1、Climate Change and Nuclear Power2024FINANCING NUCLEAR ENERGY IN LOW CARBON TRANSITIONSClimate Change and Nuclear Power2024FINANCING NUCLEAR ENERGY IN LOW CARBON TRANSITIONSFOREWORD RAFAEL MARIANO GROSSI Director General,International Atomic Energy AgencyFinancing Nuclear is Central to the Shift to N
2、et ZeroThe inclusion of nuclear in the first Global Stocktake under the Paris Agreement was nothing short of historic.After almost 30 years of United Nations climate conferences,countries both those using nuclear power and those not agreed that reaching global climate goals would require further inv
3、estment in nuclear power.This acknowledgement reflects how much global attitudes to nuclear have shifted in the past few years.Last December at COP28 in Dubai,more than 20 countries also pledged to work towards tripling nuclear power capacity by 2050.The twin catalysts of the change were the urgency
4、 of the climate crisis and the renewed push for energy security.When it comes to nuclear,fact based analysis and science have finally overcome misunderstanding and ideology.Now the challenge is to turn ambition into the hundreds of additional nuclear reactors we need to reach net zero.Time is of the
5、 essence.In the past year,levels of harmful greenhouse gas emissions and global temperatures reached new record highs.A relentless succession of floods,fires and droughts warn that we are running out of time.In March 2024,the IAEA shifted action into a higher gear when,together with the Government o
6、f Belgium,we hosted the first Nuclear Energy Summit.World leaders from more than 30 countries and the European Union gathered under Brusselss famous Atomium landmark and agreed to urgently put in place conducive financing conditions and to increase investment.The IAEAs support goes beyond high level
7、 summits.Every day,whether through analysis or assistance in the field,the IAEA is helping Member States reach their goals.There is hardly a more important one than ensuring that we leave coming generations an inhabitable planet.The scale and versatility of nuclear energy as a tool for achieving tha
8、t goal are often overlooked.The IAEAs Atoms4NetZero Initiative builds on decades of experience supporting countries in developing capacity in energy planning.It provides analytical tools and expertise to help countries assess the usefulness of nuclear power for them,including in the form of innovati
9、ve technologies,such as small modular reactors(SMRs).Introducing a nuclear programme for the first time is a multi-step process.Through its Milestones Approach,the IAEA assists countries from Africa to Asia in establishing the infrastructure necessary for a safe,secure and sustainable nuclear power
10、programme.Across its near century-long lifetime a nuclear power plant is affordable and cost competitive.Financing the upfront costs can be a challenge however,especially in market driven economies and developing countries.The private sector will increasingly need to contribute to financing,but so t
11、oo will other institutions.The IAEA is engaging multilateral development banks,including the World Bank,to highlight their potential role in making sure that developing countries have more and better financing options when it comes to investing in nuclear energy.Demand is also coming from digital te
12、chnology companies.The IAEA is helping to inform their decisions as they look to nuclear to power their growing use of artificial intelligence(AI)and data centres.Emerging SMR technologies hold immense promise to deliver clean energy.The 90 or so designs under development are a testament to the leve
13、l of innovation and excitement these technologies are generating.But there is work to do before their potential can be realized.That is why the IAEA,through its Nuclear Harmonization and Standardization Initiative(NHSI),has brought together the nuclear community to develop common regulatory and indu
14、strial approaches to facilitate global deployment and financing of SMRs.Energy-hungry technology,electrification,the shift to low carbon energy and population growth are all contributing to greater demand for nuclear.The IAEAs latest high case projection for nuclear power capacity in 2050 sees a 150
15、%increase from current levels to 950 gigawatts.This reflects decisions around the world supporting the long term operation of existing reactors,new construction of large nuclear power plants,and the development and deployment of SMRs.Realizing an increase of this scale requires annual investment of
16、more than US$100 billion between now and 2050 a fraction of what the world invests in energy infrastructure overall,but a big change from the level of investment in nuclear over the past 20 years.This latest edition of Climate Change and Nuclear Power continues the IAEAs contribution over more than
17、20 years to the analysis of the role of nuclear energy in responding to climate change.Our work in this area this year includes supporting the G20 Energy Transitions Working Group,under the Brazilian presidency.The IAEA will again be at COP this November.At COP29 in Baku,the world will find itself a
18、t a critical juncture.Can we muster the money necessary to turn ambition into reality?Financing is the central question,and that is why it is also the focus of this edition of Climate Change and Nuclear Power.Rafael Mariano GrossiDirector General,International Atomic Energy AgencyFOREWORD EXECUTIVE
19、SUMMARY 21.Introduction 41.1.Investments for Clean Transitions 51.2.Nuclear Energy and International Climate Policy 121.3.Objectives,Scope and Structure 152.Economics and Risk Management for Nuclear Energy Projects 172.1.Economics of Nuclear Energy 182.2.Mapping Risk 202.3.Getting to On Time and on
20、Budget 223.Financing Approaches for Nuclear Investment 293.1.Financing New Build 303.2.Financing Long Term Operations 584.Considerations for Small Modular Reactors 624.1.Economics of Small Modular Reactors 634.2.Opportunities for SMRs to Access New Financing Pathways in the Transition to Low Carbon
21、Energy Systems 654.3.SMR Financing Considerations and Challenges 725.Considerations for New Nuclear Programmes in Emerging Markets and Developing Economies 735.1.Considerations for Nuclear in EMDEs 745.2.Funding Infrastructure Development 765.3.Access and Cost of Financing 776.Recommendations and Co
