Nuclear energy and its discontents

Nuclear energy and its discontentsThose are over 700m kgs.  The drawback is that
                               Bythe government’s process produces uranium
 SUNIL  KEWALRAMANIoxide and hydrogen fluoride, which is not as pure as
    CHIEF INVESTMENT OFFICER,  GLOBALthat required for industrial application.
MONEY INVESTOR    Reprocessing is a problem because it can
                           produce separated plutonium which is easier to divert
September 11, 2009for weapons production than plutonium contained in
 Chart : First electricity production by nuclear energyhighly radioactive fuel. Case in mind is North Korea.
Experimental Breeder Reactor EBR-I, 20 Dec.1951,Besides, commercial reprocessing plants produce so
Arco, Idaho, USAmuch plutonium that keeping track of it all is rather
 At the outset, the Indo-US nuclear deal appearscumbersome and next to impossible. This makes it
path-breaking and allows India to regain itseasier to divert plutonium enough for weapons
techno-commercial independence and sovereigntywithout the loss being detected.
that we lost in 1978. The deal is supposed to   The progress of the global industry is by no
contribute to sustainable development, energymeans guaranteed. Several factors may impede it.
sustainability and fight against climate change.  UnlikePublic opinion may harden against nuclear power.
solar and wind energy, nuclear technology is the onlyPrivate sector investors may refuse to commit the
one that can meet power demand 24 hours a day,vast sums that will be needed. A worldwide shortage
although disruptive innovations in solar and windof skilled engineers and manufacturing facilities for
energy can change that.  It is believed that a stable,essential components is likely to be the greatest
prosperous, ecologically balanced India is good for theobstacle to delivering reactors fast enough to meet
sustainability of the world.  However, it takes timedemand. Practical solutions for the long-term storage
to buy and set up new nuclear reactors.  Cases inof radioactive waste remain elusive.
mind are French reactors in China and Russian  Yet the most serious concern of all over the
reactors in Koodankulam India.  The Olkiluto 3nuclear renaissance remains the link to proliferation.
reactor being built in Finland is more than two and aPower stations are not, in themselves, much of a risk
half years behind schedule, and cost overruns exceed- the problems lie in the uranium enrichment process,
Euros 2.5 Billion.which can be employed to develop both civil and
  Nuclear power provides 77 per cent ofmilitary versions of nuclear power.
France’s and 19.4 per cent of United State’sTo understand why this issue is at the centre of the
electricity today.  According to French PresidentUS administration's international programme, it is
Nicolas Sarkozy, each EPR (European Pressurizedimportant to focus on the three key factors inspiring
Reactor) that replaces a natural gas-fired electricitythe nuclear renaissance.
plant saves two billion cubic metres, or 70.6 billionFirst, there is security of supply. Driven by the
cubic feet, of natural gas each year, and that eachdevelopment of emerging economies such as China
EPR that replaces a coal-fired plant reduces CO 2and India, global energy demand could rise by as
emissions by 11 million tons.much as 45 per cent by 2030, according to the
   On June 26, 1954, at Obninsk, Russia, the nuclearInternational Energy Agency, which represents rich
power plant APS-1 with a net electrical output of 5energy-consuming countries. As concerns have grown
MW was connected to the power grid, the world'sabout the future availability of fossil fuels, which will
first nuclear power plant that generated electricity forbe increasingly provided by a small number of large
commercial use. On August 27, 1956 the firstsuppliers, energy consumers have come to see the
commercial nuclear power plant, Calder Hall 1,virtue in diversifying their sources of supply.
Eng-land, with a net electrical output of 50 MW wasSecond, there is economics. The economics of
connected to the national grid.nuclear power are fiercely contested, and highly
As of 30 June 2009 in 31 countries 436 nuclearsensitive to changes in variables such as construction
power plant units with an installed electric netcosts. What is unarguable, however, is that it
capacity of about 370 GW are in operation and 48provides an energy source not linked to the oil price.
plants with an installed capacity of 42 GW are in 15Even for oil- and gas-rich countries, such as Iran and
countries under construction.the UAE, another Middle Eastern country keen to
As of end 2007 the total electricity production sincebuild civil reactors, nuclear generation makes sense
1951 amounts to 59,450 billion kWh. The cumulativebecause it frees up more of their hydrocarbon
operating experience amounted to 12,750 years byresources for export. The earnings from those
the end of 2007.exports "would easily pay for investment in nuclear
Charts :energy", says Hans-Holger Rogner of the IAEA. Given
Nuclear power plants under construction, June 2009likely long-term oil and gas prices, "It makes economic
(IAEA 2009, modified)sense."
