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REFLECTIONS ON THE INTERNATIONAL NUCLEAR LAW ASSOCIATION CONGRESS IN ABU DHABI (PART 3 OF 7): 5 NOVEMBER 2018

Prospect has been invited to attend the bi-annual meeting of the International Nuclear Lawyers Association (INLA) in Abu Dhabi from 4-8 November 2018 – click here to see further information about the event

On 5th November 2018, The International Nuclear Law Association congress in Abu Dhabi held important sessions on Nuclear Liability and Insurance.

The first of these covered Post-Accident Consequences on Nuclear Liability Legislation: The Case of Japan.

Professor Masato Dogauchi, University of Tokyo, from Japan, spoke on ‘The Role of Nuclear Damage Compensation Facilitation Corporation in the Fukushima-Dai-ichi Accident’.

Professor Dogauchi said that TEPCO had in effect been “kept alive by an unlimited blood transfusion”. He stated that by 17 August 2018, the total amount TEPCO had paid to victims was about US$83 billion. For up to date figures, reference was made to the TEPCO Compensation webpage. A Dispute Reconciliation Committee and Nuclear Damages ADR Centre had been established. Such claims however do not foreclose claims for additional damage, and TEPCO remains at risk of further claims over time. Some 284 cases had been concluded, but 173 cases were still pending.

The Nuclear Damage Compensation Facilitation Corporation was established to fund TEPCO to use funds for compensating victims, and to require other nuclear operators to pay contributions to enable this Corporation to operate, based on annual operating revenue. Contributions are also required from the eight electric power companies. The government of Japan justified this by making it clear that the nuclear industry had not adequately accumulated enough funds: consumers had enjoyed cheaper electricity as a result. It was too late to accumulate funds from consumers after the event, but it was fair to impose this levy on electricity companies.

The system exposes TEPCO to truly unlimited liability. However, Professor Dogauchi concluded that the system was not necessarily apt to provide for another nuclear incident. A Retroactively Accumulated Reserve Fund was an important part of Japanese government policy, but was not necessarily a stable basis for all that may be required.

Julius F. Weltzdorfer, Germany gave an address on ‘Problems of Liability for Mental Distress in Fukushima: Evacuation Stress, Solitary Deaths, Suicides and Excess Abortions’ with news of academic research on the emerging Japanese caselaw and its implications for the revision of nuclear liability law to cover wider impacts.

Taro Hokugo, MEXT, Japan described a ‘Review of the Japanese Compensation Framework based on the Lessons Learned.’ Amongst other aspects of a review of legislative developments, he reported that the Bill to Amend the Compensation Act has just been decided by the Japanese Cabinet on 2 November 2018 and it was submitted to the Diet.

About the Author

William Wilson is a specialist environmental, regulatory and nuclear lawyer with over 25 years experience in government, private practice and consultancy. He worked as a senior lawyer at the UK Department of the Environment/DETR/Defra, and helped to build up the environmental and nuclear practices at another major law firm, as well as running his own environmental policy consultancies. William has experience of all aspects of environmental law, including water, waste, air quality and industrial emissions, REACH and chemicals regulation, environmental protection, environmental permitting, litigation, legislative drafting, managing primary legislation, negotiating EU Directives and drafting secondary legislation.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

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REFLECTIONS ON THE UAE NEW NUCLEAR PROGRAMME FROM THE INLA CONFERENCE (PART 2 OF 7): 4 NOVEMBER 2018

Delegates to the International Nuclear Law Association ‘INLA’ congress in Abu Dhabi on 4 November 2018 have now heard several key presentations about the UAE nuclear programme from knowledgeable speakers.

Prospect has been invited to attend the bi-annual meeting of the International Nuclear Lawyers Association (INLA) in Abu Dhabi from 4-8 November 2018 – click here to see further information about the event

Jacques Lavoie, INLA President and General Counsel of the Emirates Nuclear Energy Corporation ‘ENEC’ introduced the UAE programme, and was able to report that the Barakah NPP was 90% complete, with Unit 100% complete.

Obaid Al Mutawa, Deputy General Counsel at ENEC gave a brief history of the UAE programme, established to meet an anticipated trebling in energy demand in the Emirates.

David Scott, Advisor to the Executive Affairs Authority, gave a more detailed account of the evolution of the UAE programme. He reviewed and recalled the 2008 UAE White Paper, reflecting leading commitments to the highest principles and best practice, transparency, non-proliferation, safety and security, and cooperation with the IAEA.

2002 had seen a sharp oil price rise. There had been high growth in energy demand, population, and development, outstripping energy infrastructure. By 2006 there was not enough natural gas to support demand for air conditioning during the Gulf summer. Energy security reflections led to the establishment of a working group to consider options, the UAE then being 96% dependent on gas generation. By 2008, nuclear energy was recommended as part of the energy mix.

The UAE programme saw the establishment of an International Advisory Board. This worked both ways, bringing in know-how, and generating confidence overseas. Early reports were quite critical, but the public saw them being resolved. The UAE saw this as an important way of generating confidence in the programme in the early stages, now being replaced by more structured IAEA reviews. Town hall style meetings had also taken place to go out and engage with the public.

