Nuclear Renaissance – COP28 and beyond? (Mar 2024)

Nuclear Renaissance – COP28 and beyond?

The ticking clock and the carbon-intensive energy sector's current position have long demanded a swift transition to low-carbon energy sources.

Pursuant to COP28, the draft decision for the first global stocktake (CMA/5) in its Article 28 reiterated the need for deep, rapid, and sustained reductions in greenhouse gas emissions and calls on the parties to contribute to global efforts by doubling the global average annual rate of energy efficiency improvements by 2030; accelerating the deployment of zero and low-emission technologies and for the first time expressly including nuclear as zero and low-emission technology.

The mitigation measures prescribed in the draft decision on the global stocktake towards the collective progress towards achieving the purpose and long-term goals of the Paris Agreement state as follows:

“28. Further recognizes the need for deep, rapid and sustained reductions in greenhouse gas emissions in line with 1.5 °C pathways and calls on Parties to contribute to the following global efforts, in a nationally determined manner,taking into account the Paris Agreement and their different national circumstances, pathways and approaches:

(a)  Tripling renewable energy capacity globally and doubling the global average annual rate of energy efficiency improvements by 2030.

(b)  Accelerating efforts towards the phase-down of unabated coal power.

(c)  Accelerating efforts globally towards net zero emission energy systems, utilizing zero - and low-carbon fuels well before or by around mid-century.

(d)  Transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050 in keeping with the science.

(e)  Accelerating zero - and low-emission technologies, including, inter alia, renewables, nuclear (our emphasis), abatement and removal technologies such as carbon capture and utilization and storage, particularly in hard-to-abate sectors, and low-carbon hydrogen production.

(f)   Accelerating and substantially reducing non-carbon-dioxide emissions globally, including in particular methane emissions by 2030.

(g)  Accelerating the reduction of emissions from road transport on a range of pathways, including through development of infrastructure and rapid deployment of zero and low emission vehicles.

(h)  Phasing out inefficient fossil fuel subsidies that do not address energy poverty or just transitions, as soon as possible.”

It is welcome news that nuclear energy has been included and acknowledged as one of the zero and low-emission technologies. This is heralded and championed as another renaissance for the nuclear sector, which will play a key role in the drive towards net zero.

COP28 witnessed another declaration and pledge from twenty-two countries to triple nuclear energy capacity by 2050, recognising the key role of nuclear energy in reaching net zero. The declaration emphasised collaboration to advance a goal of tripling nuclear energy capacity globally by 2050.  It also underscored the need for international financial institutions to encourage the inclusion of nuclear energy in energy lending policies.

This declaration saw newcomer countries with no previous nuclear programs, like Morocco, sign up to the pledge, in addition to the US, UK, France, South Korea,and Canada.  The declaration also adds impetus to the increasing global trend of nuclear power`s acceptability as a catalyst for net zero.  The image below from the World Nuclear Report demonstrates a list of nuclear programs since1954 which have been started and/or phased out.

Figure:  NuclearPower Program Start-up and Phase-out

More than two months have passed since these declarations and announcements, and many encouraging comments have predicted another nuclear renaissance.

It is important to understand that nuclear energy as a key player in the race against net zero has been on the table for some time now.  However, despite its claimed potential to play a key role, it has accomplished much less due to reasons including but not limited to nuclear incidents (Chernobyl and Fukushima saw a dip in the nuclear programs), cost overruns, and construction delays.  Hinkley Point C is one live example of problems around cost overruns and delays.  The Financial Times recently reported that HPC had been delayed until 2029, with the cost soaring from initial projected costs of £18 billion^[2] to £46 billion.^[3]

[1] Mycle Schneider; Antony Froggatt, The World Nuclear Industry Status Report 2023 (Mycle Schneider Consulting Project,2023)
https://www.worldnuclearreport.org/IMG/pdf/wnisr2023-v4-hr.pdf accessed on 23-Feb-23