Nuclear share in electricity generation, 2008 (IAEAFinally, there is the growing pressure to meet climate
2009, modified)change goals. The US and its allies accept that the
Number of nuclear reactors worldwide by age as ofglobal struggle to cap greenhouse gas emissions
March 2009 (IAEA 2009)means nuclear energy options must be available.
Nuclear Power Plants, energy availability factor 1991 -Nuclear energy is almost free of emissions and, if
2008 (IAEA 2009)growing energy consumption is not to lead to soaring
Nuclear energy provides about 15 per cent of theconcentrations of carbon dioxide in the atmosphere,
world's electricity. Some 30 nations generate nuclearit is likely to play an increasingly important role.
power; 10 to 20 are expected to join them in the New processing technologies are being developed
next 10 years. At present there are 370 reactors into limit the amount and accessibility of
operation. The International Atomic Energy Agency,weapons-grade materials.  At an international level,
the United Nations watchdog, reckons that 1,400governments need to strengthen current international
new reactors may be built between now and 2050.anti-proliferation efforts to give the IAEA
  This expansion is creating a conundrum for(International Atomic Energy Agency) more
western policymakers, one with which the USinformation about a country’s nuclear-related
administration is now urgently grappling. Nuclearactivities and IAEA inspectors greater access to
power may be necessary to help the world meetlocations. Plants that enrich uranium for power plants
climate change goals and guarantee energy supply.can also be used to enrich for bombs; this is the path
But it also brings with it considerable securityIran is suspected of taking in developing a weapons
concerns. Detaching peaceful nuclear energy fromprogram.  An ambitious expansion of nuclear power
devastating weaponry is sooner said than done. Thewould require a lot more facilities for enriching
fuel for most modern nuclear power stations -uranium, thus enhancing the potential risk.  A nuclear
enriched uranium - in more potent forms is used forrenaissance is expected to be led by countries in
nuclear arms. Washington and its allies do not wantMiddle East and Africa—where a nuclear-energy
the expansion in civil nuclear power to allow anyprogramme could lead to development of
more nations to diversify into atomic weapons.surreptitious weapons. 
MIDDLE EASTERN MARKETS :  The lucrative fusion    To safeguard its monopoly, USEC (United
of politics and businessStates Enrichment Corporation) and affiliates in the
In a few weeks Abu Dhabi will write nuclear historyUS government imposed trade barriers on foreign,
when it unveils the winner of a multibillion dollarprincipally European producers of uranium enrichment
tender, writes Peggy Hollinger. With the initial reactorsservices.  This, in turn motivated Europeans to build
set to launch around 2016, the Emirate will be thecompeting uranium enrichment plants in the US. 
first Arab state to have nuclear power. Where AbuSince the Europeans are using proven centrifuge
Dhabi goes, others will follow: Saudi Arabia, Kuwait,enrichment technology, which has substantially lower
Qatar and Jordan have all voiced desire for nuclearenergy requirements than USEC’s ancient
power.gaseous diffusion plants; in an era of conservation of
The budding new market has drawn considerableprecious energy, the European technology deserves
political and commercial interest. Political concerns maycareful attention should the government feel going
be of the highest order; how lucrative the nuclearnuclear is indeed the way to go. Urenco, the Dutch
business opportunities really are remains unclear.uranium enrichment company is building its new plant
The international interest in the Middle Eastern marketin New Mexico. Areva, the French nuclear engineering
far outstrips its commercial value, says Steve Kidd,group, is setting up shop in Idaho. Each of the new
of the World Nuclear Association. According to WNAfacilities will produce initially, 3m Separative Work
estimates, outside of Iran only two nuclear reactorsUnits, or SWUs per year. 
will be operating in the region by 2020 and just four  The IEA has estimated that to keep the increase
by 2030. “It is not a lot compared to Chinain global temperatures to acceptable levels, the
where you could win contracts for up to 40.”world's nuclear capacity might have to increase more
One of the main reasons is clearly political. Nowhere isthan five-fold by 2050.
this better demonstrated than in France, home toGrowing international moves to put a price on carbon
some of the world’s leading nuclear companiesdioxide emissions, likely to be given fresh impetus at
such as EDF, GdF-Suez and Areva. These firms –the forthcoming UN climate conference in
all among the bidders in Abu Dhabi – are keyCopenhagen in December, also make nuclear power
tools in President Nicolas Sarkozy’s nuclearlook more attractive.
diplomacy in the Middle East: tough on IranianOpponents counter that even a large expansion of
enrichment ambitions, but open to selling know-hownuclear power would have only a small impact on the
to those countries willing to abide by internationaloverall global level of emissions. Pro-nuclear experts
rules. “It is the best way to show Iran that weacknowledge that, while it may not be a crisis-solving
are not against the Middle East having nuclear"silver bullet", it can be one of several "silver
technology,” says one French government official.buckshot" that, combined, can make a difference.