On non-proliferation, the UAE addressed the issue straight out in the legislation, which made it illegal to proceed otherwise. The UAE had ratified the Additional Protocol with IAEA.

FANR was set up as a substantially independent regulator in 2009. KEPCO was chosen as Prime Contractor. The UAE wanted an established design, and found that it worked better for a new nuclear country to use established technology. The UAE joined WANO, and joined the Convention on Nuclear Safety and the Joint Convention on Spent Fuel Management. Supervision by regulators included oversight by the Critical Infrastructure authority.

Cooperation with the IAEA was assured by full and unfettered access, but UAE has also always drawn on their expertise. The UAE has signed Bilateral Agreements on Nuclear Cooperation with a number of countries, including the UK, and the regulator FANR had signed corresponding agreements with foreign regulators and TSOs, again including the UK.

On sustainability, the UAE had been building nuclear capacity, through education, scholarship and training programmes, so now UAE has hundreds of trained engineers, PhDs, and qualified personnel, with the contribution from UAE itself increasing.

Dr Zoryana Vovchok, Director of the Department of Legal Affairs, FANR spoke about the establishment of FANR by the law of 2009, and FANR’s approach to the licensing of the first UAE NPP, from initial licences to construction stage licensing. By 2016, FANR had progressed to issuing Licences for transportation of Unirradiated Nuclear Fuel to ENEC, and for Handling and Storage of Unirradiated Nuclear Fuel to NAWAH ENERGY COMPANY.

Dr Vovchok gave an account of the extra work to take into account lessons learned from Fukushima, and further directions to ENEC to undertake assessments and extra stress tests and described FANR Regulations and Regulatory Guides, and the need to keep them updated.

About the Author

William Wilson is a specialist environmental, regulatory and nuclear lawyer with over 25 years experience in government, private practice and consultancy. He worked as a senior lawyer at the UK Department of the Environment/DETR/Defra, and helped to build up the environmental and nuclear practices at another major law firm, as well as running his own environmental policy consultancies. William has experience of all aspects of environmental law, including water, waste, air quality and industrial emissions, REACH and chemicals regulation, environmental protection, environmental permitting, litigation, legislative drafting, managing primary legislation, negotiating EU Directives and drafting secondary legislation.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

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PROSPECT LAW ATTENDS INTERNATIONAL NUCLEAR LAW ASSOCIATION CONGRESS IN ABU DHABI (PART 1 OF 7)

Prospect has been invited to attend the bi-annual meeting of the International Nuclear Lawyers Association (INLA) in Abu Dhabi from 4-8 November 2018 – click here to see further information about the event

Speaking on the first day of the International Nuclear Law Association congress in Abu Dhabi on 4 November 2018, Peri Lynne Johnson, Legal Adviser and Director at the IAEA Office of Legal Affairs, described some of the IAEA’s assistance to nuclear power programme developments in 144 countries.

She discussed developments since Fukushima in the application of the Convention on Nuclear Safety and the Joint Convention on Spent Fuel and Radioactive Waste Management, and the development of non-binding Codes of Conduct, including a new one published in 2018.

On nuclear liability, she referred to the ongoing work of the IAEA INLEX expert group, and for nuclear security, the IAEA’s work with the 39 state parties that had not yet joined the CPPNM Amendment.

For nuclear safeguards, she noted that 181 states were applying safeguards, and that 133 states have agreed to apply the Additional Protocol. However, as North Korea is amongst the states that have not signed up to these measures, there is still perhaps some way to go. With nuclear assistance, Ms Johnson noted that the IAEA reviewed about 20 states’ nuclear laws per year, and trained over 300 individuals in nuclear law.

About the Author

William Wilson is a specialist environmental, regulatory and nuclear lawyer with over 25 years experience in government, private practice and consultancy. He worked as a senior lawyer at the UK Department of the Environment/DETR/Defra, and helped to build up the environmental and nuclear practices at another major law firm, as well as running his own environmental policy consultancies. William has experience of all aspects of environmental law, including water, waste, air quality and industrial emissions, REACH and chemicals regulation, environmental protection, environmental permitting, litigation, legislative drafting, managing primary legislation, negotiating EU Directives and drafting secondary legislation.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

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RISK MANAGEMENT IN UK NEW NUCLEAR – EXPANSION OR EXPLOSION?

As HMG grapples with challenging decisions on how best to sustain energy security in the UK through potential investment in new nuclear power generation, ultimately it is appropriate risk management approaches that should remain at the heart of such decisions.

Mark Vickers, from Prospect’s Project Finance team, sets out an introduction to the issue.  

Risk Management & Nuclear New Build

There are few major infrastructure projects which share the fiendish complexity, costs and regulatory matrix of a new build nuclear power station.  Whether the UK public purse (and electricity consumers) end up supporting directly (or indirectly) SMRs or large-scale reactors (or a combination of technologies), the allocation and management of risk is a fundamental driver of how these projects should be developed.

The risk allocation is not simply between public and private balance sheets but also between the UK and overseas governments. As part of a comprehensive risk management approach, insurances can play an important role in this process, during design, construction, commissioning, operation and decommissioning phases.

