Effects of nuclear energy’s battle for inclusion in EU Taxonomy
The EU Taxonomy for sustainable activities (EU Taxonomy) became law in July 2020, but the law left several decisions to be finalized in “delegated acts.” These decisions required additional technical evaluation. The treatment of nuclear energy was one of those technical issues. On December 31, 2021, a draft delegated act was published that recognized that nuclear energy could make a substantial contribution to the reduction of CO2 emissions.
In other words, nuclear energy is considered a sustainable, “green” investment. There are some conditions that are still being debated.
Producing that draft required extensive work, active collaboration, a detailed technical report produced by the Joint Research Centre and expert reviews by two special committees (Group of Experts on radiation protection and waste management under Article 31 of the Euratom Treaty and the Scientific Committee on Health, Environmental and Emerging Risks (SCHEER))
Politically paired with natural gas
As a result of intensive politicking and compromise, the delegated act also includes provisions for the inclusion of natural gas in the EU Taxonomy. Both nuclear energy and natural gas are recognized as useful tools, but both technologies must meet specific conditions and restrictions to be considered “sustainable.”
Including natural gas sounds like a cop-out to many climate activists, but it is part of a political compromise seen as necessary to avoid German rejection of the delegated act. Replacing coal with natural gas might be a reasonable step forward for the climate, but it risks deepening European energy dependence on Russia. That’s not one of the considerations influencing the EU Taxonomy.
Fewer opposing countries than supporting countries
Many articles on this subject give the impression that there is a balance between the countries that oppose nuclear and those who want it to be recognized for its obvious attributes. Those articles usually list Germany as leading a group of opponents and France leading a group of supporters. Most of those articles name two or three countries in each camp.
There are five EU members that strong oppose nuclear’s inclusion (Germany, Austria, Denmark, Luxembourg and Spain) while there are at least 10 who have formally expressed their support to the European Commission in a letter sent in mid December 2021 (France, Bulgaria, Croatia, Czech Republic, Finland, Hungary, Poland, Slovakia, Slovenia and Romania). After that letter was sent, the Netherlands announced that their CO2 reduction plans would include a major reliance on nuclear power.
Opposition not giving up
It should be no surprise to any reader to learn that there has been a loud reaction to the release of the draft report. There are many who are professionally and ideologically opposed to any policy that includes both nuclear energy and natural gas as technologies that are eligible for “green” investments.
Opponents don’t like the idea that their hated technologies might obtain lower cost finance from banks and other institutions. They know there is a deepening pool of money seeking activities that meet ESG (environmental, social and governance) criteria.
According to data acquired by Finbold, sovereign wealth fund investments in the ESG space surged 215.27% between 2020 and 2021 from $7.2 billion to $22.7 billion. Over the same period, the number of deals increased from 19 to 37. In 2019, the investment stood at $5.2 billion. The investments remained relatively low over the last six years before 2021’s spike, with 2016 registering the lowest value at $3.7 billion
Finbold: Sovereign wealth funds ESG investments surge by over 200% in 2021
https://finbold.com/sovereign-wealth-funds-esg-investments-surge-by-over-200-in-2021/
Nuclear energy opponents recognize that ESG classification systems are likely to follow the EU’s lead in considering nuclear energy to be an environmentally sound technology.
One of the principle remaining argument against nuclear energy is that it costs too much and takes too long for projects to move from planning to operation.
A decision that enables nuclear energy to attract more interest from financial institutions will both reduce cost and reduce the time and effort required to arrange sufficient financing. This will improve cost and schedule performance for all projects that can meet the specified criteria.
These criteria include a plan to store used fuel, a plan to set aside money for waste handling and decommissioning and the use of best available technology. These criteria are under discussion because they have the potential to reduce the attractiveness of nuclear investments even if nuclear is classified as green under the taxonomy.
Berlin may not strenuously oppose the nuclear regulation because it is not clear that it will actually encourage significant nuclear power investments. That’s because the proposal includes criteria for nuclear waste management that are a potential roadblock. For both newly built reactors and operating lifetime extensions for existing ones
Foreign Policy Jan 13, 2022: Amid Energy Crisis, EU Fights Over Whether Nuclear Is Green
https://foreignpolicy.com/2022/01/13/nuclear-energy-green-europe-eu-climate/
One of the more frequently heard arguments against including nuclear in the EU taxonomy is that its presence will crowd out renewable energy investments. If the pool of available money is limited, adding a new competitor will reduce the funds that can support all other competitors.
