COP29 side event notes - tripling nuclear energy

While at #COP29 I am posting notes of the side events I attend. This one was a collaboration among the World, European, US, Canadian and Japanese nuclear associations, looking at how to achieve the COP28 declaration among existing nuclear-using economies. Alas I came in partway through.

?

JUN ARIMA (Japan): The IPCC AR6 WGIII report refers clearly to nuclear as a piece of the pathway to 1.5C or 2C and the references are nuanced.

?

There is no reference in the Summary for Policy Makers due to opposition from some countries.

?

?

In the COP28 side declaration to Triple Nuclear Energy there was a call to recognise the role of nuclear in carbon neutrality

?

And the COP28 Global Stock Take included a call to accelerate a range of zero and low emission technologies, including nuclear. The historic first reference to nuclear in any COP text. When I was a negotiator in 2001 it was a controversial topic, with anti-nuclear countries opposed to use of nuclear to produce Certified Emissions Reductions.

?

So? while IPCC AR6 acknowledges the role of nuclear, but it is downplayed versus solar and wind. SPM AR6 does not reference nuclear.

?

But the situation has changed at COP28 due to growing demand for energy security following geopolitical tensions like the Ukraine war, plus mitigation ambition.

?

What is most important is not multilateral decision making but political will in individual countries.

?

Next YVES DESBAZEILLE, NuclearEurope director

Will cover what's going on in Europe and Africa around finance.

?

Europe has a 2050 goal but if we want to get to net zero in 2050 we need net zero for power in 2040.

?

We commissioned a study looking at 150GW scenario for installed capacity by 2050. 150GW is the objective for nuclear alliance countries - it is not a tripling but an increase of about 50% for Europe.

?

Three scenarios:

• New Business As Usual - 100GW current capacity remains
• Increase: 150GW
• Change in Paradigm - 200 GW

?

Across all scenarios we need to build a lot of new reactors - 120-160GW new capacity to construct and finance.

?

This effort is more similar to 1970s-1980s effort to build the current Gen II fleet.

?

How do we invest and make it bankable?

?

There needs to be political consensus and support for the desirability of nuclear deployment for the EU. Inclusion in the Taxonomy helps; the Net Zero Industrial Act includes nuclear as eligible; inclusion in clean energy contracting; and the European Commission launch of the SMR industry agenda.

?

That said unfortunately the idea that nuclear is part of the solution remains contentious in the EU. Some Commissioners are opposed. We haven't seen an ambitious plan.

?

There are a few instruments that exist in Europe. State Aid can include contracts for difference; or the UK model. Some firms exist Europe-wide but in most of Europe nuclear is not eligible today. German and other opposition is significant.

?

Some governments support eligibility of funds, but there will need to be private investment. Can it bring a return? That is up to the nuclear industry to demonstrate that these are worthwhile projects. We've learned from the past and will reduce the risk of cost overrun and so on. The industry has to tackle that.

?

We'll need involvement of the European Investment Bank to catalyse pirvate participation - not easy given political opposition.

?

And we may need direct consumer investment in facilities such as SMRs (Finland has done this in the past).

?

Stable policy underpinned by a long term vision and goal is essential. Nuclear has a high upfront cost but can operate for 60-100 years. There is a high residual asset value in our most ambitious scenario, because of the longer life of the invested assets versus the shorter life of renewable assets in the least ambitious scenario.

?

?

Next the PANEL

?

Sama Bilbao y Leon, World Nuclear Association

?

John Kotek - Nuclear Energy Institute

?

George Christidis - Canadian Nuclear Association

Akihito Uetake - Japan Atomic Industrial Forum

?

MODERATOR: we have 31 countries calling for a tripling of nuclear by 2050. IEA challenges industry to deliver. What's driving the consensus?

?

SAMA: For the existing fleet we've seen a desire to extend its life as much as possible. We've seen prematurely shut down units starting to come back into generation. And there's enormous interest in building new nuclear - large, small, microreactors depending on location and need.

?

Why?

?

Countries at COP26 were trying to reconcile their needs and commitments. In many cases this would only be possible with nuclear. You have to meet your needs 24/7/365. We're seeing an enormous moment of awakening for people - it's not just carbon free capacity, but it needs to operate all the time. Industrial sectors that depend on affordable energy are calling for something like nuclear. The tech industry, chemicals, metallurgy, marine shipping et cetera. Nuclear can provide electricity and heat at the same time.

