Nuclear Commerce
Control Regime and the Non-Proliferation Treaty
©2008
Magisterarbeit
332 Seiten
Zusammenfassung
Inhaltsangabe:Abstract
Peaceful and non-peaceful applications of nuclear technologies share a common fate: one cannot exist without the other. As the world is about to experience a nuclear renaissance, the nuclear industry has gone through a phase of consolidation. Despite more efficient intra-industry structures and technological advancements it will still not be able to close the increasing gap in energy demand to be expected in the near future. The economic attractiveness and relative absence of emissions still make atomic power an attractive candidate for an energy mix comprising several different clean technologies.
A renewed interest in nuclear energy will at the same time demand for a robust non-proliferation framework as a safety-guarantee for the market. Export controls have been found to be an effective tool in this regard. The Zangger Committee as the legitimate interpreter of the Non-Proliferation Treaty and the Nuclear Suppliers Group representing the most influential countries in nuclear commerce have established a system of checks and balances that may not halt proliferation altogether, but which has managed to slow it down significantly.
The effect of these control structures on the development of the nuclear market cannot be assessed directly. Political and security concerns particularly attributed to nuclear matters make their application a necessity for the existence of the commerce itself. Recent global efforts such as the United Nations Security Council Resolutions 1540 and 1673 are focusing on the implementation of common set of key elements for strategic trade controls. The success of these measures will have a direct impact on the sustainability of the nuclear renaissance Inhaltsverzeichnis:TABLE OF CONTENTS:
Table of ContentsIII
Table of IllustrationsVI
List of AbbreviationsVII
AbstractX
Abstract in GermanXI
PrefaceXII
1.Introduction1
1.1.General Situation - Mankind's Capacity to build1
1.2.Hypotheses & Methodology3
1.2.1.Problem statement3
1.2.2.Hypotheses3
1.2.3.Methodology4
1.2.4.Basic structural aspects5
2.The Nuclear Universe and its genesis6
2.1.Nuclear energy production6
2.1.1.Nuclear Fission technology7
2.1.2.Nuclear inconveniences9
2.1.3.Nuclear Fusion technology10
2.2.Nuclear power in the energy mix11
2.3.Military applications of nuclear technology13
2.3.1.Nuclear disarmament14
2.3.2.National security interests & nuclear arsenals16
3.Nuclear commerce and its market18
3.1.Nuclear […]
Peaceful and non-peaceful applications of nuclear technologies share a common fate: one cannot exist without the other. As the world is about to experience a nuclear renaissance, the nuclear industry has gone through a phase of consolidation. Despite more efficient intra-industry structures and technological advancements it will still not be able to close the increasing gap in energy demand to be expected in the near future. The economic attractiveness and relative absence of emissions still make atomic power an attractive candidate for an energy mix comprising several different clean technologies.
A renewed interest in nuclear energy will at the same time demand for a robust non-proliferation framework as a safety-guarantee for the market. Export controls have been found to be an effective tool in this regard. The Zangger Committee as the legitimate interpreter of the Non-Proliferation Treaty and the Nuclear Suppliers Group representing the most influential countries in nuclear commerce have established a system of checks and balances that may not halt proliferation altogether, but which has managed to slow it down significantly.
The effect of these control structures on the development of the nuclear market cannot be assessed directly. Political and security concerns particularly attributed to nuclear matters make their application a necessity for the existence of the commerce itself. Recent global efforts such as the United Nations Security Council Resolutions 1540 and 1673 are focusing on the implementation of common set of key elements for strategic trade controls. The success of these measures will have a direct impact on the sustainability of the nuclear renaissance Inhaltsverzeichnis:TABLE OF CONTENTS:
Table of ContentsIII
Table of IllustrationsVI
List of AbbreviationsVII
AbstractX
Abstract in GermanXI
PrefaceXII
1.Introduction1
1.1.General Situation - Mankind's Capacity to build1
1.2.Hypotheses & Methodology3
1.2.1.Problem statement3
1.2.2.Hypotheses3
1.2.3.Methodology4
1.2.4.Basic structural aspects5
2.The Nuclear Universe and its genesis6
2.1.Nuclear energy production6
2.1.1.Nuclear Fission technology7
2.1.2.Nuclear inconveniences9
2.1.3.Nuclear Fusion technology10
2.2.Nuclear power in the energy mix11
2.3.Military applications of nuclear technology13
2.3.1.Nuclear disarmament14
2.3.2.National security interests & nuclear arsenals16
3.Nuclear commerce and its market18
3.1.Nuclear […]
Leseprobe
Inhaltsverzeichnis
Thomas Berndorfer
Nuclear Commerce
Control Regime and the Non-Proliferation Treaty
ISBN: 978-3-8366-1645-4
Druck Diplomica® Verlag GmbH, Hamburg, 2008
Zugl. IMC - International Management Center GmbH, Krems, Österreich, Magisterarbeit,
2008
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Printed in Germany
Nuclear Commerce
Int'l Law and Global Political Studies
Thomas Berndorfer
IV
ACKNOWLEDGEMENTS
A wise man once said that achievements only come with the support of others.
This holds true more than ever for the creation of this diploma thesis. Without the
knowledgeable and enduring support of several very special people, the result of
this work would not have been the same.
Foremost I have to thank my professor and thesis coach Anis Bajrektarevic. Not
only was his teaching an important reason to get involved in the field of
geopolitical affairs, but also it was because of his help that I was able to spend a
semester in Geneva, experiencing in person how the multilateral system works.
Let me thus state once more how much such kind help and all the valuable input is
appreciated.
Another important influence over the last weeks has been the exchange with
Verena Ehold, a talented Austrian jurist with a special focus in the field of nuclear
legislation. I am deeply obliged for all her support, especially when inviting me to
Luxembourg for an extensive interview session at the EURATOM premises. For
her future career I can but only hope that she will continue to work with the same
motivation that inspired me so much.
I can also not thank the Permanent Mission of Austria to the United Nations
Geneva enough, for the chance of offering me to work with them. Especially
Ambassador Wolfgang Petritsch, who upon coming to Krems triggered my interest
for this internship position, and Ms Christina Kokkinakis, in her position as the
deputy permanent representative of the Austrian Mission, have provided me with
all the help I could possibly have asked for. Furthermore, Dr. Helmut Friza, Ms
Manuela Sarkissian-Kleb, as well as the diplomats and other members of the staff
were a major reason to feel welcomed and appreciated.
Last but not least, my biggest thank you goes to my parents. I will never be able to
repay them to the slightest degree for everything they have done for me. I can only
try to do so.