France also believes that there could be huge widerIndia, a nation of 1.1 billion people—and one beset
commercial gains to be had from nuclear deals,both by crushing poverty and a tumultuously
especially in defence and infrastructure. The Elyséeexpanding economy—has 15 nuclear power
has sent Philippe Marini, a senator, to the region toreactors already at work. Eight more are under
explore ways of bolstering French interests. Theconstruction, more than in any other nation. The
recent decision to open the share capital ofDepartment of Atomic Energy lauds the greenhouse
state-owned Areva to sovereign wealth funds wasbenefits of nukes, but the main impetus is sheer
one early result. “Civil nuclear power is clearlygigawatt lust. That would include building reactors
closely tied to political strategy,” notes Mr Marini.such as those at Kaiga Generating Station in a
Meanwhile, several Middle Eastern funds have struckclearing in the jungled Western Ghats mountains
deals with French companies.about 20 miles inland from southwest India's
The 1979 accident at the Three Mile Island plant inseacoast. Coming upon the two 220-megawatt,
Pennsylvania and the 1986 explosion at the Chernobylpressurized heavy-water reactors is like stumbling
plant in the Ukraine, as well as the anti-nuclear movieinto a thumping big factory in the middle of
“The China Syndrome” paint a rather grimYellowstone National Park. The region gets more than
scenario of what a nuclear accident could entail.  The15 feet of rain yearly, and its forest is home to
new generation of nuclear plants is designed to beincreasingly threatened species.
safer, using fewer pumps and piping and relying moreBack near the Indira Gandhi center a 500-megawatt
on gravity to move water for cooling the hot nuclearbreeder reactor is under construction and set to
core.  Nuclear reactors are contained inside a hugestart up in 2010. Four more are to follow by 2020.
structure of reinforced concrete with walls as muchIndia is very efficient at manufacturing plutonium fuel
as five feet thick to make sure that even if a seriousfrom their original uranium fuel load, which greatly
accident does occur, radiation is not released into theincreases the amount of energy they produce. But
environment. The Chernobyl reactor did not havecritics worry that the plutonium could possibly get in
such a structure.  Even with these advances;  inthe wrong hands.
July 2008;  at a nuclear plant in Provence, France;In part because of proliferation concerns, the U.S. has
163 pounds, or 74 kgs, of untreated uranium leakedsworn off such breeder reactors for the time being.
from a faulty tank during a draining operation, seepingBut outside powers have little leverage over India's
into the ground and then into rivers that flow intonukes. With few exceptions they are entirely
the Rhone.  After this incident, a burst undergroundhomegrown. India gave itself little choice about going
pipe at another site north of Tricastin,  which leakedit alone. In 1974, it set off an underground nuclear
a tiny amount of uranium inside plant grounds, andexplosion using plutonium surreptitiously diverted from
another accident at Tricastin itself, when 100a test reactor that Canada helped it build in the
employees were contaminated by radioactive1950s.
particles that escaped from a pipe. India became a nuclear pariah. Other countries
    The US nuclear industry has itself sufferedsuspended technical assistance, and Canadian
from decades of stagnation, with an ageing labourengineers walked off a job in Rajasthan. The Indians
force and little entrepreneurial motivation.  USEC, afinished the plant themselves.
company that had a monopoly on producing theIndia is now enthusiastic masters of all things nuclear.
electric utilities’ fuel of the future, is itself facingThe uranium fuel in Kaiga's reactors comes from
a brownout.  It’s stock price has plummetedmines west of Calcutta; workshops in the south
from $ 11 two years back to $ 5 today. It hasprovide the plant with gleaming, 65-foot-high, 110-ton
alienated its utility industry customers and spent vaststeam generators that drive electric dynamos.
resources on construction of a complex new plantControl systems, zircaloy fuel tubes, and 22-ton
that has not met its original projections. The USreactor components arrive from Hyderabad.