?

MODERATOR: thats the need but how do we get there - individual countries have to make commitments - the USA announced a roadmap for 25 GW by 2035 and 200 GW by 2050. But how do we deliver that?

?

JOHN: The US commitment comes from the leader of the Democratic Party, historically more suspicious of nuclear. But those who have confronted the math find that including nuclear in the energy system reduces total costs, even if an increment of nuclear costs more than an increment of wind or solar.

?

The 35GW goal includes restarts of plants that have been shut down. There have been a number of plants that closed due to inadequate market revenue; some are not too far down the road and can be turned around.

?

It also includes more output from existing plants

?

And there's new build - plants we expect to be online by 2035 and those expected to be under construction.

?

It's not a slam dunk that we'll get that done. There are policies we'll need including IRA tax credits; and other supportive policies.

?

MODERATOR: how about Canada?

?

GEORGE: Canadian discussion is linking energy context to social and economic development. Small reactor interest has spread to large reactors. The Canadian Government has included nuclear in key funding and policy roles. The provinces are important as they set the commercial mix at play. Key provinces are interested - going beyond Ontario and New Brunswick to Alberta and Saskatchewan - and more sectors are becoming relevant.

?

There's increased interest and it is non-partisan - the Opposition and Government, and even some discussion inside the Ontario Green Party.

?

MODERATOR: what about Japan?

?

AKIHITO: Securing investment is crucial and predictability of investment recovery is a central factor. Utilities responsible for new build will not do so if they aren't certain of recovery. There must be confidence that investment will not balloon surprisingly. Need a healthy supply chain that can complete projects on time and budget. And need a proper market design that will consider the long term and business risks.

?

The UK Regulated Asset Base model is a good reference, especially in fully deregulated markets like Japan where nuclear plants are owned privately.

?

Nuclear needs stable and solid policy supported by public opinion.

?

JOHN: In the US context we've used tax credits at the Federal level. Solar and wind took off via federal tax credits plus state policies like renewable portfolio standards. As wind and solar were taking off, less than half the value of the project was in the power sales - much was in the tax credits.

?

Under IRA we now have either Investment Tax Credits or Production Tax Credits that can be used for new nuclear builds. But the challenge is that the first few of a kind of nuclear plant will have higher costs. We need to spread that out so it isn't borne by a small number of participants. So is there an opportunity for the Federal Government to ensure the first few plants fo a given design will enjoy more support due to higher costs and risks?

?

Eg the first few Vogtle units went significantly over budget and time. The utility could absorb that with federal loan guarantees but we need a different approach for the next wave.

?

MODERATOR how do we get more private investment?

?

GEORGE: important to include nuclear in clean energy definitions. Canadian clean investment banks are making a difference. New policy inclusion sends strong signals. Canadian green bonds did not initially include nuclear, but changing the definition sent a big signal to the private sector and abroad.

?

Governments have a role to enable nuclear growth.

?

MODERATOR: what about new entrant countries? What can we do to help them?

?

SAMA: The first step is for them to decide they want to include this technology in their energy mix. Need to find the most cost effective financial frameworks and ways to distribute financial risk among stakeholders in a project. In emerging economies, markets for electricity do not match the future electricity system. Need to coordinate variable energy sources, baseload. You can't set the price based on marginal costs as that will often be zero.

And we need to improve project delivery. We need to get very good in existing markets and deliver projects in new markets on time and budget.

?

The World Bank and other multilateral development banks need to recognise the essential role of nuclear in the decarbonisation challenge. Some projects will need to be partially financed by MDBs, but more important is the signal that nuclear is sustainable and belongs in all taxonomies, green bonds and financing frameworks.

?

MODERATOR: what about supply chain and policy support?

?

AKIHITO: All agree we need a strong and resilient supply chain. That means continuous investment in technology, human resources and facilities. That need a long term business perspective. That requires utility commitments and utility confidence in on-time on-budget project delivery. That requires stable positive nuclear policy founded in public support. In China and Russia policy and supply chains seem to work quite well, but in Japan no new plants have been built for 15 years. Policy is needed to break the deadlock and support the circular relationship.

?

MODEATOR: what about policy support?

?

AKIHITO: Policy needs public support. Public support matters totally. In Japan there has been a steady increase in support for nuclear in the past decade, with significant age and gender gaps still evident. Younger people are more likely to support, as are men.

