Reversing Germany's Atomic Phase-Out Negotiations Begin for Extending Nuclear Plant Lifespans
Members of the German government and leading utility providers are set to begin negotiations in Berlin on Thursday over a possible extension of the lifespans of the country's nuclear power plants. The government says it would funnel profits from the reactors towards promoting renewable energies.
One of the biggest poker games in recent German history was set to begin on Thursday in Berlin as the government begins to negotiate a partial retreat from the country's 2001 move to abandon nuclear energy.
Ronald Pofalla, Chancellor Angela Merkel's chief of staff, invited the executives responsible for nuclear power at Germany's top four energy utility companies as well as senior officials from the Economics and Environment ministries for top-level meetings about the future of atomic energy in the country. The government is playing down the importance of the meeting, with the Economics Ministry describing it as "routine." Participants belong to the so-called Monitoring Group, a panel formed by the former government of Gerhard Schröder's center-left Social Democrats and the Green Party to monitor Germany's atomic energy phase-out at regular intervals.
But Thursday's meeting is actually far more spectacular because the exact opposite of the Schröder government's policy will be at issue: reversing the phase-out, an issue that divides Germany like few others. The meeting isn't scheduled until Thursday evening, but anti-nuclear organizations planned protests in front of the Chancellery in the capital throughout the day.
233 Billion to 339 Billion in Extra Profits
For energy companies, the move could present a tremendous business opportunity. Landesbank Baden-Württemberg (LBBW), a state-owned bank, estimates that if the lifespans of existing German nuclear power plants are extended by 25 years, at a price of 80 per megawatt hour, the four energy companies would stand to make 233 billion. Most of those profits would first start coming in around 2014 because the government is expected to stipulate that plants be upgraded with modern safety technology before their lifespans can be extended. The Bremen-based Energy Institute (BEI), a scientific institute that provides analysis of energy issues, estimates a similar raft of profits. Depending on how many years the plants are kept online and how high electricity prices remain, profits of up to 339 billion could be possible.
The deal could also prove to be a cash cow for the German government. As a precondition for extending the lifespan of Germany's nuclear power plants, the government is going to demand a share of the utility company's atomic power profits from those plants. Economics Minister Rainer Brüderle of the business-friendly Free Democrats (FDP), who share power with Merkel's conservatives, would like to see the government take a cut of at least 50 percent of the new profits. Meanwhile, Josef Göppel -- the energy issues coordinator for the Christian Social Union, the Bavarian sister party to Merkel's Christian Democrats, and head of the federal parliament's environment committee -- is calling for a 75-percent take, though he won't participate in the talks.
In the contract the political parties agreed to in the new coalition government, nuclear technology is only permitted for use as a bridge technology, whose additional profits are earmarked for use to help speed up the transition to the age of green energy.
"The additional profits should be used to advance the expansion of renewable energies," said Joachim Pfeiffer, the economics issues coordinator for the CDU and CSU parliamentary group and the former CDU coordinator for energy issues. He said the conservatives would also take steps to ensure that if the lifespans of nuclear plants are extended, they will not create a competitive disadvantage for renewable energies.
The more money the government demands from the companies, the more credible its position will appear to the public. "Politicians want to position themselves as a tough negotiating party against the nuclear lobby," said Bernhard Jeggle, an energy analyst at LBBW.
A Clear Advantage for Government
Berlin already holds the best cards in this high stakes game of poker, since only the government and parliament have the power to change German legislation codifying the nuclear phase-out. Utility companies have little power in the issue. All they can do is push the government to stick to its coalition contract. But all it states is that the issue of extending plant lifespans should be addressed quickly and that a considerable part of the extra profits should go to the state.
Time, though, is running out for some energy giants. The government in Berlin is expected to reach an agreement on the extension of plant lifespans before the summer recess and legislation could possibly go before parliament for a vote as part of a larger energy policy package in the autumn.
