On the benefits of nuclear power for the energy transition
Round table discussion moderated by Dieter Aigner, Managing Director Raiffeisen KAG and the experts:
Werner Gruber, physicist (formerly of Science Busters), Vienna
Nikolaus Müllner, Institute of Safety and Risk Sciences, University of Natural Resources and Life Sciences, Vienna
Gabriel Panzenböck, Fund Manager, Bonds, Rates & FX, Raiffeisen KAG, Vienna
Stefan Sengelin, Federal Ministry of Climate Action, Environment, Energy, Mobility, Innovation and Technology, Vienna
Mr Gruber, we know you from the media as someone who’s in favour of nuclear power plants from a sustainability perspective. Can you set out your arguments for us?
Werner Gruber: As well as cooking up sausages and roast pork as a former member of Science Busters on TV, my other field of work is neurophysics. I’ve also been very active in the area of environmental protection and public relations for around ten years. Plus, I’m the research coordinator for Burgenland. In that role, I’m also close to politicians and am quite familiar with people’s preconceptions when it comes to nuclear technology. If you were to ask me “Nuclear technology – yes or no?”, I’d say “No, what for?” However, we’re not deciding in favour of or against something, but rather weighing up several possibilities and trying to keep the cost of that decision as low as possible.
What cost are we talking about?
Werner Gruber: In the case of carbon emissions, let’s take Hainburg as an example. Many Austrians said we didn’t need Hainburg. So Dürnrohr was built: a coal-fired power station that has emitted more CO2 than anything else in Austria. If we’d had Hainburg, our energy problem would look somewhat different today. To get energy these days, we in Austria can choose between coal- and oil-fired power stations – hardly a good choice in view of climate change – plus natural gas, which is a bit cleaner but comes at a high environmental price in terms of the CO2 burden, just like coal and oil. And we’ve got wind and solar power – fantastic for the environment, but with the major drawback that neither can be controlled. I can’t simply call on them when demand surges. That means we need backup power plants, and there are only two carbon-neutral options left: hydroelectric or nuclear. We’re very fortunate in Austria to have a lot of hydropower, but the Czech Republic, for example, isn’t so lucky in that regard. So I’m not going to demonise nuclear power just like that.
But the high costs and the radioactive waste make the whole thing more expensive…
Werner Gruber: It’s always the same question: What are we going to do with all the radioactive waste? But a lot of research has been done on that. Back in the early 1990s, the Italian physicist Carlo Rubbia, a Nobel Prize winner and the former head of CERN, presented his idea for turning extremely radioactive waste into less radioactive waste using neutrons. Although this waste would still need monitoring, it would only be for a very short time – about 50 years. Many European countries are already using systems driven by particle accelerators, such as Myrrha, a spallation facility that enables highly radioactive waste to be converted. Although it’s still in the experimental stages of operation, it does work, and there aren’t any physical or technical issues. It’ll soon be working under full load.
"Safety standards like you get in space travel"
Mr Müllner, your work at your institute at the University of Natural Resources and Life Sciences involves the risks associated with nuclear power plants, amongst other things. Does nuclear power have the potential to do anything for the energy transition?
Nikolaus Müllner: If you look at the time needed to develop, build, and license nuclear power plants, you’re talking decades. I can speak from experience here, because I worked on the licensing of the Atucha nuclear power plant in Argentina. People have no idea just how different a nuclear power plant is to a standard industrial plant, because the high level of radioactivity means that the requirements are simply extremely high from a technical perspective. No other industry has such stringent safety standards as nuclear technology. I’d say that the quality requirements in nuclear technology are roughly the same as you’d get in space travel, and nowhere else. And that makes the whole thing a slow process.
Might you be able to give us a specific example?
Nikolaus Müllner: The Czechs are currently planning a replacement for their Dukovany nuclear power plant, and the new plant is set to go on stream in the 2040s. Planning has been ongoing since 2015, so you’re looking at around 25 years for a new power plant to go through planning, licensing, and construction before it’s finally ready to use. But that’s for a conventional power station, not for one of the new types of reactor that are currently all over the media and that can do everything better, or so they promise. The Czechs opted for a “proof of design”, a reactor that had already been built somewhere in the world and that had shown it could work. Twenty-five years is a long time, and you need to bear in mind that the Czech Republic is a country with the right technical infrastructure. It would be bound to take ten years longer in Austria.
Probably not an option for the energy transition, then.
Nikolaus Müllner: No, because what’s currently at the planning stage won’t see the light of day before 2040. There’s no other way to put it. And we’re not talking about a great many projects either. Across the whole of Europe, you’ve got eight reactors being planned in France, plus the one in the Czech Republic I’ve just mentioned. Hungary is already building its power plant.
Does it make sense to extend the lifetime of nuclear power plants?
