Communication from the Commission to the European Parliament, the Council and the Economic and Social Committee - Update of the nuclear illustrative programme in the context of the second strategic energy review
Date: 2008-11-13
Institutions: European Commission
Subjects: electrical energy, energy policy, energy supply, industrial investment, nuclear energy, nuclear fuel, nuclear safety, security of supply

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 13.11.2008 
COM(2008) 776 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL AND THE ECONOMIC AND SOCIAL 
COMMITTEE 

UPDATE OF THE NUCLEAR ILLUSTRATIVE PROGRAMME 
IN THE CONTEXT OF THE SECOND STRATEGIC ENERGY REVIEW 

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL AND THE ECONOMIC AND SOCIAL 
COMMITTEE 

UPDATE OF THE NUCLEAR ILLUSTRATIVE PROGRAMME 
IN THE CONTEXT OF THE SECOND STRATEGIC ENERGY REVIEW 

1. 

INTRODUCTION 

This  document  –  as  part  of  the  Second  Strategic  Energy  Review  –  updates  the  information 
contained  in  the  2007  Nuclear  Illustrative  Programme1.  It  focuses  on  the  key  aspects  of 
security  of  supply,  investment  needs,  the  conditions  for  realising  investments,  and  makes 
recommendations for the continued safe use of nuclear energy in the EU. 

Over  the  past  two  years,  there  have  been  political  statements  of  interest  with  respect  to 
nuclear energy in some EU Member States and around the world. Nuclear energy has come 
back  into  the  political  debate2,  with  the  subsequent  establishment  of  the  European  Nuclear 
Energy  Forum,  the  High  Level  Group  on  Nuclear  Safety  and  Waste  Management  and  the 
Sustainable Nuclear Energy Technology Platform. The International Energy Agency and the 
OECD  Nuclear  Energy  Agency  have  also  highlighted  the  important  contribution  of  nuclear 
energy in the near future3,4. In this context, the EU can play a central role to further develop 
an even more advanced framework meeting the highest standards of safety, security and non-
proliferation. 

The Spring 2007 European Council endorsed the Commission proposal to cut greenhouse gas 
emissions by 20% as well as to increase energy efficiency in the EU by the same amount by 
2020.  At  present,  nuclear  energy  generates  two  thirds  of  the  EU  low  carbon  electricity  and 
makes  an  important  contribution  to  mitigation  of  global  climate  change.  The  Community's 
SET-Plan, which addresses Research and Development needs in all low-carbon technologies, 
including nuclear fission, is important to the future long term requirements of nuclear energy. 

Nuclear energy is also one of the most economic energy sources, less vulnerable to fuel price 
changes,  thereby  protecting  EU  economies  against  raw  materials  price  volatility.  It  also 
increases  the  security  of  energy  supply  in  Europe,  since  uranium  sources  are  widely 
distributed around the globe, in geopolitically stable areas. 

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Nuclear Illustrative Programme - COM(2007) 565, 4.10.2007. 
EESC  Opinion  on  the  Commission's  nuclear  Illustrative  Programme  (TEN/283,  12.07.2007);  The 
Maldeikis report of the European Parliament, Assessing Euratom 50 Years of European nuclear energy 
(A6-0129/2007,  02.04.2007);  Reul  Report  of  the  European  Parliament,  Conventional  energy  sources 
and energy technology (A6-0348/2007, 24.10.2007). 
World Energy Outlook 2006, International Energy Agency. 
Nuclear Energy Outlook, OECD/NEA, published in October 2008. 

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The concerns of the general public on nuclear safety and waste management still need to be 
fully  addressed.  As  shown  by  a  recent  Eurobarometer  study5,  a  large  majority  of  European 
citizens considers that the European Union is best placed to ensure that the highest level of 
nuclear safety is guaranteed in Europe. On the other hand, the fragmentation of the regulatory 
framework  in  the  European  Union,  in  particular  for  the  issuing  of  licences  and  design 
certification, constitutes an obstacle for investments. The European Union should promote a 
more coherent economic and regulatory framework. This will facilitate the investments in the 
Member  States  which  choose  to  include  the  nuclear  energy  in  their  energy  mix  and  will 
ensure that investment decisions are based on more transparent and comprehensible rules. 

2. 

