Nuclear energy and its discontents

Nuclear energy and its discontents				inventories of depleted UF6. Those are over 700m
				kgs. The drawback is that the government’s
By SUNIL KEWALRAMANI				process produces uranium oxide and hydrogen
� CHIEF INVESTMENT OFFICER,				fluoride, which is not as pure as that required for
GLOBAL MONEY INVESTOR				industrial application.
� September 11, 2009				Reprocessing is a problem because it can
Chart : First electricity production by nuclear energy				produce separated plutonium which is easier to divert
Experimental Breeder Reactor EBR-I, 20 Dec.1951,				for weapons production than plutonium contained in
Arco, Idaho, USA				highly radioactive fuel. Case in mind is North Korea.
At the outset, the Indo-US nuclear deal appears				Besides, commercial reprocessing plants produce so
path-breaking and allows India to regain its				much plutonium that keeping track of it all is rather
techno-commercial independence and sovereignty that				cumbersome and next to impossible. This makes it
we lost in 1978. The deal is supposed to contribute to				easier to divert plutonium enough for weapons without
sustainable development, energy sustainability and fight				the loss being detected.
against climate change. Unlike solar and wind energy,				The progress of the global industry is by no
nuclear technology is the only one that can meet				means guaranteed. Several factors may impede it.
power demand 24 hours a day, although disruptive				Public opinion may harden against nuclear power.
innovations in solar and wind energy can change that.				Private sector investors may refuse to commit the
It is believed that a stable, prosperous, ecologically				vast sums that will be needed. A worldwide shortage
balanced India is good for the sustainability of the				of skilled engineers and manufacturing facilities for
world. However, it takes time to buy and set up new				essential components is likely to be the greatest
nuclear reactors. Cases in mind are French reactors				obstacle to delivering reactors fast enough to meet
in China and Russian reactors in Koodankulam India.				demand. Practical solutions for the long-term storage
The Olkiluto 3 reactor being built in Finland is more				of radioactive waste remain elusive.
than two and a half years behind schedule, and cost				Yet the most serious concern of all over the nuclear
overruns exceed Euros 2.5 Billion.				renaissance remains the link to proliferation. Power
Nuclear power provides 77 per cent of				stations are not, in themselves, much of a risk - the
France’s and 19.4 per cent of United State’s				problems lie in the uranium enrichment process, which
electricity today. According to French President				can be employed to develop both civil and military
Nicolas Sarkozy, each EPR (European Pressurized				versions of nuclear power.
Reactor) that replaces a natural gas-fired electricity				To understand why this issue is at the centre of the
plant saves two billion cubic metres, or 70.6 billion cubic				US administration's international programme, it is
feet, of natural gas each year, and that each EPR that				important to focus on the three key factors inspiring
replaces a coal-fired plant reduces CO 2 emissions by				the nuclear renaissance.
11 million tons.				First, there is security of supply. Driven by the
On June 26, 1954, at Obninsk, Russia, the nuclear				development of emerging economies such as China
power plant APS-1 with a net electrical output of 5				and India, global energy demand could rise by as much
MW was connected to the power grid, the world's first				as 45 per cent by 2030, according to the International
nuclear power plant that generated electricity for				Energy Agency, which represents rich
commercial use. On August 27, 1956 the first				energy-consuming countries. As concerns have grown
commercial nuclear power plant, Calder Hall 1, Eng-land,				about the future availability of fossil fuels, which will be
with a net electrical output of 50 MW was connected				increasingly provided by a small number of large
to the national grid.				suppliers, energy consumers have come to see the
As of 30 June 2009 in 31 countries 436 nuclear power				virtue in diversifying their sources of supply.
plant units with an installed electric net capacity of				Second, there is economics. The economics of nuclear
about 370 GW are in operation and 48 plants with an				power are fiercely contested, and highly sensitive to
installed capacity of 42 GW are in 15 countries under				changes in variables such as construction costs. What
construction.				is unarguable, however, is that it provides an energy
As of end 2007 the total electricity production since				source not linked to the oil price.
1951 amounts to 59,450 billion kWh. The cumulative				Even for oil- and gas-rich countries, such as Iran and
operating experience amounted to 12,750 years by the				the UAE, another Middle Eastern country keen to build
end of 2007.				civil reactors, nuclear generation makes sense
Charts :				because it frees up more of their hydrocarbon
Nuclear power plants under construction, June 2009				resources for export. The earnings from those
(IAEA 2009, modified)				exports "would easily pay for investment in nuclear
Nuclear share in electricity generation, 2008 (IAEA				energy", says Hans-Holger Rogner of the IAEA. Given
2009, modified)				likely long-term oil and gas prices, "It makes economic
Number of nuclear reactors worldwide by age as of				sense."