Nuclear Commerce
Int'l Law and Global Political Studies
Thomas Berndorfer
V
TABLE OF CONTENTS
STATUTORY DECLARATION ...II
ACKNOWLEDGEMENTS... IV
TABLE OF CONTENTS ... V
TABLE OF ILLUSTRATIONS... IX
LIST OF ABBREVIATIONS... X
ABSTRACT ... XIII
ABSTRACT IN GERMAN... XIV
1
INTRODUCTION ...1
1.1
General Situation Mankind's Capacity to build...1
1.2
Hypotheses & Methodology ...3
1.2.1
Problem statement...3
1.2.2
Hypotheses...3
1.2.3
Methodology ...4
1.2.4
Basic structural aspects...5
2
THE NUCLEAR UNIVERSE AND ITS GENESIS...6
2.1
Nuclear energy production...6
2.1.1
Nuclear Fission technology...7
2.1.2
Nuclear inconveniences...9
2.1.3
Nuclear Fusion technology ...10
2.2
Nuclear power in the energy mix ...11
2.3
Military applications of nuclear technology...13
2.3.1
Nuclear disarmament...14
2.3.2
National security interests & nuclear arsenals ...16
3
NUCLEAR COMMERCE AND ITS MARKET...18
3.1
Nuclear economics ...19
3.1.1
Nuclear energy's attractiveness...21
3.1.2
A profit and loss account ...22
3.1.2.1
Nuclear energy as one of the cost-efficiency winners ...23
3.1.2.2
Climate change as a business opportunity...26
3.1.2.3
The Nuclear Industry and its battle for brainpower...29
Nuclear Commerce
Int'l Law and Global Political Studies
Thomas Berndorfer
VI
3.1.2.4
Nuclear policies in the spotlight...31
3.2
The nuclear fuel-cycle and its market ...33
3.2.1
The nuclear commodity market...35
3.2.1.1
The great supply shortage ...38
3.2.1.2
A booming investment opportunity ...39
3.2.2
The nuclear technology market ...40
3.2.2.1
Market players...41
3.2.2.2
Uranium conversion and enrichment business...42
3.2.2.3
The nuclear fuel market ...44
3.2.2.4
Nuclear plant construction...45
3.2.3
The nuclear operating sector ...46
3.3
Signs of a nuclear renaissance...48
3.3.1
The Global Nuclear Energy Partnership ...49
3.3.2
The US-India deal...50
3.3.3
Russian & Chinese ambitions...52
3.3.4
The EU energy strategy...53
4
THE LEGAL FRAMEWORK BEHIND THE NUCLEAR WORLD...56
4.1
Raison d'être of specialized legislation ...56
4.2
The International Atomic Energy Agency...57
4.2.1
The Atoms for Peace speech ...58
4.2.2
The three main pillars of nuclear co-operation...60
4.2.3
The Safeguards and Verification process ...62
4.2.4
Promoting safety and security...63
4.2.5
Promoting science and technology ...63
4.2.6
The IAEA and the United Nations ...64
4.3
The Non-Proliferation Treaty and its regional daughters...65
4.3.1
The NPT's main provisions...66
4.3.2
The NPT after its formation...68
4.3.3
The Additional Protocol...69
4.3.4
The NPT review conference mechanism ...71
4.3.5
The Nuclear Weapon Free Zones - the NPT's regional daughters ..72
4.3.5.1
Nuclear weapon free zones for unpopulated regions ...72
Nuclear Commerce
Int'l Law and Global Political Studies
Thomas Berndorfer
VII
4.3.5.2
Nuclear weapon free zones for populated regions ...73
4.4
Nuclear-Test-Ban Treaties...74
4.4.1
The Limited & Threshold Test Ban Treaties ...74
4.4.2
The Comprehensive Test Ban Treaty ...75
4.4.2.1
The US and the Comprehensive Test Ban Treaty...76
4.4.2.2
Verification measures...77
4.5
The Fissile Material Cut-off Treaty...78
4.5.1
Key Issues ...78
4.5.2
The way forward ...79
4.6
Other Treaties...79
5
THE NUCLEAR COMMERCE REGIME ...81
5.1
The NPT's contradicting provisions...83
5.2
Nuclear export control regimes & supporting measures ...84
5.2.1
The Zangger Committee...86
5.2.1.1
The common understandings of the Zangger Committee ...87
5.2.1.2
The conditions of supply ...87
5.2.2
The Nuclear Suppliers Group ...88
5.2.2.1
Nuclear Supplier Guidelines...89
5.2.2.2 Membership criteria ...90
5.2.2.3
The Regime's Procedures...91
5.2.3
UN Security Council Resolution 1540...92
5.2.4
The NPT Additional Protocol ...94
5.2.5
The Enhanced Proliferation Control Initiative...95
5.2.6
Overview of existing export control measures ...96
5.3
Recent efforts ...98
5.3.1
Export regimes and transparency ...98
5.3.2
Co-operation...100
5.4
Export controls in practice 9 key elements...101
5.5
The Future of Nuclear Export Controls ...103
5.5.1
Chinese efforts as a new approach ...105
5.5.2
UNSCR 1540 developments...106
5.5.3
A multilateral non-proliferation convention...107
Nuclear Commerce
Int'l Law and Global Political Studies
Thomas Berndorfer
VIII
6
CONCLUSION...109
LIST OF REFERENCES...116
APPENDIX... XV
Nuclear Commerce
Int'l Law and Global Political Studies
Thomas Berndorfer
IX
TABLE OF ILLUSTRATIONS
Figure 1: Different reactor types...9
Figure 2: Total prime energy supply 1971-2005...13
Figure 3: US-Russian nuclear weapon stockpiles development...15
Figure 4: Average US nuclear production costs, 1981-2003, cents per kWh ...25
Figure 5: Costs of generating electricity ...26
Figure 6: Greenhouse-gas emissions ranking...28
Figure 7: The nuclear fuel cycle ...34
Figure 8: Uranium requirements as of 2006...37
Figure 9: The uranium supply and demand since 1945 ...39
Figure 10: IAEA Organizational Chart ...61
Figure 11: Key provisions in the NPT...68
Figure 12: International Monitoring System...77
Figure 13: Forms of proliferation ...82
Figure 14: Reporting submitting progress of UNSCR 1540...94
Figure 15: Multilateral Nuclear Export Control Measures...97
Figure 16: Key elements for effective strategic trade controls...103
Nuclear Commerce
Int'l Law and Global Political Studies
Thomas Berndorfer
X
LIST OF ABBREVIATIONS
ABM
Anti-Ballistic
Missile
AP
Additional
Protocol
BNFL
British Nuclear Fuel
BWR
Boiling Water Reactor
CD
Conference on Disarmament
CIS
Commonwealth
of Independent States
COCOM
Coordinating Committee for Multilateral Export Controls
CPPNM
Convention on the Physical Protection of Nuclear
Material
CTBT
Comprehensive Test Ban Treaty
USDOE
United States Department of Energy
EC
European
Commission
ECSC
European Coal and Steel Community
EIA
US
Energy
Information Administration
ENEF
European Nuclear Energy Forum
EPCI
Enhanced
Proliferation Control Initiative
EU
European
Union
EURATOM
European Atomic Energy Community
FMCT
Fissile Material Cut-off Treaty
FORATOM
European
Atomic
Forum
GDP
Gross Domestic Product
GNEP
Global Nuclear Energy Partnership
HEU
Highly Enriched Uranium
IAEA
International Atomic Energy Agency
ICJ
International Court of Justice
IEM
Information exchange meeting
IMS
International Monitoring System
INF
Intermediate range missile forces
IPFM
International Panel on Fissile Materials
ITER
International
Thermonuclear Experimental Reactor
Nuclear Commerce
Int'l Law and Global Political Studies
Thomas Berndorfer
XI
LG
London
Group
LTBT
Limited Test Ban Treaty
M&A
Mergers and Acquisitions
MTCR
Missile Technology Control Regime
NAM
Non-aligned
movement
NEA
Nuclear Energy Act
NEA
Nuclear Energy Agency
NIA
Nuclear Industry Association
NNWS
Non-nuclear weapon states
NPP
Nuclear Power Plant
NPT
Non-proliferation
treaty
NPTREC
NPT Review and Extension Conference
NSG
Nuclear Suppliers Group
NTBT
Nuclear Test Ban Treaty
NTM
National technical means
NWFZ
Nuclear weapon free zones
NWS
Nuclear Weapon States
OECD
Organization for Economic Co-operation and
Development
OPEC
Organization
of
Oil Exporting Countries
PNE
Peaceful Nuclear Explosion
PWR
Pressurized Water Reactor
PSI
Proliferation Security Initiative
R&D
Research and Development
SALT
Strategic Arms Limitation Talks
START
Strategic Arms Reduction Treaty
TTBT
Threshold Test Ban Treaty
UKR
Ukraine
UN
United
Nations
UNDDA
United Nations Department for Disarmament Affairs
UNGA
United Nations General Assembly
UNODA
United Nations Office for Disarmament Affairs
Nuclear Commerce
Int'l Law and Global Political Studies
Thomas Berndorfer
XII
USA
United States of America
UNSC
United Nations Security Council
UNSCR
United Nations Security Council Resolution
WA
Wassenaar
Arrangement
WEC
World Energy Council
WMD
Weapons of mass destruction
WNA
World Nuclear Association
WW II
World War Two
ZC
Zangger
Committee
Nuclear Commerce
Int'l Law and Global Political Studies
Thomas Berndorfer
XIII
ABSTRACT
Peaceful and non-peaceful applications of nuclear technologies share a common
fate: one cannot exist without the other. As the world is about to experience a
nuclear renaissance, the nuclear industry has gone through a phase of
consolidation. Despite more efficient intra-industry structures and technological
advancements it will still not be able to close the increasing gap in energy demand
to be expected in the near future. The economic attractiveness and relative
absence of emissions still make atomic power an attractive candidate for an
energy mix comprising several different "clean" technologies.