INVESTMENT NEEDS FOR NUCLEAR GENERATING CAPACITY 

2.1. 

Projections for energy and electricity demand 

Under the PRIMES New Energy Policy scenario, the overall final energy demand in 
the EU by 2020 is expected to grow slightly (+1,5%) in case of moderate oil prices 
and to decrease slightly (-2%) in case of high oil prices6. Electricity demand growth 
is expected to be 8-9% over the same period. As a result, the share of electricity in 
the  final  energy  demand  would  grow  from  20%  to  23%.  Electricity  generation 
capacity is forecast to grow between 20% and 24% by 2020, but under the PRIMES 
New Energy Policy assumptions and depending on the oil price, the share of nuclear 
energy  will  decrease  from  30%  to  between  25%  and  26%  in  electricity  generation 
and from 14% to between 12% and 14% in total primary energy demand by 20207. 
However  these  figures  reflect  policies  implemented  in  the  Member  States  and 
thereby exclude the most recent discussions on possible lifetime extensions and new 
constructions that could change the future capacity situation. 

Energy efficiency measures  should  curb the growth of total energy consumption as 
well as electricity demand. Yet, if fossil fuel prices remain at the 2008 record levels, 
electricity  demand,  especially  in  the  transport  sector,  can  be  expected  to  increase. 
Therefore,  the  security  of  electricity  supply  will  increase  its  importance  for  the 
overall economy. 

2.2. 

Investment perspectives in the nuclear sector 

Regardless of the exact evolution of energy consumption, EU electricity demand is 
expected  to  continue  growing  faster  than  overall  energy  demand.  Insufficient  base 
load  capacity  may  jeopardise  the  stability  of  the  EU's  electricity  network  unless 
countermeasures  on  a  large  scale  are  introduced.  Renewable  energy  sources  will 

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http://ec.europa.eu/public_opinion/archives/ebs/ebs_297_en.pdf 
Given the uncertainty concerning crude oil prices the development under current trends is described by 
giving  ranges  for  2020  depending  on  a  moderate  or  high  oil  price  environment.  The  moderate  price 
environment means an oil price of 61$(2005)/barrel in 2020. The high price environment would have an 
oil price in 2005 money of 100 $/barrel in 2020. 
In the EU Energy Policy review, the IEA also notes that ''…EU nuclear generating capacity will decline 
from now on, unless significant investment is forthcoming in the near future for plant lifetime extensions 
and  the  replacement  of  facilities  reaching  the  end  of  their  operational  lives.  Without  this  investment, 
this low carbon source of base load electricity generation could be reduced from 31% to 21% of the 
total electricity generated in the EU in 2020". 

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increase  their  share  but  other  energy  sources  will  be  needed,  since  possibilities  to 
store  electricity  are  limited  and  demand  has  to  be  met  at  all  times.  Replacement 
and/or  life  extension  of  ageing  nuclear  power  plants  coming  to  the  end  of  their 
originally  foreseen  lifetime  before  2020  need  increasing  levels  of  attention.  If  shut 
down,  the  contribution  of  nuclear  energy  to  the  overall  electricity  supply  will 
substantially decrease, unless new plants are built or older ones are safely upgraded 
to operate for an extended period.  

The graph (Fig.1 Annex 1) illustrates the decreasing trend of nuclear power capacity 
in the EU despite new plants under construction or notified to the Commission8 (FI, 
FR, BG and SK), and the already agreed (or pending) operating lifetime extensions 
up to 40, 50 or 60 years. 

According  to  current  projections,  the  nuclear  generation  capacity  in  the  EU  would 
fall  by  as  much  as  33  GWe9  by  2020.  If  this  base  load  capacity  is  not  replaced  by 
new  nuclear  power  plant  (NPP),  an  important  part  of  it  will  be  replaced  by  gas  or 
coal-fired plants. The extension of the lifetime of existing plants or new build would 
be needed just to maintain the share of nuclear power generation at the current level, 
contributing  to  the  attainment  of  the  EU's  emissions  reductions  and  security  of 
supply  objectives.  With  generalised  lifetime  extensions  of  existing  reactors  to  50 
years,  capacity  would  remain  stable  until  2020.  However,  generalised  lifetime 
extensions  have  an  upper  limit  as  the  actual  number  of  installations  that  can  be 
extended will have to be assessed case by case, subject to the respect of the highest 
safety  standards  available.  The  Sustainable  Nuclear  Fission  Technology  Platform 
will  play  a  significant  role  in  identifying  research  and  development  needs  with 
respect to lifetime extensions. 