[2] Bloomberg, EDF’s UK Hinkley Nuclear Costs Balloon as Plant Delayed Anew, (Bloomberg, 2024),
https://www.bloomberg.com/news/articles/2024-01-23/edf-s-uk-hinkley-nuclear-costs-balloon-as-plant-delayed-again accessed on 23-Feb-24

[3] The Financial Times, UK nuclear plant hit by new multiyear delay and could cost up to £46bn,
https://www.ft.com/content/1157591c-d514-4520-aa17-158349203abd accessed on 23-Feb-24
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Therefore, in the midst of all the excitement, it is time to step back and cautiously examine the exciting claims about global acceptability and renaissance for the path to net zero.

When scrutinised against the touchstone of the energy policy trilemma, it has long been suggested that nuclear energy (despite its various challenges) ensures the security of supply in a low-carbon energy system.  It is an environmentally sustainable and reliable energy source and is affordable (over the long term).  Nuclear experts have long advocated this, but one immediate question that springs to mind is what is different in the claims this time?

An answer offered in response is the potential of Small Modular Reactors (SMRs)and Advanced Modular Reactors (AMRs).

The umbrella term of advanced nuclear technologies includes nuclear technologies smaller than conventional nuclear power station reactors, designed so that much of the plant can be fabricated in a factory environment and transported to the site.  The UK has categorised these under-development advanced nuclear technologies into SMRs (similar to existing nuclear power station reactors, and typically Light Water reactor designs but on a smaller scale) and AMRs (which use novel cooling systems or fuels to offer new functionality, such as industrial process heat).

The emergence of SMRs and AMRs has also dominated the recent nuclear conversation. It is claimed that these new technologies have benefits including but not limited to the following:

·   Localised energy production -They can be installed off-grid, and they may provide and produce energy locally without depending on access to a transmission network or national grid, making them more useful for remote locations.

·   Flexibility in outputs - The option to produce steam, heat, or power, making it deployable for various applications such as industrial processes, domestic heating, etc.

·   Mitigation of construction risk and delay - It is asserted that the modularity of these reactors will mitigate the risks associated with construction delays and cost overruns.

·   Unlike the conventional large GW nuclear plants, for which the Contract for Difference and Regulated Asset Base Model are presented as viable financing models, it has been claimed that advanced nuclear technologies can be based on simpler nuclear financing structures. i.e., Corporate/private PPA.

·   Integration with other generation technologies such as Hydrogen production and other renewable energy sources.

·   Due to their modularity, they are claimed to be deployable at pace in numbers once the production facility is established.  The timeline for deployment from technology approval has been estimated to be 4-5 years after the establishment of the factory.

·   Capital cost is manageable, and the levelized cost of energy is claimed to be highly beneficial.

·   The almost zero-carbon emission credentials make it highly suitable for the net-zero campaign.

These claimed benefits seem to be gaining traction globally and from governments around the world.  As mentioned above,the pledge to triple the world’s nuclear energy capacity is one way of assessing the traction of SMRs and AMRs.  Another way of looking at the significance of SMRs and AMRs is by reviewing those governmental initiatives to a) support the advanced nuclear technologies by funding to develop the export capacity of these advanced reactors and b) initiatives to engage with newcomer countries to develop their capacity building.

The US has announced USD72 million for the SMR-related program, the Foundational Infrastructure for Responsible Use of Small Modular Reactor Technology Program,known as FIRST. The program aims to empower potential nuclear energy newcomer countries to prioritize nuclear security, non-proliferation, and safety considerations when evaluating civil nuclear reactor technologies, emphasising SMRs and other advanced nuclear reactor designs.  This program is separate from additional offers from the US Export-Import Bank and its International Development Finance Corporation up to USD3 billion and USD1billion for two SMRs in Poland designed by GE Hitachi.

