THE BLOG

The Russian Nuclear Energy Proposal: An Offer You Can't Refuse

06/05/2015 05:10 pm ET | Updated Jun 05, 2016

Co-authored with Maximilian Mayer, Center for Global Studies, Bonn University,

Is nuclear energy dying a slow death after the Fukushima-Daiichi disaster, or is it growing around the world? The forecasts about the future of nuclear energy give rise to tremendous controversies. But even more important than the exact number of operational nuclear reactors in the future, it is the dispersal of nuclear technology that poses new challenges in the 21st century. One of the most pressing concerns is nuclear safety.

The proponents of nuclear energy emphasize that in addition to the already 30 nuclear energy producing countries, another 45 countries are "actively considering embarking upon nuclear power programs." Others warn us to be more cautious in our forecasts, because wanting and being able to produce nuclear energy are two drastically different things. There are major hurdles to be overcome before a country can introduce nuclear energy into its electricity grid. In addition to major investments, the aspiring country needs to acquire an acceptable level of technical expertise and build the needed regulatory regime. And there is the largely unresolved problem of nuclear waste, not only a problem for newcomers, but also for most countries that have been producing nuclear energy for several decades.

Russia has developed a proposal that seems to offer a solution to these problems. Under the acronym BOO (Build, Own, Operate), Russia's state-owned Rosatom offers to finance, build and operate new nuclear reactors for the aspiring nuclear energy countries. In the words of Jong Kyun Park, the head of the IAEA's Nuclear Power Division, this unique approach solves two of the biggest challenges that newcomers face, namely "[a lack of] financing and experienced operators." In addition to these services, Russia provides the newcomer with nuclear fuel and, more importantly, takes away the used fuel after operation; an idea called fuel-leasing. This removes concerns about nuclear waste disposal for nuclear newcomers.

The first country that will receive the BOO comprehensive package is Turkey, which has a contract for four reactors with Rosatom. There are further a number of countries that will likely order reactors with Rosatom. Jordan is the most recent example of a country that has contracted two reactors with Russia. During president Putin's visit to Cairo, president Abdel-Fattah el-Sissi announced new plans to have Russian nuclear reactors in his country. Rosatom also has contracts with Algeria, Vietnam, Argentina, Bangladesh and many more countries. It recently announced plans to build Bushehr 2 (a two reactors project) in Iran in the fall. Rosatom is particularly eager "to win business from developing countries."

Critics of the BOO approach stress that Russia could use nuclear technology as a lever for building influence around the globe. While the West is fixated on Russia's natural-gas politics and the conflicts with Ukraine, President Putin seems to be expanding global influence and acquiring new allies. It is not American Westinghouse or French Areva that are winning the new reactor contracts, but Russian Rosatom, which is a market leader with more than 30 reactors under construction.

Rosatom seems also to be active in European countries, including Hungary, Finland, and the UK. The Hungarian government came under heavy pressure from the European Commission after signing a contract with Russia for the modernization and expansion of its nuclear fleet. Brussels, eager to diversify energy supplies of the Union, rejected the idea that Hungary would only import its nuclear fuel supplies from Russia. While Russian involvement in the construction of a Finnish nuclear power plant passed Euratom oversight procedures without problems, the case of Hungry clearly signals that the Russian comprehensive package plays into European fears about energy security. The European Commission's sour reaction might lead some smaller EU countries to rethink the Russian proposal. Accepting it implies a complete dependence of Russian nuclear technology, knowhow, fuel supply, and finance.

Don't get us wrong. We do not mean to express yet another anti-Russian sentiment. Rosatom seems simply to be a very clever player on the global nuclear energy market. And Russia seems to keep the leading position since its comprehensive package is highly attractive, especially for nuclear newcomers. The only country that is potentially capable of competing with the Russian model - including the financing aspect - is China. While Chinese companies are not yet exporting reactors, the China National Nuclear Corporation (CNNC) does have serious ambitions.

Regardless of how fast global nuclear energy will expand (or shrink) in the future, its new global dispersal can't be denied. It is stunning that the shifting distribution has not led to renewed attention to the ineffectiveness of current nuclear safety governance on a global level. Apparently, the experience of the nuclear disasters in Fukushima-Daiichi were not enough of a wake-up call. Clearly, if Rosatom's "number one consideration" is to reduce costs, as the company's CEO Sergei Kirienko says, the prospects for guaranteeing nuclear safety seem questionable.

But of course Rosatom is no outlier. Neither governments nor nuclear vendors worldwide have yet come up with an oversight, reporting, transparency, and citizen participation mechanism sufficient to make sure that the role that nuclear power could play in the global future energy mix does not lead to disastrous events. Rosatom's proposal only contributes to a quicker global dispersal of nuclear energy, while the existing nuclear safety governance regime is not ready yet to ensure the safety of a global expansion.