In  these  scenarios,  immediate  decommissioning  after  obsolete  plants  shutdown 
would ease the construction of replacement capacity on existing nuclear sites. New 
investments  in  the  nuclear  sector  need  to  be  planned  sufficiently  in  advance  as 
industrial capacity also needs to be developed in order to realise these investments. 
This is not only valid for generation of electricity but also for other applications, in 
particular, nuclear medicine. 

2.3. 

Overview of new and planned NPPs, planned closures and extensions 

2.3.1.  New plants under construction, new investment plans 

Two 1600 MWe European Pressurized Reactor (EPR) are being built: in Finland (3rd 
Unit of the Olkiluoto NPP) and at Flamanville, France, expected to be operational by 
2012.  Finland  is  also  starting  the  procedure  for  the  possible  construction  of  a  6th 
reactor,  and  France  has  announced  it  will  construct  a  second  EPR  and  is  planning 
more reactors by 2020-30. 

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Under Article 41 of the Euratom Treaty, investment projects related to the nuclear fuel cycle in the EU 
must be notified to the Commission prior to conclusion of contracts with suppliers or, if the work is to 
be carried out by the undertaking with its own resources, three months before work begins. 
These  figures  take  into  account  firm  decisions  on  new  NPPs,  already  agreed  life  extensions  and  the 
currently announced phase-outs, but do not include assumptions on potential new NPPs. 

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Other  on-going,  or  firmly  planned,  new  build  in  the  EU  are  the  two  units  of  the 
Belene  AES-92  VVER  in  Bulgaria,  Units  3  and  4  of  the  Mochovce  VVER  in 
Slovakia.  Romania  is  close  to  notify  their  plans  to  complete  Units  3  and  4  of  the 
Cernavoda CANDU NPP (unit-2 connected to the grid in 2007). 

The  Baltic  countries,  Poland  and  the  Netherlands  are  considering  regional  projects 
and national options for new nuclear power plants. 

In January 2008 the UK government gave the go ahead for new nuclear build, stating 
that  nuclear  power  should  play  a  role  in  providing  the  UK  with  clean,  secure  and 
affordable energy. It published its Energy Bill, which encourages nuclear investment, 
with clauses to ensure an adequate funding provision is made by potential developers 
of new nuclear power stations for full costs of decommissioning and their full share 
of waste costs. The government has invited companies to draw up plans to build and 
operate  new  stations  indicating  that  land  surrounding  18  mostly  shut-down  sites 
around  Britain  would  be  made  available  for  sale  and  development  through  the 
Nuclear Decommissioning Authority (NDA). At least 7 new Generation III category 
NPPs are expected to be built. 

Italy  announced  on  22  May  2008  that  only  nuclear  can  produce  energy  on  a  large 
scale, in a secure manner, at competitive costs and with respect for the environment 
and it therefore plans to restart the nuclear sector, with a 2020 horizon with view to 
constructing between 4 and 8 new NPPs. 

2.3.2.  Capacity uprating and Lifetime extensions 

Capacity uprating continues to be undertaken at more than 25% of all NPPs; the EU-
wide  average  unit  availability  has  steadily  increased  over  the  last  10  to  15  years 
(reaching 84% for the period 2004-06). Over the same period, programmes on both 
capacity uprating and increasing plant availability have resulted in over 5000 MWe 
additional net power output in the EU-27 (equivalent to 3 to 5 reactors depending on 
their power level). 

However, all operating plants are soon approaching the limits of their original design 
lifetime  (30  to  40  years):  the  EU-27  average  fleet  age  is  23  years,  compared  to  a 
world  average  of  20  years  (Fig.2,  Annex  1).  Of  the  current  EU  nuclear  generating 
capacity, 18% comes from plants of 30 years old or more, and only 8% from plants 
which are 15 years old or less.10 

Based upon the original 30 to 40-year plant lifetimes, about 44 GWe or 33% of the 
installed EU-27 nuclear net capacity would need to be removed from the grid over 
the next 10 years and be replaced. And yet, the utilities face political and regulatory 
uncertainty  when  applying  for  new  builds,  which  are  investments  with  long  break-
even  periods.  Therefore,  extending  the  operating  lifetime  under  safe  conditions 
looks,  under  current  circumstances,  more  cost  effective  than  opting  for  new 
construction and is becoming normal practice in many countries. 