?

MODERATOR: how can communities benefit?

?

JOHN: This is why there has been a turnaround in the US. Many plants shut due to lack of compensation in our competitive electricity markets. But more were slated for closure than actually closed - states and Feds stepped in to provide the missing money to keep some going profitably. In the States, the potential loss of plants in a community set off alarm bells. When communities realised what was at stake, they fought to keep these long lasting safe jobs. You can build a life around a job in a nuclear power plant.

?

These plants tend to be away from big cities and communities get tax credits that provide amenities. And air quality is much higher than for communities near coal and gas plants. Communities with nuclear have about 20% higher support than the public at large. The second highest base of support is communities around coal plants, especially those slated for closure. See Wyoming welcome to Bill Gates-invested Terrapower.

?

Supply chain effects - when a community hosts a plant there is much that local suppliers can provide.

?

Vogtle in Georgia - the Southern Company saw the project through, giving Georgia 2000MW of clean firm power to offer to manufacturers looking to site in the US - auto makers, LG and others claiming clean power. Georgia is one of the fastest growing states in the US. Others want the same benefits.

?

Tech businesses also recognise the benefits - Google etc.

?

MODERATOR: What about public support for action on climate change in general? Energy prices have risen around the world due to increases in fossil fuel prices - but sensitivity to cost impacts of climate action is significant too - how can we manage affordability and energy poverty?

?

GEORGE: Ontario has 60% nuclear, 20% hydro, 20% natural gas and some renewables. Refurbishments at Darlington and Bruce Power were on time and on budget, showing potential to deliver significant infrastructure projects and boost economics of that province. Local support has translated to jobs in the trades. As the Canadian industry grows there is a direct correlation of interest with economic benefits. As soon as the policy framework put nuclear on the menu the economic and social benefits become measurable. We're now looking at multiple sectors considering nuclear to reduce their own emissions in mining, resource development etc for cost reasons as well as emissions reductions. The cost structures are very viable. Capital Power signed an MOU to explore SMRs in Ontario, that is building confidence.

?

MODERATOR: what can the global nuclear industry do to work with the 31 signatories to the global goal?

?

SAMA: industry will need to deliver those projects on time and on budget. And government support is also important - long term confidence is needed, whether via specific financial support or market structures.

?

Also need to provide resources and a clear mandate to regulators who will enable delivery of nuclear. Licensing and regulation is time consuming, but our regulators can work together to improve efficiency of processes to go from first of a kind to nth of a kind in short order. The clear mandate from government is essential for that.

?

Translating energy policy that are broad goals to specific industrial policies, action plans, implementation plans is essential. Clean energy industrial policy, not just nuclear. Much of the supply chain is not very different across clean energy, workforce likewise. A master plan will help. Supply chain and workforce both matter - there is a STEM shortage, we need engineers of all sorts and the full clean energy professional suite - project managers etc.

?

To leave nobody behind we must ensure the plans include reskilling workers and supply chains that face phase down of fossil energy.

?

MODERATOR: what are your number one priority actions so that at COP30 we've turned commitments into action?

?

AKIHITO: in many countries public sector takes final risks. But in some it is the private sector. Systems also differ in how investments are recovered - regulated or deregulated markets. Japan, US, UK combine private ownership and deregulated markets.

?

JOHN: the first nuclear renaissance fizzled when fracking came along in the USA, eroding nuclear economics. But we knew things were getting serious when the bankers and lawyers started showing up. And now they are again. Fracking has already been invented but people care about clean energy in a way they didn't twenty years ago. In a year if we've found a way to address early mover risks, you'll see movement towards many more plants in the USA.

On regulation, cooperation like on the GE Hitachi design is promising. The innovation ecosystem is key - US envies the Japanese experience of delivering large light water reactors in 5 years, when they were building them.

?

SAMA: over next three years I'd like to see lots of steel on the ground. We're still talking much more than doing. Want to see these reactors, large, small, micro getting delivered. Want to see many projects - and programs of building, more than individual projects. Governments and industry are waiting for us to deliver.

?

GEORGE: I recognise the resilience of Japan, which has taken a fresh look at nuclear generation and what is needed to meet energy security and climate objectives.

It's time to act - we've been here at a number of COPs and they're wonderful but its time to build on momentum. This one has more of a practical lens. And we need to link climate action to people's concerns about cost of living and jobs to show the one goes with the other.