Need for nuclear
by ArabianBusiness.com staff writer on Thursday, 18 June 2009
The nuclear industry in the MENA region will be worth billions to the international companies capable of building and maintaining reactors. One way or another they are already queuing up to take part.
President Barack Obama approved a deal worth around US $41 billion for the US to supply fuel and materials to the UAE, to help it develop its nuclear power ambitions. The US Congress was given 90 days to amend or reject the deal. While some xenophobic members may hesitate to sign it, it will be hard for them to ignore the value of the trade and job-creation potential.
A few days after this announcement the president of another nuclear power, France’s Nicolas Sarkozy, showed up in Abu Dhabi to open the UAE’s first foreign military base. Closer cooperation was the refrain, but the potential for lucrative nuclear energy deals provided the backdrop to the events.
Increasingly, a nuclear powered Arab state looks like a matter of when, not if. The contracts that will emerge from such a development will be worth billions, run for decades and employ thousands. And although there is a long way to go, the need and the will to make it happen is clear.
“There is definitely a very rapid growth in the rate of electricity consumption,” said Adnan Shihab-Eldin, former secretary general of OPEC, speaking at the recent GCC Nuclear Summit. “It’s one of highest in world and has been growing at 7-10% for a number of years.
“Currently, the GCC countries rely on oil and gas as the fuel of choice. The problem is that although these countries have largest oil and gas reserves they are looking for free gas (not associated with oil) to make it available. The question is if you have free gas, is it in your best interests to export this gas, or use it domestically?”
There is also the question of emissions. Although there is no obligation to reduce the amount of CO2 emissions, as some of the highest producers in the world per capita, it’s something GCC nations cannot afford to ignore. Most important of all though is the economic factor. Estimates suggest that if oil is steady above US $50 a barrel then nuclear power is a good option and the power is needed to continue the economic development and diversification of the region as a whole.
“Energy is at the core of the biggest dilemma we face: how we meet demand for development on the one hand and deal with the constraints of the environment on the other,” said Bertrand Barre, chairman of the International Nuclear Energy Academy.
“But the impending renaissance is in the planning, not yet in the building. There are issues to be solved, including the maintenance of economic competitiveness, public acceptance through no accidents and proper waste disposal. But there will be a renaissance, because there is a need for it.”
Most commentators are quick to point out that the cost of nuclear and how it competes with existing and potential future options has to be kept in mind. A reactor built away from the coast would probably need to be air cooled and according to Shihab-Eldin, this can add as much as 30% to the price tag. However, nuclear’s ability to provide a nation’s base load will keep it ahead of current renewable options, at least until storage issues are resolved.
“The economics and the comparison with fossil fuels make nuclear a very viable option,” said Shihab-Eldin.
“If oil holds above US $60, it is more economic to export the saved oil and gas. That will be more than enough to provide funds for the nuclear power plants [from planning to fuel disposal].”
Long lead times in project development, the lifespan of plants and the millennial longevity of waste fuel, means commitment to the process of going nuclear has to be total. While there are definite signs of a nuclear renaissance, there is an uncertainty about its magnitude and how it will develop.
“There are risks. They centre around the issues related to safety, maintaining the excellent safety standards of the industry and addressing the risks of proliferation,” said Shihab-Eldin.
“It does appear that the nuclear option is a must for GCC countries. If they explore it, they must have a long term commitment. Minimum construction time for a plant is 7-10 years and that’s with a nuclear infrastructure already in place.”
This includes development of highly qualified human resources, plus systems of inspection and oversight. The International Atomic Energy Agency has studied the process of going nuclear and outlined 19 issues that must be addressed, while breaking them down into three phases. The organisation’s estimated timeframe for these phases is 10-15 years.
“There are no shortcuts,” said Shihab-Eldin. “You can do it fast track, but not short cut. Even if they use BOO (build, own, operate) models a country must still have the ultimate responsibility for oversight, regulation and licensing. The first thing is to develop comprehensive nuclear legislation, as the UAE has achieved with the assistance of the IAEA.”
The sensitive issue is the source of fuel. If there is a serious development of reactors in the region a long-term source of fuel will be required. There are several multi-lateral agreements being proposed – one is being considered by the board of the IAEA in June – to provide commercial supply through nuclear fuel banks, thus removing the need for countries to develop the technology for the complete fuel cycle.
“Our position in the Gulf is to support the director general of the IAEA in this approach,” said Shihab-Eldin. “These banks should not have any additional requirements, but should be apolitical. A country that abides by non-proliferation treaties should be able to avail itself of the resources.”
Shihab-Eldin also raised the point that there is no precedent for the regional development of nuclear power and he felt that although the idea was sound, there is an opportunity for it to be led by just one or two nations.
“When you put six countries with no previous experience together to formulate a regional programme, the speed at which the programme advances will be that of the slowest member of the group,” he said. “The better approach is that of the UAE, working on the regional approach with the other countries, but leading it through a national programme.”