There  is  no  evidence  of  approved  life  extension  programmes  compromising  the 
continued  safety  of  nuclear  plant  operation.  Those  plants  selected  for  lifetime 

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45% from NPPs over 25 years, 25 % from NPPs having less than 20 y (Fig.3, Annex 1). 

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to  significant 

extension  are  subject 
investments  for  power  uprating  and 
modernisation, including improved safety features. Life extension is applied only in 
those  cases  where  sufficient  safety  margins  to  cover  ageing  mechanisms  of  major 
components are in place. A discussion on lifetime extensions is currently on-going in 
both Belgium and Germany despite the official phase out policies presented below. 

2.3.3.  Recovered capacity 

In addition to uprating and lifetime extensions, the progressive transition from use of 
gaseous  diffusion  to  centrifuge  enrichment  plants  will  recover  approximately  3000 
MWe of electricity production capacity. 

2.3.4.  Planned closures 

Belgium and Germany are planning to phase out nuclear energy after closure of the 
existing NPPs11. 

Apart from nuclear phase-out decisions taken by these 2 countries at political level, 
at  least  11  operational  plants  in  the  EU  are  expected  to  be  shut  down  by  2010, 
totalling about 7.7 GWe or 5.5% of the EU's current capacity. Lithuania and Slovakia 
will  still  have  to  shut  down  one  reactor  each  as  part  of  their  EU  accession 
commitments.  All  these  closures  contribute  to  the  forecast  decrease  in  the  share  of 
nuclear energy by 2020, unless phase-out policies are reversed. 

3. 

CONDITIONS FOR REALISING THE NECESSARY INVESTMENTS 

3.1. 

Public acceptance 

Public acceptance is essential for the use of nuclear energy in Europe. The EU has a 
mature  nuclear  industry,  covering  the  entire  nuclear  fuel  cycle,  with  a  good  safety 
and security record. However, a number of concerns still need to be addressed. 

Public  authorities  at  local,  regional,  national,  EU  and  international  level  all  have  a 
role  to  play.  It  is  necessary  to  reinforce  the  current  European  legal  framework  to 
enhance transparency and governance of nuclear activities. Efforts need to be made 
to  provide  factual,  timely  and  easily  understandable  information  to  the  public, 
ensuring an open debate among the key actors on all aspects of nuclear energy. 

The  Commission  is  addressing  these  issues  through  both  the  High  Level  Group  on 
Nuclear  Safety  and  Waste  Management  (HLG),  composed  of  senior  national 
regulators, as well as the European Nuclear Energy Forum (ENEF), a broader cross 
section of society. 

The HLG was established by the Commission in 2007 with the mandate to develop a 
common  understanding  and  to  suggest  common  approaches  for  further  improving 

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According to current policy, the generating power of German reactors is limited hence reactors should 
be shut down after about 32 years of operation, meaning that the currently operating reactors would be 
closed by 2022. In Belgium, the operating lifetime is limited to 40 years and the closure of all existing 
reactors is currently foreseen by 2025. Sweden has also made a political decision to phase out nuclear 
energy, but concrete actions to this effect have not yet been implemented. 

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nuclear  safety  and  the  management  of  spent  fuel  and  radioactive  waste.  In  the 
framework  of  the  HLG  initiative  and  taking  into  account  discussions  and 
developments  in  other  fora,  the  Commission  is  preparing  a  revised  proposal  for  a 
Directive setting up a Community framework for Nuclear Safety. 

The  ENEF  provides  a  platform  for  a  broad  stakeholder  discussion  on  opportunities 
and risks of nuclear energy, concentrating on the competitiveness of nuclear energy, 
the  specificities  of  financing  new  nuclear  build,  the  need  for  a  legal  roadmap 
accompanying  the  responsible  use  of  nuclear  energy,  ways  to  progress  on  waste 
management and approaches to enhance trust, transparency and confidence between 
the public and the actors involved in the process. 

