Internationalization of the Nuclear Fuel Cycle: Goals, Strategies, and Challenges (2009)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

APPENDIX B WORKSHOP ON INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE Convened by the U.S. National Academies (NAS) and the Russian Academy of Sciences (RAS) With the support of the International Atomic Energy Agency Vienna, Austria Summary by Rita Guenther, Marc Humphrey, and Micah Lowenthal WORKSHOP – DAY 11 Monday, April 23, 2007 Welcome from Tariq Rauf and Alan McDonald, IAEA, and Co-chairs Dr. John Ahearne and Academician Boris Myasoedov Alan McDonald of the International Atomic Energy Agency (IAEA) welcomed participants and noted that workshop deliberations would have some influence on the June 2007 IAEA Board of Governor’s meeting. John Ahearne, chair of the National Academies’ committee, observed that the increased interest in nuclear energy across the world was one motivation for this workshop because the increased use of nuclear energy may lead to the spread of enrichment and reprocessing technology, and therefore increased risk of nuclear proliferation. Ahearne went on to note that there have been several conferences on possible options for guaranteed nuclear fuel supply, and the joint NAS/RAS committees have been examining these various options. The objective of the workshop is to hear from voices outside of the group that has dominated discussions, in particular from voices of experts from key countries, although each participant is acting in a personal capacity and not as a representative of his country. The key questions of the workshop were: How can we increase access to nuclear power? How can we do so while reducing the proliferation risk? Boris Myasoedov, acting chair of the Russian Academy of Sciences’ committee, noted that energy is essential to human development, but fossil resources are limited, even in Russia. As a result, interest in nuclear power is growing quickly. Of course, alternatives such as hydrogen or renewable resources are under investigation. Since the Obninsk reactor was first 1 For a list of participants, please see the end of this Appendix. 99 

100 INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE connected to an electrical grid in 1954, nuclear energy has spread to many countries. Facing this increased use, several problems remain including nonproliferation of fissile materials and new, risky technologies. Amidst this fast development, then Russian President Vladmir V. Putin launched an initiative to provide assured access to nuclear services to countries that voluntarily reject the development of some technologies. It offers nuclear resources based on countries having met this requirement, and regardless of political circumstances. Angarsk has been designated as the first international center and in March 2007, the first seminar with IAEA representatives took place in Angarsk at which participants discussed legal aspects of such a center. Recently, Kazakhstan (in a joint presidential meeting) agreed to join this international enrichment center, which will accumulate enriched uranium in gas or solid form and will be the property of the international center. As a commercial enterprise, the center will be open to all countries through intergovernmental agreements. The management and legal aspects of the center are still being discussed. The second stage of the creation of the center will include not only enrichment but the organization of spent fuel return for reprocessing and reuse of the fissile material in nuclear power plants. The U.S. Global Nuclear Energy Partnership (GNEP) proposal also includes reprocessing. Objectives of the workshop are to discuss these various proposals for creating centers, and to hear from those who may wish to use these services. Tariq Rauf, director of the Office of External Affairs at the IAEA, expressed Director General Mohamed ElBaradei’s support for this activity. He noted that the Academies’ fuel cycle study is on a longer time frame than the IAEA study of these questions, and that the Director General will provide the IAEA Board of Governors with a new paper on new approaches in June 2007. Rauf noted that to be credible, any plan for assurance of supply must be perceived to be fair and impartial. It was clear at the September 2006 Special Event2 that no state was ready to give up any rights under the Treaty on the Non-Proliferation of Nuclear Weapons (NPT). In its June paper, the IAEA group needs to reflect this viewpoint, while finding a fair, impartial solution. There is progress, with the visit to Angarsk and the U.S. pledge to downblend over 17 metric tons of highly enriched uranium (HEU) for use in an assured fuel supply arrangement as well as with former Russian President Vladimir V. Putin’s initiative, the six-party proposal, and those from the World Nuclear Association,3 the U.K., and Germany. Rauf expressed his hope that IAEA may be ready for serious movement by the end of 2007. “Bulgaria and the Internationalization of the Nuclear Fuel Cycle,” Jordan Stamenov (Bulgaria) Bulgaria is a small country with a population of 7.5 million and very limited natural resource reserves. Bulgaria’s experience with nuclear technology began in 1955. In 1956, the Joint Institute for Nuclear Research in Dubna, an institution for education and training of nuclear scientists, was created. The first Bulgarian research reactor began operation in 1961. The IRT-2000, a heterogeneous water-water pool-type reactor (thermal capacity 2 MW), is housed at the Nuclear Scientific and Experimental Center of the Institute for Nuclear Research and Nuclear Energy of the Bulgarian Academy of Sciences (INRNE BAS). From 1990-2002, Bulgaria’s first nuclear 2 For more information on the IAEA Special Event, see http://www.iaea.org/NewsCenter/News/2006/assurancesofsupply.html, accessed on December 13, 2008. 3 The 2006 World Nuclear Association (WNA) Market Report shows the same growth projection constituted by one BN-1800 coming on line in 2023 and light water reactors for the rest of the growth through 2030 (WNA, 2006). 

WORKSHOP ON INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 101 power plant, the Kozloduy nuclear power plant (NPP), was constructed and commissioned. It comprised 6 units for a total capacity of 3,760 MW, all of first and second generation Soviet design. Fifteen years ago the Kozloduy units 1 to 4 were considered to be “not economically upgradeable” and were closed to meet European Union ascension demands. The latest IAEA inspection, however, confirmed that this “non-upgradeable” definition is no longer true and perhaps it never was. The radiation dose at this plant lies within international standards. They have worked safely for more than 100 reactor-years. Spent fuel from Kozloduy is stored on site then sent to Russia for reprocessing. Bulgaria has no final spent nuclear fuel storage facilities, and uranium mining was ceased 15 years ago. The main principles of Bulgaria’s energy policy include a transparent and unbiased economic environment and investments in energy efficiency. Regionally, Bulgaria is considered to have a well established energy infrastructure, and very good transmission capacities. It has an opportunity to become a leader in the regional energy market. In 2001, it exported 7 GWh of electricity and 14.5 billion cubic meters of natural gas. By 2010, electricity consumption will meet electricity production, minimizing exports. Bulgaria is one of the most energy intensive countries and one of the most energy import-dependent countries in Europe. Bulgaria has a goal-oriented energy policy, calling for a reliable, efficient, strategic, and socially accepted energy supply. In 2001, nuclear power accounted for 41% of net electricity generation in Bulgaria. The Council of Ministers made a resolution in July 2001 for the reconstruction of the research reactor IRT-2000 into a low-power (200 kW) reactor using low- enriched uranium 235 (LEU) fuel. On June 24, 2004, the government made the decision to begin construction of an NPP in Belene. Numerous reactor types have been considered and one of the VVER1000 designs was selected. Areva is responsible for construction. Education is one objective for human resource development for the Belene project. Russia used to provide much of the education for nuclear experts in Bulgaria, but now Bulgaria must do much more itself. Another objective is the development of new applications, such as boron neutron capture therapy. The U.S. and Russian governments signed a contract in May 2004, for cooperation in transferring Russian-produced research reactor nuclear fuel to the Russian Federation, in the frame of two programs: RERTR – Reduced Enrichment of Research and Test Reactors, and RRRFR – Russian Research Reactor Fuel Return. The IAEA – INRNE BAS initiative has held many meetings with a goal of east-west (VVER-Light Water Reactor) cooperation. In 2007, Bulgaria hosted the 7th International Conference on VVER fuel performance, modeling, and experimental support in cooperation with the IAEA. Discussion Gottemoeller: Based on past collaboration between the BAS and Argonne National Lab, what is the view of multilateral cooperation? Stamenov: We have had scientific connections for more than 35 years. We have also had good cooperation on spent fuel transport. 

102 INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE Gottemoeller: What is your view on the potential feasibility of international arrangements in managing international fuel centers, based on your experience with trilateral agreements (U.S., Russia, Bulgaria)? Stamenov: Cooperation with Argonne National Laboratory was a natural extension of existing scientific collaborations. Lowenthal: Were there any important factors leading to the Bulgaria-Russia agreement on a new reactor and fuel? Stamenov: We have had no problems so far. If there are problems with transport, they are due to transportation schemes. There may be other possibilities, perhaps using ships on the Danube to the Sea. Angarsk has not yet been discussed. “Perspectives and Policy Options of Nuclear Fuel Cycle Services,” Karyono (Indonesia) Indonesia is an archipelago nation with more than 17,000 islands near the equator, with over 120 million people, and with small uranium reserves. With its high population density and rising electricity consumption, there is now a real need for nuclear power. Indonesia’s nuclear program began in the 1970’s. According to “Act Number 10, Year 1997 on Nuclear Energy,” the executing body (BATAN) has the right to “undertake the nuclear fuel cycle services that could generate the nuclear and common industries.” The main objectives of the nuclear energy program are as follows: 1. short term – statement of nuclear options for long-term planning 2. medium and long term – science and technology foundation, operation of first NPP on the Java-Bali grid, and data collection on uranium reserves There are currently 3 candidate sites for the first NPP at the Muria facility on Java Island. The road map for the first NPP includes a public awareness campaign, site permits, regulation and licensing, and ownership decisions, to be completed by 2007. The next step will be to issue tender. Construction is planned for 2010-2015, and commissioning and operation are set for 2015-2016. Indonesia (BATAN) has a fuel fabrication facility for the research reactor (the Fuel Element Production Installation or FEPI). It is designed to produce fuel elements using imported enriched uranium for research reactors and has operated without significant defect or failure for 20 years. Since May 1996, BATAN transferred all assets of the plant to the state owned company, PT (Batan Teknologi). They plan to develop an experimental fuel fabrication facility. The Experimental Fuel Element Installation (EFEI) will be used for manufacturing and quality control of fuel bundles. Indonesia is currently analyzing the following initiatives to access nuclear fuel cycle services: • MNA: Multilateral Approach to the Nuclear Fuel Cycle Initiative of the Director General of the IAEA in 2003, and reported by the Expert Group in February 2005. 