Nikolaus Müllner: In terms of their carbon emissions, yes it does. We’re not talking zero emissions, but fewer emissions, definitely. It’s a low-emission technology. But I’ve still got the cluster risk in mind in terms of safety. The reactors we’ve already got aren’t 100 per cent safe, and we’re not going to get 100 per cent safety with future technologies either. “Safe” here means having defined plant conditions and defined accident conditions. In other words, the plant must be capable of mastering a list of accidents and incidents. But no power plant in the world is protected against all conceivable eventualities, and that specifically includes natural disasters such as the tsunami in Fukushima. And this problem also affects lifetime extensions, of course. I can’t get a power plant that was planned in the 1970s and built in the 1980s up to the technical standard that’s demanded of power plants nowadays. That’s another reason why I see the situation as being more problematic than Mr Gruber does. Needless to say, it’s a balancing act: cluster risk versus carbon emissions.
And what do you think of Myrrha?
Nikolaus Müllner: We’ve taken a closer look at the idea as part of our work for Germany’s Federal Office for the Safety of Nuclear Waste Management. Although the promises mentioned are of course good, implementation is still a long way off. It could be a sensible option for countries with an extensive nuclear power programme, such as France. The reactor, which needs a particle accelerator to reach criticality, transmutes some of the radioactive waste. That’s a completely new technology. Whether it will really work like that under real-life operating conditions remains to be seen. Although France hasn’t ruled out going down this route, it’s moving more towards deep geological repositories. Even if it all works very well, we won’t be able to manage without any repositories whatsoever, because the process generates long-lived fission products that are highly radioactive. So I haven’t got a payback time of hundreds of thousands of years or a million years, but periods of 1,000 to 10,000 years for this all to degrade.
"Not a sustainable form of energy generation"
Mr Sengelin, all of this is now supposed to be sustainable according to the EU Taxonomy. But your ministry is taking a different stance, as we all know.
Stefan Sengelin: Our view is that nuclear power is not a sustainable form of energy generation. With the Taxonomy, the EU has created a system for classifying the environmental sustainability of economic activities. The EU Taxonomy isn’t a legal framework for pursuing the objective of security of supply or banning investments in nuclear power plants. Every member state is free to choose its own energy mix. At the same time, it’s not OK for us at the ministry responsible for climate action to say “Nuclear power is environmentally sustainable.” And that’s why it doesn’t deserve the incentivisation of having flows of investment steered in its direction. Nuclear power is highly capital-intensive and, naturally, it’s in competition with other ways of producing energy. This means that capital is being directed away from these other forms, such as renewables.
So is it actually harming the energy transition?
Stefan Sengelin: As a framework, the Taxonomy is a very sensible set of rules for making the financial market more standardised, more comparable, and more transparent in terms of environmentally sustainable and green activities. It has set out some very clear specifications in the text of the act as to what environmental sustainability criteria have to be met. But the European Commission has very clearly disregarded these criteria in a complementary delegated act, which classifies nuclear power and fossil gas activities as sustainable. If new nuclear power plants can’t go on stream until 2050, for instance, there’s no way they will be able to help achieve the objective of climate neutrality by 2050 as stipulated in the Green Deal. The other environmental targets, which are also contained within the Taxonomy, will also be harmed, such as final storage or the risks we’ve already heard about. We see this as a very clear breach of the rules, and this is why we brought our much-publicised legal action against it.
But it doesn’t mean that people now have to invest in nuclear power, does it? Investors are free to put their money elsewhere.
Stefan Sengelin: Yes, that’s the regulatory aspect, which also requires investors to be told clearly what percentage of nuclear power and fossil gas is involved in an investment. Besides this regulatory aspect, however, there’s also the issue of market acceptance. And if I look at the labels that are currently relevant in Europe as far as sustainability is concerned, and various frameworks of companies and government bonds, I know from the outset that many of them exclude nuclear power. These include labels like our own Austrian Ecolabel, the Nordic Swan Label, the FNG Seal in Germany, and the LuxFLAG label. Even France’s GreenFin label excludes nuclear power. And then there are many government bonds such as Austria’s government-issued green bond. So another question is whether investors even want to invest their money in nuclear power in the first place.
And do investors want to invest in nuclear power?
Gabriel Panzenböck: Investments like these are extremely unattractive from an economic perspective. And this is something I’d like to touch on at this point. Mr Gruber said right at the start that it’s always a balancing act. What are we going to do, and what are the alternatives? And we’ve already mentioned wind and solar power, i.e. CO2-free energy sources. We’re facing a climate disaster, as we’re all keenly aware by now. And there’s also a consensus about the urgency with which we need to act. It would have been good to have done something as early as 20 years ago, but, even now, there are policy-related horizons and EU plans with specific targets that we need to meet. And, of course, this raises the question of what technologies we can use to get there.
…and whether these technologies are also attractive investment themes.