A  recent  Eurobarometer  survey12,  conducted  during  February  to  March  2008, 
concluded  that  European  citizens'  attitudes  towards  nuclear  energy  were  more 
positive  than  in  2005.  However  it  also  confirmed  that  public  acceptance  of  nuclear 
energy  is  very  much  linked  to  the  availability  of  permanent  and  safe  solutions  for 
management of radioactive waste. While Member States bear full responsibility for 
managing its own radioactive waste, European citizens want the EU to play an active 
role  to  ensure  that  national  practices  and  programmes  for  radioactive  waste  are 
monitored,  harmonised  and  coherent  with  specific  plans  and  fixed  deadlines. 
Scientific  and  technological  areas  important  to  geological  disposal  have  reached  a 
level of maturity and a "wait and see" policy is no longer acceptable. Progress has to 
be  made  towards  identified  solutions,  including  through  further  research  and 
development,  not  leaving  political  decisions  for  later  generations.  A  collaborative 
effort  amongst  the  key  research  and  development  stakeholders,  in  particular  the 
national  waste  management  agencies,  is  needed  to  establish  a  strategic  research 
agenda and deployment strategy for the implementation oriented research. 

Synergy  to  address  the  issue  of  nuclear  waste  at  EU  level  is  fostered  through  the 
HLG on nuclear safety and waste management, the European Nuclear Energy Forum 
as  well  as  the  Sustainable  Nuclear  Energy  Technology  Platform  and  a  new 
Technology  Platform  on  Geological  Disposal,  with  the  aim  to  facilitate  additional 
efforts  to  optimise  European  research  and  development,  to  better  co-ordinate,  in 
setting  common  goals  and  in  having  a  larger  participation  and  commitment  from 
industry  to  tackle  radioactive  waste  management  issues.  On  the  occasion  of  the 
presentation  of  the  sixth  report  on  nuclear  waste13,  the  Council  took  stock  of  the 
situation of nuclear waste management in the EU. 

Nuclear non-proliferation is a global issue, which reminds and concerns the public of 
the potential security risks associated with the use and future development of nuclear 
energy.  With  the  growing  number  of  countries  starting  or  considering  starting  a 
nuclear power programme, there is a clear need to strengthen nuclear safety, security 
and  guarantees  for  non-proliferation.  The  European  Union  has  an  important  role  to 
play  in  this  context  using  the  available  external  dimension  instruments:  the 
Instrument for Nuclear Safety Cooperation (INSC) and the Instrument for Stability14. 
A key priority of the Community is to maintain its support for the Non-Proliferation 

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Special Eurobarometer, no. 297 "Attitudes to radioactive waste", published July 2008. 
COM(2008) 542, 8.9.2008. 
COM(2008) 312: "Addressing the international challenge of nuclear safety and security". 

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Treaty (NPT), by developing a shared approach with the IAEA towards the risks of 
proliferation. The Joint Statement between the European Commission and the IAEA 
of 7 May 2008 outlines that importance15. 

The  Commission  intends  to  address  a  Communication  to  the  Council  and  the 
European Parliament on nuclear non-proliferation. 

In the framework of an early exchange of information and warning in case of nuclear 
incidents  in  the  EU,  the  Commission  also  discusses  with  Member  States  the 
functioning of the ECURIE system. 

3.2. 

Licensing issues 

3.2.1.  Licensing 

There  is  a  need  for  planning  stability  and  for  reduction  of  investment  risks  due  to 
regulatory  uncertainty  for  investors  and  other  stakeholders.  Licensing  includes 
standard  design  certifications,  early  site  permits,  construction  permits,  operating 
licenses or combined licenses. Public authorities in the EU should be encouraged to 
harmonize and simplify licensing procedures in order to provide legal certainty. 

3.2.2.  Design certification 

Although there are moves in Europe towards harmonised requirements for licensing, 
design certification is done nationally and is safety-based. 

The  EUR  document  is  a  nuclear  power  plant  specification  written  by  a  group  of 
potential  investors  in  electricity  generation  in  Europe,  mostly  utilities  and  other 
industrial institutions, originally designed to facilitate the licensing of EPR reactors. 
Although used as a basis for the bid specification of the new nuclear constructions in 
Finland (EPR at Olkiluoto 3) and Bulgaria (AES-92 at Belene), it is not a regulatory 
type of design safety standard at EU level. 