Last year, the UK Department of Energy Security and Net Zero announced the recipients of Future Nuclear Enabling Funds, i.e., GE Hitachi (£33.6 Million)and Holtec Britain Limited (£30.05 Million). The Canadian government has approved USD55million of federal funding for SMR development in Saskatchewan, which has selected GE-Hitachi's BWRX-300 SMR for potential deployment.

Examining the draft COP28 declaration as a parameter of acceptability of nuclear for net-zero and the tripling of the nuclear energy pledge 2050, we also need to keep an eye on the challenges unique to these advanced reactors.  The major challenges include but are not limited to the following:

(a)  Regulatory approval processes:The need to streamline the design assessment for advanced reactor technologies in multiple jurisdictions is unique to the advanced nuclear reactors due to their modularity.  The advantages of the production timescales due to modularity and standardised design for mass-level production may be lost if these new technology design assessments are cycled through regulatory approvals in each jurisdiction in the manner of GW reactors - posing a potential challenge. Under the Convention on Nuclear Safety, each state is obliged to undertake comprehensive and systematic safety assessments before the construction and commissioning of a nuclear installation and throughout its life.  This potential challenge has been attempted to be addressed through harmonisation, which is an ideal approach, but it will require time to reach an acceptable agreement.  One practical way (advanced and advocated by Castletown Law in the third of its SMR guides)^[1]is to address the challenge of streamlining the design assessment is regulatory cooperation (under IAEA supervision) pursuant to bilateral or multilateral collaboration agreements to expedite the approval of designs that have been approved in one regulatory jurisdiction without compromising the regulatory independence of the host country.

(b)  From technology development to project delivery: Paul Murphy, in his insightful paper,^[2]notes that the developers of these new technologies (SMRs and SMRs) now have to transition from technology development to project delivery, requiring proper project structuring and developing a ‘good project’. Regarding challenges faced in project financing, Murphy suggests reconciling the pricing exposure project owners face (due to lack of capital and constructors being unwilling to expose their balance sheets to completion risks) through other government-supported means to de-risk the project.  Similarly,he suggests that governments may support and strengthen the supply chain with low-interest loans and long-term repayment terms to make project delivery achievable.  The factors and steps suggested by Murphy in his paper cover the major challenges faced by nuclear projects in the context of advanced nuclear technologies.  The challenges must be addressed carefully to deliver nuclear projects using advanced technologies.

[1] Andrew Renton; Simon Stuttaford, SMRs: Adoption and Approval Under IAEA Oversight - Part III, (Castletown Law, 2022)
https://www.castletownlaw.com/papers/smrs-adoption-and-approval-under-iaea-oversight accessed on 23-Feb-24

[2] Paul Murphy, The 3x Challenge: A Time of Transition for the Nuclear Industry, (GABI, 2023)
https://thegabi.com/wp-content/uploads/2023/12/Paul-Murphy-Brief-FINAL.pdf accessed on 23-Feb-24
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There have been other challenges with laying down the siting criteria and environmental permitting for advanced nuclear technologies that must also be addressed while considering the jurisdictional context.

The upshot of the discussion above is that the drive towards low carbon energy transition faces unique challenges that cannot be addressed without including nuclear energy as part of the energy solution, which has saved carbon dioxide emissions in the range of 63 Gt CO2 since its first age of development, i.e.,the 1950s.  This factor is being recognised and acknowledged in the draft decision for COP28.  The acceptability is gaining momentum and is supported by promising developments in advanced nuclear technologies.

Adopting nuclear power generation through advanced nuclear technology seems inevitable (in view of the benefits claimed by advanced nuclear technologies) to avoid missing the key temperature targets.  It is time to create an infrastructure, regulatory and project-delivery-focused,that is fit for future generations, which would align with the Paris Agreement,where the Conference of Parties had noted with concern that more extraordinary efforts (our emphasis) would be required by the parties to reduce the emissions up to 40 gigatons (Gts).

The draft including nuclear in efforts towards net zero indicates the potential of nuclear power in the role it can play in the transition on the one hand and a pragmatic solution to the current problems faced by energy policymakers.

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