A renewed interest in nuclear energy will at the same time demand for a robust
non-proliferation framework as a safety-guarantee for the market. Export controls
have been found to be an effective tool in this regard. The Zangger Committee as
the legitimate interpreter of the Non-Proliferation Treaty and the Nuclear Suppliers
Group representing the most influential countries in nuclear commerce have
established a system of checks and balances that may not halt proliferation
altogether, but which has managed to slow it down significantly.
The effect of these control structures on the development of the nuclear market
cannot be assessed directly. Political and security concerns particularly attributed
to nuclear matters make their application a necessity for the existence of the
commerce itself. Recent global efforts such as the United Nations Security Council
Resolutions 1540 and 1673 are focusing on the implementation of common set of
key elements for strategic trade controls. The success of these measures will have
a direct impact on the sustainability of the nuclear renaissance.
Nuclear Commerce
Int'l Law and Global Political Studies
Thomas Berndorfer
XIV
ABSTRACT IN GERMAN
Friedliche und nicht-friedliche Anwendungen nuklearer Technologien teilen ein
gemeinsames Schicksal: Beide Bereiche sind von einander abhängig. Während
die Welt eine Renaissance der Kernenergie erlebt, hat die Atomindustrie eine
Phase der Konsolidierung hinter sich. Trotz effizienterer Industriestrukturen und
des technologischen Fortschritts wird es jedoch für die Atomindustrie nicht möglich
sein, die wachsende Kluft, die aus der erwarteten Nachfrage nach Energie in der
nahen Zukunft erwächst, und der tatsächlichen Energieproduktion zu schließen.
Die wirtschaftliche Attraktivität und die relative Emissionsfreiheit machen
Atomkraftwerke nichtsdestotrotz zu einer interessanten Alternative für einen
Energiemix, welcher mehrere verschiedene "saubere" Technologien umfassen
könnte.
Das wachsende Interesse an der Kernenergie wird gleichzeitig die Forderungen
nach einem robusten Regelwerk zur Nichtverbreitung von Atomwaffentechnologie
als Sicherheitsgarantie für den Markt erhöhen. In diesem Zusammenhang haben
sich Exportkontrollen zunehmend als ein wirksames Instrument herausgestellt.
Das Zangger Commitee als legitimer Interpret des Atomwaffensperrvertrags und
die Nuclear Suppliers Group, welche aus Vertretern der einflussreichsten Länder
im Bereich des nuklearen Handels besteht, haben ein System der gegenseitigen
Kontrolle implementiert, das zwar nicht in der Lage scheint, den illegalen Handel
mit Atomtechnologie gänzlich zu verhindern, ihn aber doch beträchtlich
eingeschränkt.
Die Auswirkung dieser Kontrollstrukturen auf die Entwicklung des nuklearen
Marktes kann nicht eindeutig beurteilt werden. Anforderungen der globalen
Sicherheitspolitik sehen in ihnen aber eine Notwendigkeit für die Existenz des
Marktes. Jüngste Bemühungen wie die Resolutionen 1540 und 1673 durch den
Sicherheitsrat der Vereinten Nationen konzentrieren sich auf die Implementierung
von gemeinsamen Schlüsselelementen für die strategische Steuerung des
Handels. Der Erfolg dieser Maßnahmen wird einen direkten Einfluss auf die
Nachhaltigkeit der nuklearen Renaissance haben.
Nuclear Commerce
Int'l Law and Global Political Studies
Thomas Berndorfer
XV
PREFACE
The basic aim of this work is to trigger a new, fact based debate about the
prospects of nuclear commerce, as well as the special legislatory framework it is
embedded in. The last years, which have seen several changes within the nuclear
industry, have opened up an array of new possibilities. However, where there is
light one will find shadow and in the particular case of atomic power the threat of a
spread of nuclear weapon technology to rogue countries or terrorist organizations
is all to looming. In this sense the author hopes to underline the importance of
non-proliferation measure for the functioning of a nuclear commerce. Only the
existence of a solid security framework will manage to refute the market's various
opponents.
The idea for this work was born from the combination of two fields which are of
importance more than ever these days. Firstly, the interaction of political players
with market mechanisms as subsumed under the term of International Political
Economy and secondly, the matter of energy issues and all the components that
are associated with it. The particular correlation of those two fields can nowhere
better be seen than in the unique environment of nuclear commerce.
Both the peaceful and the non-peaceful application of nuclear technologies have a
direct impact on the international as well as domestic level of security. The future
will not only see an increase in energy demand, but also a further spread of
nuclear know-how. Hence, there is a strong need to raise awareness about the
efforts and incentives which are taken to address these issues. The academic
society will have to look into the subject of nuclear energy from a different
perspective and this diploma thesis should give an indication of new possible fields
of research. After all, the amount of statistics and expert opinions in this field is
scarce and thereby provides for a restriction to the above demanded fact based
debate on nuclear commerce.
Thomas Berndorfer
1
1 INTRODUCTION
1.1 General Situation Mankind's Capacity to build
"Occasional pages of history do record the faces of the "Great Destroyers",
but the whole book of history reveals mankind's never-ending quest for peace,
and mankind's God-given capacity to build [...]. The United States pledges
[...] its determination to help solve the fearful atomic dilemma to devote its
entire heart and mind to find the way by which the miraculous inventiveness
of man shall not be dedicated to his death, but consecrated to his life."
(EISENHOWER (1953), n.p.a.)
The atomic dilemma that Dwight D. Eisenhower in his famous `Atoms for Peace"-
speech refers to is more relevant than ever. The threats nuclear technology has
brought along with its emergence during World War II have not vanished. They
might have altered, with an increasing number of hostile actors, but are still
present in every discussion about the future of this technology. Thus the two sides
of the nuclear coin, the peaceful and the non-peaceful, have always to be seen as
inseparable. The influence this has on nuclear commerce and the energy
production debate is considerable.
In a time in which anticipated energy demands will be increasing by the factor 1.5
between now and 2030 (IEA (2006), p. 37), the importance of reliable energy
supply is vital. Energy shortages have dramatic impacts on economies that are
built with a reliance on a steady supply. The affected areas can be found
throughout the spectrum of daily life: from simple activities in the household to
transport and production. It is in the interest of the governments of the world and
respectively their national industries to secure the energy required.
In this quest for energy security two options are available: either one produces
energy from one's own resources or obtains supply guarantees from other
countries. Both can cause difficulties and in turn lead to another two questions for
the producer: Which technology should be used for energy production and how
does one obtain the necessary resources needed to fuel it? Unlike alternative
Nuclear Commerce
Int'l Law and Global Political Studies
Thomas Berndorfer
2
means of energy-production such as solar and hydro-electric energy, most
conventional technologies struggle in respect to the second point.
Nuclear energy, which was once seen as a technology that could solve all future
energy issues, has struggled to deliver on its promise till now. Even worse, with
unsuccessful disarmament attempts and the clandestine proliferation events in
Pakistan, Korea and Iran, the debate about the possibilities of nuclear warfare
have been sparking up once again. The discovery of the secrets of nuclear fission
is frequently compared to the opening of Pandora's Box.