WENRA brings together the nuclear regulatory authorities of EU Member States and 
Switzerland. Its main objectives are to develop a common approach to nuclear safety, 
to  provide  an  independent  capability  to  examine  nuclear  safety  in  accession  and 
candidate  countries  to  the  EU  and  network  regulators  in  Europe  by  exchanging 
experience  and  discussing  significant  safety  issues.  WENRA  has  established  and 
regularly revises its reference levels applicable to reactor safety, taking into account 
the Safety Requirements issued by the International Atomic Energy Agency (IAEA). 

Recommendation:  common  reactor  safety  levels  for  existing  NPPs  and  new 
build should be adopted. 

3.2.3.  Generation III designs 

Generation I reactors were developed in the 1950-60s, and outside the UK, none are 
still  operating  today  in  the  EU.  Generation  II  reactors  are  those  that  are 
predominantly in operation in both the EU-27 and the rest of the world. Generation 

15 

www.iaea.org/NewsCenter/News/PDF/iaea_euratom070508.pdf 

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III advanced Light Water Reactors and evolutionary designs offer advances in both 
safety  and  economics  over  preceding  generations  and  are  thus  proposed  for 
construction  of  new  plants  in  the  EU.  Lacking  formal  definitions,  they  are 
characterised by the following features: 

–  Improved  safety  systems,  including  passive  or  inherent  safety  features  and  a 
containment  providing  protection  against  internal  impacts  due  to  effects  of 
accidents as well as against external impacts; 

–  Increase in thermal efficiency and thus a reduction in fuel requirements; 

–  Longer plant life;  

–  Improved fuel technology and thus reduction of the volume of high level waste. 

Examples of Generation III reactors are the recent new builds in Olkiluoto (Finland), 
Flamanville (France) and Belene (Bulgaria). 

Nuclear  plants  must  also  be  carefully  protected  against  both  attempted  sabotage  or 
terrorist attack and possible theft of nuclear material. Recent plants in the EU have 
included safeguards and security requirements into their design, setting an example 
in terms of nuclear security and non-proliferation. 

Recommendation:  only  designs  whose  safety  and  security  levels  are  equivalent 
to Generation III, or subsequent improvements should be considered in the EU 
for future new build. 

3.3. 

Financing issues 

A  NPP  has  significantly  higher  construction  costs  than  an  equivalent  coal  or  gas-
fired plant. However, an NPP is less costly to operate over the design lifetime, due to 
lower and more predictable fuel costs. Yet, the size of the initial investment and the 
time  needed  to  pay  it  back  implies  a  high  risk  for  private  companies  that  sell 
electricity  on  short-term  contracts  or  on  the  exchanges.  So  far,  this  has  favoured 
generation  plants  with  lower  capital  costs  and  higher,  potentially  fluctuating,  fuel 
costs  (such  as  gas-fired  plants).  The  price  increase  of  fossil  fuels  over  the  last  five 
years is strongly influencing a reassessment of the structure of financing, leading to a 
renewed interest for investing in new NPPs. 

However,  the  recent  volatility  in  global  credit  markets  is  likely  to  put  pressure  on 
large  scale  investment  projects  in  the  near  term.  At  the  same  time,  rising  costs  for 
construction materials and labour have led to increased cost estimates for new power 
plants in general. 

All forms of electricity generation produce some form of negative externality – costs 
imposed on third parties that are not directly paid by the producer – and generation 
costs often do not reflect these external costs. The most significant external costs for 
nuclear  power,  i.e.  costs  for  decommissioning  and  waste  management,  should  be 

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internalised in the electricity price16. Measures to mitigate global warming, such as 
an effective emissions trading mechanism, are ways of internalising external costs of 
fossil  fuels  and  could  provide  a  level  playing  field  for  the  economics  of  nuclear 
power. 

It is important to ensure in the EU that nuclear energy projects do not benefit from 
any State subsidy. Different ways to proceed are possible in this regard.17 

3.3.1.  Cost structure for NPPs 

Servicing the construction costs of a nuclear power plant is the most important factor 
determining  the  competitiveness  of  nuclear  energy.  Despite  high  investment  costs 
(∼70% of total generation costs for nuclear in contrast to ∼40% for coal and ∼30% 
for  gas)  and  the  need  to  internalise  all  waste  disposal  and  decommissioning  costs, 
nuclear power plants compete favourably with fossil-fuelled units (€40–45/MWh and 
no emissions trading costs). Improvements in nuclear power plant performance over 
the last 10 to 15 years have resulted in increased plant availability and output, further 
lowering generating costs. 