22、nclusions 83REFERENCES 86LIST OF ABBREVIATIONS 95CONTRIBUTORS TO DRAFTING AND REVIEW 96Table of Contents EXECUTIVE SUMMARYThe 2024 edition of Climate Change and Nuclear Power delves into the dynamics of financing nuclear projects to unlock much needed nuclear energy capacity as ambitious climate tar
23、gets draw nearer.We explore the imperative for robust financial frameworks to propel the adoption of nuclear energy as a cornerstone of global decarbonization efforts.Nuclear energy investment must increase from around US$50billion per year during 20172023 to US$125 billion annually to meet the IAEA
24、s high case projection for nuclear capacity in 2050.Tripling the existing nuclear capacity would require more than$150 billion annually.To mobilize such capital,nuclear projects must prove bankability by mitigating financial risks.Ensuring construction and cost predictability is pivotal to investor
25、confidence.Nearly two thirds of the total cost per megawatt-hour from anuclear power plant(NPP)can be attributed to construction and investment costs.With a construction duration of almost six years for the majority of large reactors,construction cost remains acutely sensitive to fluctuations in con
26、struction schedules and finance costs.Commitment to multiple reactors transforms first-of-a-kind(FOAK)risks and challenges into investment opportunities to achieve construction time and cost predictability.The first large reactor projects built in countries after one or two decades are reported to h
27、ave capital costs of around US$800011 000 per kilowatt(excluding financing),or more.In comparison,countries with uninterrupted experience in nuclear new build projects are reported to have capital costs closer to US$25005000/kW.CLIMATE CHANGE AND NUCLEAR POWER2Sizewell nuclear power station,United K
28、ingdom.This evolving landscape hints at a potential shift towards broader acceptance and support for nuclear energy financing,bolstered by innovative financial mechanisms and a growing recognition of nuclears crucial role in achieving global climate targets.While government involvement remains cruci
29、al for managing certain risks,private sector financial involvement is becoming increasingly viable for nuclear energy projects.Financial mechanisms such as green bonds and loans,coupled with guarantees,offer tools for risk mitigation and broader investor participation.Including nuclear power in sust
30、ainable taxonomies could further catalyse commercial bank involvement,with multilateral development banks potentially playing a supportive role,particularly in developing countries with nascent financial markets.Small modular reactor(SMR)developers promise economies of volume to lower initial capita
31、l costs and reduced construction risks alongside the potential for diversified revenue streams.While no current SMR project offers arealistic view into the cost of SMRs in serial production,collaborative efforts among the nuclear industry,policy makers and regulators are needed to clear the path for
32、 the significant rollout of SMRs.Multifaceted approaches that include policy reforms and international partnerships are imperative to bridge the financing gap and accelerate the clean energy transition in emerging markets and developing economies(EMDEs).Robust regulatory frameworks,new delivery mode
33、ls(especially for SMRs),skilled labor development and comprehensive stakeholder engagement strategies could unlock new avenues for sustainable energy investments towards development goals.SMRCLIMATE CHANGE AND NUCLEAR POWER31.Introduction The impacts of climate change are increasingly visible across
34、 the globe,highlighting the need to rapidly reconfigure the global energy system to achieve carbon neutrality by mid-century and limit global warming to 1.5C 1.At the same time,the world continues to grapple with energy security vulnerabilities and broader sustainability challenges,which remain acut
35、e in many emerging markets and developing economies(EMDEs)2.The overall demand for clean energy such as that required with an increased use of AI and electrification of transportation networks exacerbates this need.Responding to these challenges necessitates urgent action to scale up,redirect and ac
36、celerate investment to deliver clean,sustainable and just energy transitions around the world.In this context,mobilizing financing for investment in nuclear energy will play acritical role in supporting ambitious climate change mitigation and adaptation and in delivering reliable,affordable,clean an
37、d modern energy to underpin economic and social development and energy security(seeBox 1).CLIMATE CHANGE AND NUCLEAR POWER41.1.Investments for Clean TransitionsTo achieve the goals of the Paris Agreement,it will be necessary to deploy acombination of low carbon technologies.The electricity sector re
38、sponsible for roughly 40%of energy related emissions 3 will need to shift from unabated fossil fuels to renewables,fossil with carbon capture technology and nuclear generation while delivering substantially more electricity as end use applications in buildings,industry and transportation are electri
39、fied to replace the direct use of fossil fuels 4.In sectors less suited to electrification,a switch to other clean energy carriers will be critical for reaching net zero.The International Energy Agency(IEA)estimates that reaching net zero carbon dioxide(CO2)emissions by 2050 will require annual ener
40、gy sector investment of US2022$4.75 trillion from 2030 to 2050,compared with US$2.8trillion in 2023 4.The increase between 2023 and 2030 represents around one percentage point of global gross domestic product,indicating the need to channel substantial additional capital to the energy sector 4.Most o
41、f the investment(around US$4.2 trillion in 2030)needs to be directed towards clean energy,representing roughly a doubling in advanced economies and China,and a fivefold increase in other EMDEs by 2030(increasing to almost tenfold by 2050).The main investment targets include clean power(over US$2 tri
42、llion per year in generation and grids)and energy efficiency and end use,with a smaller amount for other clean energy supply 4.Almaraz nuclear power plant,Spain.CLIMATE CHANGE AND NUCLEAR POWER5Sanmen nuclear power station,China.BOX 1 Nuclear energy:a key part of secure,reliable,stable and sustainab
43、le net zero transitions Nuclear energys broad contribution is not always remunerated in energy markets or considered in investment decisions.Nuclear and Renewables Partner to Achieve Net Zero All low carbon technologies are needed to achieve net zero targets.Nuclear energy offers substantial mitigat