WORKSHOP ON INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 103 • Developing Global Nuclear Infrastructure: Initiative of the President of the Russian Federation, January 25, 2006. • GNEP (Global Nuclear Energy Partnership): Initiative of the U.S. President, February 2006. • RANF: (Concept for a Multilateral Mechanism for Reliable Access to Nuclear Fuel), initiative of France, Germany, the Netherlands, Russia, the United Kingdom, and the United States, May, 2006. • NTI: Initiative of a non-governmental organization, Nuclear Threat Initiative, of Washington D.C., September 2006. There are six principle criteria for nuclear fuel cycle services from an Indonesian perspective: 1. Correspondence with the Preamble of the Indonesian Constitution: Indonesia will actively promote peace 2. Harmony with the IAEA system: multilateral, integrated safeguard system consisting of a comprehensive safeguards agreement and the Additional Protocol 3. No contradictions with the NPT 4. Non-discriminatory 5. Indonesia supports the right of the Parties to the NPT to undertake research and development (R&D) for peaceful purposes and to fulfill IAEA integrated safeguards agreements and the NPT 6. International assurance for developing countries (party to the NPT) for long-term, timely access to nuclear fuel cycle services (uranium enrichment and reprocessing), for their NPPs There are several constraints on nuclear fuel cycle services. Fuel cycle services should be easily provided by the market and domestic capabilities for certain countries. If there are no long-term assurances, there will be a need for domestic fuel cycle facilities. The establishment of domestic services would only be justified (technically, economically) if there is a large NPP capacity. The optimal option beyond domestic services may include bilateral agreements between supplier and user countries (perhaps under a memorandum of understanding) or multilateral nuclear fuel cycle facilities in the region. Indonesia’s NPP milestone is to build and operate 4 NPPs by 2025. Indonesia is considering the following policy options for nuclear fuel cycle services: 1. Natural uranium – purchase from diversified producer countries or produce domestically 2. Uranium processing and conversion – purchase from diversified producer countries or produce domestically 3. Uranium enrichment – purchase from diversified producer countries 4. Fuel fabrication – first loading from diversified producer countries, long-term leasing, or domestic production if economically viable 5. Spent fuel storage – store at plant in the short term and at a centralized facility in the medium term 6. Radioactive waste – processed and managed at the plant or a centralized facility 

104 INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 7. Indonesia will adopt a once-through fuel cycle policy In conclusion, nuclear fuel cycle services could generate common industries. The possibility of mutual multilateral cooperation for front and back end facilities in the east Asia region (involving the IAEA and international community) would be an attractive initiative. Discussion Ivanov: Russia is developing a floating NPP. Would this be useful for Indonesia? Russia would supply the plant and 40 years of support (including take back of spent fuel). Have you considered this? Karyono: Indonesia’s regulatory body (BAPETEN) requires all NPPs to be on land. Also, we would only consider proven technology for electricity (at least 3 years demonstrated proof). What would the level of uranium fuel enrichment be for floating reactors? Ivanov: 17% enrichment at the lowest. Karyono: A small NPP is interesting for electricity generation in the remote islands of Indonesia. However, before using a floating NPP, Indonesia should consider if it is also in harmony with the Treaty on the South East Asia Nuclear Weapons Free Zone, ratified in 1997. Rauf: You have said you will rely on the world market, though fuel fabrication may be done domestically. If supply is denied for political reasons, what strategy would you use to deal with it? Karyono: Up to this point we have had only a small nuclear enterprise with LEU for a research reactor. We have contracted out for enrichment services, and so far we have not had any problems. Forrstrom: What happens after interim storage of spent fuel? Karyono: We have a once through fuel cycle policy with interim storage first. We have many uninhabited islands. Prepared Remarks of Mohamed Shaker (Egypt) The IAEA Expert Group studied the question of assurances of supply, which twenty years ago, in 1987, was being discussed in the IAEA Committee on Assurances of Supply (CAS), which went into abeyance that year. CAS was unable to reach consensus on both the “principles for the international nuclear energy cooperation and nuclear non-proliferation” and on “emergency and back-up mechanisms.” The 1987 United Nation’s Conference for the Promotion of International Cooperation in the Peaceful Uses of Nuclear Energy also failed to reach agreement on such a set of principles. As president of the conference, I tried hard to achieve consensus on such principles, to no avail. I believe we have a good chance this time, after 20 years, to move forward and tackle this issue in a constructive and creative way. We 

WORKSHOP ON INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 105 have a lot of food for thought in the valuable report of the IAEA Expert Group on multilateral approaches to the nuclear fuel cycle. We also have a number of initiatives and proposals put forward by the Director General of the IAEA and a number of leaders, which I hope we have a chance to examine more thoroughly during this workshop. I will begin with a few words on the motivations and prospects for reviving the nuclear power program in Egypt. Twenty years ago, Egypt was about to make its choice of its first nuclear power plant, but failed to do so in the aftermath of the Chernobyl accident in the Ukraine in 1986. After Egypt’s ratification of the NPT in 1981, it negotiated a number of cooperative agreements with leading supplier states to begin the implementation of an ambitious nuclear power program. Most of these cooperative agreements are of long duration and are still valid. After a long lull, which went beyond 20 years, the nuclear power project is being reconsidered in the context of the energy mix in Egypt for reasons and factors similar to those existing in other countries. Also, one cannot miss today’s renaissance in nuclear energy. There are 29 reactors in 12 developing and developed States being constructed in addition to four units being planned in China alone. This is a great leap forward, which I believe will attract others to do likewise, if their energy needs require such an endeavor. Egypt decided in 1980 to invest in nuclear power before its great discoveries of gas post- Chernobyl, which brought great relief to the energy sector and more particularly to its electricity needs. It was responsible for the uplift of Egypt’s industries and other domestic needs. This was also one reason for the country not to hasten to rekindle its interest in nuclear power. Nowadays, the generation of electricity is mainly dependent on the use of natural gas and oil. In the year 2005-2006, Egypt consumed 17.3 million tons of oil and 541 billion cubic feet of natural gas. Only 12% of electricity is generated by hydro power. Wind energy generates only 1% of electric power. Currently, wind power is of the capacity of 230 megawatts. Next year it is expected to reach 430 megawatts. In 2010, it is expected to generate 3% percent of the total electric power. Egypt is about to establish its first solar energy plant of 150 megawatts. If Egypt were to invest in a nuclear power plant of a capacity of 1000 megawatts, this would save us 1.78 million tons of oil or 69.9 billion cubic feet of natural gas per year. In a period of 60 years, which is the average life span of a nuclear power plant, the savings in oil would reach 106 million tons of oil, or 4.2 trillion cubic feet of natural gas. This would also spare Egypt the equivalent of 210 million tons of carbon dioxide. It is noteworthy that the reserves in oil and gas are expected to be exhausted in 15 and 34 years respectively. New discoveries in both sources of energy could extend the duration for a few extra years. The average energy demand for electricity in the last ten years was 7% annually. Last year’s demand increased by 10.2%. During 2006, the total demand of electric power was 18,160 megawatts, out of the total capacity of 21,300 megawatts. These figures should indicate the type of studies and comparative analysis that are still being undertaken to determine whether it is justifiable to add nuclear power to the energy mix. Both the Higher Council on Energy and the ruling National Democratic Party are in the midst of assessing and examining the nuclear power potential in Egypt. No final decisions have been made but the Arab Summit in Riyadh last March recommended that members of the Arab League should coordinate and exchange views on Arab cooperation in the peaceful uses of nuclear energy. The prospects for reviving the nuclear power program in Egypt are not yet very clear, but are still being pondered. If a decision is made to go ahead with nuclear power, it will be to face their future electric needs in light of the short life span of Egypt’s oil and gas resources, as well 

106 INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE as the limitations on hydro power; only in cooperation with African neighbors on the River Nile, can Egypt double its hydro power sources. With regard to the second question concerning what type of arrangements for nuclear fuel provision would be particularly attractive or unattractive in light of Egypt’s national interests and concern for the nonproliferation regime, the question reminds one of Egypt’s dormant agreement of cooperation with the United States signed in 1982, after ratification of the NPT. According to the agreement, the United States is to provide Egypt with fuel along with a reactor, provided Egypt would return the spent fuel to the United States and compensate them for it. Egypt then had no problem with such an arrangement, which obviously reflected proliferation concerns. Today, however, the guarantee of a fuel supply as a back up measure is a basic requirement, especially in case of interruptions for political reasons. Also, in some cases it will be better to separate between the supply and building of a nuclear power plant, and the fuel needed for it. The latter could be guaranteed through reliable arrangements with the IAEA or regional organizations that would guarantee the fuel supply to its participants in the fuel cycle. This leads to the third question concerning the different proposals and initiatives, whether by the Director General of IAEA or by a number of leaders. I argue that we ought to decide whether the material to be assured or the material to be guaranteed is the nuclear fuel itself or the enriched uranium, or both. Most of the initiatives and proposals are concerned with the supply mechanism. None has dwelt thoroughly on the merits of a multinational or regional nuclear fuel cycle as suggested by the Director General of the IAEA in 2003. I fear that one or two of the initiatives or proposals may accentuate the divide between the haves and the have-nots. It is very important to guarantee that any assurance mechanism would not result in a real or perceived division between those two categories of States. • In any future mechanism there should be a role for the recipients of technology and materials together with the suppliers. • Any role to be played by the nuclear-weapon States as guarantors of supply would be more effective and credible if these States would also take steps towards nuclear disarmament. • Article IV of the NPT, and especially the inalienable right enshrined in it for peaceful uses should be re-emphasized clearly and categorically. There are interpretations and even attempts aiming at diluting the provisions of Article IV. They run counter to the spirit of finding ways and means to guarantee the supply of nuclear material and equipment to all those who abide by the nuclear nonproliferation regime. What is the future of the Nuclear Suppliers Groups (NSG) in this context or in the new arrangement that would ensue as a result of these proposals and initiatives? On many occasions, I have emphasized the importance of a dialogue between the NSG and the potential recipient States before new guidelines have been set forth by the NSG. I believe we need a fair mechanism, hopefully a transitional one towards the new arrangement. In conclusion, I offer these remarks in all frankness and sincerity. I believe that we are embarking on a very important phase that ought not be wasted and disrupted like other ventures in the past. 

WORKSHOP ON INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 107 Discussion Walker: At the time it was signed, the 1982 agreement between Egypt and the United States satisfied Egypt’s interests, but today a guaranteed supply is a basic requirement. What has changed? Shaker: We still have a U.S. agreement in force (it is 30 years in duration); and if we were to revive the program and if the U.S. were the first partner, Egypt would not request a change in the agreement unless the United States and Egypt agree that they should reexamine it. In any of our agreements (e.g. with Australia, Canada, France, Germany), it is important to have solid guarantees of supply of fuel. This is a fast-changing world and relationships change quickly. We should have a backup, automatic mechanism in case fuel or equipment supply is disrupted. Rauf: You mentioned an amendment to Article IV. Could you explain what you meant by this? Shaker: Without Article IV, there would be no NPT. Article IV is more important than Article VI. Article IV gives the right to pursue uranium enrichment. For example, Iran has this right, but could defer the right. If Article IV were to be amended it would be for the sole purpose of strengthening the inalienable right rather than weakening it by devious interpretations. Bunn: Could you outline the things that have changed and lead to your optimism? If a regional center were established in the Middle East, would participation by Iran be acceptable? Shaker: I am not “optimistic,” but 20 years ago the focus was only on the principles of cooperation. Today we have bold proposals from the Director General and other leaders. These did not exist in the 1980’s. There has also been some other encouraging work. The question now is whether or not the political will is there (and not just technical know-how). With regard to Iran, for years Egypt has been a proponent of a Mideast weapons-of-mass-destruction-free zone. This would extend to all Arab countries, Israel, and Iran. At the Arab summit, we looked for a mechanism to make this 20-year dream a reality. There is now determination to find such a mechanism, which could be revived by reengagement for the settlement of the Palestinian-Israeli conflict. Iran could be brought in. “The Energy Sector of Armenia,” Areg Galstyan (Armenia) Loss of energy security is a subject of great risk for Armenia, which is situated in a difficult geopoilitical zone but is keeping its political and economic stability. The impact of energy security loss on the social-economic life of Armenia can be assessed by the bitter experience gained during the energy crisis of 1993-1995. Armenia is wholly dependent on outside energy sources. The only domestically produced primary energy is electricity from hydroelectric plants and, conditionally the single nuclear plant (nearly 45%). The closure of this NPP in 1989, caused an energy crisis, leading to an increase in demand for hydropower and subsequent ecological harm. Therefore, the second unit (of two) at the NPP was restarted in 1995, allowing Armenia to overcome the crisis. In 2005, a new strategy for the period to 2025 was announced, calling for nuclear and renewable energy. The strategy aims to achieve sustainable economic development in Armenia; 