March 2009 (IAEA 2009)				Finally, there is the growing pressure to meet climate
Nuclear Power Plants, energy availability factor 1991 -				change goals. The US and its allies accept that the
2008 (IAEA 2009)				global struggle to cap greenhouse gas emissions
Nuclear energy provides about 15 per cent of the				means nuclear energy options must be available.
world's electricity. Some 30 nations generate nuclear				Nuclear energy is almost free of emissions and, if
power; 10 to 20 are expected to join them in the next				growing energy consumption is not to lead to soaring
10 years. At present there are 370 reactors in				concentrations of carbon dioxide in the atmosphere, it
operation. The International Atomic Energy Agency, the				is likely to play an increasingly important role.
United Nations watchdog, reckons that 1,400 new				New processing technologies are being developed to
reactors may be built between now and 2050.				limit the amount and accessibility of weapons-grade
This expansion is creating a conundrum for western				materials. At an international level, governments need
policymakers, one with which the US administration is				to strengthen current international anti-proliferation
now urgently grappling. Nuclear power may be				efforts to give the IAEA (International Atomic Energy
necessary to help the world meet climate change				Agency) more information about a country’s
goals and guarantee energy supply. But it also brings				nuclear-related activities and IAEA inspectors greater
with it considerable security concerns. Detaching				access to locations. Plants that enrich uranium for
peaceful nuclear energy from devastating weaponry is				power plants can also be used to enrich for bombs;
sooner said than done. The fuel for most modern				this is the path Iran is suspected of taking in developing
nuclear power stations - enriched uranium - in more				a weapons program. An ambitious expansion of
potent forms is used for nuclear arms. Washington				nuclear power would require a lot more facilities for
and its allies do not want the expansion in civil nuclear				enriching uranium, thus enhancing the potential risk. A
power to allow any more nations to diversify into				nuclear renaissance is expected to be led by countries
atomic weapons.				in Middle East and Africa—where a nuclear-energy
MIDDLE EASTERN MARKETS : The lucrative fusion				programme could lead to development of surreptitious
of politics and business				weapons.
In a few weeks Abu Dhabi will write nuclear history				To safeguard its monopoly, USEC (United
when it unveils the winner of a multibillion dollar tender,				States Enrichment Corporation) and affiliates in the US
writes Peggy Hollinger. With the initial reactors set to				government imposed trade barriers on foreign,
launch around 2016, the Emirate will be the first Arab				principally European producers of uranium enrichment
state to have nuclear power. Where Abu Dhabi goes,				services. This, in turn motivated Europeans to build
others will follow: Saudi Arabia, Kuwait, Qatar and				competing uranium enrichment plants in the US. Since
Jordan have all voiced desire for nuclear power.				the Europeans are using proven centrifuge enrichment
The budding new market has drawn considerable				technology, which has substantially lower energy
political and commercial interest. Political concerns may				requirements than USEC’s ancient gaseous
be of the highest order; how lucrative the nuclear				diffusion plants; in an era of conservation of precious
business opportunities really are remains unclear.				energy, the European technology deserves careful
The international interest in the Middle Eastern market				attention should the government feel going nuclear is
far outstrips its commercial value, says Steve Kidd, of				indeed the way to go. Urenco, the Dutch uranium
the World Nuclear Association. According to WNA				enrichment company is building its new plant in New
estimates, outside of Iran only two nuclear reactors will				Mexico. Areva, the French nuclear engineering group, is
be operating in the region by 2020 and just four by				setting up shop in Idaho. Each of the new facilities will
2030. “It is not a lot compared to China where you				produce initially, 3m Separative Work Units, or SWUs
could win contracts for up to 40.”				per year.