44、ion potential and can support the integration of renewables in low carbon energy systems.Resilience,Reliability and Security of Energy SupplyNuclear power can ensure a secure,reliable and resilient energy supply.Operating on demand,irrespective of weather,nuclear power can stabilize the grid in syst
45、ems with high shares of variable generation while contributing to security of energy supply.AffordabilityNuclear power can underpin an affordable,low carbon energy system by minimizing the amount of energy generation that exceeds demand and the need for expensive flexibility and storage infrastructu
46、re.Sustainable Development and Just TransitionsNuclear energy can help developing nations secure electricity access,socioeconomic development and industrialization to meet their Sustainable Development and Climate Goals as part of a just transition.Sources:Refs 58Decarbonizing Beyond ElectricityIn a
47、ddition to providing a 24/7 electricity supply,nuclear power is the only low carbon,large-scale heat source able to replace fossil fuels for industrial heat and hydrogen production.CLIMATE CHANGE AND NUCLEAR POWER6-50050100150200250300AdditionsExtensionsRetirementsAdditionsExtensionsRetirementsAddit
48、ionsExtensionsRetirements202420302031204020412050Eastern EuropeSouthern AsiaCentral and Eastern AsiaNorthern AmericaNorthern,Western and Southern EuropeOther regionsIn the power sector,the IEA estimates that installed capacity of nuclear power will need to more than double by 2050 to reach net zero
49、9,which is similar to the increase in the IAEAs high case projection(which is not a net zero pathway per se)10.1 Large reactors are likely to remain the main source of nuclear power over the coming decades,encompassing both existing reactors,many of which are projected to be extended beyond their or
50、iginally anticipated operational lifetimes,and new construction(as shown for the IAEA high case in Fig.1).However,there is also increasing interest in SMRs,which can potentially increase the role of nuclear energy,including in small grids,new markets and applications,both electric and non-electric.U
51、tilizing low carbon steam and heat from nuclear power plants could serve as a crucial strategy for decarbonizing heavy industries,which significantly contribute to global emissions.FIG.1.Nuclear power capacity additions,long term operations and retirements in the IAEA high case projection,20242050(G
52、Wnet)10,12.1 However,other scenarios,including many compiled for the IPCC Sixth Assessment Report,see a much larger potential for nuclear energy to contribute to net zero for instance,around 30%of low carbon scenarios in the Sixth Assessment Report envisage more than a tripling of nuclear electricit
53、y generation by 2050 11.CLIMATE CHANGE AND NUCLEAR POWER7The IAEA high case projection for nuclear capacity reaches 950 GW(net)in 2050,a 2.5-fold increase from 2023 installed nuclear capacity,requiring an increase in average annual investment from historical levels.While investment in nuclear power
54、has averaged US2022$50 billion per year during 20172023,it is projected to reach US2022$75 billion in 2024 13.Realizing the nuclear capacity expansion in the IAEA high case projection is estimated to require over US2022$90 billion from 2024 to 2030 and US$125 billion from 2031 to 2050,for both const
55、ruction of new nuclear power plants and long term operation of existing plants,not including supply chain and fuel cycle investment(see Table 1)that is,equivalent to around 2.5%of total annual investment requirements for net zero4.In comparison,the IAEA low case projection implies maintaining invest
56、ment at recent historical levels.In the IAEA high case,the investment requirements are split roughly equally between advanced economies and EMDEs.Over the period to 2050,average nuclear investment in the IEA Net Zero Emissions by 2050(NZE)Scenario is similar to the estimate for the IAEA high case(se
57、e Fig.2).Realizing higher levels of nuclear deployment,exemplified by the ambitious declaration launched at the 2023 UN Climate Change Conference(or COP28)by 25 countries,pledging to triple global nuclear capacity by 2050 14,will require an even larger increase in annual investment from current leve
58、ls 15,16.For example,extrapolating the capacity addition assumptions in the IAEA high case to reach a tripling of capacity shows that more than US$150billion is estimated to be required annually from 2031 to 2050(Fig.2).BOX 2:CONTRIBUTION BY EQUILIBRION Nuclear for sustainable aviation fuels General
59、ly not captured in many projections or scenarios is an expanded role for nuclear energy to provide low carbon fuel and heat,for instance for sustainable aviation fuels.The Eq.Flight system developed by Equilibrion is designed to produce low carbon sustainable aviation fuel using nuclear energy,air a
60、nd water.The primary energy required for generating hydrocarbons through this process is immense,and as a high density energy source with consistent operation and flexible siting,nuclear is naturally well suited to these demands.The market is large,as well.The global airline industry expects to need
61、 440 billion litres per year by 2050.That would require the equivalent of approximately 1200 GW of electricity,which could be provided by approximately 1200 large nuclear reactors or 4000 SMRs,assuming a 300 MW capacity for SMRs.CLIMATE CHANGE AND NUCLEAR POWER805010015020020172023202420302031204020
62、412050)snoi l l ib(tnemtsevn i l aunnAHistorical(IEA)IEA NZEIAEA high caseTripling pledgeTABLE 1.Average annual nuclear power investment in the IAEA high and low case projections,20242050(US2022$billion)4,10,12,17.Note:based on investment cost assumptions in 4 and 17;columns may not sum to the repor
63、ted totals due to rounding;other regions comprise Africa,Latin America and the Caribbean,Oceania,Southeast Asia and Western Asia 10.LOW CASEHIGH CASE202420302031204020412050202420302031204020412050Central and Eastern Asia161714242423Eastern Europe9108152117Northern America866173045Northern,Western a
64、nd Southern Europe10109172121Southern Asia55481110Other regions55491417Total53534590121132of which:New construction39483875114122Lifetime extension146714711FIG.2.Comparison of annual nuclear energy investment to 2050 under different projections and scenarios (US2022$billion)4,9,10,12,13,17,18.CLIMAT