Because a power plant does not yield profits during construction, longer construction 
times  and  construction  delays  translate  directly  into  higher  interest  charges  on 
borrowed  funds.  Standardised  regulatory  processes  for  siting,  licensing,  and 
construction  would  shorten  the  overall  time  frame  required  and  increase  certainty 
that, if the plant is built as designed, it will be allowed to operate. 

3.3.2.  Level playing field for financing 

In order to achieve the transition to a low-carbon economy, the EU needs a balance 
between  market  investment  decisions  and  regulation.  While  the  market  will 
ultimately  influence  decisions  on  technologies  and  concrete  investment  projects, 
public authorities have a vital role in guiding clean energy investments by providing 
clear and credible long-term policy frameworks. 

While  financing  new  NPP  construction  belongs  to  private  operators  and  the  capital 
markets, some measures may be justified to facilitate financing, especially since the 
general investment climate for large-scale borrowers has become more difficult over 
the past year. The European Investment Bank revised in 2007 its investment policy 
to include nuclear power related projects. Euratom loans have been provided in the 
past  for  new  nuclear  installations  and  for  safety  improvements  of  reactors  in  the 
acceding and other countries. This facility is limited by an overall ceiling, adopted by 
the  Council. The  amount currently available could  only  provide  a  small  part  of  the 
financing  required  for  2  or  3  projects.  The  Commission  has  proposed  raising  the 
borrowing  and  lending  ceilings  for  Euratom  loans  and  remains  committed  to  doing 
so  at  an  appropriate  time18.  These  loans  are  given  at  market  rates  by  borrowing  on 

16 

17 

18 

Commission Recommendation on adequate financial resources for decommissioning funds (OJ L 330, 
28.11.2006). 
The UK in its recent Energy Bill, stipulated that development of new nuclear plants should be initiated, 
funded, constructed and operated through the private sector to avoid any perception of State aid. 
COM(2002) 457, 6.11.2002. 

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the international capital markets; they do not come from the Community budget and 
do not constitute subsidies. 

3.4. 

Civil liability for nuclear damage 

Operators of nuclear power plants are liable for any damage caused by them, and are 
therefore  required  to  take  out  insurance.  National  laws  are  supplemented  by  a 
number  of  international  conventions19.  Compensation  above  the  limits  provided  in 
the  conventions  and  in  national  legislation  needs  to  be  covered  by  the  individual 
insurance, or the State concerned must accept responsibility as insurer of last resort, 
as is the case for liability in other industries. Additional details are given in Annex II. 

Recommendation: a more coherent and harmonised liability scheme should be 
developed to ensure a comparable level of protection for citizens and to create a 
level playing field for EU nuclear industry. 

4. 

SECURITY OF SUPPLY FOR NUCLEAR FUELS 

Nuclear reactor operators usually purchase concentrated uranium ores and conclude 
contracts  with  fuel  cycle  service  providers  for  the  chemical  conversion  of  the 
concentrates to uranium hexafluoride, for its enrichment and chemical conversion to 
uranium  oxide,  and  finally  for  its  fabrication  into  fuel  elements  for  loading  into  a 
power reactor. For all these production activities, long term contracts prevail (5 years 
being  typical  but  10  years  or  even  longer  term  contracts  are  not  uncommon).  Spot 
market  deliveries  play  a  minor  role,  although  long  term  contract  prices  are  often 
linked to recent spot prices. 

4.1. 

Supply and demand situation, investment needs (Fig.4 Annex 1) 

With about one third of the world's reactors, EU fuel needs are also about one third 
of the global nuclear fuel market. The EU industry has the needed capacity to fulfill 
EU requirements for uranium enrichment and fuel fabrication (except for the Russian 
design  VVER  reactors),  but  lacks  some  capacity  for  uranium  conversion  and  is 
dependent on imported uranium. 

Annex II describes the nuclear fuel cycle. 

19 

Paris Convention (OECD) on Third Party Liability in the Field of Nuclear Energy of 1960 bolstered by 
the  Brussels  Supplementary  Convention  in  1963  and  entered  into  force  1968.  Vienna  Convention 
(IAEA) on Civil Liability for Nuclear Damage of 1963, entering into force in 1977. 

