GERMAN EXCLUSION CRITERIA ON NUKES TOOTHLESS?

Nuclear Monitor Issue: 
#592
12/09/2003
Article

(September 12, 2003) Hermes, the German export credit insurance agency (ECA), has so-called "environmental guiding principles" taking into account ecological and social considerations. The new Red/Green government (Social-Democratic SPD and the Green Party) developed the new rules in April 2001 and since then they have an exclusion criteria on Nukes: "Export of nuclear technology designed for the building of new or conversion of existing nuclear power plants are excluded from support by the Federal Government". However, from the beginning critical voices have warned that the wording "nuclear technology" might leave enough interpretation loopholes to make the criteria not actually exclusive. A recent case sadly confirms and justifies these warnings.

(592.5539) Urgewald - Finland has taken the political decision to build a new nuclear power plant, which would be the country's fifth reactor (see also WISE/NIRS Nuclear Monitor 587.5514: "Fight against Finnish new reactor to continue").

Teollisuuden Voima company (TVO), a power company owned by Finnish industrial enterprises (mainly paper industry) and electricity generating companies applied for and received permission from the government to build the station.

Guaranteeing the availability of cheap electric energy for the Finnish industry was the main argument to justify the need for the new NPP. Right now, TVO is collecting bids, with the demand that the new nuclear unit should provide electricity in the range of 1000 to 1600 MW. Furthermore it should be located in one of the existing sites in order to benefit from the existing infrastructure. The final bidders are the Russian Atomstroyexport (offering a 1000 MW PWR), the US General Electric (offering a 1400 MW BWR) and the French-German Framatome ANP offering a choice between the 1500 MW EPR European Pressure water Reactor or the Siemens designed 1000 MW boiling water reactor (SWR-1000).

In June, Siemens handed in to the German government a pre-request for a Hermes guarantee in order to get cheaper credits and offer a better price to the Finnish. As it obviously concerns a new power plant they should have, according to the Hermes guiding principles, gotten a negative response straight away. But Siemens argued that they want the guarantee only for the turbines, which are no specific nuclear technology but could be used as well in a gas power plant. This argument has been challenged by several engineers who agree that the power output of a nuclear unit is higher than the one of a gas unit, which makes nuclear turbines always bigger than gas turbines.

The German Ministry of Foreign Affairs, in the inter-ministerial Committee that decides on Hermes credits (the only one run by a Green Minister), seemed ready to swallow the Siemens argument but got strongly reminded of the Green bottom-line of non-support for Nukes by the environmental ministry (which is not part of the Committee).

Within the Committee there was a tough fight against the Minister of Economic Affairs and Chancellor Schröder whom are both strongly in favor of the guarantee for Siemens. Thus the inter-ministerial Committee missed the chance to clarify the exclusion criteria. Instead, Siemens got a "letter of interest" as a compromise. This letter indicates that a Hermes guarantee might be provided if the company gets the contract to build the NPP. A second letter precises that this doesn't mean they will get the guarantee in any case but that they will have to come back to the committee and undergo an administration screening and review. In that way the decision for or against the guarantee has been postponed.

Another issue about the Siemens' request is strikingly interesting: as the Hermes credits are meant as an instrument to promote the export of German technology to and for "emerging and difficult markets" (the credits insures the exporting company against non-payment for the delivered goods; if this happens the company will get full compensation) economists and environmentalists are eagerly waiting for the arguments that proof Finland to be a "emerging market with a high non-payment risk".

This leads to the question why Siemens is still trying to get a guarantee and why parts of the government think they should hand ou the cover. On this point Siemens argued with the US-competitor (General Electric) that might get a guarantee from its ECA, the U.S. Export-Import Bank. They might argue as well with the high risk of a new technology (on both offered systems few experience exists) and with the high risk of a new NPP built in a liberalized energy market.

But it might be just as well the fact that it is Siemens requesting the guarantee, since the company appears powerful enough that it is beyond the rules that apply for other companies. This brings up the question of subsidies, since the guarantee would help the delivering company to get better interest rates. Since the project sponsor has a bad rating, without the guarantee interest rates would be rather high.

Although it seems a clear case that the project does not fit into the Hermes criteria it is also true that the Siemens company itself is so powerful and influential in Germany that it might not have to obey the rules that would apply for any other company.

According to Finnish newspapers no decision on the bidding process will be taken before the end of this year. If Siemens shows up again next year with a formal request for a guarantee, the government will have to proof how serious they are with their official policy to not support the further development, at home and abroad, of nuclear technology.

The decision is even more important as it will influence the decision on the on-going debate on older applications for Hermes guarantees to exports nuclear technology or even complete stations to for instance Brazil, Bulgaria or Slovakia. If the government gives away the exclusion criteria on Nukes by providing a guarantee for the new Finnish NPP, Siemens will be very rapidly bringing up these old cases and ask for more financial guarantees via the Hermes credits.

Source and contact: Regine Richter, Urgewald, im Grunen Haus, Prenzlauer Allee 230, 10405 Berlin, Germany
Tel: + 49 30 4433 91 68
Fax: +49 30 4433 91 33
E-mail: regine@urgewald.de
Web: www.urgewald.de