This argument, however, is fundamentally a business argument that ignores the shared goals of reducing CO2 and reducing dependence on fossil fuels. It also ignores the very real possibility that including nuclear in the taxonomy will attract large amounts of new money to the clean energy investment world.
Benefits of intense discussion
The epic political battle over nuclear energy’s inclusion in the EU Taxonomy is likely to produce unexpected positive results. Instead of being ignored and “damned with faint praise” nuclear energy has been lavished with attention from both sides of the conflict.
Traditional nuclear industry leaders would strongly disagree with Oscar Wilde’s famous quote: “There is only one thing in life worse than being talked about, and that is not being talked about.” But being ignored and left out of routine conversations has not done nuclear technology any favors during the past 30 years.
Many of the positive statements from nuclear supporters have been science-based arguments using credible sources like the UN Economic Commission for Europe’s recent Life Cycle Assessment report to prove that the life cycle emissions from nuclear power production are slightly less than wind and substantially less than solar. In contrast, nuclear opponents have made sweeping statements about safety or waste that are not supported by nuclear energy’s documented track record.
The most concrete reasons for keeping nuclear energy tools in a box during the battle against climate change are excessive costs and repeatedly delayed projects. Though not simple or easy, both cost and schedule are characteristics that can be – and must be – addressed and improved.
It’s not hard to remember a time when wind and solar were far more expensive than they are today. It was less than 20 years ago. The impressive cost reductions that those technologies achieved came largely from well-established steps collectively called “learning curves” that can be adopted by nuclear project developers.
It’s true that nuclear projects have not generally followed established product trends. But it is also true that the nuclear industry has not actually tried to use learning curves and product repetition to reduce costs and schedules. Better access to more sources of capital will help alter future history.
Some of the conditions in the draft sound a lot like ALARA, e.g.,
“The upgraded project implements any reasonably practicable safety
improvement and makes use of accident-tolerant fuel.”
It’s also interesting that will vote by “reverse reinforced
qualified majority”:
“The Council will have the right to object to it by reverse
reinforced qualified majority (which means that at least 72% of
MS (i.e. at least 20 MS) representing at least 65% of the EU
population are needed to object to the Delegated Act), and the
European Parliament by a majority (i.e. at least 353 MEPs) in
Plenary.”
I have to admit, the arcane minutae of this issue are mind-boggling.
The skill some people have for throwing caltrops onto what looked like a clear road is just amazing.
In EU, this is a clear road.
At the risk of being overtaken by events, WNA has summarized an interview with Energoatom CEO Petro Kotin in EnergoBusiness. I couldn’t find the original interview myself, and in the process of not finding it stumbled across a few other interesting factoids:
– Of the five senior executives biographed on Energoatom’s Management page, three — including Mr. Kotin — are former SROs. Currently operating 15 PWR’s for 13.8 GW capacity and 85 TWh/y — about a quarter of EDF France — Energoatom is not a lightweight operation.
– In a 4 January 2022 meeting between Minister of Energy Herman Halushchenko and US Charge d’Affaires Kristina Kvien, Mr. Halushchenko “reminded that the Russian Federation had blocked the coal supply to Ukraine by rail… likewise, a significant reduction in Russian gas transit through Ukraine.”
Rod then kindly provided a google-loosely-translated link to the interview I was actually after: Westinghouse technology makes it possible to build a Ukrainian power unit in the future:
– Ukraine is the only country to source WWER fuel elsewhere than TVEL. Energoatom currently has 2.5 years on hand, and Westinghouse has promised they can ramp their current 60% contribution to 100% within two.
– Mr. Kotin is planning for 13(!) new 1GW units, of which the first five would be AP1000.
– A Ukrainian engineer would be main contractor for AP1000 work, Westinghouse would be technology provider with responsibility for reactor island.