In common with other safety critical industries, nuclear power developments are very closely controlled through national and international regulations, which govern all critical safety and security aspects. However, even the most comprehensive legislation and stringent supervisory  regimes can prove susceptible to human error, poor management culture and inappropriate behavioural standards.  No amount of insurance can remove these risks. Indeed, continuing corporate governance and accounting failures in non-nuclear industries, such as at Carillion and Tesco, demonstrate that the poor general business risk management lessons of the past need to be relearned with greatly sustained and continuing effort. The apparent or proximate cause of a failure of risk management processes may not in fact be the root cause.

Approach

So, against a more dynamic risk environment, whether arising from emerging cyber, domestic terrorism or climatic risks (or simply the changing nature of traditionally well understood nuclear risks), what risk management approach might HMG now adopt?

The environment for high risk investments in new nuclear (as indeed in many other infrastructure sectors) can increasingly be characterised as being “VUCA” (i.e. volatile, uncertain, complex and ambiguous).   As both promoter and steward of the UK’s industrial strategy, it is encouraging that HMG recognises the place for new nuclear developments in the National Policy Statement.  Nevertheless, a more holistic, less industry specific and non-siloed approach to nuclear risk management would seem appropriate for the modern age.

Whistleblowing & IT Security

For example, whistleblowing policies in nuclear projects will only prove effective if staff have the moral courage to challenge openly their leaders’ decisions where they believe such decisions clearly erode the integrity of risk management, safety or security standards. Further, the risks of embedded design faults, malevolent IT technology malware or inadequate staff background checks may require closer integration with national cyber security strategy and relevant expert agencies such as GCHQ.

Conclusion

New nuclear is certainly no exception to the typical infrastructure risks such as construction delays and cost overruns. These are present in all major infrastructure projects.  However, nuclear project risks increasingly exist alongside other, complex and emerging societal risks, which demand a more sophisticated analytical understanding and approach, especially so where the public purse is the ultimate risk taker.

About the Author

Mark Vickers is an experienced public and private sector complex risk consultant, with a focus on financing projects in energy and infrastructure. He was Director of Project Finance for NuGen’s planned 3.8GW new nuclear plant in Cumbria in the UK and is a director of a new energy start up technologies platform. Mark was previously a commercial & investment risk advisor at The Crown Estate, focused on new marine energy technology investments in UK waters, such as wave & tidal power, floating wind turbines and offshore transmission grids.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

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SECTOR DEAL BETWEEN GOVERNMENT AND THE NUCLEAR INDUSTRY—KEY MESSAGES

This article was first published on Lexis®PSL Energy on 18 July 2018. Click for a free trial of Lexis®PSL.                                                                                                                                                                                            Energy analysis: Rupert Cowen, senior commercial and nuclear energy lawyer at Prospect Law, highlights some of the key messages of the sector deal between the UK government and the nuclear industry

Original news

£200m nuclear deal to secure UK energy mix, LNB News 28/06/2018 94

The Department for Business, Energy & Industrial Strategy (BEIS) has announced a £200m deal with the nuclear sector to secure the UK’s diverse energy mix and drive down nuclear energy costs. The deal includes £32m to kick-start a new advanced manufacturing programme to develop potential world-leading nuclear technologies like advanced modular reactors, and a commitment to increasing gender diversity in the civil nuclear workforce, with a target of 40% women in the sector by 2030.

What are the key messages and conclusions of the sector deal? Is there anything unexpected or new?

 To those of us old enough to remember the 1970’s, when the government of the day offered support to ‘the white-hot heat of technology’, the new industrial strategy is back to the future with its ‘grand challenges’ to put the UK at the forefront of the industries of the future.

Although the strategy promises government support in many sectors, it is a moot point whether nuclear can be said to be an industry of the future. Although, it is clear that some in this government believe that if the price of constructing generating capacity can be reduced, it does have a future in the UK.

As a mark of the confusion which reigns within the government authorities seeking to assist industry, even before the ink is dry on the nuclear sector deal, the National Infrastructure Council’s National Infrastructure Assessment cautions against a rush to agree government support for multiple new nuclear power stations, and proposes that after Hinkley Point C in Somerset, the government should agree support for only one more nuclear plant before 2025. This following on from the government’s refusal to support the Severn barrage.

Among the hyperbole of the nuclear sector deal, is the promise to ‘transform our future’. The deal does at least make good on the promise of financial support with confirmation of £56m for R&D in advanced modular reactors (AMRs), £85m to replace the funding Culham lost because of the withdrawal from Euratom; and other promises include £40m toward a facility to develop advanced nuclear technologies together with support for an advanced manufacturing program and a national supply chain programme.

The stand out point is that, although there will be government support for AMRs, that support does not extend to the small modular reactors (SMRs). Despite its disappointment, Rolls Royce—who would have been the main beneficiary of government support for SMRs—said that it continued to believe that ‘UK SMR can be a significant contributor to providing low cost, low carbon electricity’.

Nuclear energy supporters see AMR’s as a lower cost alternative to traditional reactors which are struggling to compete with the rapidly falling cost of renewables.