108 INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE enhance the energy independence and security of the country including diversification of imported and domestic energy resources; and ensure efficient use of domestic energy resources and the development of renewable energy sources and energy savings. The “Least Cost Generation Plan for 2006” (LCGP) was developed in 2006, with the assistance of the U.S. Agency for International Development (USAID) based on the principles of the “Economic Development of the Republic of Armenia within the Framework of the Energy Sector Development Strategy,” which was approved by the Armenian Government. After considering a number of development scenarios, incorporating gas and oil price changes and environmental impact, they concluded that nuclear energy is the only option for base-load capacity in Armenia. Guided by the implemented analysis, as well as by strategic and economic research, the following recommendations are made in the LCGP: 1. decommission the Armenian Nuclear Power Plant (ANPP) in 2016 or earlier, as soon as the new nuclear energy unit is ready 2. complete funding of ANPP safety upgrade projects and the required investments to ensure safe operation of the nuclear plant before its decommissioning 3. complete a comprehensive safety and environmental assessment of the ANPP site to determine compliance of the site with decommissioning and construction requirements for the new units 4. develop a comprehensive decommissioning plan that shall be implemented five years before the commencement of ANPP decommissioning and shall be based on the provisions of the ANPP Decommissioning Strategy approved by the Armenian Government 5. determine funding sources for ANPP decommissioning, form a decommissioning fund, select the fund’s manager who will manage it until control over the low risk investments is switched to international organizations 6. develop and implement a plan targeted to resolve problems regarding Armenia’s ability to finance and construct a new nuclear plant by including size and allocation issues 7. develop local renewable resources to enhance energy independence and ensure diversity of energy sources 8. develop and implement projects that encourage energy efficiency, making this sector attractive for consumers and contributing to the acquisition of energy efficient equipment and devices 9. establish and implement a project to minimize the impact of tariffs on consumers with regard to the commencement of ANPP decommissioning and new nuclear capacity Any decision about the future status of the Medzamor NPP should consider the following: the government of Armenia confirms its consistent position on NPP decommissioning and at the time of decommissioning, at least 2.5 billion kWh electrical energy generation should be guaranteed by new capacities for covering electricity demand in base-load, which will grow to 5 billion kWh in 10-15 years. Energy generation should provide for social- economic development and long-term energy demand growth, and any abrupt jump in tariffs should be avoided. 

WORKSHOP ON INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 109 The 2025 strategy calls for a new NPP at the Medzamor site in the near-term. The only way to ensure energy security is to build new NPPs in the republic. Armenia intends to continue investment with its partners. Currently, the NPP produces 2.5 billion kWh of electricity. By 2025, up to 60% of total domestic consumption will be produced by nuclear power. The remaining demand will be covered by renewable (mainly hydro) resources (30% of total demand) and the rest will be covered by thermal resources. To implement new NPP construction, the law can now cancel the state monopoly on ownership of new units (leading to more flexibility and more attractive investment). Specific recommendations include building new units on the same site, continuing investments in maintaining the safety of existing units, and establishing a decommissioning foundation. Funds will come from tariffs on energy from these units. Fresh fuel is supplied by Russia. The development of a wet storage facility is in progress (with help from Areva). The third stage is being developed to store spent fuel at the NPP site. We do not intend to develop enrichment capabilities, so Armenia is very interested in nuclear fuel cycle services, and it welcomes the formation of international fuel centers under the aegis of the IAEA. As a result of the studies conducted by the Ministry of Energy, the following action plan for the nuclear energy sector was accepted: implementation of all necessary steps toward continuous enhancement of safety levels at ANPP until its decommissioning; preparation and implementation of ANPP decommissioning procedures; resolution of the issue of construction of a new nuclear unit to replace the operating unit at the ANPP. Through the initiative of the Armenian Government, amendments were made in the Law of Energy and adopted by the National Assembly of Armenia, abolishing the state monopoly. This will allow investments in the construction of new nuclear units from other financial sources too. In our opinion, the role of new nuclear units for base-load electricity as well as the electricity supply to regional countries also provides an opportunity for special financing. Armenia received an official proposal from the Russian Federation to join the pilot project at the International Uranium Enrichment Center (IUEC) at Angarsk. The establishment of the Center was considered by governments of interested countries on the basis of: intergovernmental agreements with respect to the inalienable rights of countries to the peaceful use of nuclear energy without discrimination; the absolute and reliable adherence to nuclear nonproliferation requirements; and mutual benefits and market relations. Armenia declared its principal commitment with regard to the proposal. However, Armenia’s participation largely depends on its Concept of nuclear energy development as well as on the proposed structure and operational functions of the Center. Discussion Rauf: Has Armenia looked into long-term fuel supply? Galstyan: Fuel for the existing NPP will come from Russia until it is decommissioned (under a long-term agreement). For future units, we are only at the feasibility stage. It is too early to discuss this, though the answer may be similar to long-term commitments based on previous experience. We have great interest in long-term supply commitments. Budnitz: Assuming good relations for the next 10 years, could Armenia be brought into the Russia-Kazakhstan Center in Angarsk? This seems logical but not necessary. 

110 INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE Galstyan: Of course we are aware of the preliminary Russian-Kazakh discussions. Armenia is not yet involved. There is no talk of a definitive agreement, and Armenia has not yet been invited to join. Myasoedov: Indeed, Russia and Kazakhstan are in full agreement. Russian President Vladimir V. Putin will soon sign an agreement in Kazakhstan. A special mechanism is to be developed to bring in other international partners. This requires a government-government agreement. We already have an existing facility for a center, and there is no need for the development of new capacities. We have yet to complete legal formalities, but participating commercial organizations will share risks and benefits. Solonin: In terms of fuel supply, TVEL provides a significant portion of the world demand for nuclear fuel. The market is stable. Global producers treat deals very carefully. We can guarantee Russian supply of nuclear fuel over the entire cycle (including uranium extraction). Budnitz: There is a difference between the current arrangement and a new arrangement, as Russia will take back and keep spent nuclear fuel. This is a positive option for Armenia. Solonin: We are ready to take back VVER400 fuel and reprocess it at RT-1. Uranium produced is to be used for atomic energy. We must think carefully about transportation because of the geographical location of Russia and Armenia. We are ready to start negotiations. Ivanov: I have a comment on changes to Russian law. The legislation now allows legal entities to be owners of fissile material. It can be legally transported without a change in ownership. Participating countries can be assured that fissile material ownership will not be changed. Also, Russia can now accept foreign spent fuel for long-term storage. Interim storage is not as good; long-term storage must be faced eventually. Recent legislation is only for Russia; there is no international law governing transport routes. For example, Bulgaria was ready to transport through Romania and Ukraine, but there were problems. Rail transport will be important, as will air (using special containers). The law was changed by the Russian parliament in light of international fuel centers. We must start this work now. Forrstrom: Dr. Galstyan, you seemed positive about international assurances. Is this true in general, or in the case of political cut-off? Galstyan: In principle, we are positive in general. Will there be political limitations in the future? We cannot say. Today, we have clear plans about the feasibility of nuclear power in the future. We are not worried about political hindrances. Gottemoeller: We have heard about the new Russian laws and the new Armenian laws meant to facilitate private investment in NPPs. Will these involve regional cooperation or just focus on private investment? Galstyan: Last year there were new amendments. Atomic energy will continue to be a state monopoly only for spent nuclear fuel, waste, and fissile material. We are thinking about specific 

WORKSHOP ON INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 111 investments. We are trying to attract investment for new units (owned by a state or a private firm). Rauf: Dr. Ivanov, regarding the Duma amendment and the issue of ownership change: What exactly is allowed? What is new? Will Angarsk provide only enrichment services? Ivanov: Here is what is new: before, fissile materials on Russian soil could only be owned by the state. Therefore, TVEL-held uranium required government permission. For example, natural uranium, before the new law, had to be state-owned. Therefore, intergovernmental agreements were needed to guarantee return. Now, private bodies can own fissile material in Russia, if they are listed as allowed and experienced to do so (by the Russian President). (There are new uranium mining negotiations underway with Japan.) Regarding Angarsk: this will be an enterprise providing enrichment as specified by the customer, no natural uranium will be dealt with (other plans handle this). Myasoedov: Regarding Russian-Armenian state cooperation, sometimes, relations between states are not good (e.g., Russia-Georgia). An international center is not a state-state agreement. It is a commercial entity, with an independent council stressing equal rights for all participating countries (perhaps with an IAEA representative). Agreements will be made with the Angarsk enterprise. However, enrichment technology cannot be transferred. This is an unconditional demand. “Australia’s Current and Future Nuclear Fuel Cycle Activities,” Ian Smith (Australia) Australia has more uranium than any other country and is interested in selling it. The assurance proposers need to involve people who have the bulk of the world’s uranium. There is increasing political interest in the nuclear industry prompted by climate change, international nonproliferation commitments, uranium prices and Australia’s uranium deposits. Australia has much of the world’s “low cost” uranium resources and there is high potential for future discoveries. Australia provided more than 20% of world production in 2005, and can increase uranium exports significantly. Australia acknowledges the potential value-added to uranium mining by conversion, enrichment, etc. The recommendation however is to not pursue these options at this time but to retain the possibility for the future. The government is open to supporting an international fuel bank as a means of limiting the spread of proliferation sensitive technologies by providing fuel supply assurances and allowing the expanded use of nuclear power. There is increasing political interest in the nuclear industry, prompted by climate change, nonproliferation concerns, and the high price of uranium. Recently, a review of “Uranium Mining, Processing, and Nuclear Energy in Australia” was conducted. Though Australia contains the world’s largest uranium reserves (low-cost, high quality uranium), it produces less than Canada. Uranium is currently mined at only 3 mines; another mine is approved and will open in 2008. This is due to politics and “artificial blockages.” Australian uranium resources include: 1. 12,360 tons U3O8 exported in 2005 