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5. 

CONCLUSIONS 

Nuclear energy plays an important role in the transition to a low carbon economy and reduces 
EU external supply dependency. The choice to include nuclear energy in the energy mix lies 
with the Member States. Nevertheless, it should be noted that if strategic investment decisions 
about power generation capacities in nuclear as well as in renewable energy are taken rapidly, 
nearly two thirds of EU's electricity generation could be low carbon in the early 2020s. 

The  role  of  the  European  Union  is  to  ensure  that  this  source  of  energy  is  developed  while 
meeting the highest level of safety. The European Union should also promote more coherent 
rules  on  licensing  and  safety  for  the  construction  of  new  nuclear  power  plants.  This  will 
facilitate investments and ensure to the citizens that these decisions are implemented on the 
basis  of  clear  and  transparent  rules.  An  appropriate  regulatory  framework  for  new  nuclear 
investments  would  facilitate  future  investments  in  this  sector  and  thereby  contribute  to 
security of supply. 

The  strategic  investment  choices  for  the  generation  of  electricity  will  have  an  impact  for 
decades on CO2 emissions, competitiveness and security of supply in the EU. 

Public  authorities  have  a  role  to  play,  by  establishing  predictable  and  effective  licensing 
procedures,  improving  public  acceptance  by  addressing  concerns  related  to  nuclear  safety, 
waste management and decommissioning. Due consideration should also be given to the issue 
of facilitating access to financing. 

The EU industry is a global leader in nuclear technology and has the capacity to supply both 
reactor equipment and most of the fuel cycle services, even though natural uranium is mostly 
imported. To maintain this leadership and to develop the next generation of nuclear reactors 
required to meet the ambitious 2050 EU low carbon vision, research and development effort 
in the framework of the SET Plan European Industrial Initiative on fission energy needs to be 
progressively stepped up. 

The  role  of  the  EU  is  to  develop  further,  and  to  support  third  countries  through  its  external 
instruments in accessing, the most advanced framework for nuclear energy, meeting the high 
standards  of  safety,  security  and  non-proliferation  as  required  by  the  Euratom  Treaty.  The 
Commission  is  preparing  a  revised  proposal  for  a  Directive  setting  up  a  Community 
framework for Nuclear Safety. The Commission supports the implementation of the already 
existing technical solutions for nuclear waste management. While maintaining the high level 
of nuclear safeguards throughout the EU, as a model for security inside and outside the Union, 
the  EU  should  continue  its  efforts  to  promote  high  safety  and  security  standards 
internationally through its external cooperation instruments. 

Security of supply of nuclear fuels cannot be taken for granted, especially should there be a 
rapid increase in global demand due to an expansion of nuclear power programmes. However, 
the situation is better than for fossil fuels, due to the wide ranging availability of uranium and 
the  possibility  to  recycle  nuclear  materials  several  times.  The  industry  must  increase  its 
capacity in line with demand, but with the exception of new mines, this can be done within 
the time frame of the construction of a new power plant. When there is enough evidence of 
additional demand, the required processing capacities will be built. 

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While  the  capital  requirements  are  often  important,  financial  markets  have  recognized  the 
profit  potential  of  energy  related  investments  and  capital  is  available  to  financially  sound 
projects. Significant new investments are already being undertaken in the EU and elsewhere. 
Increasing  natural  uranium  production  takes  more  time,  but  over  the  next  5  to  10  years, 
production around the world is expected to increase significantly. Global uranium resources 
are sufficient at the current rate of consumption20. However, over the longer term, new reactor 
technologies are needed to reduce the depletion of uranium resources. 

The implementation of a diversified supply policy remains vital for the EU nuclear industry. 
The low number of major players at the various steps of the fuel cycle may create unexpected 
supply constraints. Due to the need for uranium imports and taking into account EU's leading 
position for developing nuclear technology, it is important for the EU to maintain and further 
develop  cooperation  with  third  countries,  in  particular  through  Euratom  agreements  on 
peaceful uses of nuclear energy as well as on research cooperation. 

20 

Without  taking  into  account  more  efficient  utilization  of  resources  resulting  from  the  potential 
deployment of Generation IV reactors in the future. 

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