65、E CHANGE AND NUCLEAR POWER9 A dynamic energy and finance landscape The need for substantial investment to realize net zero comes at a time when many energy markets,particularly deregulated electricity markets,are failing to drive sufficient low carbon investments in critical long-lived generation an
66、d transmission assets and system flexibility measures 19,20.In addition,the broader outlook for the global energy,policy and finance landscape continues to evolve on both the demand and supply sides.BOX 3 FIG.3.Total final electricity and energy consumption in IPCC Sixth Assessment Report and IEA NZ
67、E pathways,2050 4,2124.IEA NZE1971202105010015020025030035040002004006008001000Final electricity consumption,2050(EJ)Final energy consumption,2050(EJ)1.5C2C2.5C3CNot specifedEstimated warming(with 50%probability)CLIMATE CHANGE AND NUCLEAR POWER10On the demand side,the urgency of reaching net zero em
68、issions is projected to drive stronger demand for electricity in the heating and cooling,transportation and industrial sectors(see Fig.3);at the same time,rapid developments in the technology sector are driving new electricity demands(see Section 3.1.3.2).On the supply side,renewed interest in energ
69、y security in the face of geopolitical tensions is influencing patterns of global energy production and trade.For instance,the IEA expects an almost 50%increase in global liquified natural gas capacity this decade at a time when the outlook for demand remains uncertain 4,potentially changing the eco
70、nomics of gas-fired electricity generation.Natural gas generators,which can provide highly flexible,dispatchable generation(albeit with higher carbon emissions),may compete with investment in new nuclear power projects,particularly given the lower upfront costs and different risk profile of gas gene
71、ration(see Section 2).Angra nuclear power plant under construction,Brazil.CLIMATE CHANGE AND NUCLEAR POWER111.2.Nuclear Energy and International Climate PolicyThe world has reached an inflection point in recognizing nuclear energys key role in meeting ambitious climate change targets.This is reflect
72、ed by the inclusion of nuclear energy in the outcomes of the first Global Stocktake under the Paris Agreement 25 and the declaration issued at COP28 by 25 countries pledging to triple nuclear capacity by 2050 14.As of early 2024,15 countries include nuclear in their latest nationally determined cont
73、ributions(NDCs)under the Paris Agreement,and more than 20 include nuclear in their long term low emissions development strategies,as summarized in Fig.4 26,27.Many countries are also including nuclear energy in sustainable investment taxonomies and similar frameworks or providing other forms of dire
74、ct policy support for example,in the United States of America under the Inflation Reduction Act and in the European Union under the Net Zero Industry Act(see Section 3.1.4.4)28,29.Together,this expanding group of countries accounts for a substantial share of the global economy and investment flows a
75、s well as global emissions 3.CLIMATE CHANGE AND NUCLEAR POWER120 100 200 300 400 500 600 700 800 0 5 10 15 20 25 30 35 40 Nuclear electricity generation,2022(terrawatt-hours)Global GHG Emissions(%)United States of AmericaEuropean UnionChinaFranceRussian FederationKorea,Republic ofCanadaJapanIndiaUni
76、ted KingdomUnited Arab EmiratesPakistanBrazilMexicoArgentinaSouth AfricaUkraine*BangladeshEgyptGhanaIndonesiaKazakhstanPhilippinesSaudi Arabia SingaporeTrkiye20502050206020502060205020502050207020502050-20502050205020502060-20602060-206020502053COP28 tripling pledgeNuclear in Taxonomy*Nuclear in lon
77、g term strategyNuclear in nationally determined contributionNet zero targetor other national sustainable investment frameworkincluded in long term strategies of 8 EU Member States under EU TaxonomyUkrainian operational data were not available for the year 2023*FIG.4.Nuclear energy,climate change com
78、mitments and sustainable investment taxonomies in selected countries,ranked by nuclear power generation in 2023,as of August 2024 5,10,13,3032.CLIMATE CHANGE AND NUCLEAR POWER13“We need torrents not trickles of climate finance”SIMON STIELL Executive Secretary,United Nations Framework Convention on C
79、limate Change(UNFCCC)Despite this interest,current market and policy environments may be unable to mobilize the scale of investment required for net zero for both nuclear energy and the clean energy transition more broadly.Simon Stiell,Executive Secretary of the United Nations Framework Convention o
80、n Climate Change(UNFCCC),reminded decision makers early in 2024:“Weneed torrents not trickles of climate finance”33.This is especially the case in many EMDEs,which face a significant gap between access to financial assets and investment requirements,as outlined in Section 1.1.Accelerating and scalin
81、g up investment is one of the pressing priorities for the international climate change community,with key commitments expected at the upcoming 29th UN Climate Conference(COP29)34,35.A new collective quantified goal on climate finance(NCQG),with an emphasis on the“needs and priorities of developing c
82、ountries”36,is expected to be set at COP29.Key decisions and negotiations during 2024 are addressing“the scale and elements of the NCQG”and“the need for enhanced provision and mobilization of climate finance from a wide variety of sources and instruments and channels”among others 37.Deliberations ar
83、e also expected to build on the outcomes of the first Global Stocktake,and it is notable that the COP29 host government has highlighted nuclear energys inclusion in the Stocktake and affirmed Azerbaijans intention to prioritize mobilization of“resources for the peaceful utilization of nuclear techno
84、logy in combating climate change”(along with nuclear safety)during its COP29 presidency 38.CLIMATE CHANGE AND NUCLEAR POWER141.3.Objectives,Scope and StructureAgainst this backdrop,this publication seeks to inform the climate change community negotiators,government officials,energy and climate polic
85、y makers,experts,non-governmental organizations and media representatives about the potential of nuclear energy in mitigation and to highlight challenges and best practices in financing nuclear projects.This includes financing the construction of both large reactors and SMRs as well as investment in
86、 long term operations and enhanced climate resilience of existing plants.The booklet also considers potential policy and market reforms to support the construction and planning stages of nuclear power programmes as well as the suitability of various financing models under different market and policy
