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Policy uncertainty is ‘preventing industry from making investment decisions’ Policy uncertainty in a number of countries is preventing the nuclear industry from making investment decisions and “forthright recognition” by governments of the value of nuclear energy would encourage policymakers to explicitly include nuclear in their long-term energy plans and commitments under the Paris Agreement, the International Energy Agency has said.

The Paris-based agency said in a report on meeting climate goals that nuclear policy uncertainty is partly the result of inconsistencies between stated policy goals – such as climate change mitigation – and policy actions.

While some countries maintain they can meet decarbonisation objectives while phasing out nuclear (Belgium, Germany, Spain, Switzerland) or reducing its share (France), others continue to recognise the need to increase nuclear reliance: China, Russia, India, Argentina, Brazil, Bulgaria, the Czech Republic, Egypt, Finland, Hungary, Poland, Saudi Arabia, the United Arab Emirates, the UK and Uzbekistan.

In late 2018, the EU long-term energy strategy clearly stated that nuclear power – together with renewables – will form the backbone of the EU power system in order to reach carbon neutrality by 2050, the IEA said. At the same time, ongoing EU taxonomy discussions regarding the eligibility of nuclear power generation for sustainability funding highlight the difficulties in recognising the contribution that nuclear energy makes to climate change mitigation.

The IEA said electricity market uncertainty makes it difficult for investors to predict the amount of revenue a nuclear power plant could generate over several decades.

“Regulators could reduce this uncertainty by improving electricity market designs to assign an appropriate value to the clean, dispatchable energy nuclear power plants provide,” the report said. “It is particularly important to develop long-term contracts schemes to reduce the exposure of long-lived nuclear assets to short-term market risks.”

The IEA said its sustainable development scenario (SDS) offers a pathway for the global energy system to reach three strategic goals: the Paris Agreement’s well-below 2°C climate goal, universal energy access and substantially reducing air pollution.

But the IEA said that based on existing and announced policies “we are far from on track”.

It said that in 2019, 5.5 GW of additional nuclear capacity was connected to the grid and 9.4 GW was permanently shut down, bringing global capacity to 443 GW. New projects of about 5.2 GW were launched and refurbishments are under way in many countries to ensure the long-term operations of the existing fleet.

Nevertheless, while the existing nuclear fleet remains the world’s second most important low-carbon source of electricity, new nuclear construction is not on track with the SDS. According to current trends, nuclear capacity in 2040 will amount to 455 GW – well below the SDS level of 601 GW. Additional lifetime extensions and a doubling of the annual rate of capacity additions are therefore required.

The report said that by building on lessons learnt from recent Generation III first-of-a-kind projects like Flamanvillle-3 in France and Olkiluoto-3 in Finland, policymakers could support a rapid reduction in construction costs by making timely decisions on new-build projects.

“Taking these decisions as soon as possible would put nuclear back on track with the SDS and would also provide considerable economic stimulus in the short term through job creation.”

The report noted that no regional or global licensing framework exists for nuclear power technologies, which means vendors have to repeat the certification process and adapt to national codes and standards in every country, lengthening the duration of projects and raising costs and uncertainty.

It called for more efforts to harmonise regulatory requirements and promote design standardisation.

Date: Friday, 12 June 2020
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