Schröder bows to international pressures in nuclear row

Germany`s Chancellor Gerhard Schröder has bowed to the growing resistance to plans to phase out nuclear power in a move that has left BNFL and Cogema breathing a sigh of relief. This latest development demonstrates that it is unlikely that the government will achieve its aim without either a huge struggle or an even bigger bill. Siân Green examines the issues.

Siân Green

Gerhard Schröder, Germany`s Chancellor made major concessions to the nuclear industry in January as talks began between the government and electric utilities over the phase out of nuclear power. Schröder said that the reprocessing of spent nuclear fuel in France and the UK would continue, and that the shut-down of the country`s nuclear plants would be carried out on a case-by-case basis.

Schröder`s decision will improve Germany`s relations with Cogema of France and British Nuclear Fuels Ltd. (BNFL), which both have contracts to reprocess fuel from Germany`s nuclear power plants. The decision could, however, cause problems with his Green coalition partners. Environment minister Jürgen Trittin (Green) who was keen to end nuclear power, particularly fuel reprocessing.

The first round of talks between the German government and the country`s nuclear utilities, held on 26 January, was designed to help the two sides reach agreement on how to phase out nuclear energy. But earlier in January, complications had emerged over long term fuel reprocessing contracts, which the government said would be terminated.

Both Cogema of France and BNFL have long term contracts with the German nuclear utilities to reprocess and recycle spent fuel from German power plants. The complications over these contracts delayed submission of a draft law on nuclear energy to parliament, scheduled for January 29, and gave early indications that the government was not facing an easy ride.

The draft law, announced in October last year, pledged to revise the country`s existing nuclear energy law and establish a legal framework for the withdrawal and decommissioning of the country`s 19 nuclear reactors. It also aimed to end the reprocessing of spent nuclear fuel by January 1, 2000.

Schröder has now said that reprocessing in France and the UK will continue until suitable alternatives can be found. While this bodes well for BNFL and Cogema, it does not mean that their contracts will not be terminated in the future. Both Cogema and BNFL will seek financial compensation if the contracts are terminated, and have said that their contracts are legally binding and backed by international government agreements.

BNFL`s and Cogema`s contracts are with the German nuclear utilities. Most of the contracts began in 1990 and run until around 2010. For the period up to around mid-2000, the contracts are “take or pay”, i.e. the utilities must pay Cogema and BNFL whether they reprocess fuel or not. Thereafter they only pay for fuel treated.

BNFL has contracts with German utilities, including RWE, Veba and Viag, for up to 2200 t of reprocessing worth in excess of £1bn (euro1.43bn, $1.65bn). A significant quantity of this fuel has already been delivered to Sellafield where it is stored prior to being reprocessed. BNFL has already reprocessed some of this through its Thorpe recycling plant. BNFL states that the German contracts represent ten per cent of Thorpe`s current order book of £12bn.

Cogema`s contracts are executed at its La Hague facility. Christian Gobert, executive vice president of Cogema, said in an interview that the company stands to lose an estimated FFr30bn (euro4.6bn, $5.3bn) if its contracts are terminated. He added that the contracts account for ten per cent of the company`s revenues, and that it would do all it could to protect its rights under the international government agreement.

According to Gobert, the international agreements be- tween the French and German governments and also the British and German governments, include commitments to prevent obstacles to: the access of German utilities to French and British reprocessing facilities; the transport of spent fuel in Germany; and the return of waste to Germany.

“The German government is clearly in contradiction of these commitments,” said Gobert prior to Schröder`s recent decision.

But while Cogema and BNFL can, for the moment, breathe a sigh of relief, Schröder has probably done little to improve relations with his coalition partners.

The Greens, and Trittin in particular, have been the driving force behind the new nuclear policy. Trittin has been responsible for drafting the proposed law, a task he did without consulting the electric industry, and was particularly keen on ending reprocessing by the 1 January 2000 deadline.

But Schröder did not always seem to agree with Trittin, and appeared more concerned over possible compensation payments to BNFL and Cogema. A January 13 meeting between the two arms of the coalition to finalise and agree on nuclear policy did little to encourage Trittin to “toe the line”.

Other disagreements between the Greens and Social Democrats arose over the timescale of nuclear phase-out. Schröder has said that the process will take around 20 years, whereas Trittin is aiming for a much shorter timescale of less than ten years.

With so much at stake, it is unlikely that either Tritten or his opponents in this debate will relent. This could be a very long and drawn out battle indeed.