87、 regimes.The role of government in unlocking the potential of nuclear energy,in cooperation with the private sector,and the emergence of new financing frameworks and partners are also explored.The next section introduces the economics and financing of nuclear energy projects,including fundamental co
88、ncepts related to nuclear project capital cost and cost of capital.Unique considerations and risks for investors in nuclear projects are also introduced,including risks linked to construction,revenue and public acceptance,among others,along with critical elements in de-risking projects by ensuring c
89、onstruction and cost predictability.Section 3 presents a comprehensive analysis of financing options for nuclear energy projects,illustrated with case studies and lessons from financing approaches in recent new build projects around the world covering both deregulated and regulated electricity marke
90、ts.The section covers a wide range of financing approaches,from traditional financing mechanisms through to emerging sustainable finance instruments,such as green bonds and carbon markets.The potential role of new players in nuclear investment,such as multilateral financial institutions and export c
91、redit agencies,along with interest from private sector investors is also explored.In addition,the section discusses options for financing the long term operation of existing nuclear power plants and measures to enhance climate resilience.CLIMATE CHANGE AND NUCLEAR POWER15“Without the support of nucl
92、ear power,we have no chance to reach our climate targets on time.”FATIH BIROL Executive Director,International Energy AgencyTemelin nuclear power plant,Czech Republic.Section 4 then focuses on specific considerations for financing SMRs,which may be inherently less exposed to construction and financi
93、ng risks and have the potential to open up new markets,including by delivering clean heat,electricity and hydrogen.Section 5 seeks to address the particular challenges and opportunities associated with nuclear projects in EMDEs embarking on a nuclear energy programme.Some of the issues explored incl
94、ude technology transfer,localization considerations and securing access to affordable finance.Several case studies are presented to illustrate the range of approaches employed in EMDEs depending on national circumstances and priorities.Section 6 then synthesizes key recommendations and conclusions f
95、or decision makers in governments,the finance sector and the nuclear industry related to policy and regulation,market design,multi-stakeholder cooperation,supply chain development,project management and risk sharing,among others.AP NEWS,Security and climate change drive a return to nuclear energy as
96、 over 30 nations sign summit pledge,21 March 2024.CLIMATE CHANGE AND NUCLEAR POWER16 Economics and Risk Management for Nuclear Energy Projects Nuclear power projects share economic and financial similarities with other large-scale infrastructure projects,but the project lifetime far exceeds that of
97、most electricity generation projects.The economic cycle of a new nuclear power project,encompassing initial planning and development,construction,commercial operation and decommissioning,can span more than a century.Investing in new nuclear projects requires significant capital,which remains tied up
98、 for several years until the plant becomes operational and starts generating revenue.While not detailed in this publication,investments in nuclear programmes can yield considerable macroeconomic benefits that may also impact investment decisions 39,40.Two main components drive project feasibility an
99、d financial sustainability of a capital-intensive investment such as nuclear:capital costs and the cost of capital.Capital costs encompass all of the expenses associated with constructing nuclear power plants,including labour,plant materials and professional services.The cost of capital reflects the
100、 required rate of return required by lenders and investors to deploy their capital into the project.It encapsulates factors such as inflation,risk premiums and opportunity costs,shaping the financing landscape and influencing investment decisions in the nuclear energy sector.2.CLIMATE CHANGE AND NUC
101、LEAR POWER172.1.Economics of Nuclear EnergyConstruction costs,which are made up of overnight costs and the interest accrued during construction,constitute a large portion of the lifetime generation costs of a new nuclear project(referred to as levelized cost of electricity or LCOE),while the remaini
102、ng portion is divided almost equally between fuel procurement and management and operation and maintenance costs.For example,assuming a cost of capital of 7%,which is a typical rate for a utility,construction costs would constitute roughly 70%of the total lifetime generation costs,of which 15%can be
103、 attributed to interest accruing during construction(see Fig.5).A similar cost structure can be observed for SMRs,for which a shorter construction time,and thus less interest during construction,may only partially compensate for higher expected overnight costs per unit of electricity generation(see
104、Section 4).Most low carbon energy technologies are characterized by high overnight and fixed costs compared to fossil fuel generation.These technologies require substantial pre-construction investments in land acquisition and permits,which must be addressed before any construction expenses are incur
105、red.Shifting to a low carbon energy mix will require a considerable upfront investment,irrespective of the chosen blend of technologies.The cost structure is radically different when considering the long term operation of existing plants:lower refurbishment cost significantly reduces the overall sha
106、re of capital costs,leading to a very competitive electricity generation cost against other energy technologies(see Section 3.2 on financing long term operations).The substantial capital intensity of a new nuclear build renders the project highly sensitive to fluctuations in the cost of capital,over
107、night costs and the construction schedule.A 1%variation in the cost of capital for a nuclear project can lead to an approximately 10%increase(or decrease)in electricity generation costs.Similarly,a two-year delay in construction is estimated to result in a 5%increase in electricity generation costs.