The other stand out points were:

  • acknowledgement of the need for direct government advanced financial support to reduce the cost of construction of the existing planned nuclear development in the UK
  • the new facility to develop advanced nuclear technologies is possibly going to be located at Trawsfynydd with support from the Advanced Manufacturing Research Centre (AMRC)

In return, those members of the industry who canvassed the Nuclear Industry Council have made a commitment to:

  • reduce the cost of new nuclear build projects by 30% over the next 12 years
  • reduce the cost of decommissioning old nuclear sites by 20%—reference is made to the current debate on the proper end state for legacy nuclear sites and the BEIS consultation on funding decommissioning

To the more cynical reader, the relationship between end state and cost reduction will not be lost.

This announcement comes only days after EDF announced that the cost of constructing Hinkley Point C had increased by a further £1.5bn to over £20bn.

Are there any remaining unanswered questions?

The government has indicated in a vague and unsubstantiated way that in the case of Wylfa Newydd, it might consider attaching taxpayer funds to the construction of the site, but with the ambition of achieving a strike price for the electricity that will be about £15/MWh cheaper than for Hinkley. Such a strike price would be about £77.50/MWh. This price is still higher than the £57.50/MWh allocated for UK offshore wind contracts in September 2017.

Are there any other important points worth mentioning?

The sector deal does not help with the biggest own goal for the nuclear industry in the UK and ensuring it is not affected by Britain leaving the European Union, and to aim for continuity with Euratom arrangements to enable the nuclear industry to continue operating after 29 March 2019.

About the Author

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law and Prospect Advisory and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

Rupert Cowen has worked in various countries on nuclear projects and has drafted for and provided ongoing guidance to those creating or revising national legal regulatory frameworks. He is recognised as a leading expert in international nuclear law and regulation; he lectures on a frequent basis around the world and has published papers on various aspects of nuclear regulation, particularly nuclear waste strategies.

Prices quoted are indicative and may be based on approximate or readjusted prices, indices or mean levels discussed in the market. No warranty is given to the accuracy of any view, statement or price information made here which readers must verify.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

Prospect Law Ltd, July 2018

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THE EUROPEAN COURT OF JUSTICE REJECTS AUSTRIA’S CHALLENGE TO HINKLEY POINT C

The Austrian Government’s challenge to the EC’s approval of state aid to support the development of the nuclear power station at Hinkley Point in the UK was last week rejected by the ECJ.

Austria and Nuclear Energy

Despite being home to the International Atomic Energy Agency (IAEA), an international organisation which “seeks to promote the safe, secure and peaceful use of nuclear technologies“, Austria has a strong anti-nuclear policy that stems from the country’s venture into nuclear energy in the 1970’s. A 700 MW(e) NPP was constructed at Zwentdorf and completed in 1978, but never commissioned. Despite the then government being in favour of nuclear power, there were many large anti-nuclear demonstrations which led to a 20-year ban on nuclear energy in the country; in 1997 this ban was extended indefinitely.

Not only does Austria’s anti-nuclear policy apply to its own generation of electricity, but also to electricity bought from other countries – in 2015 it passed a law banning the importation of nuclear generated electricity (insofar as it is possible to differentiate between the two when drawing from the grid in real time).

Neighbouring Countries:

Austria also has a history of trying to stop the development of nuclear power in neighbouring countries, having previously raised objections to the Temelin NPP in the Czech Republic and Mochovce NPP in Slovakia. In February 2018, Austria launched a lawsuit against the European Commission (EC) for its approval of Hungarian state subsidies for the construction of two reactors at the Paks nuclear site in Hungary – the outcome of this is awaited.

Austria’s concern about Temelin caused IAEA Director General, Mohammed ElBaradei to comment in 2007:

six out of seven of Austria’s neighbour countries have nuclear power plants. I would advise the Austrians not to concentrate on the fact that power plants exist, but rather on their safety”, and;

ultimately, it makes no difference whether the nuclear power plants are in Austria or on its borders. We at the IAEA ensure that the best possible safety standards are applied. I want to guarantee to all Austrians that the reactors surrounding Austria have nothing to do with Chernobyl. Of course, there can never be a 100% guarantee. It is just like flying: very safe, but with a residual risk. But I am not in the least concerned about Temelin. I can say that with a clear conscience, since I too live here in Austria”.

Hinkley Point C:

But Austria takes an anti-nuclear stance beyond its neighbours. In October 2014 it brought a case against the EC for its approval of the UK government’s state aid for Hinkley Point C, which the Commission argued was compatible with the internal market and that the construction of the plant was in the British public’s interest.

Hinkley Point C comprises two 1600 MW(e) EPR reactors and is being constructed by EDF Energy’s subsidiary NNB Generation next to the shutdown Hinkley Point A and operating Hinkley Point B stations in Somerset.

Austria sought to challenge the EC’s decision through the filing of a lawsuit with the European Court in July 2015, supported by Luxembourg. On the other side, the UK, Czech Republic, France, Hungary, Poland, Romania and Slovakia supported the EC’s case. The challenge drew the wrath of Agneta Rising, Director General of the World Nuclear Association, who said in a statement issued at the time:

It is one thing to have an opinion, it is quite another to try and force your opinion on someone else. The UK public, indeed people in all countries, have the right to choose nuclear to meet their energy needs and to help address climate concerns if they so wish. It is a pity that the Austrian government has decided not to respect that right”.

Ruling against Austria:

In its ruling of 12 July, the European Union’s General Court stated:

the Commission did not err in taking the view that the UK was entitled to define the development of nuclear energy as being a public-interest objective, even though that objective is not shared by all of the Member States“.