Paradoxically, all this comes at a time when the world is crying out for a clean and
stable energy supply, both things that the nuclear industry boasts it can deliver.
With new and more efficient technologies in the pipeline, as well as new deals
being signed especially in the developing world, the nuclear industry seems to be
at a turning point. It will have to prove that it is able to satisfy two of the world's
biggest needs at the moment: providing enough energy in order to fuel economies
and while doing so, to reduce the level of current CO
2
output, which is considered
to be the main driving force behind climate change. In order to do so, several
aspects of nuclear commerce will have to be taken into account. First of all, the
maintenance of the intra-industry dynamic which has been built up over the last
years is of utmost significance. Second, the legislatory framework placed onto the
nuclear market needs to be examined as to the effect it has on nuclear commerce.
Third, cooperation between the major market participants will take in a leading role
in the establishment of a common front in the advancement of peaceful nuclear
interests.
Finally, all this has to be achieved while simultaneously preventing a renewed
proliferation crisis of nuclear weapon technology to resurface. Another increase of
activities in this field is likely to taint the positive impact a nuclear energy
renaissance might have on the political and economic climate. To respond to this
challenge, the "miraculous inventiveness of man [...] [and his] capacity to build"
(EISENHOWER (1953), n.p.a.) will once again have to be dared!
Nuclear Commerce
Int'l Law and Global Political Studies
Thomas Berndorfer
3
1.2 Hypotheses & Methodology
1.2.1 Problem statement
The security of energy supply will most likely be one of the key issues in the years
to come. The current system has not proved itself to be adequate to cope with the
rising demand. Resources for conventional power production are slowly running
out, while alternative means are still not prevalent enough to take over more than
a minority of the workload. The generally poor economic viability of alternative
energy projects is additionally putting pressure on the energy supply industry.
Nevertheless, the share of nuclear electricity, which has produced a significant
part of the world's electricity output at a reasonable price ever since its discovery,
is slowly going down.
The potential of nuclear technology is undisputable, but various restrictive
international regimes are being forced onto the industry. Further proliferation
attempts have to be stopped, while at the same time the development of peaceful
applications of the technology need to be encouraged. Consequently, the crucial
task will be to find equilibrium between checks and balances and the application of
free market mechanisms in nuclear commerce. Moreover, the applied non-
proliferation measures are to be measured by their effectiveness in stopping illicit
nuclear trade activities.
1.2.2 Hypotheses
Given the situation described above, it is the ambitious aim of this paper to provide
answers as complete as possible, to the following questions:
Nuclear Commerce
Int'l Law and Global Political Studies
Thomas Berndorfer
4
· Will the nuclear industry be capable of closing the emerging energy
generation gap at a competitive price?
· Can the current framework in the field of nuclear commerce function as a
suitable non-proliferation tool and specifically in the field of double use
technology?
· Does the nuclear non-proliferation framework hinder the development of
nuclear commerce?
1.2.3 Methodology
The subject was in general dealt with empirically and qualitative research was of
the utmost priority. For this reason, where it was technically feasible, the original
source was consulted. Data from the relevant international bodies, such as the
International Atomic Energy Agency (IAEA), the Zangger Committee (ZC), the
Nuclear Supplier Group (NSG), various research institutes
1
and databases of
private companies were the prime source of information.
Furthermore, important findings, especially in the context of nuclear export
controls, were provided by the two International Seminars on the Role of Export
Controls in Nuclear Non-Proliferation held in Vienna 1997 and New York 1999. For
a restriction on information in this very sector, the findings of these conferences
provided a unique insight into current and future developments. Much what has
been discussed back then is implemented today. The same holds true for the
Annual Statements made by the Nuclear Supplier Group, as they are otherwise
meeting behind closed doors.
Specialized literature written on selected topics, relevant for the scope of this work
and interviews with experts on key issues were used to obtain additional support
to fully cover the questions raised. Quantitative data was a means of emphasizing
the points made. Moreover, recent mentioning of the topic in speeches as well as
1
E.g.: The Nuclear Energy Agency (NEA) and the Stockholm International Peace Research
Institute (SIPRI).
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5
in the media was being incorporated in this work in order to provide the reader with
an idea of the contemporary relevance of the issues covered.
1.2.4 Basic structural aspects
The structure of this scientific work is defined by the research hypotheses.
Consequently the structure consists of four core sections. The introductory part
provides the reader with a general idea of the current situation and the aim of this
work. The second part introduces basic nuclear concepts which the reader needs
understand in order to be able to follow the discussion in its entirety.
The third and main section provides a detailed guide to the different sides to and
components of nuclear commerce. Subsequently the legal framework which the
nuclear market is embedded in will be presented. The usage of nuclear export
controls as a non-proliferation tool in the market will conclude this part.
Section four finally brings all research findings together and analyses their impact
on nuclear commerce. It will be the objective of this last part to relate, once again,
all the information to the research questions raised and aims at providing as
much as possible precise and straightforward answers to them. This will partly
be done by having a critical look on experts' opinion and by conducting an outlook
into the possible future of nuclear energy and the nuclear commerce.
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2 THE NUCLEAR UNIVERSE AND ITS GENESIS
The nuclear technology today has reached a level of complexity that is difficult to
penetrate for the general public. Debates about possible applications usually
center on details, for which an engineering degree seem to be a prerequisite. It is
thus the aim of this chapter to introduce the reader to the most important concepts
of the nuclear universe. Acquiring a basic knowledge about these ideas should
help to obtain a better grasp of the matter examined in this work.
Fundamentally, a distinction between the two branches of atomic power needs to
be made. While nuclear energy clearly has its roots in the military domain, the
peaceful application has rapidly picked up speed. These days, the possibilities of
applying nuclear technologies lie not only in the energy sector, but also in others
such as agriculture and health. However, the primary focus of this work will be on
the industry which specializes on the matter of generating electricity through
atomic power. The rational here for is, that it is this part of the nuclear industry
where the issue of the co-existence of peaceful and non-peaceful applications
becomes apparent the most. Consequently, the reader of this chapter will first of all
be presented with the different possible means of nuclear energy production,
thereafter will move on to the military appliances and finally may find out about the
importance of non-proliferation efforts for a nuclear renaissance.
2.1 Nuclear energy production
Almost every conceivable human activity in the world depends on energy. Only
shortages in its supply lead to a self-realization of the dimension currently
experienced. The relationship between matter and energy has been provided by
Einstein's theory of special relativity. The practical implications are significant
since there are only few basic forces: gravitational, electrostatic, electromagnetic
and nuclear (MURRAY (2001), p. 9). To exploit the potential of nuclear energy,
there is the previously mentioned differentiation into peaceful and non-peaceful
possibilities. As for the peaceful energy production, two concepts have been
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7
developed, with only one being commercially applied yet. Research and
development is still not exhausted in either of the two domains and a further
elaboration of the ideas behind their concepts appears to be reasonable.
Nevertheless, for limitations of the scope of this work, the reader is recommended
to consult specialized literature as to the detailed scientific state-of-the-art of
nuclear energy.
2.1.1 Nuclear Fission technology
The Italian physicist Enrico Fermi is widely regarded as the grandfather of modern
nuclear fission technology (STEPHENS (2007), p. 3). At a time when many
scientists thought the concept to be unrealistic, it was a group led by this scientist
that first managed to create fission through the bombardment of uranium with
neutrons. The following years saw many different physical agents used in the
experiments, as well as an increased interest of the global scientific community in
the matter. Although the possible peaceful application of nuclear fission was
already seen from the very beginning, it was the enormous military interest during
WW II that accelerated its development. The chapter on the military application of
nuclear technology will further elaborate on these events. Basically fission works
like this:
"Nuclear fission is the process of splitting the nucleus of a heavy atom (target
nucleus) into two or more lighter atoms (fission products) when the heavy
atom absorbs or is bombarded by a neutron. Fission releases a large amount
of energy along with two or more neutrons. The large amount of energy
released is due to sum of the masses of the fission products being less than
the original mass of the heavy atom. When a heavy atom fissions, it releases
neutrons which can be absorbed by other heavy atoms to induce further
fissions. This is called a chain reaction. If each neutron releases two more
neutrons from such fission, then the number of fissions doubles each
generation." (WASHINGTON STATE DEPARTMENT OF HEALTH (2003), p.