108、2 Consequently,the investment community places greater emphasis on the predictability of costs and schedules rather than the actual expenditure.2 This increase reflects only the higher interest that accrues during construction and does not include higher overnight costs as a result of the delay.CLIM
109、ATE CHANGE AND NUCLEAR POWER18Large nuclearreactorSmall modularreactorNuclear lifetimeextensionWind onshoreSolarphotovoltaicCombined cyclegas turbinetsoc noi tareneg y t i c i r tce lEOvernight CostsInterest During ConstructionOperations&MaintenanceFuelFIG.5.Representative breakdown of electricity g
110、eneration costs by technology 4.For new NPPs,construction costs are highly project specific and vary widely across countries,reflecting not only differences in technologies,labour costs,project scope and financing mechanisms but also different recent experiences in plant construction.For instance,th
111、e deployment of FOAK large reactors and the need to re-establish specialized new build nuclear energy supply chains and workforce have contributed to delays and cost overruns in some new nuclear projects.Reported capital costs(excluding financing costs)for the first projects after many years in the
112、EU,UK and USA range around US$8 00011 000/kW or more 17,4144.In comparison,in countries with ongoing experience in NPP construction and mature expanded nuclear energy supply chains,and often lower labour and regulatory costs,construction costs(and construction times)have been comparatively lower.For
113、 example,recent new builds in China,the Republic of Korea and the Russian Federation are reported to have capital costs closer to US$25005000/kW 45,46.The recent experience in these countries,along with lessons from the rapid deployment of nuclear energy historically in much of the world,provides im
114、portant insights into how to minimize risk and cost by delivering on time and on budget.By reusing the same design from one project to the next and constructing multiple units simultaneously,along with other approaches described in Section 2.3,the IEA assumes that China and India will be able to del
115、iver nuclear projects for less than US$3000/kW,while in the EU and the USA,new build costs could be reduced to around$4500/kW by 2050 17.CLIMATE CHANGE AND NUCLEAR POWER192.2.Mapping RiskNuclear energy projects are similar in many ways to other large-scale,high capital cost infrastructure projects.H
116、owever,nuclear energy investments are also characterized by an additional distinct set of considerations and risks,which influence the cost of capital.The complex project planning period,long construction timelines,regulatory complexities,long payback periods and lengthy debt tenors inherent in nucl
117、ear energy projects amplify the risk profile and necessitate meticulous risk management strategies.Risks over the lifetime of a nuclear energy project fall into three categories:intrinsic,common level and extrinsic risks(Fig.6).Intrinsic risks are largely within control of the project owner;common l
118、evel risks are project related uncertainties that reflect the shared allocation of risk mitigation among the project owner and its commercial partners;and extrinsic risks reflect an array of additional factors,which can significantly influence the projects viability but over which the project owner
119、has little to no control.Mitigating intrinsic and common level risks as perceived by financial institutions which can,to some degree,be controlled or mitigated by parties to the nuclear energy project could aid in lowering the cost of capital for nuclear energy projects.The project and financial ris
120、k of a nuclear new build change significantly with time.Risks are maximal in the early phases of the project(pre-construction,beginning of construction)and progressively decline as the construction advances.The project risk for nuclear new build drops significantly after commissioning,when the plant
121、 begins generating revenue through energy sales and provides a steady cash flow to cover operating costs and debt obligations.This risk profile limits the number of potential investors in the early phases of a nuclear project.However,the investment basis becomes much broader in the advanced phases o
122、f construction and after commissioning,making refinancing possible and contributing to a lower cost of capital.CLIMATE CHANGE AND NUCLEAR POWER20Design ConstructionDelivery uncertainty Waste managementWaste disposalTotal costPriceRevenueFinancingSupply chainRegulatoryPoliticalReputationalClimateProj
123、ect cash flow profileRisk profileVERY HIGHVERY HIGHHIGHLOWMODERATE+nominal cash flows STAGE 1 Pre-projectSTAGE 2 Pre-constructionSTAGE 3 Construction STAGE 4 Operation/Maintenance STAGE 5 DecommissioningIntrinsicCommon levelExtrinsicFIG.6.Representative nuclear energy project cash flow and risk prof
124、ile.CLIMATE CHANGE AND NUCLEAR POWER21EUROPEAN COMMISSION,Speech by President von der Leyen at the Nuclear Energy Summit,21 March 2024.2.3.Getting to On Time and on BudgetWhile renewable projects have seen significant growth in new markets driven by project developers,the nuclear industry faces a sh
125、ortage of developers who can effectively connect policy goals with actual project implementation.For renewable energy projects,developers typically bring technical expertise along with a willingness to navigate innovative financing mechanisms,complex regulatory processes,risk management and communit
126、y engagement.In the nuclear energy sector,time and cost unpredictability of projects heightens the perceived financial risk,which could be a limiting factor to deploying sufficient nuclear energy capacity to achieve net zero targets.The skillful management of the construction schedule is fundamental
127、 to minimizing cost and attracting private sector investment.A proven track record of timely project delivery can foster investor confidence and thereby secure financing on more favourable terms.In addition,adherence to the stipulated construction timeline ensures on-schedule completion and adherenc
128、e to budgetary constraints and enables the project to generate revenues as planned.Nuclear energy construction sites typically entail extensive operations,engaging a peak workforce of up to 10 000 individuals over prolonged durations 47.Consequently,even a one-month delay during the peak constructio
129、n phase can incur costs of tens of millions of dollars before accounting for additional interest costs 48.“Key tasks lie ahead if nuclear is to make asubstantial contribution to climate neutrality objectives.The main one is to secure new investments.Support is needed from governments to ensure that
130、financing is available and that nuclears contribution to electricity security is properly valued and remunerated.”URSULA VON DER LEYENPresident,European CommissionCLIMATE CHANGE AND NUCLEAR POWER22Nuclear energy programmes that have historically achieved construction and cost predictability which co
131、vers most of the large reactors ever built,with a majority constructed in less than six years(see Fig.7)tend to share several key features:Standardization of reactor technology Finalizing the reactor design prior to the start of construction has historically minimized costs overruns.Standardized des
132、igns paired with commitment to volume streamline supply chains and facilitate the training of personnel,leading to smoother project execution.Decoupling the nuclear island from other civil elements of the project can help to facilitate the predictability of the cost and schedule.Commitment to volume
133、 Building an order book for multiple reactors can help to socialize FOAK costs across multiple projects and later achieve economies of scale.This commitment to volume can be established through robust energy planning and may be spread among countries via inter-country agreements to allow for a shari