112 INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 2. Low cost reserves (94,000 tons at Ranger, 21,000 tons at Beverley, 1.6 million tons at Olympic Dam) 3. Potential resources over 1,400,000 tons The recent government review found that uranium resources are plentiful (including potential for future discoveries); uranium exports can be increased significantly; and impediments to the expansion of uranium mining are recognized and being addressed. It was also acknowledged that conversion and enrichment could add value to uranium resources (though there would be investment challenges and challenges in accessing enrichment technology). The recommendation is to not pursue these options now but to retain the possibility for the future. Australia has a very strong commitment to the NPT and safeguards, with the strictest uranium export controls in the world, requiring a bilateral safeguards agreement before supply. Only 11 countries receive Australian uranium, with conditions set through bilateral treaties. (Negotiations are underway with China.) The government is open to supporting an international fuel bank as a means of limiting the spread of proliferation-sensitive technologies by providing fuel supply assurances and allowing the expanded use of nuclear power. This is a good commercial opportunity. Challenges will include integrating this into the current market, transportation of spent nuclear fuel, retention of the ability to enforce bilateral arrangements, and maintenance of strict export controls. A full analysis of the implications of such a system has yet to be completed. There is an unprecedented level of public awareness of climate change in Australia, and therefore an understanding of the need for greenhouse gas reduction. This has led to the consideration of nuclear power. Questions remain, however, about how to handle nuclear waste, including the cost. A government review scenario suggested a reduction of 8-17% of CO2 emissions by 2050 due to the construction of 25 NPPs. Potential investors in the nuclear power industry would require a stable policy environment and a predictable licensing and regulatory scheme. Australia’s nuclear waste disposal policy does not allow acceptance of waste from other countries or the use of reprocessing. Reprocessing is unlikely to be attractive for Australia until warranted by a domestic industry. An advanced ceramic waste form technology (synroc = synthetic rock) has been developed by the Australian Nuclear Science and Technology Organization for long-term immobilization of high level waste (HLW). Synroc is a waste form built on natural minerals that have demonstrated their survival over geological timeframes and are highly-proliferation resistant. There are tailored ceramic and glass-ceramic waste forms for problematic waste streams; this suite of waste forms has become internationally recognised as a de-facto performance baseline for HLW waste forms. In conclusion, the government review has looked at all aspects of uranium mining and nuclear power in Australia. A cabinet-level response is imminent. Australia is most involved in the front and back ends of the fuel cycle through the supply of uranium and technology respectively. Discussion Solonin: Are there plans to set up spent fuel repositories in Australia? 

WORKSHOP ON INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 113 Smith: No. Bunn: You stated that in terms of adding value to your uranium, the current recommendation is to not pursue this now, but to leave it open for the future. Correct? Smith: We believe Australia has the potential to be a major supplier. Lowenthal: Could you explain the uranium export controls you mentioned? Smith: There are currently rules against reshipment, reprocessing, and about enrichment levels. There is also an independent accounting process. Also, there are fallback provisions if IAEA safeguards break down. Myasoedov: Will Australia send uranium to enrichment centers? Smith: There has been no decision yet. It is not clear that there are such strict disposition requirements with the centers. Gottemoeller: In Moscow, there have been reports of Russian-Australian cooperation on uranium exports. What is the status of these? Are changes in Australian law required to allow for foreign investment? Smith: Australia wants to keep the option open. It supports the NPT and believes a fuel bank could help this. I still have not seen the details. Australia supports every country’s right to develop nuclear power, but none of the proposals has safeguard requirements that meet Australia’s standards. Gottemoeller: Would foreign investments be allowed? Smith: Yes. Foreign investment is allowed and exists. Recently, a Russian delegation visited Australia, but these types of negotiations take a long time. McDonald: It seems that none of the current proposals have safeguards requirements strict enough for Australia. Smith: We welcome this opportunity, and would like to be involved in the discussion. McDonald: Would Australia object to others pursuing assured fuel supply with other uranium? Smith: No, but the countries with uranium reserves were not included in the initial conversations, which was a major omission; we want to be part of the conversation now. Pedro Raul Villagra-Delgado (Argentina) The importance of nuclear power’s potential for sustainable energy development, as well as for areas such as medicine, improving conservation of foods, etc., is being revisited and there 

114 INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE is a clear tendency to its increased use in the future. All countries have the right to benefit from its potential uses for exclusively peaceful purposes, in line with their own national priorities and objectives, and in conformity with international law, the general rules on nonproliferation, and the need to eliminate threats to international peace and security. The NPT created two categories of states. That logic should not be replicated in other agreements. No new system based on discrimination against those who comply with the international rules on nonproliferation has a chance to be considered legitimate. Nuclear technologies are not intrinsically bad. There is no reason why a kind of technological privileged group should be established to the detriment of the rest of the whole international community nor any reason why a country with impeccable credentials like Argentina should renounce its legitimate rights to develop nuclear energy for peaceful purposes if it deems that it may be conducive to its technological development. Any approach that may imply that countries not willing to renounce their rights to develop elements of the nuclear fuel cycle in the future may encounter difficulties in accessing the market for nuclear fuel may act as an incentive to developing such facilities and the very notion of it may be in breach of NPT Article IV, which recognizes the pre-existing inalienable right of states to develop research, and production and other uses of peaceful nuclear technologies. This right is not a result of the NPT but the very notion of statehood. The Argentine document (NPT/CONF.2005/W.33) of the 2005 NPT Review Conference contains very useful ideas on this matter, which I fully share. The objective of developing either international mechanisms based on facilities owned by any given State or through international centers should be clearly determined, whether it is to curb proliferation or to provide a reliable system to guarantee supply of nuclear materials to allow the development of nuclear energy in the years to come. If the purpose is the former, the proposed mechanisms may prove to be unsuitable as they will be targeted toward those who are in compliance with the international nonproliferation regime with very little or no chance of engaging those countries who do not. If their purpose is to facilitate the development of nuclear energy on a mutually convenient basis, these mechanisms could be of interest for some countries. For those who intend to violate their NPT obligations, any scheme intended to develop multilateral approaches to the nuclear fuel cycle will most likely be irrelevant as they will most surely not participate in any mechanism which could impinge on their actions intended to acquire nuclear weapons. If their purpose is to facilitate the development of nuclear energy on a mutually convenient base, these mechanisms could be of interest for some countries. For those countries, which represent the vast majority, there is no problem in acquiring nuclear fuel abroad today. The market is functioning well and it would be advisable not to disrupt it. Urenco explained during the International Group of Experts that they could not provide such guarantees as the final decision on whether or not to export would not depend on the license issued by the country where the exporting plant was located. Neither could they export to a fuel bank, as only final recipients could apply for their licenses. In any event, guarantees of supply should have an international nature and therefore be made by treaties instead of mere commercial contracts, as was the case with Urenco. Argentina is going to build a third and fourth NPP. There is a debate as to whether restricting enrichment technology is the right approach or if we need improved safeguards. In 2004-2005, I participated in the IAEA Expert Group on “Multilateral Approaches to the Nuclear Fuel Cycle.” Its report of February 2005, is the most thorough study on all aspects of the multinational approaches and should be followed. Paragraphs 312 and 321 shed light on the political aspects of it. We must take into account (1) access to nuclear energy and (2) the 

WORKSHOP ON INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 115 nonproliferation regime. I am more optimistic than most. The scope of the IAEA work shows that there are only a limited number of “problem states.” They have been the same ones for many years. Only two countries are under IAEA scrutiny on this matter. Any action proposed needs to recognize a preexisting right to develop any non-weapons technology under Article 4, paragraph 1. The question remains, will the numerous proposals [on assured supply] help the nonproliferation regime? Will a system of guaranteed supply interfere with the existing market even in countries with appropriate safeguards? They can only be established on a voluntary basis. Otherwise, they will be contrary to the NPT. New conditions under which States access nuclear fuel or technologies for peaceful uses should renounce their rights under Article IV of NPT, even if in full compliance with their nonproliferation obligations, may constitute a breach of NPT Article IV, by those demanding such new conditions, particularly by nuclear weapons states who, it could be argued, are themselves in breach of Article VI. A mandatory system could only be based on rules applying to ALL States and ALL facilities, including nuclear weapon states. Argentina will not resign forever any nuclear fuel cycle rights but will support any safeguards, either current or enhanced. Concerning regional centers: what is their political context? There is concern about locating them in nuclear weapons states. In addition, disarmament must be addressed. Article VI must be complied with, progress on the Comprehensive Test Ban Treaty and the Fissile Material Cut-off Treaty must be made, and the 13 steps agreed on at the NPT 2000 Review Conference most be implemented. Any idea corroding the delicate balance of the NPT may unravel the whole nonproliferation regime. Argentina does not see the need for multilateral approaches to the nuclear fuel cycle because there is no problem with markets. In the early 1990’s, much forward progress was made. The Additional Protocol was developed cooperatively after the first Iraq war, but stalled at the end of the decade. Regarding “breakout” (withdrawal from NPT with 3 months notice) the system is actually not as flawed as portrayed. It is clear that Article XI of the NPT brings the matter of withdrawal from the NPT to the United Nations (UN) Security Council and this body should act if it deems that a country being party to the treaty developed nuclear weapons, as that would be a breach and a conceivable a threat to international peace and security. The problem may be that the U.N. Security Council does not act when it should, but then no multilateral nuclear approach is going to solve this. Multilateral nuclear approaches trying to stop proliferation will not work. They may, on the contrary, help increase access to nuclear energy. Discussion Gottemoeller: What is your view of what should be done to get Article VI back on track? Villagra-Delgado: We can’t do much without the commitment of the main actors to eliminate their nuclear weapons. There was much progress in the 1990s, but they are now stalled and even losing ground with talk of improving armaments. But without progress on Article VI, there can be little progress on other issues. It is an obligation under the NPT and it has to be seen as a mandatory requirement. 

116 INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE “Brazilian Utility Perspective,” Leonam dos Santos Guimarães (Brazil) Brazil is famous for many things including beaches and carnival. There is another side of Brazil that you must know: innovation, technology, competitiveness, and productivity. This includes the “nuclear Brazilian industry.” Brazil has a synergetic mix of large uranium reserves, fuel cycle technology, pressurized water reactor (PWR) technology and nonproliferation. This could provide an important contribution to “assurances of supply,” both globally and locally. Nuclear power in Brazil is a state monopoly established by the constitution. The nuclear fuel industry in Brazil has uranium and technological capabilities: mining and milling; conversion; enrichment; re-conversion; pellets; fuel fabrication; NPPs. Uranium is considered a public asset. Today, Brazil operates two NPPs (Angra-1 and Angra-2) and Brazil will commission a third NPP (Angra-3). In the future, they will be a leader in R&D, and will operate 4 NPP (with 2 turbo generators). There is an unprecedented level of public awareness of climate change impact due to intense drought in much of Brazil and the fact that there are water shortages and restrictions in most major cities. Brazil is a big country (in terms of area, population, and gross domestic product) and the 10th largest electric generator (and 2nd largest hydropower producer) in the world. However, it is only the 90th largest energy consumer (per inhabitant). Brazil relies a great deal on hydropower, but this needs “thermal regulation” (to compensate for seasonal fluctuations in water stock/storage). This drought was the root cause of the 2001 electricity supply crisis. This tendency will be amplified by expansion of hydropower in the Amazon basin. Brazil has access to thermal fuels, including coal, biomass, natural gas, crude oil, and uranium. Costs, volatility, and assurance of supply are factors to consider. Brazil needs more thermal generation to stabilize the system. Brazil is one of few countries with large uranium reserves and local production, and has full, open fuel cycle technologies. Brazil also has nuclear power technology and is concerned about nonproliferation. Only 30% of our territory has been prospected. In the end, we expect to be among the three leaders in uranium production. The Lagoa Real mine assures supply for the Angra NPPs and any new ones through 2030. The Itataia mine should be developed for international markets. Currently, Brazil is operating and maintaining the Angra 1 and 2 NPPs, which produce 657 and 1,350 MW of power respectively. In the near term, engineering, procurement, construction and commissioning are expected to begin for the Angra 3 NPP, which is to produce 1,350 MW. Further R&D for nuclear power will continue. Brazil’s medium-term vision includes investing profits in industrial development, aiming to achieve self-sufficiency and “added value” to exports; no planned reprocessing (abandoned 30 years ago); and development of long-term interim storage of fuel assemblies (deferred decision on fuel cycle). Brazil has two demonstration enrichment plants and one user plant under construction. The long-term vision includes: continental integration and assuring regional supply of uranium and (open cycle) nuclear fuel services with full scope safeguards. Brazil’s decisions about expanding or ceasing enrichment and fuel fabrication are not based on the profitability of the enterprise; price volatility and assurance of supply must be considered as well. Conversion, enrichment, and fuel fabrication amount to about 30 % of the fuel cycle cost. The Brazilian constitution calls for peaceful uses of nuclear energy. We have a remarkable record of more than 25 years without technical deviations or suspicious events. Like Germany, Japan, and the Netherlands, Brazil has “2+1” enrichment plants fully safeguarded. We 