2)
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NPPs are trying to take advantage of the above described process. By using
uranium-233, uranium-235 or plutonium 239 as a source material
2
for a controlled
chain reaction, nuclear energy is released. This energy manifests itself as heat,
which can be used to boil water and the steam generated as a result drives a
turbine, thus creating electricity. Figure 1 presents an overview of the types and
numbers of reactors currently in use. Additionally, one can see which types of
coolant as well as moderators are in use. Moderators are utilized to keep the chain
reaction stable and coolants are used to avoid an excess of heat in the process.
As for nuclear fuel, a quite long and complex manufacturing process has to be
gone through. Starting with the extraction of uranium from the ground, the ore is
usually milled on site and then transported and purified in fuel manufacturing
plants (WILSON (1996), p. 12). Subsequently, it is converted into uranium
hexafluoride because as such it is easier to vaporize and hence to enrich the
proportion of the basis material (ibid.). The last step, depending on the reactor
type, sometimes includes adding a certain part of plutonium and finally the
conversion to metallic rods or oxide pellets. Naturally, the exact production
procedure varies according to the technologies used
3
.
Countries and producers all around the world have mainly chosen light-water
designs for their nuclear power programs, so that today 65 percent of the world
capacity is PWR and 23 percent BWR (WNA (2008b), n.p.a). The NPPs are
furthermore divided into categories, depending on their level of technical
advancement. The evolution started with prototypes, moved on to the plants
currently in operation and is about to arrive at the construction of 3rd generation of
advanced power plants. However, plans and projects
4
for Generation IV reactors
are already in existence. Alternatives to uranium, such as the more abundant
thorium are an important part of the research activities.
2
Those three isotopes are used in nuclear reactors for their fissile nature.
3
The CANDU reactors for example are running on natural uranium alone.
4
As an example, the Generation IV International Forum (GIF) can be seen at:
http://gif.inel.gov/
.
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Figure 1: Different reactor types
Reactor type
Main
Countries
Number GWe
Fuel Coolant
Moderator
Pressurised Water
Reactor (PWR)
US, France,
Japan, Russia
264 250.5
enriched
UO
2
water water
Boiling Water Reactor
(BWR)
US, Japan,
Sweden
94 86.4
enriched
UO
2
water water
Pressurised Heavy
Water Reactor
'CANDU' (PHWR)
Canada 43
23.6
natural
UO
2
heavy
water
heavy
water
Gas-cooled Reactor
(AGR & Magnox)
UK 18
10.8
natural U
(metal),
enriched
UO
2
CO
2
graphite
Light Water Graphite
Reactor (RBMK)
Russia 12
12.3
enriched
UO
2
water graphite
Fast Neutron Reactor
(FBR)
Japan, France,
Russia
4 1.0
PuO
2
and
UO
2
liquid
sodium
none
Other
Russia 4
0.05
enriched
UO
2
water graphite
TOTAL
439
384.6
Source: WNA (2008a), n.p.a.
2.1.2 Nuclear inconveniences
Atomic power is probably best known not for its positive aspects, but for the threats
people associate with it. This is to say, the influence of negative stereotypes on the
public opinion is considerable in the case of nuclear technology. Concerns are
quite often legitimate, but sometimes can be clarified by presenting a balanced
information overview of the realities behind the issues. The four most negatively
connoted topics are listed below. They shall merely be a reference for further
research and shall remind the atomic industry that the need to address them is of
paramount importance.
·
Safety incidents such as Chernobyl/UKR or Three Mile Island/USA
·
Terrorism through WMD or attacks on NPPs
·
Nuclear waste management
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·
Radiation exposure
2.1.3 Nuclear Fusion technology
The second alternative to producing nuclear energy faces a different kind of debate
than its commercially applied counterpart. While enormous research projects such
as the ITER are a clear indication of the political dedication to the topic, there is not
yet sound proof that nuclear fusion will be a viable solution for our energy problems.
"Nuclear Fusion is the process by which nuclear reactions between light
elements form heavier elements. In cases where the interacting nuclei belong
to elements with low atomic numbers substantial amounts of energy are
released." (ENCYCLOPÆDIA BRITANNICA (2007), n.p.a.)
Realizing a commercially viable nuclear fusion reactor has indeed been an
undertaking somewhat comparable to the chase for the Holy Grail. On the one
hand, the technology offers an almost infinite source of energy, but on the other
hand, despite almost 50 years of experiments, it has not yet been possible to
construct a self-sustaining fusion reactor. Duplicating a process on earth that is
usually only seen in the sun and the stars is an almost impossible undertaking
(ASIMOV (2000), p.119). To create the necessary pressure, scientists are using
lighter elements instead. The process therefore requires a huge amount of kinetic
energy which is provided by the feeding of enormous heating (ibid, p.120). Such a
complex task brings along many technical challenges, many of which are still
unsolved.
Precise forecasts of a possible commercial application may not be possible yet, but
estimates suggest that the middle of the 21st century is a realistic target (LANG
(2007), p. 88). Success will depend to a significant degree on the advancement in
the ITER as the world's leading fusion project and the availability of investment
once a functioning reactor design exists. The Cadarache/France-based project, to
which all major nuclear powers contribute, originated 1985 from a Gorbachov-
Reagan deal. Current estimates aim at a start of operation in 2016 and a projected
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test phase of 20 years. Project milestones, thus, do not foresee the start of a
commercial-sized fusion reactor before the year 2050 (ITER (2005), n.p.a.).
Additional insight into the complex matter of atoms might come from another
multinational research project. CERN, the European Organization for Nuclear
Research has been heavily involved in the field of fundamental physics for over a
half a century. Located on the Franco-Swiss boarder close to Geneva, it was one
of the first European joint-ventures, with 20 members as of today. Through the
participation of foreign scientist and an exchange with other laboratories, a
considerable advancement in the understanding of the fundamental building blocks
of the Universe is attempted.
2.2 Nuclear power in the energy mix
Nuclear energy and the commerce associated with it form as such the basis for
this work. The worldwide energy market sees a competition between different
supply sources. A closer look at the world's prime energy supply mix shall put the
role that the nuclear sector plays in a more adequate perspective. As an additional
point of interest, the reader shall be reminded of the historic development in the
energy/electricity market. Atomic energy's fate is closely connected to the progress
of this trend. Increases in general energy demand will readjust the current balance
and require renewed efforts should the present position be maintained.
Figure 2 offers a valuable historical insight to the development of electrical power
supply. Nuclear energy's role with 6.3 percent in comparison to its competitors,
such as oil with 35 percent or coal and gas with 25.3 and 20.7 percent respectively,
seems of minor significance. Looking back at levels in 1973, when nuclear had
only a 0.9 percent share; we can see a positive development though. The oil crisis
of 1973 has shifted some of oil's market share to nuclear and gas, as they were
the only available alternatives. The OECD-region was back then, as it is now, the
by far biggest energy consumer.
Why was this historic insight so special? The answer lies in the way energy
technologies are sold to the public. In the case of atomic energy this is of special
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importance. Industry representatives boast themselves with having a share of 15.2
percent (IEA (2007), p. 24) in the electricity generation mix nota bene. The picture
is indeed a fundamentally different one in this sector. Coal with some 40 percent
plays the key role, while oil with only 6.6 percent is of lesser significance. Once
again, the 1973 crisis cost oil a big portion of its market share and has boosted
nuclear by over 12 percent up to today (ibid.). Hence it is advisable always to make
a distinction between the different shares in the overall energy and electricity
market. Another interesting aspect of the electricity market is the price movements.
