William Ramsey on emerging nuclear markets

Nuclear Becomes ‘A Real Business Opportunity’ For China and India

This is the full text of an interview with William Ramsay, (right) director of the energy program at the Institut Français des Relations Internationales.

He talked Nov 9 to NucNet about emerging nuclear markets in China and India, and the future of Yucca Mountain. [Reprinted with permission.]

NucNet – Before joining the IFRI, you worked at the International Energy Agency (IEA). What are your thoughts on the major challenges to new build faced in emerging markets such as India?

Ramsay: India is a rather immature market, and you’re talking about a 10 billion dollar investment. I think this may be less in India because of manpower and other lower costs, but it’s still a very expensive proposition – into a marketplace where politicians still play with electricity prices and where you haven’t really got a national grid where you can sell it around the country. How do you assure yourself of the market conditions to make that kind of an investment? That to me is the biggest challenge.

The state will have to meet this challenge, which is probably why around the world most nuclear power plants are run by states because of the huge upfront investment. If states want to go with that investment and carry the burden of that front-end capital, then perhaps private investors will also want to play a part. There is a lot of money, a lot of capital inside India. But there needs to be some degree of assurance for the investors that they will get a return. Progress here is going to be slow, which is why the state is going to have to pick up some of the burden of the nuclear power plants.

NucNet – How would you assess the Chinese nuclear expansion in the coming years?

Ramsay: In China they are hell-bent on building. They not only see an opportunity for indigenous power, so that they don’t need to depend on Russian gas, or anything coming across an open ocean where they haven’t got a deep ocean navy. An indigenous fuel cycle is wonderful for the Chinese. They also see an opportunity to export their reactors and are looking at a real business opportunity. In the medium term I think they will become a major nuclear technology power.

NucNet – With regards to nuclear new build, both the US approach to climate change and the future of the loan guarantee program have been cited as major factors during this Obama administration. What developments for the loan guarantee program are on the horizon?

Ramsay: This depends on particular legislative proposals. I know legislators who are enthusiastic about nuclear want a bigger loan guarantee program because 18.5 billion dollars [12.4 billion euro] is not going to be enough for more than three or four reactors. That particular debate isn’t visible from the outside yet, but the reactor builders are pressing the administration for expanding on that. It’s hard to do this now when there is so much budget pressure on other things, such as health care.

NucNet – Energy Secretary Stephen Chu has not formally announced a nuclear program expansion in the US, but is said to remain positive on nuclear energy. Is he sending out mixed messages about nuclear?

Ramsay: I think he is. He has a couple of reservations himself, in terms of the back-end of the fuel cycle and non-proliferation. He doesn’t view nuclear energy as the silver bullet; he views it as part of the mix. So he’s not going to want to appear as a proponent and he’s been quite careful not to do that. It’s really a portfolio approach, which is appealing to congressmen because they can pick the part of their portfolio which satisfies their constituency.

NucNet – With regards to the Yucca Mountain project, is it correct that the Obama administration cannot actually close it, because it is mandated under the terms of the Nuclear Waste Policy Act?

Ramsay: Yes, that’s right; there are some residual obligations in that Act.
It has a fair amount of bearing on some of the utilities’ attitudes to other waste disposal opportunities. Yucca Mountain has almost gone into cryogenic suspension, but it’s not dead.

NucNet – Yucca Mountain funding has been cut, but will this affect new build?

Ramsay: States that have got legal impediments to new build because the back-end is not resolved are probably not going to be building or expanding capacity. So for the short to medium term there isn’t a reason to think that Yucca will change anything.

NucNet – Energy Secretary Stephen Chu has said loan guarantees should be doubled. Is something going to happen soon?

Ramsay: I think so, yes. He’s not going to come forward with big numbers and terrorise the current debate on health care, but as soon as that is finished, we can get back to those numbers. There was an article concerning nuclear power sent by senators John Kerry and Lindsey Graham* to the ‘New York Times’ Apparently this was part of an effort by the administration to draw Republican support.

NucNet – This year’s Gallup Environment Poll put US public support for nuclear energy at 59%, an increase on 2007. Surely public acceptance must still represent a challenge in light of Yucca?

Ramsay: Well, it is surprisingly high, and I’ve seen public acceptance figures even higher than that. So you’ve got a bit of a license [for nuclear energy] there. I think there is some degree of convergence, albeit reluctant, between the environmentalists who are looking for answers to sustainability, and who are coming to recognize that it’s really pretty hard to ignore nuclear. By no means is there still a tremendous amount of resistance to nuclear out there… unless there is an accident.

NucNet – So is it premature to speak of a renaissance in the US?

Ramsay: If we get any new units it’s a renaissance. We haven’t had anything for a long time, but now we have all the applications, a smoothing of the regulatory process and much better public acceptance of nuclear power. The only thing slowing things down is the drop-off in short-term demand because of the economic crisis. But everybody knows that’s going to pass.

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William Ramsay is senior fellow and director of the energy programme at the Institut Français des Relations Internationales (www.ifri.org). He was deputy executive director of the IEA from 1999 to 2008. Prior to that he had a high profile career in international energy policy as a U.S. diplomat.

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