NEWS ANALYSIS: The Growing Nuclear Fuel-Cycle Debate

Oliver Meier reporting from Vienna

A series of nuclear-related crises and a growing interest by several countries in nuclear energy production has revived interest in ways to prevent the spread of nuclear technologies that can be easily misused for the production of nuclear weapons materials.

Since the dawn of the nuclear age, governments have cast about for ways to manage the dual-use nature of nuclear technology. In the 1970s and 1980s, several proposals were discussed for creating an international framework to govern uranium enrichment and plutonium reprocessing, but none were implemented.

However, these concerns have taken on a new life as fears have grown that Iran may misuse its nuclear fuel-cycle facilities to produce nuclear weapons materials and after Pakistani nuclear scientist Abdul Qadeer Khan’s clandestine nuclear black market network was unmasked.

Against this background, countries such as Japan, Russia, the United Kingdom, and the United States, as well as the International Atomic Energy Agency (IAEA) and nongovernmental organizations such as the Nuclear Threat Initiative (NTI) and the World Nuclear Association (WNA) are offering novel suggestions on how to rein in this dual-use technology. Although they have yet to agree on a plan, a late September IAEA General Conference and Special Event on the subject indicated growing convergence about the way forward. Most proposals take a cue from IAEA Director-General Mohamed ElBaradei and offer various means to establish multilateral control over the nuclear fuel cycle.

The Consensus

First, the proposals generally agree that any fuel-supply mechanism should not disturb the international market for nuclear fuel services. Currently, four large commercial entities provide low-enriched uranium (LEU) for nuclear power: Urenco, managed jointly by Germany, the Netherlands, and the United Kingdom; Eurodif, a multinational company headquartered in France; the United States Enrichment Corporation; and Tenex, based in Russia. Together, these providers currently produce enough LEU to satisfy global demand.

LEU can be manufactured into fuel for light-water reactors, by far the most common type of reactor in use globally.

Many of the proposals seek to ensure the market neutrality of a future supply mechanism by designing it as a “reserve” that would be tapped only if supply is interrupted.

Second, advocates concur that the establishment of multilateral fuel-cycle arrangements should be implemented step by step. The front end of the nuclear fuel cycle, that is, the supply of nuclear fuel and in particular LEU for power production, is seen as the most urgent issue to be addressed. How to deal with the back end—nuclear waste and reprocessing of spent fuel—should be addressed at a later stage.

Third, there seems to be broad agreement that having a diverse set of complementary “fuel reserves” may be better than relying on a single source of supply.

Fourth, setting up stockpiles of LEU is seen as more practical than establishing stockpiles of fabricated nuclear fuel. Fuel assemblies are manufactured to the specifications of every reactor type and sometimes specifically for each reactor, making a fuel bank containing nuclear fuel for all possible recipients impractical.

Beyond these shared characteristics, a variety of unique proposals have been advanced.

Global Visions: U.S. and Russian Proposals

The United States and Russia have offered the most far-reaching visions for a global supply mechanism. Both have offered to provide a range of nuclear energy services ranging from fuel supply to fuel take-back and reprocessing.

Under the Global Nuclear Energy Partnership (GNEP), launched in January by the United States, countries that renounce fuel-cycle activities would become eligible to receive U.S. nuclear fuel. Assistant Secretary for Nuclear Energy Dennis R. Spurgeon explained Sept. 19 at the IAEA special event that “the purpose of GNEP is to facilitate the safe, secure, and economic expansion of nuclear energy.” It intends to accomplish this by developing and providing novel, proliferation-resistant nuclear technologies as well as fresh fuel and spent-fuel management, with a particular focus on developing countries.

Spurgeon also provided additional details about a separate U.S. offer to down-blend 17.4 tons of highly enriched uranium (HEU) removed from the U.S. defense program and set the resulting LEU aside in a domestically held reserve, a proposal first announced a year ago. Such a stock, equivalent to six to eight core refuelings of an average light-water reactor, could complement reserves established under control of the IAEA, Spurgeon said. Gregory Schulte, the U.S. ambassador to the IAEA, said in a Sept. 20 interview with Arms Control Today that the United States is not willing to consider making this material part of an international stockpile because U.S. law requires national control over such material. Schulte conceded that, “for some countries, that will provide reassurance, but for others, perhaps it won’t.”