WORKSHOP ON INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 117 ask, how much additional separative work unit (SWU) is needed for the nuclear renaissance? Do current facilities have enough capacity? In conclusion: 1. Any solution envisaging limiting the access of some countries to technology will mean assuming the bankruptcy of the international nonproliferation regime. 2. The IAEA is not a commercial enterprise, limiting chances of success. 3. Brazil has large uranium reserves, technology, and fully safeguarded industrial facilities for all open fuel cycle steps and could play an important role in future IAEA assurance of supply mechanisms such as a hosting a regional production center. 4. The problem is not assuring supply but assuring political stability. Only democracy and development can do this. Discussion Kelly: What is “long-term interim storage?” dos Santos Guimarães: We adopted long-term interim storage to gain public acceptance. We have a long-term 500 year storage strategy. We have no intention of reprocessing. Kelly: Are there international or regional elements to your back-end strategy? dos Santos Guimarães: It is international only in the establishment of a regional enrichment center. The spent nuclear fuel storage site is just for Brazil. Ivanov: Argentina’s and Brazil’s positions are understandable: defending their countries’ interests. This is not on the agenda of internationalization. For example, take the policy of delayed decision. Russia’s strategy is to set up a temporary site for irradiated fuels to be used later in fast breeders – a valuable product. Internationalization is a concept under which irradiated uranium may be stored. If interested, Russia would offer its services to others. Russia stands ready to offer solutions if interested. Long-term shipment is not an option. Ahearne: Ambassador Shaker [from Egypt] mentioned regional cooperation in the Middle East. Has there been any such cooperation in South America? dos Santos Guimarães: Argentina and Brazil were pioneers in cooperation. We developed nuclear energy by ourselves, first without safeguards, but have had a common nuclear policy since the late 1980’s (for example, accepting foreign waste not acceptable). Bilateral cooperation will continue without the label of “regional cooperation.” Villagra-Delgado: Brazil and Argentina are pioneers in regional cooperation and offer a good model. There is a bilateral system of safeguards and common nuclear policy, both domestically originated. It is difficult to imagine better cooperation. In terms of waste, we are constitutionally prohibited from receiving foreign waste. It is tough to secure public acceptance of even domestic waste. The Russian proposal is interesting, but it does not improve nonproliferation. The IAEA safeguards system works very well, with only a few exceptions that 

118 INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE have been clearly detected. Regional cooperation and commerce with IAEA safeguards are the best way forward. Ahearne: What about Chile, Peru, or Uruguay (i.e., multilateral cooperation)? dos Santos Guimarães: Peru is the only other South American country with nuclear technology (for medicines). The other countries are too early in their development now. Cooperation will come naturally. Also, I must mention the Tlatelolco Treaty, establishing Latin America as a nuclear weapons free zone. Villagra-Delgado: Chile has been considering nuclear energy and its first NPP. This could be a good opportunity for multilateral cooperation. They should approach Brazil and Argentina to learn from our experience. Malaysia also sent experts to Argentina to learn about “reactor operators.” This is another good opportunity for “multilateral” cooperation. ABACC is always ready to help. Shaker: You are looking into the future. Urenco and Eurodif are good [multinational] examples. Brazil and Argentina could operate something like this. Can Latin America, or Japan (and the Far East) set up new regional centers for uranium supply as well? Solonin: Let’s assume there exists an international nuclear fuel cycle center, which can guarantee fuel over a reactor’s life cycle and which is economically favorable. Would Argentina and Brazil use the center or their own facility? Villagra-Delgado: Yes, this is potentially very attractive, but this is not just an economic decision. All technological developments have spin-off potential for the country in other areas. Can long-term contracts be provided if no facilities are developed? We are not sure, probably not. Will we renounce our rights to technological development? This is out of the question. We do not want to go backwards and watch our capabilities die. We will not settle for sub-standard teaching at our universities. dos Santos Guimarães: Thirty years ago, the same deal was made with the U.S. This was broken in the 1980’s. This is a fact. This offer now is too late. Brazil is already constructing an enrichment plant. I am sure that the domestic costs are lower than imports from Russia. “Nuclear Story of Korea,” Chang-Kook Yang (South Korea) Nuclear power in Korea is motivated by energy security, diversification of energy sources (from 1973 to 2006, foreign energy dependence rose from 56% to 97%—during this time, nuclear energy rose from 0% to 39.4% and gross national product increased 45 times), economics, national pride, reduced oil dependency after the 1973 oil crisis, and reduced greenhouse gas emissions. Nuclear power in Korea began in the 1970’s with turnkey contracts with foreign vendors. In the 1980’s, they slowly learned this technology from vendors with component-based contracts. In the 1990’s, joint development of new fuel types was pursued with foreign vendors promoting export of fuel assemblies. Also in the 1990’s, Korea achieved 95% self reliance of 

WORKSHOP ON INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 119 design and construction technology for NPPs. In the 2000’s, they are promoting the export of nuclear power plants and today they operate 20 NPPs, with 6 under construction (4 OPR1000s and 2 APR1400s) and 4 more are planned by 2020. Korea does not have a program for localization of the CANDU technology; the OPR1000 and the APR 1400 have been developed by local entities. In terms of the nuclear fuel cycle, all uranium concentrate is imported. Since the 1950s Korea has looked for uranium but has failed to find economically recoverable resources; 100% of resources have been imported. To enhance security, a diversification of supply sources has been pursued. Reliability of supply is one of the most important considerations, so they would like to enter into long-term contracts with reliable suppliers. They have no plans for domestic enrichment services, and therefore have contracts with Urenco, Eurodif, and TENEX. Korea has developed the next generation of fuel for the Westinghouse type reactor, OPR 1000, and APR 1400 with foreign vendors. All fabrication services for Korean reactors can now be provided by local entities. Enrichment and spent fuel reprocessing is divided between “haves” (pursuing technology transfer on commercial basis among them) and “have-nots” (with strict restrictions on such cooperation). Internationalization of the nuclear fuel cycle should be based on industry experience. From a commercial point of view, nuclear fuel supplies have evolved to provide better services. Fabrication technology can be acquired on a commercial basis or through joint R&D. South Korea has never experienced fuel supply cut-offs. In the existing market, suppliers would respect a company’s reputation. Even if supply is disrupted, there are alternative sources. The existing market for fuel has functioned so well even though supply disruption occurred for several reasons, utilities purchased nuclear material from alternative sources. Nuclear power plants could be operated without a stop. The concept of a nuclear fuel bank is acceptable. They see three prerequisites for an assurance of supply mechanism: immediate supply of nuclear material in the case of supply disruption without political consideration of NPT compliant nations, a fair market price, and not hindering the existing commercial market. Providing reassurance to fuel supply will reduce the risk of proliferation. The following are problems to be solved before assurance of supply proposals can be realized: international consensus must be reached, financing must be determined, technical problems (proliferation-resistance reprocessing, burner reactors, etc.) must be addressed, and industry must participate. In conclusion, the commercial market has answered industrial needs well and such confidence will continue in the future. However, the proposals raised by several countries will give additional assurance of supply to newcomers (as a last resort). That will reduce the temptation of conducting R&D in sensitive technologies for additional security of supply and reduce the risk of proliferation. Discussion Fetter: What is the enrichment policy in South Korea? Reprocessing policy? Yang: Korea currently has 16 PWRs and is planning 6 more. Korea needs 2M SWU/year, but has no plans to construct enrichment facilities now. In terms of reprocessing, we maintain a wait and see policy, and spent fuel is stored at onsite interim storage facilities. It took 20 years just to 

120 INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE locate a low-level waste disposal site. We are in the early stages of R&D for pyroprocessing, which is different from wet technology (more proliferation resistant). Gottemoeller: Has your emphasis on joint R&D work for “next generation fuels” added to interest in cooperating with international centers if there are enhanced opportunities for collaboration (e.g., on next generation technologies)? Yang: As the fabrication market is under severe competition, Korea now needs more economic and safer fuel, but the development of new fuel is too expensive for one company. We have no plans to develop enrichment or wet reprocessing technology. Villagra-Delgado: This is an important point. There is good cooperation between many countries, and it could be an enticement. But some proposals are aimed at preventing the development of technology, which is wrong. Knowledge is not inherently bad. Training of people is important. Does it outweigh the proliferation risk? I am not sure. Argentina is not interested in a turnkey system. dos Santos Guimarães: There has been multinational cooperation on fuel development. Opportunity is a market question. Gottemoeller: What about new technologies not yet on the market (such as Generation IV)? dos Santos Guimarães: Generation IV is a good example. There is still a long way to go before industrial use. Smith: In Australia, R&D of advanced technologies is important to enable us to be an “informed procurer.” For example, we recently purchased a research reactor from Argentina, and were able to buy a world class reactor at an attractive price. Budnitz: In regard to “confidence in the common market,” how do your NPPs behave in terms of ordering in advance? How much fuel is ordered, and how far in advance? Yang: Deliveries are received 4 months before reloading. The lead time is based on each individual contract, though we plan to maintain approximately a 1 year supply in the inventory for 20 NPPs. We believe this will help to manage a disruption. Budnitz: We have just heard that a customer desires 1 year of assurance, but is confident that the market will be reliable. Bunn: But Brazil could say that the United States cut off supply to Brazil, and it took many years to overcome. Under these circumstances, you might need more supply on hand until you can find another supplier. Budnitz: This was a disruption when Brazil had only one plant. 

