Brahma Chellaney The Hindu March 17, 2008
India’s zeal for reactor imports needs to be tempered by the fact that more than half a century after U.S. Atomic Energy Agency Chairman Lewis Strauss claimed that nuclear energy would become “too cheap to meter,” the nuclear-power industry everywhere subsists on generous state support and shows the slowest rate of advancement among all energy technologies.
The American-inspired multilateral export controls, including on high-technology flow, that have blocked India from importing even reactors and fuel for power generation, need to go in full — not just partially and conditionally as under the proposed Indo-U.S. nuclear deal. India is keen to boost nuclear power generation by buying reactors from all the three principal countries that can make such exports — the U.S., France and Russia. In consecutive months this year it has finalised agreements to buy reactors from France and Russia, subject to a rule change by the Nuclear Suppliers Group (NSG), a U.S.-led cartel. Its hopes of opening up international civil nuclear trade, however, have been dealt a blow by uranium-rich Australia’s U-turn on yellowcake exports to India — an ill-founded decision by its new Prime Minister that is to stand even if the NSG changes its rule.
Mix of energy sources needed
India needs a mix of energy sources as a commercial hedge against unforeseen risks, and nuclear power certainly deserves a place in a diversified energy portfolio. But India needs to temper its new-found enthusiasm for nuclear power, which currently supplies barely 2.5 per cent of its electricity.
First, generating power from imported reactors dependent on imported enriched-uranium fuel makes little economic or strategic sense. Had the proposed import of such light water reactors (LWRs) — the only type on offer — been part of India’s planned transition to autonomous capability, akin to China’s, the purchase of that model could have been justified. But India has no intention to design and build LWRs locally.
Second, just as lucrative arms export contracts oil the military-industrial complex of any major international power, reactor exports are integral to the French and Russian nuclear power business and to America’s efforts to revive its moribund industry, which has not received a single domestic reactor order since the 1970s. The political salesmanship on reactor exports thus is no less intense than on arms sales, with the sales pitch on both centred on the word “security,” although energy or national security does not mesh with import dependency.
Today, India is under pressure to replicate in the energy sector the very mistake it has made on armaments. One of the world’s top arms buyers, India now annually imports weapons worth between $4 billion and $6 billion, many of questionable value, even as its own armament production base remains weak and underdeveloped. Despite the rising arms imports bill, the Indian military is becoming less capable of winning a decisive war against an aggressor-state. Nuclear power, which was unappealing until imports were not possible, with the domestic industry actually starved of necessary funds for expansion through much of the 1990s, is now touted as an answer to India’s energy needs. But why should India compound its mistake on armaments by importing high-priced reactors when it can more profitably invest in the development of its own energy resources?
Third, the share of nuclear power in worldwide electricity supply has been stagnant at 16 per cent for the past 22 years. A 2003 MIT study put it thus: “Today, nuclear power is not an economically competitive choice.” The industry is still dependent on generous state subsidies for survival. To be sure, every energy source relies on some state subsidy. But nuclear power involves the most significant external costs, which are usually passed on to the taxpayers, including on accident liability cover, anti-terrorist safeguards, radioactive waste storage, retirement of old reactors, research and development, and international safeguards. To know the true cost of nuclear-generated electricity, the eclectic state subsidies need to be factored in.
Such is the reality that even External Affairs Minister Pranab Mukherjee was compelled to admit in the Rajya Sabha last December: “Yes, it is proved, everybody admits that nuclear energy… is definitely costly.” This is borne out by India’s indigenous power reactors: escalating construction costs have resulted in all the newer nuclear plants pricing their electricity at between 270 and 285 paise a kilowatt hour (kWh). Compare those tariffs with Reliance Energy’s coal-fired Sason plant project, which has contracted to sell power at 119 paise a kWh, or even with the poorly-run Dadri plant, which supplies electricity to Delhi at 225 paise a kWh, although coal has to be hauled for the plant over long distances. When India produces electricity from reactors it wishes to import, the already wide price differential will increase.
Mr. Mukherjee, however, tried to put an interesting gloss, claiming that nuclear power “technology is moving ahead… With the advancement of the technology… nuclear energy, if it appears to be too costly today, perhaps, it will not appear that costly tomorrow.”
