The bill for closing down and cleaning up the world’s ageing nuclear reactors will exceed $100bn over the next 25 years alone, the leading energy watchdog has said, warning that governments risk underestimating the cost.
With almost 200 reactors due to be shut down by 2040, the International Energy Agency says in its annual report there are “considerable uncertainties” about decommissioning costs, reflecting governments’ limited experience in safely dismantling nuclear plants. In the last 40 years, only 10 reactors have been closed down.
“This is an urgent area that needs consideration,” Fatih Birol, the IEA’s chief economist, told the Financial Times.
The IEA called on regulators and utilities to ensure enough funds were set aside to cover future expenses.
The estimates for clean-up costs are contained in the IEA’s closely watched World Energy Outlook, which this year includes a comprehensive analysis of the global nuclear industry.
It will inevitably raise questions about the economics of nuclear power at a time when countries such as China and the UK are pressing ahead with ambitious reactor-building programmes.
Nuclear energy has been seen by many nations as an effective way of cutting their carbon dioxide emissions, as well as reducing their dependence on expensive energy imports.
But governments pursuing nuclear expansions have long been criticised for underplaying the full lifetime costs of operating reactors, which include shutting them down and cleaning up their sites.
They have also pointed to the safety issues, which were dramatically underscored by the Fukushima disaster in 2011, and the still unresolved question of how to dispose of radioactive nuclear waste.
The IEA said the amount of spent nuclear fuel will double to more than 700,000 tonnes by 2040.
But even now, Mr Birol noted, “some 60 years after the first nuclear power plant started operation, no country has yet opened a permanent disposal facility for commercial high-level waste”.
Paul Dorfman of the Energy Institute at University College London noted that the IEA’s $100bn figure is only for decommissioning and does not include the costs of permanent waste disposal.
“The UK’s own decommissioning and waste disposal costs are £85bn alone, so that gives you an idea of the astronomical costs associated with nuclear,” he said.
But Andrew Sherry, director of the Dalton Nuclear Institute at Manchester University, said the surge in nuclear retirements will “spur the sector to find ways to reduce volumes of this high-level, or radioactive waste, in the decommissioning and waste management process”.
Addressing broader concerns around global energy security, Mr Birol stressed that despite a current well-supplied oil market, production may fall short of expectations in 2020 and later.
“Short-term conditions should not blind us to the problems that may be around the corner” as the world increasingly relies on only a handful of producers, Mr Birol added.
US shale oil production will begin levelling off at the start of the next decade, developing Brazil’s deepwater fields will be a complex and capital-intensive process and the lack of investment amid security risks in regions such as Iraq – these would all contribute to greater stress on the oil market, he said.
“We see more than half of the growth in Middle East production coming from Iraq. But to deliver on this it needs to be investing around $15bn per year. The risk is that the current instability will deter investment and that, as a result, we might see a shortfall in supply.”