WORKSHOP ON INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 121 dos Santos Guimarães: Angra-1 is a turnkey plant from Westinghouse with a government-to- government agreement, and fuel is assured by the contract. When Brazil changed its policy from turnkey to technology transfer, the U.S. government used assurance of supply to put pressure on Brazil. Brazil turned to Germany to develop fuel, and CAVEU had to produce fuel for a Westinghouse reactor, which was difficult. Brazil mines enough yellowcake for Angra-1, 2, and 3. This is then sent to Canada then to Europe then back to Brazil. We say that “uranium needs an I.D. AND a passport!” This chain could be disrupted for many reasons. We do not have a big inventory. Budnitz: We are talking about a political interruption of Angra-1 [Brazil], but what would happen to a country like South Korea, which gets 40% of its electricity from nuclear power? This would cripple the country. Yet they have confidence in the world market. Bunn: Why don’t you keep a larger inventory given your experience with the United States? dos Santos Guimarães: Brazil lies outside of today’s “political hotspots.” We fulfill all of our nonproliferation requirements, and are not concerned about politically-driven cut-off. Additionally, it is too cost prohibitive to have a larger inventory. Villagra-Delgado: The market works very well (aside from a few bad apples). We must try to prevent an assurance mechanism from becoming a hindrance to the market: “If it isn’t broken, don’t fix it.” Myasoedov: This is a good discussion with countries having ambitious plans. We see more and more irradiated fuel, which will give rise to new problems, such as terrorism and radiation dangers (especially in densely populated countries). We cannot convert spent fuel to fuel elements. There should be a strategy for spent fuel. Yang: Spent fuel is a headache; even an interim storage site is difficult to locate. Korea has no plans to reprocess spent fuel. For an international center of this type, what would they charge? Without this information, I cannot answer the question. Myasoedov: Russia is now searching for approximate answers. We cannot postpone answers forever. Shalabi: Fuel supply arrangements are negotiated country-to-country. What about the licensing process and regulatory requirements? Villagra-Delgado: As far as supply of fuel is concerned, for a receiving country to be assured of quality, the licensing country must be guaranteed that the licensed company has good quality control. This is a well-tested practice, following the example of other international companies. This process makes it possible to see if fuel meets requirements and standards. Ahearne: Should we be optimistic or pessimistic or cautious? Will the Russian program handle all problems? What about the Direct General’s fuel bank proposal? 

122 INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE No response. Levenson: I would like to hear comments from speakers about how far in the future they might consider fast reactors. No response. Ivanov: Russia has operated fast reactors for over 30 years, and it is a good example of how you can deal with nuclear waste and close the fuel cycle. At this point we have problems with fast breeders. The BN600 in operation meets safety requirements. We’ve tested different types of fuels, looked into the volume of nuclear waste, and closing the fuel cycle. What about the BN800? Russia expedited funding, and plutonium was produced and accumulated. The nuclear weapons states must lead the example in disarmament. Our attitude should be determined for each particular country. Russia welcomes cooperation on the future of the nuclear fuel cycle in relation to breeder reactors. Galstyan: In Armenia, we are aware of the fact that we are consumers of nuclear power. These proposals and international centers are a promising start to addressing the problem of handling irradiated fuel. We would welcome new emerging tendencies. Shaker: A back-up mechanism should not be limited to political problems. There exist other types of disruptions. I think the mechanism should be triggered for other reasons. We should look at a bank in terms of a larger framework. Will it be an IAEA bank? Controlled by the Board of Governors? Villagra-Delgado: All these questions were discussed at length and in depth in the IAEA Expert Group Report issued in February 2005. We should pay more attention to it. Any fuel bank must be a virtual bank, since there are too many types of fuel. Every reactor needs its own. It is technically incorrect to say that we can have ONE fuel bank for all. Any bank must be based on treaties, not contracts between states (and the IAEA). It should not be based on the whim of any country. dos Santos Guimarães: I have the impression that we have a solution to a poorly defined problem. The threat is not clear. We must define the problem. No historic proliferation threat was due to assurance of supply. What exactly is the problem? Solonin: Consider the IAEA INPRO project, initiated by Russia. This has been joined by approximately 30 countries. It formulates the basic principles underlying the nuclear energy industry. Recall the basic principles: economy and competitiveness, safety and security, environmental considerations, radwaste treatment, nonproliferation, and infrastructure development. The nuclear industry must take these six principles into account. If the industry is to develop further, all these problems should be considered. Rauf: The question has been raised, what is the problem? There is a threat that sensitive technology is spreading, which may lead to more “latent” nuclear states when political considerations change. To guard against this without a new have/have-not divide, this sensitive 

WORKSHOP ON INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 123 technology should be controlled under international auspices. We need a mechanism of assured supply, moving current facilities from national to international, and setting new facilities as international. We have three levels: existing markets; assurance from existing market, or “virtual assurances” (including the U.S. proposal to downblend 17 tons of HEU); and a fuel bank, under IAEA auspices, that would not disturb the existing market (enough enriched uranium for one load of a 1 GW reactor)—note that the Nuclear Threat Initiative offer falls under this category. For some countries, enrichment R&D is good, leads to progress, and is not a proliferation threat. Last June the Director General said that no country should renounce its right to enrichment technology. Now there exists momentum to achieve something. The expansion of nuclear energy will call for new suppliers, new entrants, but under multilateral approaches (technology in a “black box”). Any proposal calling for a country to forego technology is dead on arrival. Perhaps we need a multi-vault bank—each with its own conditions. The IAEA vault would have a minimum number of conditions. WORKSHOP – DAY 2 Tuesday, April 24, 2007 Discussion Comments by Acting RAS Committee Chair, Academician Boris Myasoedov This workshop has been initiated by the U.S. National Academies and the Russian Academy of Sciences. The RAS plays a special role with a lot of experience working with complex issues. The Academies of the Commonwealth of Independent States continue to interact on many issues. The president of the Ukrainian Academy believes these issues to be important, as does the Armenian Academy and the Kazakh Academy. Comments by NAS Committee Chair, Dr. John Ahearne There is an expansion of nuclear energy today. Countries with no NPP are considering building them, while countries with few NPPs are interested in adding more. Where will the fuel for these NPPs come from? How will it be disposed of? Will fuel be purchased, or produced? Production would require enrichment and fabrication, thus producing a proliferation threat. Uranium is available from many countries, but enrichment and fabrication is only available from a few. In addition, not too many have fabrication capabilities either. The market seems to be working. Our South Korean participant expressed confidence that the market will continue working in the future. However, our Brazilian participant pointed out that fuel can follow a tortuous path. There is little international experience with reprocessing, nor is there much interest in the question regarding fast reactors for treatment. There seems to be trust in the IAEA, which is important for the safeguards system, especially that for enrichment. We’ve 

124 INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE heard of a dormant U.S.-Egyptian agreement, which might be a model. Any new system should not exacerbate the have/have-not divide. Article IV of the NPT gives the right to various fuel cycle elements. We have seen that people are most concerned about electricity, and that nonproliferation concerns (e.g., voiced by the Director General, the U.S., and Vladimir V. Putin) may not be as widespread as believed. If there is a nuclear renaissance, there will be a need for education and a growing number of experts. Nuclear power was a discipline in decline, and a renaissance will bring a need for new knowledgeable people. In terms of uranium, new mines are opening, which is a change from recent years when there was no incentive to explore, and some mines closed. Now uranium is at a high value. There is a need for uranium growth. Our Australian participant voiced concern that uranium-rich countries should have a central voice. An international point: many (if not all) of the proposals have conditions. If there is a political disruption to a contract, and a country is in good standing with the IAEA, then fuel will be assured. But, should this assurance go beyond political disruptions (to include other unforeseen events)? We have seen that fuel is critical (for example, in South Korea). This raised the question of how much fuel should be stored in inventory. If there is a fuel bank, what will it be a bank of? Yellowcake? Enriched uranium (to what level of U-235 enrichment)? Fuel elements? What about spent fuel disposal? Once fuel is given, who owns it? Will it be linked to a take-back option? Permanent disposal is a problem everywhere. For new nuclear states, what will you do with spent nuclear fuel? We mustn’t forget that reprocessing is also a proliferation risk. And finally, how many different options ought to be provided? Comments by Acting RAS Committee Chair, Academician Boris Myasoedov I agree with all of this, with one exception. The nuclear renaissance will begin soon, so this problem is very timely. Russia has a lot of hydrocarbons, has lived through the Chernobyl disaster, and has experienced a strong “green” anti-nuclear movement. We are now moving to the second stage of nuclear power revival. In 2010, we aim to commission one NPP with two units, and we wish to raise nuclear energy to 25% of our electricity by 2015. This is an historic time, in which mankind will turn to NPPs. Other sources have been discussed, but none are ready yet. So the international community faces a problem. How can we resolve this? We must ensure, without political restrictions, access to nuclear power to all countries. How do we safeguard (in developing countries)? It would be rational to allocate funds not to their own development, but to use experience from other countries. It is important to prevent proliferation of fissionable materials. The NPT plays an important role, but this is just a treaty. Democratic countries abide by this, but can withdraw. In the Soviet Union, our political system was not a democracy. This had many negative elements, but many good things too, including the development of peaceful nuclear power, and an entire system of developing nuclear power in other countries. We had plans to supply nuclear power to other countries; they visited Soviet NPPs, and the U.S.S.R. supplied and took back fuel. We had no problems in this respect. However, this cannot be applied to today’s case. These were bilateral agreements, which could be transformed in light of new circumstances. Today, an understanding should be based on close international cooperation, without conditions, granting access to the development of nuclear energy without spent nuclear fuel 

WORKSHOP ON INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 125 treatment concerns. We should remember the spirit of the NPT, which was developed and approved despite differences of opinion. If mankind switches to a broad use of nuclear energy, we should consider a renewable approach based on fast breeder reactors and the use of spent fuel. The Putin Initiative is a decision to create an international center. The decision has been adopted, and implementation is beginning. The following are the main ideas of the center: 1. Creation of an international center in Russia as a pilot project to provide an assured and guaranteed supply of uranium. 2. Established by countries via intergovernmental agreements to support the inalienable right to develop nuclear power without discrimination. 3. Strengthen the international nonproliferation regime using a market approach – joint enterprise (or intergovernmental agreement of other form) including nongovernmental and invited participants with no access to enrichment technologies. 4. Governments of participating states will be the executive bodies. 5. Legislative, financial, and industrial aspects will be based on existing Russian enterprise (secure provision of enrichment services, create stock of LEU). 6. Provides for regulation or access of foreign personnel to monitor quality. 7. Price of products set by co-founders, corresponding to world prices. 8. To guarantee its goals, international status is central (IAEA as an observer, under IAEA guarantees). In conclusion, it is the only way to arrange for an international basis of nuclear energy enlargement. Burns: From a military perspective, this discussion has been interesting and persuasive, and touched on the fundamental problems. The problem with national users of an international commodity is one of assurance. Those with their own capabilities are blessed but few. Others are dependent on shipments, and therefore are at risk of disruption. We need a broad spectrum of willing suppliers, and for users to comply with international standards. I have a concern about the use of sanctions: I believe these are counterproductive after a short period of time. Over the long term, they no longer deprive the target; 20-25 years of sanctions does not work. A regime couched on assurance must give up long-term sanctions. Sanctions meant to punish (e.g., deprive of nuclear energy) cannot be tolerated. Multiple options to nuclear power would not be a bad thing, and a broad spectrum of options would lead to a persuasive argument. Solonin: The further development of nuclear energy is inevitable. Furthermore, the development of fast burner and breeder reactors are necessary preconditions. The development in the near term will face problems of reprocessing. Questions of nonproliferation and the creation of dual use fissile material will be problematic in the medium term. Practically, there are 3 possible groupings: countries with all nuclear fuel cycle elements willing to develop and help with development; countries thinking of developing nuclear fuel cycle elements; countries looking to develop NPPs. All possibilities are acceptable and should be developed. The possibility of international centers is not yet there. We are still working on principles, but have 