In a rapidly changing world, technological advances are inevitable. But international studies have shown that nuclear power, although a 50-year-old mature technology, has demonstrated the slowest “rate of learning” among all energy sources, including newer technologies such as wind power and combined-cycle gas turbines. It remains highly capital-intensive with comparatively long lead times for construction and commissioning, which prolong the start of returns on capital and put off private investors.
Global warming concerns
Fourth, the nuclear power industry, after being in decline for a quarter century, lacks the capacity to undertake a massive construction programme that could make a noticeable difference to global warming. Even at the current slack rate of reactor construction in the world, bottlenecks are a problem for key components. The industry relies on a few international manufacturers. At least nine power reactor components, including giant pressure vessels and steam generators, are made in only one facility owned by Japan Steel Works. A recent U.S.-based Keystone Centre report pointed to a six-year lead time for some parts.
To control one-seventh of the global greenhouse gas problem, according to calculations by Princeton University Professors Robert Socolow and Stephen Pacala, the world will need to triple its installed nuclear power capacity by building more than 1,300 reactors. And the U.S. share of that project (including replacing plants reaching the end of their lifespan) will entail building five power reactors a year for 50 years. Yet, notwithstanding all the tax breaks, loan guarantees, liability cover and other subsidies on offer, no reactor construction has begun in the U.S.
Fifth, despite the industry’s efforts to latch on to the rising international concerns over climate change and present nuclear power as “clean,” the reality is greyer. While electricity generation itself is “clean,” the nuclear fuel cycle is carbon-intensive, with greenhouse gases emitted in mining and enriching uranium with fossil fuels.
Reactor construction also carries large carbon footprints. In addition, radioactive wastes from reactor operation pose technological challenges and environmental costs. Governments, environmentalists and industry still cannot agree on how best to dispose of radioactive waste. Reprocessing of spent fuel can help minimise, but not eliminate, such toxic waste.
While nuclear power proponents trumpet the emission-free front end, opponents cite the exceptionally problematic back end. A more balanced approach is called for, with the short-term benefit of generating more nuclear power weighed against the long-term environmental costs for future generations.
Sixth, a sobering fact is also the unflattering reactor construction record of France and Russia, both eager to bag Indian contracts. France is offering the same new model that the French firm Areva is building in Finland — the Olkiluoto-3 plant, the first Western European reactor construction since 1991. That much-hyped project is running at least two years behind schedule and $2.1 billion over its original $4-billion budget. What was trumpeted as a sign of a possible nuclear comeback in Europe is set to become the most expensive nuclear plant built in history. Such is the horror construction story that Areva and its partner, Siemens, have had to re-forge some key equipment and replace substandard concrete.
While India’s own indigenous programme has managed to reduce construction time, with the Tarapur 3 and 4 reactors coming up ahead of schedule, the two Russian VVER-1000 (V-392) reactors, being constructed since 2001 at Koodankulam under a Moscow-financed contract, are running far behind schedule. The first unit is now expected to be commissioned only at the beginning of 2009. The bottlenecks over Koodankulam — a $3.4-billion project — are partly due to the Russian industry’s struggle to recoup itself fully from the post-1991 problems.
Another reason is that although Russia is building an advanced VVER-1000 model at Koodankulam, with Western instrument and control systems, its own industry has moved to a third generation standardised VVER-1200 reactor of 1170 MWe for the home market.
Against this background, India needs to tone down its zeal for reactor imports. In the long run, the path to energy and climate security lies through carbon-free renewable energy, which by harnessing nature frees a nation from reliance on external sources of fuel supply. While seeking to prise open the international civil nuclear trade, India ought not to succumb to contrived deadlines. The deal with America can take effect only if it wins bipartisan support in the U.S. Congress — a fact that belies the attempt-to-hustle-India claim that it can be sealed only by the Bush administration.
(The writer, a Professor of Strategic Studies at the New Delhi-based Centre for Policy Research, is the author, most recently, of Asian Juggernaut: The Rise of China, India and Japan.)
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