EU should incentivize use of nuclear power, says IEA

01 December 2014

The European Union should complement its Emissions Trading Scheme (EU ETS) with policies to attract "critical investment" in low-carbon technologies - including renewable energies, nuclear  power and carbon capture and storage  (CCS) – "through sector-specific measures to enhance technology innovation and address non-economic barriers," the International Energy Agency (IEA) said in a report issued today.

The recommendation was one of five listed in the report titled Energy Policies of IEA Countries: European Union – 2014.

Paris-based IEA also said the EU should enhance bloc-wide co-operation on uprates, safety upgrades, and extensions of the lifetimes of the region's existing nuclear power plants to ensure highest safety standards and regulatory stability, while ensuring appropriate incentives can be used in those member states that "wish to maintain the nuclear option as part of the energy supply diversity and security". In addition, the EU should ensure co-ordination among member states to consider the disposal of all forms of radioactive waste, particularly high-level waste, including the possible creation of regional repositories.

The European Union has made progress in liberalising energy markets, and its "global leadership on climate change is to be commended, but there remains much room for improvement," the report said.

"Much of the integration of Europe's energy market has been confined to northern and western parts of Europe, and that until important interconnections are built across the entire bloc, the EU will not have a truly integrated, single energy network – the basis for an 'Energy Union'. Moreover, despite reforms at the wholesale level, markets are increasingly distorted by the persistence of regulated prices and rising green surcharges and levies. EU leaders agreed in October 2014 to ambitious climate and energy targets for 2030. Now, the legal framework must be put in place, with market rules for a low-carbon system. The transition to such a low-carbon system remains challenging, as electricity and transport sectors rely heavily on fossil fuels. This requires the swift reform of the EU ETS and support to investment in low-carbon technologies."

IEA executive director Maria van der Hoeven added an Energy Union should not represent "a buyer's cartel", but should rather feature an integrated energy market and effective climate and energy policies. The EU must "better pool its resources", she said, within the internal energy market to enhance both energy security and the competitiveness of its industry.

EU electricity systems and markets need to accommodate growing shares of variable renewable energy, according to the report. At the same time, the EU faces the retirement of half its nuclear generating capacity in the next ten years. Decisions need to be made about uprates, upgrades and lifetime extensions.

"Energy security must be placed at the centre of the Energy Union. In order to reduce dependency on one single supplier, the EU must further diversify gas and oil supplies, and cannot afford to reduce its energy options: nuclear, coal and unconventional gas and oil will need to be part of the mix," it said.

The IEA report calls for "a new commitment" to the internal energy market across the EU, with an interconnected energy network and competitive retail markets to ensure: in electricity, the market integration of variable renewable generation with strong co-ordination of electricity system operation; generation adequacy; and demand-side response, balancing and intra-day markets across interconnected systems in gas, access to and efficient use of gas storage and liquefied natural gas terminals and unconventional gas sources.

Between 2008 and 2013, the EU has been "directly feeling" the impact of global energy developments, the report said. These include the vast increase in energy demand in emerging economies; the turmoil in North Africa, Middle East and Ukraine, threatening oil and gas production or supplies; the surge of unconventional oil and gas production in North America; ample and low-cost international coal supplies; and the nuclear accident in Fukushima Daiichi, bringing back concerns about the use of nuclear power, while at the same time, leading to increased pressure on the global liquefied natural gas supplies.

Power plants in the EU are ageing and almost half the electricity generating capacity is likely to be shut down in the coming decades, notably the plants using coal and nuclear, which today provide base-load electricity supply, with shares of 28% and 27% in 2012, respectively. There is a risk for Europe, the report said, of losing the diversity of its electricity generating capacity. Investments are needed to modernise the power fleet in the longer term, while maintaining diversity from coal and nuclear in power generation in the transition, amid gas security and electricity adequacy concerns.

Half of the European Union's 131 nuclear power plants have been operating for more than 29 years. The ageing of the EU reactor fleet requires immediate decisions regarding new plant construction, safety, upgrades and uprates, licence extensions, retirements, and decommissioning as well as used nuclear fuel and radioactive waste management. Given the significant role that nuclear plays in the electricity system, an EU policy is important to support these decisions, including addressing safety and security concerns, notably linked to nuclear waste management.

Efficient carbon markets need to be complemented by sector- and technology-specific regulation and by support to energy research, development, demonstration and deployment. This is particularly important for new renewable technologies, nuclear and CCS, the report said. The forthcoming 2030 Climate and Energy Framework "has to deliver an investment policy for low-carbon technologies, consistent with the European Union's long-term decarbonisation pathway to achieve 80% to 95% greenhouse gas emission reductions by 2050, according to the Energy Roadmap 2050, and the global climate change agenda," it said.

The IEA is an autonomous organization which "works to ensure reliable, affordable and clean energy for its 29 member countries and beyond."

Researched and written
by World Nuclear News