Russian President Vladimir Putin on Jan. 25 announced the Global Nuclear Power Infrastructure (GNPI) to provide nuclear power services through a network of international nuclear fuel-cycle centers (INFCC). In an article in the September 2006 issue of the IAEA Bulletin, S. V. Ruchkin and Vladimir Loginov of Tenex said that GNPI-INFCC “is aimed primarily at countries who are developing nuclear power but not planning to establish indigenous uranium-enrichment and [spent nuclear fuel] reprocessing capabilities.” Access would be restricted to countries “meeting established non-proliferation requirements.”

Russia, which apparently has huge surplus uranium-enrichment capacities, boasts that its proposal can be implemented quickly. In a presentation at the IAEA event, Ruchkin emphasized that “key preconditions” for setting up an international enrichment facility “are supposed to be provided by the end of the year.” An international uranium-enrichment center will be established at the Angarsk Electrolysis Chemical Complex, in the city of Angarsk in east Siberia, and could start operating in 2007, he said.

As with GNEP, Russian officials also hope that the centers eventually house reactors with a new proliferation-resistant means of burning some of the elements in spent fuel for additional energy, according to other Russian experts.

Although no decision has been made on the exact legal basis for such a center, membership in the consortium would clearly guarantee access to its services and products but not the technology itself. The center itself would be run by Russia.

The Six-Parties Proposal

In June, the six states that operate the largest, commercial enrichment facilities presented a joint Concept for a Multilateral Mechanism for Reliable Access to Nuclear Fuel (RANF). France, Germany, the Netherlands, Russia, the United Kingdom, and the United States proposed to establish a “last resort safety net” to address potential supply problems. The initiative is vague on specifics but offers a “multi-tiered set of measures” to establish both basic assurances as well as a reserve of enriched uranium that could serve as a backup mechanism in case supplies were interrupted for nontechnical and noncommercial reasons. The IAEA would play the role of an arbiter and also be responsible for making technical judgments about the eligibility of access to the mechanism. The proposal has become a kind of umbrella under which more specific fuel-bank ideas have been advanced.

Limited Proposals

In May 2006, the WNA, a private-sector alliance of major nuclear power enterprises, issued an expert group report that recommended a layered approach to enrichment fuel services. At first, interruptions of supply would be addressed through normal market procedures. If these mechanisms fail and if the IAEA finds that an enrichment contract has been breached for bilateral political reasons unrelated to nonproliferation, it would intervene and invoke collective guarantees by enrichers and thus assure the supply of nuclear fuel from other sources. Should it still be impossible to solve the supply problem, nationally held stocks of enriched uranium product, such as that proposed by the United States, could be used to fill any possible gap. In order to be market neutral, such material could be produced by down-blending HEU stocks from former military stocks.

The most novel offer under discussion in Vienna was the announcement by the privately funded NTI to donate $50 million, provided by NTI adviser and U.S. billionaire Warren Buffet, to create an LEU stockpile owned and managed by the IAEA. NTI would donate the money under two conditions: that within two years, one or several IAEA member states contribute an additional $100 million, and that the agency take “the necessary actions to approve establishment of this reserve,” former Senator and NTI Co-Chairman Sam Nunn said Sept. 19. “Every other element of the arrangement,” Nunn emphasized, “would be up to the IAEA and its member states to decide.”

Still, Laura Holgate, vice president for the Russia/New Independent States Programs at NTI, offered some ideas “in order to advance the discussion of an IAEA fuel reserve.” According to Holgate, NTI believes that such a reserve should be in the form of uranium hexaflouride enriched to a level of 4.9 percent, which is a typical enrichment level for reactor fuel. The initial $150 million would be sufficient to purchase 50-60 metric tons of such materials, the equivalent of one loading of a standard power reactor.

“In order to be seen as a true backup to an extant commercial fuel service contract,” the stockpile would have to be physically placed outside the current six supplier states, Holgate argued.