 It added that “the objective of promoting nuclear power, and, more specifically, of promoting the creation of new nuclear energy production capacities, is related to the Euratom Community’s goal of facilitating investment in the nuclear field“. It also said that each Member State has the right to choose from among the different energy sources those which it prefers.

The court also said that Austria had failed to invalidate the EC’s findings that it was “unrealistic” to expect a comparable amount of wind generating capacity could be built over the same timeframe as constructing Hinkley Point C “given the intermittent nature of that source of renewable energy“.

Austria can appeal to the European Court of Justice within the next two months.

Although Austria does not have an operating commercial NPP, it does have TRIGA research reactor at the Atominstitut (ATI) in Vienna. It is therefore by definition a generator of radioactive waste, and under the requirements of the EU’s radioactive waste Directive should have a long-term policy for dealing with it. It is a signatory to the Joint Convention on the Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management, and a signatory to the Convention on Nuclear Safety.

Conclusion

So Austria does take its nuclear responsibilities seriously and has declared its international commitment to improving nuclear safety, for example as reflected in its latest report to the Convention on Nuclear Safety saying that it “attaches utmost importance to international efforts to harmonise and steadily increase nuclear safety”.

Regarding its relationship with the IAEA however, the Austrian government saysAustria’s interests regarding the IAEA are primarily nuclear safety and radiation protection as well as safeguards against the proliferation of nuclear weapons. Austria ascribes considerable importance to the Convention on Nuclear Safety, and expressly supports the Agency’s integrated monitoring system”.

At first sight, Austria appears to be a thorn in the side of the nuclear industry, bringing challenge after challenge to nuclear developments throughout Europe. However, each of these challenges has been dealt with robustly and summarily dismissed. Should Austria stop its opposition to nuclear?  Perhaps ironically for Austria its challenges to date have had positive outcomes for the industry, but one could argue that its stance has the benefit of allowing arguments for and against to be discussed.

About the Author:

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector.

The firm is made up of lawyers, engineers, surveyors and finance experts. This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

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UK GOVERNMENT PUBLISHES DRAFT NUCLEAR SAFEGUARDS REGULATIONS

On 9 July 2018 the UK government published a consultation on draft Nuclear Safeguards Regulations (see link). The draft Regulations are the next essential piece in the framework being introduced in the UK following the decision to leave the Euratom Treaty in parallel to the decision announced to leave the European Union. These are important Regulations with wide implications for all nuclear operators and those in the nuclear supply chain.

The consultation runs to 14 September 2018 and covers all parts of the UK. Consultation workshops will take place in London on 2 August 2018 and in Manchester on 15 August 2018, and others may be announced later.

Following the triggering of Article 50, Treaty for European Union, the UK government concluded that leaving the European Union had the consequence of the UK being required to leave the Euratom Treaty, and it gave notice of that intention at the same time [see earlier Prospect Law briefings in June 2017 and March 2018, parts 1-3].

In order to avoid any actual or potential gaps in the coverage of nuclear safeguards, and to ensure its continued firm commitment to both the international system of nuclear non-proliferation and uninterrupted support for civil nuclear developments, the UK government has had to go to considerable lengths.

On 26 June 2018 the Nuclear Safeguards Act 2018 received Royal Assent, introducing a new and enhanced framework for the Office for Nuclear Regulation ‘ONR’ to apply safeguards outside of Euratom. The Nuclear Safeguards Act 2018 will amend relevant provisions of the Energy Act 2013.   Publication of the draft Nuclear Safeguards Regulations on 9 July 2018 is the next step in addressing the detailed regulatory requirements of this process.

The Regulations will aim to deliver an equivalent regime to that applying under Euratom from Day One of the UK’s exit from the European Union and Euratom, by whatever route that now takes. As expected, most of the new day to day responsibilities will fall on the ONR.

The UK Department for Business, Energy and Industrial Strategy ‘BEIS’ has also set up a working group with those with like responsibilities in Scotland, Wales and Northern Ireland, and this has been considering related issues such as the shipment and treatment of radioactive waste.

In addition, the UK has prioritised development of bilateral Nuclear Cooperation Agreements with four jurisdictions with their own particular legislation controlling nuclear trade and cooperation, namely Australia, Canada, Japan and the USA, and a UK-USA Nuclear Cooperation Agreement was signed on 4 May 2018.

The Regulations will contain important definitions such as those of “fissionable material” and “relevant international agreement”. It is intended that on Brexit, key Euratom regulations will become “retained EU law” under the European Union (Withdrawal) Act 2018, and then be repealed when the draft Nuclear Safeguards Regulations come into force.

If the draft Withdrawal Agreement between the EU and UK, on which political agreement was reached in March 2018, takes effect, then the Euratom regime will last through to 31 December 2020. However, if the UK leaves the EU on 31 March 2019 without being able to conclude a Withdrawal Agreement, the legislative framework of which these Regulations are part aims to ensure continuity.