Gabriel Panzenböck: From a purely economic perspective, we’ve got a situation where solar, wind, and storage technologies are all following Moore’s law – in other words, costs are falling in percentage terms year on year. It’s incredible how rapidly technologies are becoming cheaper at the same time as progress is advancing. And these technologies are already available and cheap. With nuclear power, however, quite the opposite is the case: Power plants are getting increasingly costly, even after adjusting for inflation. Every kilowatt-hour of nuclear power is getting steadily more expensive. Plus, it’s affected by the phenomenon known as externalities. This means that final storage, for instance, gets paid for out of the public purse. This presents an additional risk for investors, because there’s a tendency to internalise these externalities. And that would make the whole thing even more expensive. So there are aspects on many cost levels that are arguments against nuclear power. So if I were an investor and had the choice between expensive space technology – I like Mr Müllner’s comparison – and cheap renewables, it’d be quite clear what could generate higher returns and what I’d choose, a real no-brainer.
You’re also part of a working group for the energy transition, one of several key issues of the future that we’re tackling and analysing in teams. What insights – from an investor’s perspective – has this given you?
Gabriel Panzenböck: A great many, but one in particular that it’s really important for me to mention. Energy supply is currently undergoing something of a paradigm shift. The approach that energy utilities – particularly electricity companies – used to take of simply reading off load profiles and charging consumers a flat rate every month will soon be a thing of the past. We’re now moving very clearly towards a market-based system. This is because, with energy generation becoming more dynamic – you can’t always draw on wind and solar power – energy prices are bound to fluctuate more. This will incentivise consumption and bring about market mechanisms that reflect that. That means that smart metering will be the future. Consumption will follow production, not the other way round. However, this also means that network effects will play a key role. After all, if the wind isn’t blowing in Germany, then it might be in Poland, in Greece, or in Portugal. There are maps that give you a wonderful idea of the correlation between the various places the wind is likely to be blowing or not blowing. And if you compare the costs for a wind farm to those of a nuclear power plant, it’s a very simple calculation.
"We need storage capacity"
Mr Gruber, you’d like to add something.
Werner Gruber:I know that wind and solar power are extremely sexy at the moment. The only problem is the battery storage system. We’re currently setting up a 340-megawatt battery storage system in Burgenland, which has been home to a great many wind and solar farms for decades. This will allow us to power the whole of the province for four hours. Let me repeat that: four hours, no longer. In other words, if we get four days of fog and no wind, which happens maybe once a year, then we’ve got a problem. We need storage capacity, and this is a highly experimental field in technological terms. ETH Zurich has built a one-terrawatt storage system, but nobody knows yet whether it’ll be a success or whether we’ll have to dispose of it in five or ten years together with all the harmful substances it contains. The plan that Mr Panzenböck mentioned, whereby we buy in energy from parts of Europe where the wind is currently blowing or the sun shining, sounds good, but we don’t have the grid for it. And even if we did manage it using electricity, we’d still be losing around 30 per cent. Given the current energy crisis, however, we can’t afford any losses at all – not even one single kilowatt. And building such a grid is likely to take ten years, twenty if we’re also including the western and eastern edges of Europe. But it’s an important plan for the more distant future.
What’s now on the agenda for Europe’s politicians? Where do we need to pull the big levers?
Stefan Sengelin: There are currently a lot of measures for reducing CO2 on the agenda. The political debate isn’t easy, and some of those measures are hard to implement because they’ll affect a great many people and the resistance is correspondingly high. But we’re working on it nonetheless. One very important measure is carbon pricing. Austria has finally joined the list of countries that have adopted explicit carbon pricing. Needless to say, the economic dimension that Mr Panzenböck has mentioned is benefiting the energy transition significantly. We’ve got a clear cost advantage with all these technologies. If the talk is of deciding between nuclear energy and fossil energy sources, then the debate needs to be broadened. We need investments in load management, in technologies like networks, storage systems, and smart meters, that will enable us to replace the load profiles in their current form with other options and that will mean we no longer need power plants that have to be running all the time in that form. Let’s direct financial flows towards these technologies that will help put us in a position where we can replace our old systems. What does this require from the politicians? Definitely financial incentives, but that’s not all. Above all, we need clear, uniform definitions and disclosures of what’s green and what investments will help achieve the objectives of the Green Deal. In this context, greenwashing – i.e. misleadingly designating investments as “green” even though they don’t do enough to help meet environmental and climate targets – is an issue that’s being closely monitored by the regulators. It’s important that the issue of climate action is accorded the same importance as monetary indicators, and this is now being implemented at European level with the new corporate reporting requirements.
Nikolaus Müllner: There’s one more issue that nobody has raised and that I’d just like to mention: energy savings. There’s still a very great deal that can be done here. There’s a very nice report from the Environment Agency Austria about how the country can meet its climate targets. The report’s authors mainly recommend savings. Switching the economy to a circular economy, trying to slim down this abundance of products that we currently have, extending the lifecycles of individual products – at a stroke this gives me less transport, less waste. Encouraging more compact building when planning housing developments so I don't have as much transport, reducing soil sealing. Of course, this won’t be done overnight either, but it strikes me as much easier to implement than the other options. In other words, simply dialling down energy consumption a bit.