Energy Policy of 2005 provides loan guarantees up toThe Obama administration and its main allies, believe
80 per cent of the project cost, production taxthey must strengthen the rules of the game before
credits of $ 18 per MWe for new nuclear capacitythe next wave of reactors is built. The focus of their
through 2021 and insurance protection up to $ 500attention is a conference next May in New York,
million against delays during construction. It iswhich will review the 40-year-old nuclear
surprising that despite the industry being in existencenon-proliferation treaty. More than 160 countries will
for over 50 years, it has still not been able to standattempt to broker stronger rules that widen the use
on its own legs.of civil nuclear power, while penalising those states
 According to the Department of Atomic Energy,that try to diversify their programmes into weapons
India has enough indigenous uranium for 10,000 MWproduction. However, suspicions and resentments
of nuclear power for 30 years. Present mismatch inbetween the members of the nuclear club and those
uranium availability is a consequence of poor foresightaspiring to join it mean reaching an agreement will not
and inadequate prospecting and mining.  Besides, thebe easy.
planned 40,000 MW of nuclear power will cost noSecuring tougher rules is only one part of US
less than $ 100 Billion or Rs 4 lakh crores.strategy. Other ideas being considered include an
   Nuclear power plants emit virtually no carbonIAEA proposal to create a small number of huge
dioxide, no sulfur, no mercury. Even when taking intonuclear fuel banks that will supply a large number of
account “full life-cycle emissions”—includingreactors. The merit of this idea is that it will mean
mining of uranium, shipping fuel, constructing plantsmost countries have no justifiable reason to enrich
and managing waste—nuclear’s carbon-dioxidetheir own uranium in the way Iran is currently seeking
discharges are identical to the full life-cycle emissionsto do.
of wind and hydropower and less than solar power.Separately, other ideas are being promoted to ensure
 However, one study has determined that to makethe safety of nuclear materials. In particular, the US
a significant contribution towards stabilizingwants to promote a nuclear security conference in
atmospheric carbon dioxide; about 21 newWashington next March, one that aims to ensure
1,000-megawatt nuclear plants will have to be builtnuclear materials do not fall into the hands of
each year over the next 50 years, including thoseterrorists.
needed to replace existing reactors, all of which are There are signs that some countries are prepared
expected to be retired by 2050.  This indeed callsto stay out of uranium enrichment. The UAE, for
for a tall order.example, has said it has no interest in acquiring fuel
 For two AP-1000 nuclear plants designed bycycle capability, and is open to the idea of importing
Westinghouse for Florida utility Progress Energy, thefuel from an international supplier.
estimated cost is $ 14 Billion (over $ 6000/kW).But there is also resistance. Some states that may
MidAmerican Energy Holdings, a power utility ownedwant to develop nuclear power, such as developing
by Warren Buffett’s Berkshire Hathaway,countries belonging to the Group of 77 and the
shelved its own nuke plan earlier this year, saying itNonaligned Movement, say they need the confidence
no longer made economic sense.that a reliable supply of nuclear fuel will be available. A
   There are only two vendors (Japan Steel Workssmall number of fuel banks, they say, cannot provide
and France’s Creusot Forge, part of Areva) whothat.
are able to supply critical reactor components. TheOthers, including such leading emerging economies as
biggest bottleneck is in the huge reactor vessels thatBrazil and Egypt, have refused to sign the NPT's
contain a plant’s radioactive core.  At present,"additional protocol" that gives the IAEA the power
only one plant in the world is capable of forging theto conduct unfettered inspections of a nation's
huge vessels in a single piece, and it can produce onlynuclear facilities. Almost every country in the world,
a handful of forgings a year.  Besides, there is aincluding Iran, has signed the NPT - except India,
severe shortage of nuclear engineers.Pakistan and Israel. However, only 123 have signed
    Of concern in any nuclear deal is the how thethe additional protocol and only 91 have brought it
disposal of waste products can be handled safely andinto effect.
economically.  When you produce enriched uranium,There is some scepticism about the chances of a
you also produce depleted uranium, which is lessdeal being reached at the NPT review conference in
radioactive than the original ore, or natural uranium. May. Suspicion that the US and other nuclear powers
This comes in the form of uranium hexafluoride,are setting the rules to suit their own ends remains
which is a solid at room temperature.  The villain ofhigh. The last NPT review attempt in 2005 ended in a
the piece in depleted UF6 is the fluorine, which, whenflop. Four years on, the stakes have been raised. If
it disassociates from uranium, becomes a corrosivethe 2010 conference goes the same way, the
gas. Most UF6 in the US is being stored in slowlyconsequences will be grim - for the world's security,
rusting metal containers in the open air, not aprosperity and climate.
preferred solution for what becomes a corrosive gas 
if exposed to the atmosphere. The US governmentNote : Mr Sunil Kewalramani is a WHARTON
is building two facilities just to deal with theBUSINESS SCHOOL MBA and Chief Investment
government’s own inventories of depleted UF6. Officer, Global Money Investor.