134、ng of initial costs and reduced financial risk for individual projects.Effective interactions with regulators and harmonization of regulatory requirementsEstablishing regular consultations and clear lines of communication between stakeholders and regulatory bodies can help ensure understanding and c
135、ompliance to requirements,targeting their harmonization.Proactive engagement can help to ensure that regulatory requirements translate into practical technical terms,enhancing understanding and adherence to standards.Shared ownership models Distributing financial risks among multiple stakeholders an
136、d mitigating the risk and cost for any single entity can lead to more efficient utilization of capital and expertise.Shared ownership models encourage long term investment and commitment for nuclear energy projects,contributing to the sustainability of nuclear energy projects over their lifespan.Bui
137、lding or rebuilding supply chain and workforce A strong domestic industrial base can support the construction of nuclear facilities and contributes to broader economic development.Historically,the endeavor to strengthen a nuclear energy supply chain was shaped by a strong political will to build a s
138、eries of reactors that could benefit from the learning curve and standardization effect.Building confidence in a pipeline of projects can also serve to build both a robust supply chain and a skilled workforce.Willingness to take on learning costsFor countries climbing the nuclear learning curve,cons
139、truction delays and subsequent cost overruns could occur,especially in cases where the host country would like to localize part of the supply chain.This can be appropriately accounted for in early stages of a new nuclear energy programme.To reach Nth-of-a-kind(NOAK)can require specific adjustments t
140、o the financing scheme to accommodate construction risks and delays in revenue generation.Third party assurance can also help to build investor confidence in early projects.CLIMATE CHANGE AND NUCLEAR POWER23Nogent nuclear power plant,France.010203040506070800510152025Sum of Net Capacity(GW)Construct
141、ion duration(years)AfricaAmerica-NorthernAsia-Far EastAsia-Middle East and SouthEurope-Central and EasternEurope-WesternFIG.7.Total capacity added by construction duration for all reactors with capacity between 800 and 1200 MW,by region 18.CLIMATE CHANGE AND NUCLEAR POWER24BOX 4:CONTRIBUTION FROM ED
142、F Nuclear New Build Programme optimization strategyEDF organized the renewal of the French nuclear fleet by setting up a programme for the construction of several pairs of identical EPR2s(initially 3 pairs(6 units),with a potential project of extension to 7pairs(14 units in total).This programme str
143、ategy makes it possible to:develop a bearing to ensure a unique envelope design for the entire series benefit from increased volumes on purchases and maintenance over time create a dynamic of learning and continuous improvement de-risk the construction and operation of series reactors provide the op
144、erator with a homogeneous fleet for the benefit of safety,operating quality and control of operating costs.Except for certain works that are site specific in nature,the EPR2 design is generic and meets envelope requirements,which make it possible to cover the conditions of the different implementati
145、on sites envisaged for the EPR2 in France.The choice of a generic design coupled with a strategy of standardizing equipment and grouping purchases in framework contracts covering the three pairs makes it possible to reduce the volume of engineering studies to be performed(in particular for equipment
146、 qualification)and to pool the costs of contracting contracts.It also allows for reductions of unit prices.The approach makes it possible to benefit from the series effect in terms of equipment production.It also gives visibility to the industrial sector and thus contributes to the development of sk
147、ills.An analysis carried out on the nuclear fleet in operation highlights an economic benefit associated with the substantial volume effect,depending on the areas and conditions of the purchase(framework contracts,firm commitments,deployment schedule,common shares in the contracts,etc.).The learning
148、 effect will reduce construction times and consequently the cost of the civil engineering,assembly and testing phases as well as site engineering hours for both the construction and operations(e.g.team training,performance of industrial partners during unit outages,modification studies linked to per
149、iodic reviews).With this programme strategy,the risks and uncertainties will mainly affect the core studies and the implementation activities carried out on the FOAK unit(first-of-a-kind unit to be built).The subsequent pairs will be built based on afixed design,except for site-specific design works
150、,and controlled industrial processes and construction sequences.The planning and cost at completion of the programme therefore benefit from margins and provisions for risks,contingencies and uncertainties decreasing between pairs.CLIMATE CHANGE AND NUCLEAR POWER25BOX 5:CONTRIBTUTION FROM BNP PARIBAS
151、 Financing nuclear projects:the view of BNP Paribas,the leading bank of the Eurozone BNP Paribas is a significant player in the energy sector and can provide financial products and services to governmental entities,utilities,developers and the supply chain developing civil nuclear power.BNPs lending
152、 policy defines the major requirements for investing in a nuclear project,including limitations on host country,technology and spent fuel management.In recent decades,there has been a notable deceleration in the development of nuclear power plants,accompanied by waning interest in financing.However,
153、the present geopolitical and energy sector landscape has undergone significant changes,igniting a newfound momentum for the expansion of nuclear capabilities.This momentum is particularly evident given the Intergovernmental Panel on Climate Changes finding that all scenarios that achieve carbon neut
154、rality in 2050 include nuclear power.As a bank committed to allocate 40 billion in financing to low carbon energies(including nuclear energy)by 2030,we are currently involved in advising on and financing a number of different projects in a variety of countries.The financing structures are always com
155、plex,as there is no standalone financing:many stakeholders must be involved,starting with governments that need to support the projects from inception by putting in place the adequate regulation,subsidies,and a long-time power purchase agreement to guarantee an off-take price.Notwithstanding the cha
156、llenges(time and cost intensive certification,permitting and building process,etc.),we have seen much stronger,while still cautious,interest in the sector from a wide range of debt and equity investors.This interest applies both to conventional large-scale plant and to SMRs,where there is significan
157、t interest given the potential for relatively rapid deployment and shorter construction phases.CLIMATE CHANGE AND NUCLEAR POWER26Barakah nuclear power plant,United Arab Emirates.Courtesy of Emirates Nuclear Energy Corporation,2024.“The development of the UAE Peaceful Nuclear Energy Program and its f
158、lagship Barakah Nuclear Energy Plant have been central components to enabling the UAEs energy transition and becoming an international player in the civil nuclear energy industry.The Barakah plant in just three years has transformed the nations energy landscape,generating 40 TWh of clean,baseload el
159、ectricity while preventing the release of 22.4 million tons of carbon emissions annually.Indeed,the UAE has added more clean electricity per capita than any nation globally in the past 5 years,with 75%of this generated by the Barakah plant demonstrating the positive impact nuclear energy can have on