NTI President Charles Curtis, who chaired the IAEA special event, emphasized in a Sept. 28 interview with Arms Control Today that NTI wanted to shift the discussion from setting conditions to providing assurances for states to dissuade countries from investing in domestic fuel-cycle capabilities. “You’re not going to have states trading away their rights to technology,” Curtis stated.

On Sept. 12, Japan proposed an IAEA Standby Arrangements System for the Assurance of Nuclear Fuel Supply. The proposal is supposed to complement the six-party proposal in two ways. First, Japan’s proposal suggests addressing all front-end nuclear fuel-cycle activities, from uranium mining to fuel fabrication. Secondly, Japan suggests establishing an early warning mechanism operated by the IAEA. The agency would collect and analyze declarations of all participating supplier states and, based on those reports, alert member states of imminent market failures.

In a different take on the idea of fuel-supply assurances, the United Kingdom suggested issuing ”enrichment bonds” as a means of guaranteeing enrichment services. These bonds would be legal arrangements between the supplier state and company, the recipient state and the IAEA that “would guarantee that, subject to compliance with international law and to meeting the nonproliferation commitments to be assessed by the IAEA, national enrichment providers will not be prevented from supplying the recipient state with enrichment services in the event the guarantee is invoked.”

The thrust of the proposal is to increase the confidence that export approvals will be given by placing the final judgment on the export of LEU in the hands of the IAEA and that other issues or political considerations will not stand in the way of nuclear trade. According to notes on its policy that British officials distributed for the special IAEA meeting, such an approach would “significantly limit the criteria upon which export approvals are normally based (to include only nonproliferation considerations)” but argues that “governments must ultimately be prepared to relinquish some rights in exchange for a broader nonproliferation gain.”

Germany also joined the debate with a late and ambitious proposal. In a Sept. 18 interview with the German daily Handelsblatt, Foreign Minister Frank-Walter Steinmeier, noting that the IAEA statute provided for the agency to build and operate its own nuclear facilities, proposed to place “multilateral uranium enrichment under the auspices of the IAEA and its export controls.” Steinmeier suggested that a third country could provide an exterritorial area for a uranium-enrichment plant. The facility would be financed by recipient countries that would then have the right to acquire nuclear fuel.

In a Sept. 19 press conference in Vienna, German Secretary of State of the Federal Ministry of Economics and Technology Joachim Würmeling placed the German proposal in the context of a midterm solution to the concerns about Iran’s and North Korea’s nuclear programs. Würmeling explained that companies from established nuclear enrichment countries would construct the new facility, which would operate as a “black box.” Fuel recipients that currently do not enrich domestically would have no direct access to the facility. The German proposal is not market neutral because it would de facto establish a new competitor on the world market for nuclear fuel services.

Würmeling announced that Berlin would forward its initiative during the first half of 2007, when Germany holds both the EU Presidency and the Group of Eight chair. In a statement to the German Parliament on Oct. 19, Steinmeier described international reactions to his proposal as “encouraging.”

Mixed Reactions

Many speakers, including ElBaradei, emphasized that assurance of supply mechanisms are “not an attempt to divide the nuclear community into suppliers and recipients.” However, it was notable that all proposals to establish fuel reserves or other supply mechanisms emerged from current or potential nuclear fuel suppliers.

Many potential recipients, mostly from developing countries, remained either indifferent or voiced fears that a new “cartel” might be created. Many of them based their positions on the “inalienable right” of nuclear Nonproliferation Treaty states-parties to the peaceful use of nuclear energy. Iranian Vice President Gholamreza Aghazadeh in his statement to the general conference echoed these sentiments by warning “that the developed countries are seeing to create a monopoly” on uranium enrichment.

Malaysia was less critical. In a Sept. 20 statement to the IAEA general conference, Daud Mohamad, director-general of the Malaysian Institute for Nuclear Technology Research, cautioned that a multilateral approach to the nuclear fuel cycle should not be discriminatory. Nonetheless, he said that that it “should provide a more economically attractive option for developing countries embarking on a nuclear power generation program, particularly those countries with a relatively small nuclear program involving only a handful of nuclear power plants.” Malaysia currently does not operate nuclear power reactors but is studying the possibility of doing so.

