Governments with a domestic nuclear industry have been helping their companies find new markets and supporting their exports. While in the 1960s and 70s this support came largely through fairly blatant use of overseas development budgets, ECAs became a very important tool for promoting nuclear exports when using aid money became politically problematic.
The problem with the nuclear industry
The disasters of Chernobyl and Fukushima reminded the world that nuclear power is a very dangerous way to provide energy. However, even without fatal accidents like those in Ukraine and Japan, the routine operations of nuclear power plants produce radioactive waste, the safe disposal of which remains an unresolved worldwide problem. The production of fuel rods for nuclear power plants also poses many environmental problems in uranium mining countries like Niger, Namibia, Kazakhstan, Australia and Canada. These include pollution of scarce water resources, bad health and safety standards for workers and the radioactive contamination of huge areas.
ECAs and the nuclear industry
Aside from being the most controversial and dangerous method of generating energy, nuclear power is also among the most expensive. The technology would never have achieved the geographical penetration it has today without massive public funding. In the 1960s enthusiasts of nuclear power predicted that electricity would become too cheap to meter, but in fact the industry has always depended upon manifold forms of public subsidy to survive.
Governments with a domestic nuclear industry have been busy helping their companies to find new markets and supporting their exports. In the 1960s and 1970s, this was done, fairly blatantly, using overseas development budgets, sometimes combined with export credits. When aid money for nuclear became a more problematic issue, the export credit agencies became a very important tool for promoting nuclear exports. Governments provided either export credits or export credit guarantees, the latter allowing the company to obtain lower interest rates on the money markets.
Pay back later, and later, and later
The so-called OECD Arrangement aptly illustrates the importance of ECAs for the nuclear industry. The Arrangement is a sort of gentlemen’s agreement between the participants and provides a framework of conditions for “the orderly use of officially supported export credits”. It allows longer repayment terms for nuclear power stations than for conventional power stations.
This anomaly is apparently justified because nuclear power plants take longer to generate sufficient income to pay off the debt, despite being an established technology of several decades. It seems that the nuclear industry suffers a structural handicap which prevents it from following a ‘learning curve’ normally expected within maturing technology-based industries, where the rate of return improves over time as technology improves, and problems are minimized with experience.That the nuclear industry has not pursued this learning curve was taken into account during the most recent amendments to the OECD Arrangement in 2009, when the maximum repayment period was extended from 15 to 18 years.
This extension continues the semi-concealed system of subsidies for nuclear power, while obstructing and distracting from the desperate need to make a systemic, strategic move to a decentralized, efficient and renewable energy system.
Dodgy deals with ECAs and the nuclear power industry
While the nuclear industry suffered a slump following the Fukushima disaster the industry maintains hopes for new-builds, especially in Asia as both China and India have ambitious plans for expanding their nuclear fleet. One of the prominent projects in India is Jaitapur, where 2-6 European Pressurised Reactors are supposed to be built by French company Areva. The proposed site is located within a high risk earth quake zone, and has been met with fierce resistance from locals. In April 2011 a protestor was killed when the police shot into a demonstration. The ECAs Coface from France and Hermes from Germany have been discussed as guarantors for this disputed project.
Another disputed project is Angra 3, a nuclear power plant in Brazil for which Areva is supposed to provide equipment and wants to get a guarantee over 1.3 billion Euros from the German ECA Hermes. Angra 3 is an old project representing out-dated techniques, a poor evacuation plan, and is located in a region well known for problems with land-slides. As of January 2013 it looks like Areva's exports will be paid by a public Brazillian bank, so a Hermes guarantee will no longer be needed.
What is ECA Watch doing?
Given the high risks of nuclear and its dependence on support through export credit agencies, we ask the stop of guarantees and credits for nuclear exports in order to stop this dangerous technology.
Read Financing Nuclear Times, a newspaper-style publication that outlines the history of Export Credit Agencies' support for the nuclear industry