126 INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE nothing yet in practice. We should take practical steps to convince others to use this possibility, then see if it works or not. This discussion is very useful. Gottemoeller: The previous speaker’s comments were very useful. Developing a more international nuclear fuel cycle requires broad acceptance. We must convince others over time to cooperate. This will require proof of practical utility. We must take measured steps with a pilot program in order to build confidence. Regarding the issue of incentives as opposed to sanctions: How do we provide more incentives? New technologies? The possibility of technical cooperation (new fuel, reactors)? This is now restricted to capital-rich countries, others are left on the margins. In the future, it would be worth considering drawing countries into a new approach on the front or back end? Bezzubtsev: As a representative of radiation security and regulation, I am interested in international requirements for safety and the normative base of development of more nuclear energy. The question of safety is important, and a national base is required to harmonize safety internationally; individual countries will develop their own rules and regulations. Yesterday, most of the discussion was on nuclear fuel centers and enrichment services. Countries interested in nuclear energy are not interested in UO2 or UF6. Rather, they are interested in fuel assemblies. Therefore, they may opt for leasing services through international centers, in order to get the final product (meeting security requirements) and to train staff to use irradiated fuel. Enrichment services and the market will require a normative base, which Russia has. Russia has just passed a law on fissile material ownership. More attractive would be a center intended to handle irradiated fuel. In Russia, nuclear fuel can be repatriated for long-term storage or reprocessing–this is attractive to new countries. There is a legal base for handling of irradiated fuel, and Bulgarian and Ukrainian fuel is sent back for reprocessing or storage. Over the past two years, there has been a joint U.S./Russian repatriation project (for research fuel) under Russian rules for safe handling and addressing ecological problems. The radwaste problem is a big concern. It will be important to take back and store some waste. A law is being prepared to resolve pending issues of radwaste handling as Russia cannot now accept radiological waste from other countries. Levenson: From the U.S. perspective, I cannot speak of ongoing projects. Few if any countries rank proliferation concerns over energy security. Neither the haves nor the have-nots will forego anything in the long term (e.g., the United States first decided against reprocessing then changed its mind). There are two groups (open fuel cycle and closed) with two different time schedules and should be considered separately. In the near term, the focus will be on an open cycle: assured quantity of fuel, timely delivery, and at a good price (the “carrot” system). Countries will occasionally reassess domestic development, therefore an “assured supply” must remain economical, i.e. must remain cheaper than a domestic supply. Energy security is so important that even with an assured supply countries may want alternatives. There are three parts of an assurance of supply: assured quantities, schedule, and price. Price might be the most important. Countries with expanding nuclear programs will assess whether a domestic program is cheaper. The central system should not be so profit driven that they ignore this. Even if a country is a participant in a multinational supply, they will probably also seek other arrangements for security of supply system. 

WORKSHOP ON INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 127 In terms of a closed cycle with advanced technologies, in the past, there has been lots of nuclear power though all was based on Canadian, Russian, or U.S. technology. Domestic technology was not necessary. We should make it clear to users that technology will be shared with “have-nots” wishing to move to a closed fuel cycle. When a country is ready to move to a closed fuel cycle, they should be assisted in doing so. Energy security, nonproliferation, and economics sometimes compete; we need a middle ground. Bychkov: I would like to touch on several parallel issues: supply of fresh fuel and reprocessing; transportation; waste storage; long-term isolation and immobilization; and accidents. There must be an overall system of services not just supplies. Then, an approach to internationalization would not be a copy of current systems, there would be a need for further development. Perhaps we can optimize the development of the nuclear fuel cycle. For example, consider a country with several fast reactors that need the fissile material for operation; that country would undertake reprocessing. Now, the fuel cycle is focused on enrichment, this will shift to joint R&D and joint systems (e.g., fast reactors). In theory, these are components of GNEP, but there is still a long way to go. From practical experience in international initiatives (e.g., INPRO), we have developed new ways to oversee the spread of technology and its transfer. This knowledge would tend to make possible the oversight of certain nonproliferation facilities. A super-national mechanism would work as an incentive to improve technology. Fetter: Growth in nuclear power is not inevitable, but desirable (because it can have no CO2 emissions), but it must grow by a factor of five to make a dent in overall CO2 emissions. If this leads to a number of countries able to enrich and reprocess, there will be many virtual nuclear weapon states and this is not desirable. This latent capability will create tension and distrust, which may outweigh benefits. If there is an expansion, it will be necessary to limit the number of countries with enrichment and reprocessing technologies. The idea of international centers is interesting, but limited. A fuel bank can play a small role. My impression from the presentations is that waste is one of the biggest concerns. Therefore, if there were a central, international option for long-term storage, take back, and disposal, this would be a good incentive. A leasing and take back mechanism may be the most promising. More countries may wish that we consider take back (though not necessarily with reprocessing, at least not until economically necessary). It would be good if more countries were open to hosting an international spent fuel storage or disposal facility. Petrov: There will be a need to train future experts to implement what we are now discussing. We have paid close attention to uranium mining and technologies, but not to the waste (which will be a result of these activities). Access to the knowledge market is not free to developing countries. It will be up to states to resolve these issues. There will soon be a problem with mining training. With respect to training in waste disposal, if problems, obstacles, and difficulties are not resolved, the accumulated spent nuclear fuel will serve as a brake on future development, as is an international center for training in “subsoil sciences” to set up underground repositories. This should be a principle issue. There is a need for a center with international experts of geology, and other fields for a future international spent fuel center (under the IAEA). 

128 INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE Budnitz: I am not convinced that the number of countries, whose participation in an assured fuel scheme would be crucial to improved nonproliferation, is sufficient. Consider this “Berkeley metaphor.” The city of Oakland has one of the highest murder rates in the country, and therefore so does Alameda County. However, if I convinced all my friends to sign a pact saying that they will not commit murder, this would have very little effect on the murder rate in Alameda County. Would such a scheme change the behavior of countries that would otherwise misbehave? However, the scheme is worth pursuing, because I may be wrong. My question is this: Does a large number of countries, whose participation would make a difference, exist? Once a country is determined to misbehave, this scheme will be of little help. No country will ever give up an inalienable right. Bunn: If we want to grow nuclear energy (over the next 40-50 years) without increasing proliferation risks, we must limit enrichment and reprocessing technology. We need to provide an incentive to countries to make a sovereign choice to not develop enrichment and reprocessing. The commercial market seems to work well. In this discussion, several classes of countries have been mentioned: 1. Some countries are not interested in enrichment or reprocessing technologies, so this scheme won’t matter to them. 2. Some countries are interested in enrichment, but assurances of supply are not important (e.g., Australia, Brazil). 3. For some countries, enrichment was used to pursue nuclear weapons. 4. There is a set of countries “on the fence.” If more assurance is given than the commercial market, this may affect internal debates. For this last class, the idea is worth pursuing. However, we must not “mess up” the commercial market. There is a distinction between a fuel bank (no sign up) and an international fuel cycle center (sign up and pay). Must a country make a decision right now? Can they do so in 15 years? What are the conditions for assurance or denial of fuel? Forego forever? (Not realistic.) Refrain from enrichment while participating? Good nonproliferation standing? (Who decides? UN Security Council? IAEA? The U.S. cutoff of Brazil is perceived differently in Brazil and the U.S.) If suppliers could overcome the political obstacles to take-back, and we could find a host for an international facility, this would be a major breakthrough for nuclear energy. Fresh fuel supply (front end) works well, but spent nuclear fuel handling (back end) is more problematic. If we could offer a country both services, we would have lots of leverage. We can applaud Russia for doing this with Iran and potentially other countries. Galstyan: During this meeting we have heard a wide range of views, and I respect the different positions. Armenia has a pragmatic position and prospects are assessed realistically. For example, there is no infringement on our pride that commercial airliners are produced by only two companies, Airbus and Boeing. We understand that some technologies are only realistic for certain rich countries. Our big concern is the following: What about spent nuclear fuel? Armenia understands what it means to lose electricity security and to lose NPPs. Despite good fuel contracts, there are no 100% guarantees about hydropower or fossil fuels. Nuclear energy is a “delicate sphere” 

WORKSHOP ON INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 129 calling for different fuel schemes (different from those in the common market) taking into account dual use technology. Villagra-Delgado: Article VI of the NPT is important, and should not be put aside. Regarding (bilateral) assurances of supply and multilateral nuclear approaches, we must ask, what is the objective? Enhanced nonproliferation? These approaches will add little as they will apply only to well-behaved countries as the others will not join them. A revival of nuclear energy? This might be useful. We must recognize that the safeguards system is working well. We have had no new problem countries in the NPT regime for more than 20 years. On the other hand, countries outside of the NPT framework, which have developed nuclear weapons are in the process of getting a “clean bill of health.” Is that not a contradiction? I conclude that effective safeguards are the way to go. How are assurances presented? What are the conditions for guarantee of supply? If the safeguards system is not working, if the Additional Protocol is so flawed, why should a country sign onto it? Stating that they are not good enough and that we need something totally new may be self-defeating and weaken the whole regime. Pursuing an assurance of supply may send the wrong message to countries about the functioning of the market. The “haves” telling the “have nots” is too complicated and too expensive; this is unacceptable. Saying that the enrichers are virtually proliferators presumes that the countries want to proliferate instead of just developing civil nuclear energy, which is the reality in most cases. Then there is the question of “breakout.” I disagree entirely that this is unilateral legal option. If a country uses its membership in the NPT to develop nuclear weapons, it would have acted contrary to its obligations under the Treaty and would be in breach of it. Upon declaring its intention to opt out of the Treaty, the matter must be referred to the UN Security Council where action could be taken. Agreement in the Council, particularly among the P5 countries will be needed. If these cannot agree on such a case, there is no multilateral approach that could solve that lack of will to act. Besides, it is clear that an assurance of supply based on a “join and renounce or else” system will terminate the commercial market and could be perceived as an attempt at the cartelization of it. dos Santos Guimarães: I pose the question: What is the problem? It seems there are two routes to nuclear fuel: purchase turnkey fuel assemblies or purchase uranium and fuel services. Fuel assemblies are customized commodities. Even with our cooperative development with Korea and Slovenia, we cannot just ask them to provide us with some assemblies. For turnkey NPPs, an international fuel bank will not provide assurances. For uranium and fuel services, this may be useful (e.g., the Russian proposal) but we still have the problem of fuel fabrication. A country must have its own fuel fabrication facility. Therefore, a take-back option would be very interesting. This should be universalized. Power should be transferred from utilities to fuel providers. This would have a non- marginal impact on nuclear power economics. In regard to reprocessing, Brazil has no interest. In general, the problem lies with research reactors. Reactor grade plutonium is infeasible for use in a weapon, therefore reprocessing of light water reactor fuel is not a problem. The only concern is that if you can reprocess one kind of fuel then you can reprocess any kind. In regard to enrichment technologies, this technology was born in Germany and then escaped (both diffusion and centrifuge). Our experience is that we made some batches of 20% U-235 for 