All proponents of a fuel-bank mechanism emphasize that participation in a multilateral mechanism should be voluntary although eligibility of access might depend on various conditions, such as first renouncing enrichment and reprocessing ambitions.

It is not clear how such voluntary mechanisms would jibe with technology denial approaches, such as the one favored by the United States. The most recent round of the fuel-cycle debate was kicked off in February 2004, when President George W. Bush proposed an international agreement among nuclear supplier states to deny exports of enrichment and reprocessing technologies to countries that do not currently operate such facilities. Schulte confirmed this policy remains in place as far as the United States is concerned. “We still think that it is very important to prevent the further spread of enrichment technologies,” he said.

Some argued that attempts to restrict access to critical nuclear technologies has had unintended side effects. The recent interest of some states in expanding the scope of their nuclear activities has been explained by a desire to join the club of states operating a nuclear fuel cycle before membership is closed. Schulte acknowledged the debate but denied a causal link between U.S. export control policies and the recent expression of interest by Argentina, Australia, South Africa, and South Korea in establishing fuel-cycle facilities. “I don’t buy that argument. I’ve spoken to representatives of all those countries, and these decisions have been in many cases in the works for a number of years,” he stated.

The debate was further complicated by the unclear division between suppliers and recipients. For example, Japan currently enriches uranium only for domestic purposes but intends to export nuclear fuel in the future. It said it rejects the “dichotomy” inherent in the RANF proposal, which differentiates between suppliers and customer of nuclear services. Tokyo’s proposal for a standby arrangement is explicitly intended to bridge that gap.

Canada and Australia currently export uranium ore and provide other fuel services but may not want to foreclose the possibility of enriching uranium in the future. South Africa said that “some might choose to pursue sensitive fuel cycle activities in a limited way or only for research activities.” Brazil presented itself in Vienna as a supplier rather than as a recipient of nuclear fuel services.

There was also a notion that the discussion about fuel-supply arrangements is a solution looking for a problem. Historically, the “breakout” option has not played a large role in proliferation. States that developed nuclear weapons illegally or in a clandestine manner have preferred to set up dedicated military facilities to produce fissile material for the bomb instead of misusing civil facilities for that purpose.

Because the international market provides for reliable access to nuclear fuel from a variety of sources, it is also not quite clear what the added economic value of participating in a fuel-bank proposal is. Existing arrangements already provide certain assurances of supply because standard supply contracts for reactor-grade fuel contain clauses that place the responsibility for uninterrupted services on the supplier. Historically, supplies have rarely been interrupted.

In addition, any fuel-bank mechanism would have to overcome legal obstacles, including the practice of supplier states to maintain consent rights over any fissile material they deliver.

The Way Forward

Any multilateral fuel-supply assurance mechanism would have to overcome a variety of political, legal, and technical obstacles, but several speakers felt that discussions on such a model are already more specific and advanced than ever before. Richard J. K. Stratford, director of the Office of Nuclear Energy, Safety and Security at the U.S. Department of State, pointed out that “today there are numerous suppliers who are willing to take specific steps, and to spend their own money, to implement fuel supply assurances, and for many of the same reasons as in the 1980s.” ElBaradei in his statement to the IAEA special event said that “the urgent need for such a scheme today may help us to succeed.” He warned that “[w]e will all share in the benefits if we succeed, and we will share the risks if we fail.”

In the coming months, the IAEA secretariat will be preparing a “road map” for consideration by the IAEA Board of Governors in 2007. ElBaradei in his opening statement and Curtis in his chairman’s report agreed that establishment of a mechanism to ensure the supply of nuclear fuel should be considered first, starting with those proposals that are easiest to implement. Real “internationalization” of the fuel cycle, including the possible multilateralization of fuel-cycle facilities, is envisaged only in the long term, they said.

IAEA spokesperson Peter Rickwood told Arms Control Today on Oct. 20 that no decisions had been made on when the secretariat would deliver such a report or what its format might be.