One of the main reasons is clearly political. Nowhere is				The IEA has estimated that to keep the increase in
this better demonstrated than in France, home to				global temperatures to acceptable levels, the world's
some of the world’s leading nuclear companies				nuclear capacity might have to increase more than
such as EDF, GdF-Suez and Areva. These firms –				five-fold by 2050.
all among the bidders in Abu Dhabi – are key tools				Growing international moves to put a price on carbon
in President Nicolas Sarkozy’s nuclear diplomacy in				dioxide emissions, likely to be given fresh impetus at
the Middle East: tough on Iranian enrichment ambitions,				the forthcoming UN climate conference in Copenhagen
but open to selling know-how to those countries willing				in December, also make nuclear power look more
to abide by international rules. “It is the best way to				attractive.
show Iran that we are not against the Middle East				Opponents counter that even a large expansion of
having nuclear technology,” says one French				nuclear power would have only a small impact on the
government official.				overall global level of emissions. Pro-nuclear experts
France also believes that there could be huge wider				acknowledge that, while it may not be a crisis-solving
commercial gains to be had from nuclear deals,				"silver bullet", it can be one of several "silver buckshot"
especially in defence and infrastructure. The Elysée				that, combined, can make a difference.
has sent Philippe Marini, a senator, to the region to				India, a nation of 1.1 billion people—and one beset both
explore ways of bolstering French interests. The				by crushing poverty and a tumultuously expanding
recent decision to open the share capital of				economy—has 15 nuclear power reactors already at
state-owned Areva to sovereign wealth funds was				work. Eight more are under construction, more than in
one early result. “Civil nuclear power is clearly				any other nation. The Department of Atomic Energy
closely tied to political strategy,” notes Mr Marini.				lauds the greenhouse benefits of nukes, but the main
Meanwhile, several Middle Eastern funds have struck				impetus is sheer gigawatt lust. That would include
deals with French companies.				building reactors such as those at Kaiga Generating
The 1979 accident at the Three Mile Island plant in				Station in a clearing in the jungled Western Ghats
Pennsylvania and the 1986 explosion at the Chernobyl				mountains about 20 miles inland from southwest India's
plant in the Ukraine, as well as the anti-nuclear movie				seacoast. Coming upon the two 220-megawatt,
“The China Syndrome” paint a rather grim				pressurized heavy-water reactors is like stumbling into
scenario of what a nuclear accident could entail. The				a thumping big factory in the middle of Yellowstone
new generation of nuclear plants is designed to be				National Park. The region gets more than 15 feet of
safer, using fewer pumps and piping and relying more				rain yearly, and its forest is home to increasingly
on gravity to move water for cooling the hot nuclear				threatened species.
core. Nuclear reactors are contained inside a huge				Back near the Indira Gandhi center a 500-megawatt
structure of reinforced concrete with walls as much as				breeder reactor is under construction and set to start
five feet thick to make sure that even if a serious				up in 2010. Four more are to follow by 2020. India is
accident does occur, radiation is not released into the				very efficient at manufacturing plutonium fuel from their
environment. The Chernobyl reactor did not have such				original uranium fuel load, which greatly increases the
a structure. Even with these advances; in July				amount of energy they produce. But critics worry that
2008; at a nuclear plant in Provence, France; 163				the plutonium could possibly get in the wrong hands.
pounds, or 74 kgs, of untreated uranium leaked from a				In part because of proliferation concerns, the U.S. has
faulty tank during a draining operation, seeping into the				sworn off such breeder reactors for the time being.
ground and then into rivers that flow into the Rhone.				But outside powers have little leverage over India's
After this incident, a burst underground pipe at another				nukes. With few exceptions they are entirely
site north of Tricastin, which leaked a tiny amount of				homegrown. India gave itself little choice about going it
uranium inside plant grounds, and another accident at				alone. In 1974, it set off an underground nuclear
Tricastin itself, when 100 employees were				explosion using plutonium surreptitiously diverted from a
contaminated by radioactive particles that escaped				test reactor that Canada helped it build in the 1950s.
from a pipe.				India became a nuclear pariah. Other countries
The US nuclear industry has itself suffered from				suspended technical assistance, and Canadian
decades of stagnation, with an ageing labour force				engineers walked off a job in Rajasthan. The Indians
and little entrepreneurial motivation. USEC, a				finished the plant themselves.
company that had a monopoly on producing the				India is now enthusiastic masters of all things nuclear.
electric utilities’ fuel of the future, is itself facing a				The uranium fuel in Kaiga's reactors comes from
brownout. It’s stock price has plummeted from $				mines west of Calcutta; workshops in the south
11 two years back to $ 5 today. It has alienated its				provide the plant with gleaming, 65-foot-high, 110-ton
utility industry customers and spent vast resources on				steam generators that drive electric dynamos. Control
construction of a complex new plant that has not met				systems, zircaloy fuel tubes, and 22-ton reactor
its original projections. The US Energy Policy of 2005				components arrive from Hyderabad.