Particularly in the US (as the biggest consumer), the historic rise in prices has
always been criticized. However, when looking at the real change between 1960
and 2001, as opposed to the nominal one, it becomes clear that there has actually
been a price drop (BODANSKY (2004), p. 566).
Throughout the course of this work the role of public opinion will be emphasized. In
this regard, a study carried out by the Nuclear Energy Agency claims that the
domestic energy structure does not have an influence on the prevailing opinion
and nuclear energy generally is seen as a necessary evil for the time being (NEA
(2002), p. 110)
Taking all this into account, estimates of nuclear energy anticipate it a drop in the
electricity share to 9 percent by 2030 (WNA (2006), p.13), caused by the general
increase in energy demand, paired with insufficient new NPP constructions.
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Figure 2: Total prime energy supply 1971-2005
Source:
Source: IEA (2007), p. 6
2.3 Military applications of nuclear technology
The story about the genesis of nuclear weapons has served as a basis for many
books and movies. The dramatic race for the first practicable explosives between
the "evil" German scientific community and the "good" coalition led by the US was,
and still is, a good sell. Initiatives such as the Manhattan Engineer District, which
is commonly known as Manhattan Project, created an aura of secrecy, which, after
its purpose had been fulfilled, created "heroes" of its time. Names such as Robert
Oppenheimer and Albert Einstein, as well as the project's prime site in Los Alamos,
will always be closely associated with those times.
Indeed, the creation of the world's first nuclear weapon meant a turning point in
the international relations and security sector. Tensions between Russia and the
USA, which led to the emergence of a cold war, were also fueled by their nuclear
weapons megalomania. Moreover, the role of national pride in connection with the
acquisition or construction of this mighty weapon was increasingly gaining
importance. Finally, the attacks on Hiroshima and Nagasaki bear witness to the
escalating power of modern human weapon technology. Their example has
formed the quite legitimate fear of many people when thinking of the non-peaceful
nuclear possibilities. In this context, it should not be forgotten, though, what the
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side-effects of the military achievements of that time were. Out of the efforts made,
peaceful application of atomic power profited considerably as well. As it has
frequently been the case in history, the most dramatic advancements of peaceful
technologies were made in times of war. This especially holds true for the nuclear
industry.
The following two sub-chapters will consequently provide a brief overlook of the
military allocation of nuclear weaponry and shall inform the reader of the most
important implications on current geopolitics.
2.3.1 Nuclear disarmament
An alarming trend can be seen when one examines the global armament
expenditures. 2005 was the first year to see their excess of the one trillion dollar
barrier. USD 1,030 billion equals about 2.5 percent of the global GDP (BICC
(2007), p. 18). Historic movements divulge that an increase of 25 percent between
2001 and 2005 has been observed. The USA alone account for 46 percent of the
overall expenditures, but also Russia, China and India are on the rise (ibid.).
Later chapters in this work will present that for the non-peaceful application of
nuclear technologies the picture is to look different. The NPT contains clear
provisions calling for disarmament. Unfortunately as with conventional weapons
this undertaking proves to be tricky. Multilateral disarmament fora such as the
Conference on Disarmament have been advancing only at very slow pace. The
role of this Geneva-based establishment still seems to have a say in this regard.
Founded 1960 as the Ten-Nation Committee on Disarmament it now has 65
members dealing with practically all multilateral arms control and disarmament
problems and as such also with the following nuclear related issues: (UNOG
(2008), n.p.a.)
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Figure 3: US-Russian nuclear weapon stockpiles development
Source: IPFM (2006), p. 13
·
Cessation of the nuclear arms race and nuclear disarmament
·
Prevention of nuclear war, including all related matters
·
Prevention of an arms race in outer space
·
Effective international arrangements to assure non-nuclear-weapon States
against the use or threat of use of nuclear weapons
The CD, which is not formally part of the UNO but closely cooperating with it, has
seen a stalemate between its most influential members on the above listed matters
in the last decade. Treaties like the CTBT and downsizing of nuclear arsenals are
steps in the right direction, but modernization of those remaining warheads are a
serious threat to the cause. In this light, nuclear weapon reductions of the two
former archenemies presented in Figure 3 have to be seen. Less but stronger
firepower does not necessarily make the world a safer place to live.
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2.3.2 National security interests & nuclear arsenals
Worldwide there are seven nations
5
whose possession of nuclear weapons can be
presumed. Besides those, Israel can be counted among this elitist group, despite
never having openly admitted their acquisition of nuclear weapons. For North
Korea the case is different. Following the proclaimed first nuclear detonation in
October 2006, a fierce debate on the validity of this information sparked up. Until
today, the country is not universally regarded a NWS. Coming back to the proven
nuclear arsenals, their size varies considerably among the owners. The US and
Russia with some 10,000 warheads each outnumber all other nations by a factor of
at least 30:1 (IPFM (2006), p. 13), although with some an exact number can only
be guessed. Information on program details has conserved their vital importance to
the national security interests.
The political implications of being a nuclear weapons state are indeed enormous.
Issues as afore mentioned national pride may not be regarded as the only benefit.
During the Cold War security guarantees were given to members of the same
alliance and thereby a concept called nuclear umbrella (SCHULTZ (1996), n.p.a.)
found its way into the political and military stage. NWS thus managed to extend the
nuclear protection onto its allies. The NATO, but also the CIS were taking
advantage of such concepts to guarantee an adequate protection of its members.
Moreover, geopolitical factors did actually matter a lot in creating the need for
acquiring atomic weapons technology in many cases. It is the achievement of the
international community that not more states have joined the club. Libya, Syria and
South Africa are just some examples for countries that had sought WMD, but were
convinced no to do so. The Iran affair in this respect presents the next major
challenge in line. An array of factors, both from the current situation in the Middle
East and domestic issues is influencing this situation. Perhaps an interesting
aspect lies in Iran's demography. "A young population with no memory of the
revolution is desperate for jobs its leaders have failed to provide" (ECONOMIST
ONLINE (2007d), n.p.a.), is an accurate sum-up of the current condition of the
5
USA, Russia, UK, France, China, India, Pakistan
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country. Pursuing an active foreign policy might help to distract people from the
real issues. Threats to destroy Israel seem only to be propaganda rhetoric in this
context.
The legality of the threat or use of nuclear weapons has already been addressed
by the International Court of Justice. In 1996, the ICJ stated in an advisory opinion
that "the threat or use of nuclear weapons would generally be contrary to the rules
of international law applicable in armed conflict, and in particular the principles and
rules of humanitarian law (ICJ (1996), p. 226)". However in circumstances of
extreme-self defense, the court saw itself not in the position to state a definitive
opinion. The best way to avoid such an atomic dilemma would be to get rid of the
atomic arsenals altogether, something that seems absolutely unconceivable at the
moment though. Initiatives to revive old ideas from the time after WWII as for
example the Baruch plan, calling amongst other things for the elimination of atomic
weapons, appear to be politically inopportune. Therefore the author is convinced
that the influence of the non-proliferation regime will play a major role in the years
to come, not only for nuclear commerce, but also for geopolitics as a whole.
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3 NUCLEAR
COMMERCE AND ITS MARKET
On 6
th
September 2007 "The Economist" published two articles proclaiming an
"atomic renaissance" and a "nuclear dawn" (ECONOMIST ONLINE (2007a/b
n.p.a.). What is behind this new optimism? After about 30 years of forced inaction,
the US Nuclear Industry is about to hand in plans for the construction of at least 7
6
new nuclear power plants (NPP). Similar developments can be seen around the
world, from recent efforts in Great Britain, a new construction in Finland, to the
conclusion of a major deal with the United States by India. The market behind
these projects is slowly coming back to life and starting to flex its muscles. This
chapter aims at providing the reader with an insight into the key factors influencing
the awakening process.