About the Author:

William Wilson is a specialist environmental, regulatory and nuclear lawyer with over 25 years experience in government, private practice and consultancy. He worked as a senior lawyer at the UK Department of the Environment/DETR/Defra, and helped to build up the environmental and nuclear practices at another major law firm, as well as running his own environmental policy consultancies.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For further information or for assistance from the Prospect Law nuclear team in assessing the impact of these Regulations for your operations, or in preparing input to the consultation process, please contact Edward de la Billiere on +44 (0)7824 506022 or by e-mail on edlb@prospectlaw.co.uk.

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THE IAEA AND WHETHER IRAN IS TELLING THE WHOLE TRUTH

We continue to watch and assess the Iranian nuclear situation. Over the last week or so Israeli Prime Minister Netanyahu has been lobbying the leaders of Germany, France and the UK to accept his, and President Trump’s, assertion that Iran is already developing nuclear weapons. He backed this up by sharing with them many thousands of Iranian secret files. He says he’s not out to persuade the Europeans to withdraw from the Joint Comprehensive Plan of Action (JCPOA), stating in a recent BBC Newsnight interview that the nuclear deal is “already dead”.

Iran’s reaction to recent events was to announce that it will increase its uranium enrichment capacity, which will, in itself, not violate the terms of the JCPOA as long as it stays within certain limits. What does “uranium enrichment” mean and what are the implications of Iran’s announcements?

Uranium Enrichment

To explain this its worth looking at some basic physics and chemistry.

The chemical element uranium (symbol U) in nature comes in two main forms, or isotopes. Isotopes are atoms of the same element having the same numbers of protons and thus the same chemical properties, but different numbers of neutrons and different physical properties. The main isotopes of uranium are U-238 and U-235. On average, in nature, natural uranium contains ~0.7% U-235 and ~ 99.3% of the heavier U-238; there’s also a very small amount of U-234. U-235 is the important isotope as far as civil nuclear power stations and nuclear weapons are concerned because it can “fission” (split in two) and release energy.

Some nuclear reactor designs, including the UK’s Magnox and the Canadian CANDU designs, ran on natural uranium fuel. However, modern reactors and nuclear weapons require larger proportions of U-235 in the mix, achieved primarily through using centrifuges. A centrifuge is a spinning cylinder (not unlike a spin-dryer) in which uranium hexafluoride gas is fed into the spinning chamber and the heavier molecules of gas containing U-238 migrate towards the outside and the lighter gas molecules with U-235 towards the centre. The lighter gas will still contain much U-238, and so the process is repeated many thousands of times until the required concentration of U-235 is achieved.

Modern light water reactors need fuel which is between 3% and 5% enriched uranium, research and medical application reactors sometimes go up to 20% enrichment, and nuclear weapons require about 90% enrichment. Under the JCPOA, Iran had to give up its 20% enriched uranium and limit its enrichment programme to 3.67%, and its number of centrifuges to 5060.

Developments in Iran

In announcing its intent to increase enrichment capacity, Iran showed off some new, more efficient designs of centrifuge, which under the JCPOA it is not allowed to use, and it is this that is worrying to some. What this means is that it would need fewer centrifuges to produce weapons-grade material. Fewer units can be more easily hidden from the eyes of the outside world and the IAEA’s inspectors.

Iran doesn’t need to produce more enriched uranium for civil nuclear purposes, but with these announcements is demonstrating that it can, and possibly will, step up its campaign for higher enrichments in retaliation to the stance of the US and Israel in particular.

In his address to the IAEA Board of Governors on 4th June, IAEA Director General Yukiya Amano stated “the Agency continues to verify the non-diversion of nuclear material declared by Iran under its Safeguards Agreement. Evaluations regarding the absence of undeclared nuclear material and activities in Iran continue.” Previous statements by the Agency have given comfort to the first sentence of this extract. The second sentence however is causing some people to question whether the IAEA believes that Iran is in fact providing the “whole truth” about its programme

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

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IRAN NUCLEAR DEAL – HAS TRUMP GOT IT RIGHT?

Is President Donald Trump alone in his criticism of the “Iran nuclear deal”? And was his decision to withdraw from it a wise one, based on facts rather than conjecture? This “deal”, officially known as the Joint Comprehensive Plan of Action (JCPOA) was signed in July 2015 by Iran, the five permanent members of the Security Council (China, France, Russia, UK and US), Germany and the European Union. Of course, the US signed it under the Obama administration and President Trump made no secret of his opposition to it during his election campaign; as with “Obamacare”, was his main reason for withdrawing from the deal because it was implemented under the previous administration?

HISTORY

What do people say is wrong with the deal? Ironically, Iran’s civil nuclear development programme started in the 1970’s with assistance from the US under the Atoms for Peace programme. Under this, the US deployed many nuclear research reactors around the world and supplied the associated nuclear fuel.

Since those early days, Iran’s nuclear programme has gone through many changes, but to many, in recent years, it was pursuing what appeared to be its own nuclear weapons development programme. Like any country signed up to the Non-Proliferation Treaty (NPT), which Iran became party to in 1970, it has a right to undertake research into the production of nuclear energy for peaceful purposes. Iran protests that its research was purely related to power generation was not helped when the existence of previously unknown uranium conversion and enrichment facilities, which could be related to nuclear weapons research, were revealed in the early 2000’s. For a chronology of key events in Iran’s nuclear history see here.

