Financing schemes for disposal

the utilities set aside provisions for interim storage of their waste; the estimated discounted costs were around €5.8 billion in 2014.276 After the financing reform, this amount was transferred to an external segregated fund and all interim storage costs, including for spent nuclear fuel that will arise from continued operation, will be paid by the public fund. In Sweden, the costs for the centralized interim storage facility CLAB are paid by the Nuclear Waste Fund.

The most complex financing situation for interim storage of spent nuclear fuel is in the US. The Nuclear Waste Policy Act required the Department of Energy (DOE) to take over spent nuclear fuel in 1998. This created a significant liability for the DOE. The absence of a high-level waste repository forces local utilities to store spent fuel on their own sites, including already decommissioned sites. For this interim storage, the utilities request substantial financial compensation from the DOE, which has spent over US$10 billion in legal penalties so far. DOE estimates that total damages could amount to US$20.8 billion, if it begins accepting fuel in 2020. With further delays, the liabilities could increase by hundreds of millions of dollars annually.277 The US Department of Justice manages a Judgment Fund of taxpayer money, about US$2 million per day, on all nuclear power plants, operating or shut down, to help manage their spent nuclear fuel.

In France, EDF estimates an additional €18.7 billion (US$21.1 billion) for spent fuel management (for example storage, reprocessing), and another €1.2 billion (US$1.4 billion) for waste removal and conditioning.278 This amounts to €51 billion (US$57.5 billion) only for handling and storing the waste generated from operation.

FINANCING SCHEMES FOR DISPOSAL

The polluters are not always financially liable for disposal (and partly waste management, too); in some cases, liability is transferred to a state-governed organization that is also responsible for radioactive waste.279 Most countries require funds for the long-term management of radioactive waste to be managed externally and segregated from the operator or licensee. In France, for instance, the operators of nuclear power plants must bear all costs related to waste management, but an external fund for the construction and operation, final closure, maintenance, and monitoring of the intermediate- and high-level waste disposal installations was created. ANDRA, the state-owned waste management agency, holds and manages the fund (Article 16 of the 2006 Waste Law).280 In addition, there is also an internal, restricted ANDRA fund for research for future storage facilities. The two funds are fed by payments from the operator’s internal funds at the time they are needed. However, the only fund fed right now is the research fund, as there is still no construction license. Instead, the operators make payments from their internal fund (for waste management) to ANDRA’s general budget to finance operations related to the storage facilities for short-lived, medium-level waste.281 Due to the 2006 Waste Law, the assets in the funds of EDF and Areva have to be reported separately, and the market value has to be at least as high as the liabilities to be covered. If EDF goes bankrupt, the state can claim right over the assets. An administrative authority supervises the internal funds; it can impose corrective measures, including the right to impose payments to ANDRA’s budget.

276 Warth & Klein Grant Thornton AG Wirtschaftsprüfungsgesellschaft, 2015. 277 US Department of Energy 2012, “Blue Ribbon Commission on America’s nuclear future”. 278 EDF 2019, “Consolidated Financial Statements at 31 December 2018”. 279 Wuppertal Institut 2007. 280 Government of France 2006, The 2006 programme act on the sustainable management of radioactive materials and wastes, Office parlementaire — Assemblée nationale. 281 Wealer, Hirschhausen, and Seidel 2019.

In Germany, in the old financing system, private companies managed the financial resources to cover waste disposal by internal non-segregated funds without public authority controlling. A 2016 law led to a fundamental change in the German funding system with the implementation of an external segregated fund, which will have to finance all aspects related to final disposal.282 The fund was fed with the amount of the former provisions for waste management of €24.1 billion (US$27.2 billion), including a risk premium, into an external segregated public fund. The Fund for the Financing of Nuclear Waste Management was set-up in mid-2017 to ensure that the money is invested “securely and profitably.“ Yet, responsibility and future risks will have to be borne by the public, infringing the polluter-pays-principle.283 In its first financial year, the fund only invested a fraction of its assets, most of which are still held at the Bundesbank (Federal Bank) at an interest rate of 0.4 percent. The result was around €39 million (US$44.1 million) of interest expenses during the fund’s first six months of existence.284 In the US, HLW disposal is financed by the Nuclear Waste Fund, with revenue from a levy of US$0.001 per kWh on the electricity price. Over time, the fund has accumulated over US$34.3 billion. Money is no longer collected in the fund as a result of a federal lawsuit against the Department of Energy in 2013, because the DOE failed to accept spent nuclear fuel for disposal (see section 7.8).

The UK provides another approach to financing decommissioning. The state is responsible through the Nuclear Decommissioning Authority for the management and financing of legacy wastes and decommissioning cost of the first generation of nuclear (mostly Magnox) reactors. For the later reactors and new build decommissioning and waste management costs are funded through a Funded Decommissioning Programme and are based on a fixed unit price that is, in principle, funded by the operators. It is intended to fund a deep disposal repository which will be developed and managed by the state.

Table 7 gives an overview of the funding systems, the total cost estimate, and set aside funds in selected countries. The data indicates that countries fall short of setting aside enough funds to cover expected costs for disposal. For instance, France and the US have set aside funds for disposal which would cover only around a third of the estimated costs.

TABLE 7: Funding systems for disposal in France, Germany, and the US as of December 2018

FRANCE* GERMANY US

FINANCING SCHEME

internal segregated and restricted fund, then moved to waste management agency (ANDRA) at construction start external segregated fund external

ACCUMULATED BY levy on electricity price investment of the funds previously levy on electricity price but no longer collected

TOTAL COST ESTIMATES US$ 34.9 billion US$ 19.8 billion** US$ 96 billion

SET ASIDE FUNDS, (IN % OF COST ESTIMATE)

US$ 11 billion (32%) US$ 27.2 billion (>100%)** US$ 34.3 billion (36%)

Source: Own depiction Notes: *only applies to EDF ** including interim storage, LILW and HLW disposal.

282 Government of Germany, Act on the reorganization of responsibility in nuclear waste management (Gesetz zur Neuordnung der Organisationsstruktur im Bereich der Endlagerung (BGBl., I, S. 1843 768/16). 283 Jänsch, E., Brunnengräber, A., von Hirschhausen, C. and Möckel, C. 2017, Wer soll die Zeche zahlen? Diskussion alternativer Organisationsmodelle zur Finanzierung von Rückbau und Endlagerung (Who should pay? Discussion about alternative organizational models for the finance for decommissioning and storage) GAIA-Ecological Perspectives for Science and Society, 26(2), pp. 118-120. 284 Fonds zur Finanzierung der kerntechnischen Entsorgung (German Fund for the Financing of Nuclear Waste Management) 2018, Geschäftsbericht 2017 (Status Report 2017).