When talking about nuclear commerce in general, one refers to a worldwide trade
centered on nuclear technology. The very focus on a technology, that is as
politically colored as in this case, brings along considerable obstacles. Security
concerns make a completely liberalized trade unimaginable; therefore an economic
analysis of the market is affected by the excessive secrecy in certain areas, as well
as by the more visible political component. In fact, the reader should bear in mind,
that nuclear trade cannot be regarded without taking account of the relevant
national interests involved.
To provide a structured overview, this chapter has been split into two sections.
Section 3.1 aims at presenting nuclear technologies from an economic and
marketing point of view. Hereby nuclear energy is mainly referred to for its
controversial matter, and in addition this part tries to attempt a comparison with its
immediate rivals from the coal and gas sector. The subsequent sections will in turn
analyze the different segments of the commerce. It shall provide an idea of the
influence the market structure will have with respect to the development of the
industry.
6
Plus another 25 proposed reactor projects as of January 2008 (WNA (2008), n.p.a).
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3.1 Nuclear economics
The beginning of the commercial nuclear area in the 1950's was marked by an
overwhelming enthusiasm for the technology's potential. Research and
development carried out during WWII had left it with a solid scientific basis.
However, the US government had kept a tight monopoly on any possible
applications, as laid down in the Nuclear Energy Act of 1946
7
. As it turned out, the
consequences of this move were not favorable for the country's own ambitious
goals. Both the Soviet Union and the United Kingdom showed considerable
progress in their own programs, thereby putting further pressure on the US to
advance as well. The solution was seen in the 1954 amendment of the NEA,
declaring that:
`The development, use, and control of atomic energy shall be directed so as
to promote world peace, improve the general welfare, increase the standard
of living, and strengthen free competition in private enterprise'
(USA (1954), 42 USC 2011, Sec.1 b.)
Taking this step freed the government of two obstacles that it had increasingly
struggled with. Firstly, by opening up the industry to private business, the burden
of complete secrecy, which had cast a shadow over any undertakings for so long,
was relieved. Secondly, increased activity in the sector managed to prove those
experts wrong, who claimed that high quality uranium ore is of such extreme
rareness that it could not be diverted from weapons production.
Backed by this emerging political will, huge investments were made to
commercialize energy production plants. In 1957 Shippingport/Pennsylvania
(WESTINGHOUSE (2008), n.p.a.) saw the first commercial NPP put into operation
by the US company Westinghouse. To exploit economies of scale, ever larger
reactors were erected, pushing the technical feasibility to a limit. Quite naturally,
the security systems of these bigger plants had to be adapted, resulting in notable
extra costs. Since the scale-up had been undertaken at an enormous speed,
proper safety controls could not always be assured. To quote Peter Bradford, the
7
Roosevelt referred to it as controlled application of nuclear energy in a peaceful process.
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US Nuclear Regulatory Commissioner, the development was `[...] almost as if the
airline industry had gone from building Piper Cubs to jumbo jets in about fifteen
years' (CRAVENS (2007), p. XIV). Quite logically, the effect of any safety failings
on public opinion was disastrous and severe accidents like Chernobyl/Ukraine and
Three Mile Island/Pennsylvania provided further proof of the matter.
Strangely enough, at the very same time the change in public opinion occurred,
one of the biggest opportunities for the industry had opened up. As a reaction to
the Yom-Kippur War and disputes with the so called Seven Sisters, a group of the
major oil industry representatives, the Organization of the Petroleum Exporting
Countries (OPEC) had imposed an oil embargo on the US, Western Europe and
Japan. As an immediate reaction, a struggle of the major industrialized countries
to free themselves from their dependence on oil could be observed. In principle,
the opportunity for nuclear power expansion was tremendous, but due to lacking
public support, could not be exploited. There was one exception though: France,
where nuclear energy has consistently been promoted by French politicians. With
a nuclear energy supply rate of 78% today (ECONOMIST ONLINE (2007b), n.p.a.),
it has become the most reliant NPP user worldwide. In the rest of the world,
however, the negative image and missing political support led to a stop of almost
all new construction plans. The "sleeping beauty" curse was to remain for the next
thirty years.
From a lessons learned perspective, the nuclear industry seems to have done its
homework these days. The present geopolitical and economical situation created
by the dependence on fossil fuels has caused a certain pain to the international
community, which the sector might be able to heal. The world is crying out for more
energy, as clean and secure as possible. The idea of NP being the only power
source able to cater to the demand is being promoted lately, and from an objective
analysis' point of view, the campaigning seems to have struck a chord. In the end,
success will be determined by offering what is required on a long term basis, and
to do so at an economically competitive level.
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3.1.1 Nuclear energy's attractiveness
It appears that an important influence on further developments is made by this new
image that is being sold to the public. Taking a closer look at the technology's
marketing arguments a fresh perspective might be obtained.
What exactly are the proclaimed advantages of nuclear energy? Four main factors
have frequently been repeated over the last few years. First of all, nuclear energy
offers a stable supply of energy. Considering the economic long-term outlook in
combination with the looming fossil fuel resource constraint, an additional focus on
reliable generation sources can be anticipated. The stability of nuclear energy can
be explained by the allocation of uranium in politically relatively secure countries.
Furthermore, Uranium exists in relative abundance and will guarantee supply
beyond this century (GÜLDNER (2007), p. 486). More information on this
controversial point will be provided in the chapter on "the nuclear commodity
market".
Secondly, another advantage is its improved economics (CAVANAUGH III (2006),
p. 10). Various factors are said to be responsible for this result. However, new
technologies and the experience curve are the main contributors. On the one hand,
existing plants were overhauled and received a life extension in many cases and
on the other hand new reactor types
8
are coming on to the market. With larger
capacities and lower failure rates, the economic figures are constantly improving.
The long-term experience in NPP operation has enabled this progress and its
documented history helps companies to present new projects as assessable,
proven investments.
Thirdly, talk about an oncoming nuclear renaissance has allegedly created
increased momentum for the business. Indeed several new initiatives such as the
US Energy Policy Act 2005 provide new incentives for nuclear energy projects
(UNITED STATES OF AMERICA (2005), Title VII.). It is needless to mention that a
favorable investment environment will attract further financing, which in turn might
8
The new NPP are Third Generation power plants.
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22
help to obtain economies of scale advantages. The chapter "Signs of a nuclear
renaissance" will add further insight into developments around the world.
Last but by no means least, the most popular positive association with nuclear
energy is being established with respect to combating climate change. Ever since
nuclear supporters managed to get a foot into the green energy debate, a realistic
chance to influence the public image has been seen. Unquestionably, the
marketable potential of such an assumption is significant and is consequently
stressed on a regular basis.
As the author of this work strongly opposes agreeing to the points presented above
without having a critical look on their validity, the arguments will have to stand up
to criticism in the following sections.
3.1.2 A profit and loss account
The aim of a thorough analysis is to achieve a satisfying degree of completeness
in the investigation. We will see in the course of the next pages that for energy in
general, and for the nuclear power in particular, this is not an easy thing to do.
Most of the pros and cons brought forward only take into account a single
dimension, leaving out many relevant secondary ones.
So far there has been no consensus on a comprehensive energy technology-
specific set of indicators. Recent attempts in this area have started with the
fundamental question of what should actually be measured. For example, let us
take a concept that has already been well established: Sustainability. According to
its classic definition from the Report of the World Commission on Environment and
Development,
9
it can be defined as: (UN GA (1987), Res. 42/187)
"Meeting the needs of the present without compromising the ability of future
generations to meet their own needs"
9
The paper is also known as the Brundtland Report after the Norwegian Prime Minster who was
head of the above mentioned Commission.
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For energy matters a more specific definition has been developed:
(KIRCHSTEIGER (2007), p.620)
"Sustainable energy is energy derived from sources in technological
processes such that the needs of society are met while at the same time the
continuity of economical, environmental and social aspects of human society
is maintained for future generations".