Attempts to curb Iran’s nuclear research through diplomatic means, various international agreements and the imposition of sanctions through UN resolutions seemed to be having some effect, but there were indications that weapons research had not stopped – In 2006, Iran was found to have a heavy water production plant but had not notified the International Atomic Energy Agency (IAEA). Heavy water can have a “dual use” purpose in either nuclear weapons production or for power production. To make matters worse, Iran did not permit full inspection of its facilities by the IAEA, something which all countries signed up to the NPT must allow.

Iran’s stance towards the international community changed somewhat in 2013 with the election of president Rouhani, thought to be more moderate than his predecessor Ahmadinejad. He requested the start of new negotiations with the international community, and even had direct talks with President Obama.

THE JCPOA

These new negotiations laid the foundation for the JCPOA and an interim agreement came into effect at the start of 2014 which allowed for increased inspections by the IAEA and the suspension of certain parts of its programme in return for relief from some sanctions. The IAEA issued a statement that Iran had complied with terms of the interim agreement which was reinforced by a statement on 5 March 2018 from the IAEA’s Director General, Yukio Amana, to the IAEA’s Board of Governors: “As of today, I can state that Iran is implementing its nuclear-related commitments …”; a conclusion supported by the Agency’s inspectors who spend some 3000 calendar days per year on the ground in Iran.

The JCPOA is quite a complex agreement, under which Iran has to reduce its stockpile of enriched uranium, limit any future enrichment to values not capable of producing nuclear weapons, limit uranium enrichment to one site, not build any new heavy water reactors, and adapt its existing one for peaceful purposes. Iran will also sign up to the Additional Protocol and submit to a comprehensive inspections regime by the IAEA which will involve some 150 inspectors. So long as Iran complies with the terms of the JCPOA, then various sanctions will be eased or lifted altogether.

The signing of the JCPOA was welcomed by virtually every country and international institution, although Israel remained critical. Iran’s fellow Middle East states saw it as bringing stability to the region. So what does President Trump have to be concerned about?

PRESIDENT TRUMP’S VIEW

Under US law the JCPOA is a non-binding agreement and has to have the approval of Congress following certification by the President. In his statement of 8th May 2018, President Trump said “It is clear to me that we cannot prevent an Iranian nuclear bomb under the decaying and rotten structure of the current agreement” and the deal is “defective at its core”. He further believes that Iran is a “sponsor of terror” and that there is a “very real threat of Iran’s nuclear breakout”; moreover, he linked Iran’s missile and other defence activities to the deal, something it was not designed to do. He is particularly concerned that much of the agreement is time-limited – around a decade or so for many of its provisions, but he wants it to be permanent.

INTERNATIONAL REACTION

Ahead of the 8th May statement, the position of the JCPOA’s counter signatories was that they remained committed to the deal, but their powers of persuasion were obviously non-existent. The UK Foreign Secretary, Boris Johnson said President Trump would be “throwing the baby out with the bathwater” if he went ahead with his decision; French President Macron Tweeted after the statement “France, Germany and the United Kingdom regret the US decision to get out of the Iranian nuclear deal …the international regime against nuclear proliferation is at stake.” UN Secretary General Antonio Guterres says he is “deeply concerned by the US decision to withdraw from Iran nuclear deal”, and calls on all other parties to fully abide by deal’s commitments.

THE US SCIENTISTS’ VIEWS

More criticism of the President’s position came from 90 American scientists in a letter published in October 2017 asking Congress to remain party to the agreement. They noted also that non-nuclear activities, not covered by the JCPOA, could be addressed separately and acknowledged Iran’s willingness to hold separate talks on its ballistic missile program. They point out that the IAEA’s system of safeguards under the Additional Protocol is the “strongest set … implemented by the IAEA”. They go on to say that additional “real-time” verification measures would be beneficial, not only in Iran, but in all non-nuclear weapon states where there is doubt about product use and that multinational control of enrichment plants would provide an extra level of security, citing the arrangements that URENCO, the European enrichment company.

FORMER GOVERNMENT OFFICIALS AND EXPERTS’ COUNTER VIEWS

A counter statement by the Foundation for Defense of Democracies (FDD) was also given in October 2017 which supported President Trump’s stance. It was signed by some 20 “former Government officials and experts” and included former IAEA Deputy Director General Olli Heinonen. It described the JCPOA “as one of the most highly deficient arms control accords in the history of American arms control diplomacy”. It went on to say that “We hope that the White House and Congress can come together to fix a fundamentally flawed agreement, curb Iran’s illicit activities, and end the nuclear blackmail imposed by the current JCPOA”.

WHAT NEXT?

Some observers believe that the US withdrawing from the JCPOA will mean Iran will continue to develop a nuclear weapons’ programme, however, technically, the JCPOA remains in force. Will it trigger a nuclear arms race in the Middle East? Although not officially recognised, it is well believed that Israel possesses over 40 nuclear warheads, on a par with India and Pakistan. Netanyahu fully supports President Trump’s decision, of course, giving his own assessment of Iran’s nuclear programme, saying “Iran lied”.

In March 2018 on a visit to the US Saudi Arabia’s Crown Prince Mohammed bin Salman said “… if Iran developed a nuclear bomb, we will follow suit as soon as possible”.