The timing is particularly problematic for nuclear power plant operators RWE and EnBW. Both companies have nuclear power plants that, under existing legislation, might be forced to close before lifespans are extended. LBBW estimates that RWE alone would stand to lose up to 5 billion if its two Biblis reactors (online since 1974 and 1976) were forced to go offline, not including the costs for dismantling the facility.
Concerns about aging reactors are significant, and the government could ultimately shut some of the old ones down in order to make the extension of other plants more palatable to a German population that is already opposed to nuclear energy. "The CDU knows that the people don't like nuclear energy and could use the prospect of closing down older reactors," said Wolfgang Pfaffenberger, the head of the Bremen Energy Institute. "We currently have an excess supply of electricity. If some of these plants are shut down, the lights are not going to go out in Germany."
'Time Is Pressing'
That fact is not lost on the industry. "Time is pressing," said a spokesperson for the German Atomic Forum, the industry lobby group. "We are prepared for negotiations immediately." Meanwhile, RWE chief Jürgen Grossmann is calling for "expedient clarity about the future of nuclear energy." Wulf Bernotat, who heads utility company E.on, warned that it would be "politically irresponsible" to close the first nuclear plants before a deal is reached on the extension of lifespans. But he also signalized a willingness to pay the government, although he didn't provide concrete numbers. "It clear to the industry that the government will make us pay a price for an extension," he said.
But the government hasn't made any definitive statements about it yet. Chancellor Merkel has remained silent about whether or not the Biblis A or Neckarwestheim 1 (online since 1976) nuclear plants will be closed. And Environment Minister Norbert Röttgen, who will be in charge of the issue, has also kept mum. Economics Minister Brüderle, on the other hand, has suggested he could foresee a solution in which no plant would have to be shut down. But he hasn't gone into detail.
Still, the government could reach a deal that would allow utility companies to transfer government-regulated energy production allowances for newer nuclear power plants to older ones, thus extending the lifespans of plants whose operating licenses would have otherwise expired.
RWE and EnBW applied in 2006 to do exactly that, but their requests were turned down by then-Environment Minister Sigmar Gabriel of the Social Democrats, whose government remained firm about the phase-out. The companies then took their case to court, where they were rejected.
Did Nuclear Operators Try to Stretch Lifespans for New Government?
Following that decision, operations at the Biblis plant were suspended conspicuously often for maintenance. And strategy papers were uncovered showing that operator EnBW slowed electricity production at its Neckerwestheim 1 plant in order to artificially extend the reactor's lifespan. According to the paper, the goal was to stretch out the plant's allowed operating lifespan until after German elections in September, which ultimately delivered a new government of the conservatives and the FDP that was friendlier to the idea of buying more time for nuclear energy in Germany. But the company has denied the allegation, saying the election had nothing to do with its considerations.
Nevertheless, the moves could now pay off. Environment Minister Nortbert Röttgen, who is fond of portraying himself as an environmentalist with conservative credentials, is now likely to reverse some of the last two governments' positions. He will either agree to allow power allowances from newer plants to be transferred to older ones or he will keep in place a temporary moratorium on suspending the operating licenses of older reactors until autumn.
That puts Röttgen in a strong negotiating position, since it means he can impose additional conditions and also ask for money from the companies. The minister has already issued one demand: He wants the nuclear waste currently being held at the country's Asse facility, a former salt mine in the state of Lower Saxony that is in danger of collapsing, to be removed quickly. It is conceivable that the utility companies would be forced to pay for the transfer.
And it could get very expensive: Germany's Federal Office for Radiation Protection (BfS) recommended in a study that all of the nuclear waste being stored in the shafts at the facility should be removed because of the threat of collapse. The agency recommended that the approximately 126,000 barrels of nuclear waste with low and medium levels of radioactivity currently being stored there be transferred to the Konrad respository, a former iron ore mine in the same state, for permanent storage.