– After Khmelnytsky 4 pilot, siting for remaining AP1000 is TBD. Mr. Kotin hopes to negotiate a license similar to China’s enabling Ukraine to design, build, and export it’s own variants. Initial financing would be through US Exim bank.
Interesting times.
Much better that they are going to build AP1000 reactors rather than more RBMK reactors.
With all the emphasis given to the newer smaller and hopefully less expensive generation IV reactors, I kind of wonder if these may be some of the last big central station nuclear powerhouses built.
Ukraine does not have any RBMK (graphited moderated, light water cooled) reactors left, only Russian designed PWRs. Russia has nine or so, but they’re gradually replacing them.
It’s really not fair to lump a clean technology like nuclear energy to a dirty one like dangerous natural gas.
I’m not sure if the Germans will soon want to declare coal “green,” since they are burning so much of it this winter during dunkelflaute events. I would suspect that those who are calling dangerous natural gas “green” are the same people who want to trash wilderness with wind turbines. Wind turbines entrench the gas industry; wind turbines are lipstick on the gas pig. Without access to gas (or in Germany’s case coal) the wind industry would not exist.
It’s amusing that the Germans are still running around Europe with the nonsense statement that “nuclear is too dangerous.” There are oodles upon oodles of papers in the scientific literature estimating the mortalities per TWh for various generating technologies, and coal is in every case the worst. The Germans have shut nuclear plants to burn coal and they are quite literally killing people as a result. Yet in the age of the celebration of the lie they can declare “nuclear is too dangerous” while they quite literally kill people by replacing it with something that is dangerous.
I would agree with anyone who says gas is not “green,” but laugh derisively at anyone who states that nuclear isn’t. There are zero reliable energy technologies, zero, that are as sustainable as nuclear energy, nor any that are as safe as nuclear energy.
The EU commision defines an activity as “sustainable” if it makes a “substential contribution to each” of the following six environmental objectives:
1. Climate change mitigation
2. Climate change adaptation
3. The sustainable use and protection of water and marine resources
4. The transition to a circular economy
5. Pollution prevention and control
6. The protection and restoration of biodiversity and ecosystems
To me, that sounds like a reasonable (and fair) definition. Even though this definition probably does not match what the Greens or Greenpeace mean with “sustainable” or “green”.
For gas projects, the taxonomy lists various requirements, e.g.,
1. a gas plant must replace a coal plant
2. the gas plant must have less capacity than the coal plant that it replaces
3. the lifetime of the gas plant must be limited to 15 years
It’s also reasonable to expect that a gas project that fulfills those requirements does indeed contribute to the six environmental objectives.
3. the lifetime of the gas plant must be limited to 15 years
Hmm. Sure thing. And just how is one to enforce that? Put it in the contract?
I don’t know. Maybe revoke the operating license after 15 years.
I also don’t know what the financial benefits for a “sustainable activity” actually are. Or for that matter, why a retail investor should care about the ESG label of a fund.
@Helmut Eller
ESG labels are probably not very important to most retail investors, but they are becoming increasingly important for the huge money pools that reside at endowments, pension funds, family offices, sovereign wealth funds, and international development banks.
@Helmut Eller: I’m thinking it impractical to build a single gas plant with but a 15 year lifetime and supply. Perhaps one could schedule the retirement of 3 coal plants at 15-year intervals, the single gas plant serving to replace each in turn.
That way, when the first coal plant retires and is replaced by the gas plant, the second coal plant comes due fifteen years later but if then it’s determined for some reason there is no suitable replacement, the second and third coal plants can then continue operating along with the 45-year gas plant, the first coal plant can remain in mothballs, and everyone has a share.
> I’m thinking it impractical to build a single gas plant with but a 15 year lifetime and supply.
That’s an interesting point. From an economic point of view, it does seem impractal. Though, economics aren’t part of the taxonomy.
Also, some seem to have high hopes that the gas infrastructure can be reused in a future where Europe imports hydrogen from desert countries.
@Helmut Eller
This description of the EU Taxonomy indicates that economics plays a significant role in the effort.
https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/eu-taxonomy-sustainable-activities_en
Its fundamental purpose is to encourage investment dollars to flow into activities that benefit the sustainable development goals. Investors, especially the professionals that choose investment strategies for large institutions, are not going to adjust their strategies to put money into activities that are uneconomic over the long term.