130 INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE research reactors under full safeguards (with lots of inspections). Above 10-12%, we have problems with hexafluoride impurities. Additional purification of hexafluoride is needed to go up to high enrichment, and that additional purification is easily detected by safeguards. Impurities could be introduced for these reasons. We can discuss these issues directly. We should discuss “haves” and “have notes” in the open, why do this implicitly with subterfuge calling it assurance of supply? Throughout history, energy technology has changed mankind (as the level of “energy concentration” increased): first wood for fire, then coal, then oil, then gas, then uranium. The question is who will control uranium? The United Kingdom became predominant as wood turned to coal, and the United States became predominant as coal turned to oil. As oil turns to uranium, who will take control? Consider the question of assuring supply. The 18th century United Kingdom Portugal Agreement assured a supply of manufactured products in exchange for olives and wine, and as a result Portugal is underdeveloped to this day. Ahearne: I have to point out that a past NAS study on plutonium disposition concluded that reactor-grade Pu can be used for a crude but powerful weapon. Smith: Proliferation is a political, not a technical problem. The common market works well for supply. We must separate “multilateral” from “multinational.” The multinational nature of the commercial enrichment market is an important element of assurance of supply. If Australia is to enrich, we should join Urenco. Any mechanism to guarantee enrichment should not interfere with the common market. Reprocessing is a different question: it is more dangerous for proliferation and there is not a broad market. Without this, nuclear power is wasteful (only a small percentage of energy is extracted). There is an opportunity for a multilateral closing of the fuel cycle, in a manner to maximize energy extraction while minimizing waste. I believe we are looking at the wrong end: Enrichment is working, and the true opportunities lie with reprocessing. Shaker: I call attention to the Expert Group’s report. If we want to internationalize the nuclear fuel cycle, this should be done gradually and built on confidence, step-by-step. It cannot be done universally (neither in participation nor in the parts of the fuel cycle being internationalized). Currently, there are no problems in NPP countries, but newcomers may need help with supply. (A history of colonialization and deprivation leads to a desire for assurance.) But, do we guarantee fuel? Enriched uranium? Natural uranium? For example, to an automobile owner, which is more important, guaranteed access a gas station or an oil well? It will be important in the future to have multiple supply centers, ensuring competition and an improvement in quality, delivery, and price. Regarding the NPT: If a country withdraws, why? The UN Security Council is the judge. We should leave the withdrawal clause in place–it is the safety valve. It is important to give newcomers a chance to have their say. They should participate in decision making. We should not divide further into “haves” and “have-nots.” We should give future importers a role. Urenco and Eurodif should allow the participation of others. Brazil and Japan have the potential to become regional centers. Stamenov: On what basis should we draw our conclusions? Do we want to increase energy capacity and diversity while reducing emissions? Do we want to improve conservation? Our 

WORKSHOP ON INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 131 2004 decision for 2 new VVER-1000 units affirms our choice for the next 30-40 years. Taking into account that all experiments to put other kinds of fuel in the VVER were not exactly successful, we are committed to Russian production. The problem seems to lie with spent fuel—transportation, repatriation, and storage. If there would be an international center for spent fuel, Bulgaria would be very interested. If you have limited expert resources (a small country) then you can rely on a larger country to address those nuclear problems and focus on other problems. We have excellent experience in fresh fuel and spent nuclear fuel transportation, and have solved some ecological and social problems. Transportation is a serious problem. Bulgaria is interested in an international spent nuclear fuel solution. From a legal point of view, there is a difference in view: is spent nuclear fuel “waste” or “material?” Experience with international centers suggests that if they start on a commercial basis, there are many potential problems. It is better to begin work from a budget basis from the participating countries. Yang: How would an international center be managed? Would it be multinational, or be managed by the IAEA? What kinds of contracts? Commercial or intergovernmental? What about export regulations? There is not much difference between government contracts and commercial arrangements because everyone needs an export license from the government. Karyono: In Indonesia, we have no experience with NPP operation, only with fuel fabrication and research reactors. We believe that the R&D industry has a duty. What is the optimum solution? Regarding a safeguards system, would this be multinational, IAEA, or based on bilateral MOUs? McDonald: First, I believe there is a semantic confusion, between “assurance of supply” and “assurance against interruption.” There is a general question of assurance—international mechanism to facilitate the nuclear renaissance—against political or commercial interruptions. The IAEA will restrict our attention to political interruptions only. No mechanism should disrupt the commercial market. Second, I’d like to call for an “upbeat intervention.” We must be careful to respect everybody’s rights. Nobody wants to give up any rights. But consider the Dutch/German/U.K. proposal for “enrichment bonds:” a guarantee to produce, enrich, and provide export licensing for uranium. This is a big step. They are ceding some of their sovereign rights to the IAEA for the greater good. This proposal was voluntarily put forth, and is a big step. Our opinion from the Angarsk visit, is that this is a very pragmatic approach. Third, I pose the following “stumper.” Consider a country like Australia. It is not worried about political risk, and considering commercial activities. The IAEA assurance mechanism is not a priority, but they certainly have no objection. In the end, it may even help them. Article IV of the NPT requires us to act in a non-discriminatory manner. But, Australian export controls are deliberately discriminatory. If Australia signs on, then the IAEA plan becomes discriminatory. Would it be better not to include Australia? Starz: (A) Why now? These ideas have been around for a long time. Yet, some things are more obvious now (highlighted by the nuclear renaissance). There is a new concern for the proliferation of sensitive technologies (and so called “latent” capabilities). Now, momentum is building (from suppliers and proposals). Will it lead to something this time? (B) What is the rush? The goal is to reduce the incentives for domestic nuclear fuel cycle capabilities. Do we 

132 INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE have time to do so? If not, why not? (C) It seems that the beneficiary pays. What will be the conditions? Will they stick? Those with the highest benefits should have the least cost in giving up their rights. This may help sort out different options. Kelly: I am interested in the idea of incentives, and a focus on the back end. This could free countries from their own regulations. We should have a system to incorporate storage of spent nuclear fuel into these front-end discussions. We also need training in final spent nuclear fuel management. How could this benefit from an international partnership? Shalabi: What seems to be missing are political options for take-back and leasing. Going back to Ambassador Shaker’s automobile analogy, why not put a fuel cell right in the car? Finally, what is meant by “discriminatory?” This is a regulatory decision and not something else. McDonald: Australians have explained that a discriminatory process (the right is ultimately reserved to say no) is distinct from a criteria-based approach (if all criteria are met, ok). In Russia, for example, if Russia is a supplier and the IAEA agrees to supply, does Russia have to agree? Shouldn’t we just combine Russian and IAEA criteria from the beginning? Berriman: In Australia, our policy is not “discriminatory,” but “selective.” Closing Remarks by Acting RAS Committee Chair, Academician Boris Myasoedov: During this workshop we have worked interactively, which has been very important. Of course we didn’t solve all problems, and more seminars are needed. We have heard some controversial opinions, which should be studied. If international centers are created, should there be many? Few? What about geographical considerations? We should work together to avoid conflicts. These centers should deal not only with enrichment approaches, and it should be a gradual process. We should not use a natural uranium bank, and we should consider spent nuclear fuel storage problems. All steps should be voluntary. We shouldn’t push the process and put all countries together into “one small room.” Russia has made some practical steps. The Russian system was developed independently, but there is a need for cooperation. An international system is not needed for Russia alone, we have good experience in all steps of the nuclear fuel cycle, including fast reactors. Instead, we need to combine our efforts. LIST OF WORKSHOP PARTICIPANTS Argentina Villagra Delgado, Pedro Raul, Embassy of Argentina to Australia Wilkinson, Moira, Permanent Mission of Argentina to the IAEA Armenia Galstyan, Areg, Ministry of Energy of Armenia 

WORKSHOP ON INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE 133 Australia Berriman, Annette, Department of Foreign Affairs and Trade of Australia Hutchings, Ronald, Permanent Mission of Austria to the IAEA Smith, Ian, Australian Nuclear Science and Technology Organization Walker, Martin, Permanent Mission of Australia to the IAEA Brazil Guimarães, Leonam dos Santos, Eletronuclear Vallim Guerreiro, Antonio José, Permanent Mission of Brazil to the IAEA Bulgaria Stamenov, Jordan, BAS, Institute for Nuclear Research and Nuclear Energy Canada Shalabi, Ahmed, Permanent Mission of Canada to the IAEA Egypt Shaker, Mohamed, Egyptian Council for Foreign Affairs Indonesia Hiswara, Eri, Permanent Mission of Indonesia to the IAEA Karyono, H.S., National Nuclear Energy Agency (BATAN) Korea, Republic of Cho, Chang-Sok, Korea Nuclear Fuel Company, Ltd. Yang, Chang-Kook, Korea Nuclear Fuel Company, Ltd. Russian Federation Bezzubtsev, Valery S., Federal Service for Ecological, Technological and Atomic Supervision of the Russian Federation Bychkov, Alexander V., Federal State Unitary Enterprise “State Scientific Center of Russian Federation”; Research Institute of Atomic Reactors Ivanov, Valentin B., Member of the State Duma Russian Parliament Lushnikova, Liudmila, Institute of Biochemical Physics, Russian Academy of Sciences Myasoedov, Boris F., Russian Academy of Sciences Petrov, Vladislav A., Institute for Ore Deposits Geology, Petrography, Minerology and Geochemistry of the Russian Academy of Sciences Shiyan, Yuri K., Russian Academy of Sciences Solonin, Michael I., TVEL Corporation Zmeyevsky, A., Permanent Mission of the Russian Federation to the International Organizations in Vienna Switzerland Kelly, Julian, Association for Regional and International Underground Storage (ARIUS) 

134 INTERNATIONALIZATION OF THE NUCLEAR FUEL CYCLE United States of America Ahearne, John, Scientific Research Society (SIGMA XI) Budnitz, Robert J., Lawrence Livermore National Laboratory Bunn, Matthew, Harvard University Burns, William F., Major General (USA, retired) Fetter, Steve, University of Maryland Gottemoeller, Rose, Carnegie Endowment for International Peace Guenther, Rita, The National Academies Humphrey, Marc, The National Academies Levenson, Milton, Bechtel International (retired) Lowenthal, Micah, The National Academies Starz, Anne, Permanent Mission of the USA to the UN Organizations in Vienna International Atomic Energy Agency Forrstroem, Hans, Department of Nuclear Energy McDonald, Alan, Department of Nuclear Energy Planning and Economic Studies Rauf, Tariq, EXPO —Verification & Security Policy Coordination Simpson, Fiona, EXPO—Verification & Security Policy Coordination