Consequently, it can be said that all energy supplies are of a sustainable nature
(ibid.), but their degree of sustainability is an important matter. A very promising
study carried out by the Nuclear Energy Agency, a specialized organization within
the OECD, did exactly that and came up with a set of indicators that should help to
define the varying sustainability levels. Annex A examines different aspects of
nuclear power and puts them in relation to its direct competitors.
An in-depth analysis of each and every point presented by the NEA would go
beyond the scope of this work. The focus will therefore be on a few criteria which
are of direct relevance to the arguments brought forward in favor of nuclear energy.
3.1.2.1 Nuclear energy as one of the cost-efficiency winners
Every form of generating energy will ultimately be measured by cost-
competitiveness compared to its direct rivals. The distinctiveness of nuclear power
is that NPPs stand and fall dependent on sufficient initial financing. The directly
attributable costs of nuclear energy consist of the following three types:
· Investment
costs
· Operation and maintenance costs
· Nuclear fuel cycle costs
On average 60 percent of energy generation costs are attributable to the first
category and approximately 20 percent each to the two other groups (OECD/NEA
(2003), p. 25). Consequently large sums of money have to be invested upfront,
while carrying the risk for 30-60 years. New NPPs are delicate because they
involve quite a lot of variables in the planning process. Dependence on public
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24
opinion and unsolved waste management issues are just two examples
10
. On the
one hand, the falling operational and nuclear fuel costs over the last twenty years
as seen in Figure 4 offer a significant advantage over coal, gas and oil based
means of production.
On the other hand, price volatility of uranium does not influence the overall cost
significantly. On the contrary, the recent uranium price rise makes a further
exploration of mining sites more lucrative and will stabilize the future supply of
resources.
Thus one may say that the longer a plant is running without major cost turbulences,
the higher the return on investment. Considering improved load times of between
85%-90% (NIA (2005), p. 5) and enhanced non-nuclear parts of power stations
which result in a higher output, so called "uprates", the technical progress has
benefited the profitability of NPPs. At the same time plant production license
expansions are currently being issued around the world in order to avoid electricity
shortages. In this way, each extra year equals extra profit as it helps to exploit the
initial capital invested better. Nevertheless, the key to selling nuclear energy at a
competitive price remains a cost-effective construction period. Due mainly to a new
generation of reactors, costs could be cut from about $ 4,000/kW in the mid 1970s
to approximately $ 2,000/kW today (EIA (2004), p. 55), with some even cheaper
models available. Coal processing plants for example costs about half that amount
and gas plants even only a fourth.
10
More on this can be found in the chapter "Nuclear policies in the spotlight".
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Figure 4: Average US nuclear production costs, 1981-2003, cents per kWh
Source: WNA (2005), p. 11
Putting the internal costs together, were does that leave nuclear power in
comparison to nuclear power's direct competitors? Quite naturally, available
calculations vary slightly, especially when made in different countries due to their
different safety standards. The chart in Figure 5 presents a concise cost of
electricity generation comparison from the UK. The reader will have to mind that
prices are stated in pounds and that only nuclear energy costs include a
decommission expense.
What the graph immediately demonstrates is the still existing gap in price-
competitiveness between `traditional' and renewable means of producing energy.
However, more interest in new energy projects and an expected price tag on
environmentally harmful technologies might diminish the differences. Nonetheless,
the nuclear option will remain a cost efficient option with prices at a stable and low
level, paired with potentially significant cost reduction possibilities. Annex C
contains a more detailed set of data, which is also taking account of expected
changes in price until 2030.
Conclusion 1:
Nuclear Energy is an economically favorable form of producing electricity, more so,
should a tax on emissions be charged. As a consequence the price of technologies,
which are not that environmentally friendly, would rise considerably. Additionally
faster planning processes due to standardized NPP designs and facilitated license
applications will further lower the substantial initial investment costs.
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Figure 5: Costs of generating electricity
Source: ROYAL ACADEMY OF ENGINEERING (2004), p.2
3.1.2.2 Climate change as a business opportunity
Over the last years climate change has attracted the spotlight of the worldwide
media. While for years the debate about human influence on the earth's sensitive
ecosystem had resulted in a stalemate between the involved groups, recent
scientific findings suggest that mankind is indeed altering natural conditions. Well
recognized bodies such as the UN's International Panel on Climate Change are
successfully accumulating an ever increasing set of statistics, making it possible to
observe changes over time. In fact, experts like the British Chief Scientific Advisor
David King estimate climate change to be the `most severe problem that we are
facing today more serious even than the threat of terrorism' (SAWIN (2005),
n.p.a.). The influence of a change in global climate on the international security is
remarkable. Food and water shortages as well as waves of new migration
movements will only be some of the possible challenges ahead. For a developed
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27
country like Austria a temperature rise of only 1.63 degree by 2050 might result in
a GDP decrease of EUR 1.6 billion (AT.VENTURE (2008), p. 17). Another study
calculates the loss attributable to climate change to at least 5 percent of the
worldwide GDP, but could be limited to 1 percent if necessary mitigation steps
would be taken (STERN (2006), p. VI).
Carbon dioxide, which was found to be the most significant greenhouse gas, has
seen a statistically abnormal increase over the last few centuries. Atmospheric
concentrations of methane and nitrous oxide have also increased markedly in the
course of the last 250 years (IPCC (2007a), p. 2). While the latter can be attributed
to changes in the agricultural sector, the former is a product of different behavior
patterns in fossil fuel and land usage. In 2004, 40.60 percent (IEA (2006), p. 80) of
the total CO
2
emissions were emitted in the energy transformation process.
Bearing in mind an additional growth of polluting agents in this segment, an
increased future engagement seems a logical step. The nuclear industry started to
re-emphasize its role in this matter after the IPCC labeled nuclear energy as a
climate change mitigating form of energy generation. Between 1973 and 1995
alone, it is argued, "nuclear energy avoided a cumulative emission of around 22
billion tons of carbon dioxide" (OECD/NEA (2003), p. 25). In fact the technology is
enjoying a leading position in the CO
2
low emission ranking (Figure 6).
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Figure 6: Greenhouse-gas emissions ranking
Source: ECONOMIST ONLINE (2007c), n.p.a
Nevertheless, newer studies
11
argue in a different direction. McKinsey claim
energy productivity gains to be bigger at the final consumer stage as the saving
potential there outweighs that of the energy transformation sector
(ENKVIST/NAUCLÉR/ROSANDER (2005), p.40). In this sense, the target areas
should primarily be the industry, transport, households and services. Developing
countries, and here especially the domestic usage, will serve as a more rewarding
target, as it is cheaper to avoid pollution than to cut down on it (ibid, p. 41). In the
developed world, industry offers the biggest potential. Attempts to lower CO
2
emissions should focus primarily on energy efficiency before investing in cleaner
technology. A rush to a quick and one dimensional conclusion should be avoided,
though. Considering the expected steep growth in energy demand as well as the
correspondent increase in greenhouse gas emissions, any strategy attempting to
battle climate change will have to be built on a much broader basis, incorporating
every possible sector. The nuclear proponents would benefit from presenting
themselves as one important piece of the solution in a comprehensive strategy to
combat climate change.
11
See for example "A cost curve for greenhouse gas reduction" by McKinsey and "Energy
Efficiency Policies around the World: Review and Evaluation" by the WEC.
Details
- Seiten
- Erscheinungsform
- Originalausgabe
- Jahr
- 2008
- ISBN (eBook)
- 9783836616454
- DOI
- 10.3239/9783836616454
- Dateigröße
- 2.6 MB
- Sprache
- Englisch
- Institution / Hochschule
- FH Krems – International Law and Global Political Studies
- Erscheinungsdatum
- 2008 (August)
- Note
- 2,0
- Schlagworte
- nuclear commerce suppliers group fuel cycle energy non-proliferation