@Rod
Yes, I agree the goal of the taxonomy is to channel money into certain activities. However, the six environmental objectives do not, as far as I can see, include economic factors.
So by the definition of the EU commison, an activity can be “sustainable” and unecomic at the same time.
Nevertheless, the Germans are burning coal this winter.
https://app.electricitymap.org/zone/DE
As of this writing, the German carbon intensity is more than 4 times that of France, 445 g CO2/kwh than that of France, 110 g CO2/kwh. The French would be doing even better if, in lieu of wasting money on wind plants that will be landfill in less than 25 years, they’d built more nuclear plants.
Replacing a coal plant with a gas plant is rather like an alcoholic announcing that he’s “cured” because he no longer drinks scotch but only drinks beer and wine to get drunk.
It is destructive and wasteful and environmentally absurd to build a power plant for use for just 15 years. I note that that the laws of thermodynamics require that to remove the dangerous fossil fuel waste that gas plants dump for free into the environment, carbon dioxide, one is required to not only reproduce all of the energy that was obtained by putting it there as well as the energy to overcome the entropy of mixing. Is this what we are leaving to future generations, entropy, for “just” another 15 years?
I cannot, for the life of me, agree that there is anything “reasonable” about it. The German policy relies on building two plants to do the work that one could do. The supply of neodymium and dysprosium is not unlimited. Building two systems to do what one can do is obscene.
Given recent events with the Russians parking their military on the border of Ukraine and the fact that this same country is the supplier of about three quarters of the natural gas that the Europeans consume, I would think folks over there will be a bit more open to the nuclear option in the next few years.
My furnace is running rather steadily today. It’s 25 F outside. I just wouldn’t feel quite so at ease if my gas supply came from Russia.
@ Eino: I doubt IEA Executive Director Fatih Birol’s latest post will put you any more at ease:
“We see strong elements of ‘artificial tightness’ in European gas markets, which appears to be due to the behaviour of Russia’s state-controlled gas supplier… (which) has reduced its exports to Europe by 25% in the fourth quarter of 2021 compared with the same period in 2020 – and by 22% compared with its 2019 levels. And this is despite the exceptionally high market prices for natural gas that we have seen in recent months.
“Against today’s low baseline, we estimate that Russia could increase deliveries to Europe by at least one-third, or… almost 10% of the European Union’s average monthly gas consumption – and would be the equivalent of a new LNG tanker delivering a full cargo of natural gas to Europe every day.
“The natural gas market turmoil has spilled over into European electricity markets, which typically rely on gas as a marginal fuel and are therefore affected when it experiences high prices and volatility. This has been exacerbated by lower than average hydropower output and lower nuclear output highlighting the need for adequate investment in sources of baseload supply and flexibility.”
—
At ease or not, I doubt many AI readers are holding their breath awaiting increased gas exports from Russia.
If more people could work out simple math problems, they might begin to understand why a nation that wants to maximize income from its natural gas would be reluctant to increase supplies.
Numbers vary widely from day to day, but let’s assume the average price of gas now is 4x the price this time last year. Russia is selling 25% less gas.
4 x 0.75 = 3 times as much revenue from a little less gas
Suppose it increased volume by 25% and drove prices back to just 2x those from a year ago. That would make revenues double (instead of triple) year over year, but it would consume 25% more of a depleting resource.
What if a 25% increase in supply was enough to crash the market back to 2021 prices? Obviously not in the supplier’s interest – especially if that supplier is investing in military actions against a neighbor that has reasonable expectations of intervention by some of the supplier’s customers.
Thanks for the comments.
There’s more than BTUs in natural gas. There’s a lot of cash tied up in those ancient dinosaur farts. I see that army of Russians parked next to the Ukraine border and kind of put 2 and 2 together. Europe is buying gas from Russia. Russia makes a lot of cash from the gas sales. Russia then uses that cash to threaten the Europeans.
High price and high threat – such a deal!
I could go on and make the same analogy about how manufacturing in China leads to a similar dilemma, but one country at a time.
Hmm… demand inelasticity. That’s hard… I know! Maybe OPEC can bail us out! Those Arabs are good at math 😀