the Member States or organisations from where they come.

(2) ERM Energy, Dilemma Study: Study of the contribution of nuclear power to the reduction of carbon dioxide emissions from electricity generation, 1999, 157 pages, http://europa.eu.int/en/comm/dg17/dilemma.pdf

(3) Energy in Europe, special issue November 1999, pp. 87-88, 173, http://www.shared-analysis.fhg.de/Pub-fr.htm

(4) Facilities in Member States are regularly reported upon in the Euratom Supply Agency's Annual Reports, Chapter III - Nuclear energy developments in the European Union Member States.

(5) Illustrative Nuclear Programme for the Community (PINC), COM(97) 401 final, p. 11 and table p. 41.

(6) Illustrative Nuclear Programme for the Community (PINC), COM(97) 401 final, p. 11.

(7) OECD Nuclear Energy Agency (NEA) and International Energy Agency (IEA), "Projected costs of generating electricity - update 1998", OECD, Paris 1998 (nuclear between USD 2,5 and 4,1 cents per KWh and most competitive in seven countries on 18, of which seven did not report nuclear cost projections, with a 5 % discount and in two countries with a 10 % discount);

French Ministry of Economy, Finance and Industry, Directorate Gas Electricity and Coal (DIGEC), "Les coûts de référence de la production électrique", 1997, p. 50 (nuclear between FRF 20,7 and 21,2 cents per KWh, or approximately 3,16 to 3,23 eurocents per KWh, and most competitive at 5 % and 8 % discount except with low US dollar exchange rate and low gas prices); an overview of the DIGEC reports is given in the Report to the Prime Minister by Charpin, Dessus and Pellat, "Economic forecast study of the nuclear power option", annex I, fiche 9;

Belgian independent Commission on energy choices ("Ampère", Commission), "Rapport de la Commission pour l'analyse des modes de production de l'électricité et le redéploiement des Energies (Ampère) au secrétaire d'État à l'énergie et au développement durable", conclusions and recommendations p. 16 (nuclear between BEF 1,22 and 1,70 per KWh, or approximately 3,02 to 4,21 eurocents/KWh, and most competitive with and without internalisation of greenhouse gas cost).

The US Nuclear Energy Institute has indicated that the real costs of nuclear electricity production are below coal and gas even in areas where these fossil sources are abundantly available like the USA (see "Production costs made nuclear cheapest fuel in 1999, NEI says", in Nucleonics Week, Volume 42, issue 2, p. 3).

(8) Risto Tarjanne & Sauli Rissanen: "Least-cost option for baseload electricity in Finland", The Uranium Institute 25th Annual International Symposium 2000, London 1.9.2000; http://www.uilondon.org/uilondon/sym/2000/sym00prg.htm

(9) Source NEA-IAEA. If the energy content would be more intensively used by fast breeder reactors, the coverage would be approximately 50 times the present coverage: respectively for known conventional resources at a cost below USD 80: 3 million tU or 2500 years, possible conventional resources at a cost of up to USD 130: 9 million tU or 7500 years, possible conventional resources without specified cost: 16 million tU or 13000 years, unconventional resources in phosphates: 22 million tU or 18500 years, unconventional resources in seawater: 4000 million tU or 330000 years.

(10) Articles 2 and 52, EA - Treaty establishing the European Atomic Energy Community (Euratom).