There will be plenty of commentary over the coming days and month. Decisions such as this have a tendency to implement the “law of unintended consequences”. We will monitor the situation and post further blogs on the issue.

For a PDF of this blog click here

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.
This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.
This article is not intended to constitute legal or other professional advice and it should not be relied on in any way. For more information or assistance with a particular query please in the first instance contact the department paralegal Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk

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BREXIT, EURATOM AND NUCLEAR LIABILITIES: PROSPECT LAW AT THE WM SYMPOSIA 2018 IN PHOENIX, ARIZONA PART III:

The following series of articles is written further to Jonathan Leech’s attendance at the Waste Management Symposia 2018 in Phoenix, Arizona, on 22nd March, and examines the UK’s impending exit from EURATOM and responsibility for international nuclear safeguards.

See link to Jonathan Leech’s presenter profileList of exhibitors and Conference Program

The third part of this series examines the nuclear cooperation agreements the UK has entered into over the past fifty years.

Nuclear cooperation agreements

Nuclear trade between the UK and other Euratom members relies on cooperation provisions within the Euratom treaty and common Euratom safeguarding arrangements.

Nuclear trade between the UK and other countries relies on either Euratom nuclear cooperation agreements, or bilateral nuclear cooperation agreements, the majority of which are predicated on continued UK participation in Euratom safeguards.

Of the circa 50 bilateral nuclear cooperation agreements the UK has entered since 1956, over 30 specifically recite and rely upon UK participation in Euratom safeguards. Without demonstrably adequate safeguards and replacement nuclear cooperation agreements key countries will, where their domestic law or policies require, cease trade with the UK in nuclear materials, components, technology and know-how. The relationship with the US is well understood. Absence of a ‘Section 123 Agreement’ would prevent supply of key components for both the planned Hitachi-GE ABWR and Westinghouse AP1000 reactors, and would disrupt supply of components and equipment required by Sellafield. Absence of a nuclear cooperation agreement with Australia would cut off a key source of uranium imports.

The UK Government has identified development of replacement nuclear cooperation agreements with USA, Canada, Australia and Japan as key milestones within the Euratom exit programme, including negotiation up to Q4 of 2018 and finalisation in Q1 of 2019 “to enter into force on Day 1 of Exit”. Notably there is no mention of South Korea. Written evidence from Sellafield to the BEIS Committee also identifies Kazakhstan and China as key counterparties.

Establishing the UK safeguarding regime to be in place on Euratom exit will be a pre-condition to finalising any new nuclear cooperation agreement. In each case the acceptability of any new regime will be a matter for each counterparty. As noted above, the current Safeguards Bill is merely a first step in enabling development of a domestic safeguarding regime. Whilst there are relatively few states that require nuclear cooperation agreements as a strict legal or policy requirement, for those that do the need to finalise a safeguarding regime first will add to the challenge presented by the timetable. For example, taking into account the minimum 90-day Congressional review period for a new Section 123 Agreement, any replacement UK safeguarding regime will need to be established by the end of 2018 at the latest if the agreement is to take effect immediately on the current Euratom exit date.

Update on nuclear liabilities conventions

The global nuclear liabilities landscape is changing. The last 3 years have seen significant developments, with the Convention on Supplementary Compensation finally entering into force on 15 April 2015 and significant progress towards ratification of the 2004 Protocols to the Paris and Brussels Conventions. These changes are to be welcomed as beneficial to international cooperation, but also bring changes to liabilities risks associated with the international movement of nuclear materials.

The attached global nuclear liabilities map shows the current geographic extent of the Paris Convention, Brussels Supplementary Convention, Vienna Convention, Joint Protocol and Convention on Supplementary Compensation.

Convention on Supplementary Compensation

The latest change is to the status of Canada. Following major revisions to domestic nuclear liabilities legislation, Canada ratified the Convention on Supplementary Compensation on 6 June 2017 and the convention took effect in Canada on 4 September 2017. This ensures consistent allocation of jurisdiction between the US and Canada in the event of a nuclear incident.

Paris / Brussels Conventions: Ratification of 2004 Protocols

Ratification of the 2004 Protocols by EU member states (including the UK) is now expected to take place around the middle of 2019 at the earliest.

The changes will substantially reduce risks of nuclear liabilities within Paris / Brussels jurisdictions falling outside the convention regime. Limited risks of cross-border liabilities in non-Paris / Brussels jurisdictions remain.

The UK Nuclear Installations (Liability for Damage) Order 2016 sets out extensive changes to the Nuclear Installations Act 1965. Those changes will take effect when the UK ratifies the 2004 Protocols and the Protocols enter into force.

This article is not intended to constitute legal advice and Prospect Law and Prospect Energy accepts no responsibility for loss or damage incurred as a result of reliance on its content. Specific legal advice should be taken in relation to any issues or concerns of readers which are raised by this article.

Jonathan Leech is a solicitor specialising in project and infrastructure work, with particular emphasis on the energy, nuclear and utility sectors. His work includes advising on legal and contracting strategies and regulatory issues associated with major nuclear development, decommissioning, waste and reprocessing projects, energy infrastructure and other utility and infrastructure related projects.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

For more information please contact Jonathan Leech on 020 7947 5354 or by email on: jrl@prospectlaw.co.uk.

For a PDF of this blog click here