Uranium mining, processing and nuclear energy - Opportunities in Australia?

By Emma Covacevich.

Key Points:
The Taskforce concludes that the timeframe for nuclear power delivery in Australia is "probable" within 15 years, and 10 years at the "earliest".

The Federal Government's Uranium Mining, Processing and Nuclear Energy Taskforce was established by the Prime Minister in June 2006 to investigate issues surrounding the development of nuclear-based energy production in Australia. On 21 November 2006, the Taskforce released its draft report, which sets out in some detail the energy cycle of nuclear power generation and distribution, as well as expert assessments of the associated costs, environmental impacts, safety issues, economic implications, and regulatory models drawn from overseas.

It concludes that the timeframe for nuclear power delivery in Australia is "probable" within 15 years, and 10 years at the "earliest".

Terms of reference

The Taskforce's terms of reference are set out across three broad categories:

• economic issues
• environmental issues; and
• health/safety and proliferation issues.

Under economic issues, the Taskforce was mandated to report on the capacity for Australia to increase uranium mining and exports in response to growing global demand, the potential for establishing other steps in the nuclear fuel cycle in Australia, and the extent to which nuclear energy could be economically viable and competitive in the longer term.

The environmental issues include nuclear power's potential contribution to the reduction of greenhouse gas emissions, and its place amongst the emerging alternative energy technologies in Australia.

The health, safety and proliferation issues relate to waste processing and storage issues, national and international security implications, and the safety of producing nuclear energy.

Key findings

The Report makes several findings:

• Downstream steps of uranium conversion, enrichment and fuel fabrication could add a further $1.8 billion of value annually if all Australian uranium was processed domestically.
• Deployment of nuclear power starting in 2020 could see 25 reactors producing over a third of the nation’s electricity by 2050. However, for it to become competitive, the energy system must explicitly recognise the costs of greenhouse gas emissions. Even then, private investment in the first-built nuclear reactors may require some form of government support or directive.
• The energy industry's legislative framework in Australia is currently decentralised and diffuse amongst states and the Commonwealth. Experience in other nuclear countries shows that a more integrated and consolidated national regime would be necessary.

Other key findings of the Report include:

• The current state of nuclear technology means that nuclear power would be between 20-50 percent more costly to produce than coal or gas-fired power. This gap may close in the decades ahead.
• The greenhouse gas emission reductions from nuclear power could reach 8 to 18 per cent of national emissions in 2050. The Taskforce is of the opinion that Australia's greenhouse challenge requires a full spectrum of initiatives, of which nuclear power should be one.
• Australia has suitable areas for developing waste disposal repositories. Nuclear waste disposal generally needs to be 500-1200 metres underground.
• Increased nuclear involvement would not increase Australia's risks of terrorist attack or unauthorised proliferation of weapons.

Opportunities for Australia in value-added nuclear markets

Currently, the industry in Australia is largely restricted to uranium exporting. The viability of value-adding markets such as conversion, enrichment and fuel fabrication was studied by several submissions. The Taskforce concluded that commercial participation in value-added markets could significantly increase the value of Australian uranium exports. Studies show, however, that entry costs into those markets are high. Competitive viability on the international stage will ultimately depend on factors such as capital cost, operating costs, the ability to access technology on competitive terms, the international market, access to the required skill base and the regulatory environment.

Electricity generation

The Taskforce is more optimistic about the possibility of domestic nuclear power generation as a source of electricity in Australia. The conclusion is that should nuclear power generation begin in 2020, over a third of the nation’s electricity could be generated by some 25 plants by 2050.

It cites comparative data from other countries to the effect that nuclear-generated power is competitive, particularly given the rise of fossil fuels in recent years.

Governmental policies need to set out how nuclear power could be amongst the sources of Australian energy, how it could contribute to the Australian energy mix, and how public confidence and acceptance of nuclear technology could be achieved. These include:

• the development of power plant designs that reduce costs and increase safety measures
• the need to address Australia's "long and thin" electricity distribution network to cope with overload demands; and
• how the risk of competing against state-owned generating assets within the national electricity market (NEM) may deter private investment in large power plants (including nuclear).

Overall, however, the Report finds that these and other issues are not insurmountable. The Taskforce is particularly optimistic from an economic point of view with regard to the externalities associated with nuclear power generation. Traditional sources of power generation are relatively high in greenhouse emissions, such that externalities must be internalised by legislative policy. With nuclear power generation in other OECD countries, however, the strict regulatory regimes requiring the containment of radioactive waste to ensure its isolation from the biosphere, alongside the fact that little greenhouse gas is emitted by nuclear technology itself, means that nuclear power cycles "already internalise the major portion of their potential external costs".

Given, however, the higher costs of power generation compared with fossil fuel-based sources, the Taskforce finds that the introduction of nuclear power in Australia must be accompanied by explicit pricing of greenhouse emissions for nuclear power to be competitive.

Regulatory features needed

Currently, Australia's regulatory regime extends to uranium mining and transportation, radioactive waste management, export and import control, and nuclear research by way of state and federal legislative regimes. For example, Australia's current three uranium mines operate under different regimes. Further complicating this is the fact that the states and territories have separate agencies for the regulation of health and safety, and environmental standards.

Should Australia move towards nuclear power generation, states the Taskforce, a single national regulator for radiation safety, nuclear safety, security, safeguards, and related impacts on the environment would be desirable to cover all nuclear fuel cycle activities.

The Report cites the regulatory features of the US, Canadian, Finnish, UK regimes, finding that Australia needs to "streamline" current regulatory arrangements. Elements necessary to achieve this include:

• the establishment of an appropriate central licensing body; and
• codes and best practice guidelines need to be developed in respect of nuclear safety, environmental protection, operational radiation protection, auditing and inspections of facility operations, physical protection, civil liability arrangements and waste management.

Conclusion

Overall, the Taskforce is optimistic about the viability and economic value of nuclear power generation for Australia, as well as cautiously hopeful about the possibility of Australia's entry into the nuclear value-added markets. The environmental potential of nuclear technology, particularly in respect of the current political atmosphere to reduce greenhouse gas emissions, is given considerable thought in the interim Report.

However, the Taskforce's interim Report has met with some political opposition. State Labor leaders have stated that they will not allow nuclear power plants to be built in their respective states. Constitutional law expert Professor Greg Craven from Curtin University has been cited, however, as saying that the Federal Government could override State legislation (see Juliet Cummins' article in this edition). Furthermore, opposition has emerged from environmental groups with the Greens declaring Prime Minister John Howard's nuclear power ambitions "[as] an expensive, fanciful distraction from taking urgent action to address climate change". Other environmentalists have expressed concerns that the Northern Territory would become a dumping ground for nuclear waste.

The final report will be released at the end of 2006 and we will provide an update in due course.

For further information, please contact Emma Covacevich.