provides loan guarantees up to 80 per cent of the				The Obama administration and its main allies, believe
project cost, production tax credits of $ 18 per MWe				they must strengthen the rules of the game before the
for new nuclear capacity through 2021 and insurance				next wave of reactors is built. The focus of their
protection up to $ 500 million against delays during				attention is a conference next May in New York,
construction. It is surprising that despite the industry				which will review the 40-year-old nuclear
being in existence for over 50 years, it has still not				non-proliferation treaty. More than 160 countries will
been able to stand on its own legs.				attempt to broker stronger rules that widen the use of
According to the Department of Atomic Energy, India				civil nuclear power, while penalising those states that
has enough indigenous uranium for 10,000 MW of				try to diversify their programmes into weapons
nuclear power for 30 years. Present mismatch in				production. However, suspicions and resentments
uranium availability is a consequence of poor foresight				between the members of the nuclear club and those
and inadequate prospecting and mining. Besides, the				aspiring to join it mean reaching an agreement will not
planned 40,000 MW of nuclear power will cost no less				be easy.
than $ 100 Billion or Rs 4 lakh crores.				Securing tougher rules is only one part of US strategy.
Nuclear power plants emit virtually no carbon				Other ideas being considered include an IAEA proposal
dioxide, no sulfur, no mercury. Even when taking into				to create a small number of huge nuclear fuel banks
account “full life-cycle emissions”—including				that will supply a large number of reactors. The merit
mining of uranium, shipping fuel, constructing plants and				of this idea is that it will mean most countries have no
managing waste—nuclear’s carbon-dioxide				justifiable reason to enrich their own uranium in the
discharges are identical to the full life-cycle emissions				way Iran is currently seeking to 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 make a				the safety of nuclear materials. In particular, the US
significant contribution towards stabilizing atmospheric				wants to promote a nuclear security conference in
carbon dioxide; about 21 new 1,000-megawatt nuclear				Washington next March, one that aims to ensure
plants will have to be built each year over the next 50				nuclear materials do not fall into the hands of terrorists.
years, including those needed to replace existing				There are signs that some countries are prepared to
reactors, all of which are expected to be retired by				stay out of uranium enrichment. The UAE, for example,
2050. This indeed calls for a tall order.				has said it has no interest in acquiring fuel cycle
For two AP-1000 nuclear plants designed by				capability, and is open to the idea of importing fuel from
Westinghouse for Florida utility Progress Energy, the				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 owned				want to develop nuclear power, such as developing
by Warren Buffett’s Berkshire Hathaway, shelved				countries belonging to the Group of 77 and the
its own nuke plan earlier this year, saying it no longer				Nonaligned Movement, say they need the confidence
made economic sense.				that a reliable supply of nuclear fuel will be available. A
There are only two vendors (Japan Steel Works				small number of fuel banks, they say, cannot provide
and France’s Creusot Forge, part of Areva) who				that.
are able to supply critical reactor components. The				Others, including such leading emerging economies as
biggest bottleneck is in the huge reactor vessels that				Brazil and Egypt, have refused to sign the NPT's
contain a plant’s radioactive core. At present, only				"additional protocol" that gives the IAEA the power to
one plant in the world is capable of forging the huge				conduct unfettered inspections of a nation's nuclear
vessels in a single piece, and it can produce only a				facilities. Almost every country in the world, including
handful of forgings a year. Besides, there is a severe				Iran, has signed the NPT - except India, Pakistan and
shortage of nuclear engineers.				Israel. However, only 123 have signed the additional
Of concern in any nuclear deal is the how the				protocol and only 91 have brought it into effect.
disposal of waste products can be handled safely and				There is some scepticism about the chances of a deal
economically. When you produce enriched uranium,				being reached at the NPT review conference in May.
you also produce depleted uranium, which is less				Suspicion that the US and other nuclear powers are
radioactive than the original ore, or natural uranium.				setting the rules to suit their own ends remains high.
This comes in the form of uranium hexafluoride, which				The last NPT review attempt in 2005 ended in a flop.
is a solid at room temperature. The villain of the				Four years on, the stakes have been raised. If the
piece in depleted UF6 is the fluorine, which, when it				2010 conference goes the same way, the
disassociates from uranium, becomes a corrosive gas.				consequences will be grim - for the world's security,
Most UF6 in the US is being stored in slowly rusting				prosperity and climate.
metal containers in the open air, not a preferred
solution for what becomes a corrosive gas if exposed				Note : Mr Sunil Kewalramani is a WHARTON
to the atmosphere. The US government is building two				BUSINESS SCHOOL MBA and Chief Investment
facilities just to deal with the government’s own				Officer, Global Money Investor.

Etec Nm

Nuclear energy and its discontents