160、 a nations energy security and sustainability.”MOHAMED AL HAMMADI Managing Director and Chief Executive Officer,Emirates Nuclear Energy CorporationCLIMATE CHANGE AND NUCLEAR POWER27BOX 6:CONTRIBUTION FROM KPMG The role of cost and deliverability assurance in achieving on-time and on-budget performan
161、ceCompletion of a project on time and on schedule requires the project to set the appropriate cost and schedule baselines at the outset.The UKs Infrastructure and Projects Authority publishes guidance for the appropriate estimation techniques,which evolve in line with the projects development maturi
162、ty 49.At early project maturity,parametric techniques such as reference class forecasting can capture outturn cost and schedule data from previous,similar projects and generate a probability distribution to establish the most likely outcome for the new project.This provides an advantage to clients w
163、ith an established historic portfolio of projects from which they can obtain data.This means FOAK nuclear technologies may initially be challenged in setting accurate baselines.Such a challenge is not unique to the nuclear sector,however.New technologies(such as carbon capture,utilization and storag
164、e)have the same challenges of being able to benchmark based on prior examples.As a project design matures,bottom-up estimates will be used and eventually replaced with market data as a project is tendered and contracts awarded.Third party assurance supports investor confidence in the appropriateness
165、 of the estimating technique used,given the maturity of the project.KPMG designs cost intelligence approaches for clients to invest effort in the early stages of aproject to get the baseline costs right,leveraging outturn costs from the portfolio to feed into more intelligent estimates.Once the cost
166、 and schedule baselines have been set,the projects organization and management approach will impact its ability to deliver to those baselines.The UK Governments Green Book methodology for business case compilation includes the Management Case as one of the five key dimensions of the project because
167、the integration of people,processes and technology enables delivery of the project as a whole.FOAK projects may look organizationally like start-ups in the early project stages,having grown organically from a small number of people.However,as they scale for delivery,the organizational structure and
168、governance must also grow to ensure that capacity and capability remains right-sized.A third party view to compare the project to both other sectors and good practice can give the confidence in delivery ability;KPMG frequently completes rapid diagnostics of programmes to provide this insight cross-s
169、ector.CLIMATE CHANGE AND NUCLEAR POWER28 Financing Approaches for Nuclear Investment When it comes to financing long term investments in nuclear power projects,strategic planning and financial foresight play pivotal roles.Financing nuclear power projects requires balancing capital-intensive investme
170、nts with long term project sustainability.This section will delve into the distinct characteristics and financing strategies for new nuclear projects,compare them to long term operations of nuclear projects and highlight recent notable endeavors.3.CLIMATE CHANGE AND NUCLEAR POWER293.1.Financing New
171、BuildTypically,long term nuclear energy projects are financed through a combination of the following:GOVERNMENT BACKING:Governments play a crucial role in underpinning and sustaining nuclear power initiatives through energy planning.Through direct investments,loan guarantees,subsidies and export cre
172、dit agencies(ECAs),governments provide financial stability and incentivize private investors to participate in these ventures.PUBLICPRIVATE PARTNERSHIPS:Collaboration between public entities and private investors is common in financing nuclear energy projects.Publicprivate partnerships distribute ri
173、sks and responsibilities among stakeholders while leveraging the strengths of both sectors.This model can ensure a more robust financial framework,mitigating uncertainties and enhancing project feasibility if managed appropriately.Publicprivate partnerships can create the possibility of a misdistrib
174、ution of risk among stakeholders;this has led to the bankruptcy ofstakeholders during the construction phase of nuclear energy projects.3 OFFTAKE CONTRACTS:Securing power purchase agreements or feed-in tariffs with high volume users like utility companies or industrial consumers guarantee revenue st
175、reams over extended periods,bolstering investor confidence.Such contracts provide stability amidst fluctuating market conditions,rendering nuclear investments more attractive to financiers.It is uncommon today for energy intensive or industrial consumers to act as counterparties to power purchase ag
176、reements or feed-in tariffs for new build reactors.OTHER FINANCING INSTRUMENTS:Various mechanisms to attract financing can be employed to fund nuclear power projects,including bonds and infrastructure funds.These instruments diversify financing sources and reduce reliance on traditional bank loans,f
177、ostering greater resilience and flexibility in project financing.3 The strategy of allocating risk to suppliers contributed to the bankruptcy of the EPC contractors of both Olkiluoto unit 3 and Vogtle units 3 and 4.Areva,a French multinational group,faced significant cost overruns and delays in the
178、construction of Olkiluoto 3 in Finland,causing financial strain and contributing to Arevas bankruptcy in 2017.Around the same time,Westinghouse Electric Company faced delays and cost overruns in the construction of Vogtle 3 and 4 and VC Summers 2 and 3,in part due to regulatory hurdles and technical
179、 challenges with the AP1000 reactor design.Westinghouse filed for bankruptcy in March 2017 50.CLIMATE CHANGE AND NUCLEAR POWER30The highest risk to the economics of a nuclear power project occurs during the construction period.During construction,the project incurs high levels of debt with no guaran
180、tee that the power plant will be completed on time and on budget.This delivery risk and cost uncertainty is exacerbated by FOAK design,performance,regulatory and political uncertainties that can all disrupt or extend the time before the project is operational and can begin generating revenue.These r
181、isks have historically been too great for the debt market to accommodate without guarantees.Debt and equity of the project are often intertwined in this period due to a relatively limited number of parties willing or able to take on such significant financial risk;these ownership models are typicall
182、y in the form of government and corporate financing.This may change as countries or regions mitigate their construction risk with a series approach to deploying nuclear energy projects.Throughout the nuclear energy projects life,different debt and equity combinations may be pursued to ensure positiv
183、e project economics.In addition to raising equity,the owner of a nuclear power plant can draw substantial benefit from deploying various complementary debt instruments to minimize the cost of capital.Financing sources can be a combination of loans,export financing,bank financing,bilateral credit,bon
184、ds and structured financing,all of which can change throughout the life of the project as the risk profile varies.3.1.1.Government backingMost export nuclear energy new build projects have seen significant involvement of governments(vendor country,host country or both)in financing,often with a direc
185、t formal agreement.Host government financing may be direct,by providing equity or debt,or indirect,such as loan guarantees to private lenders or mechanisms to share revenue risk such as power purchase agreements or other offtake contracts.Both sovereign loan guarantees and grants provided by the ven
186、dor government via an ECA have been used to finance recent nuclear power projects.In several projects,vendors also participate as equity and/or debt provider,but the host government will retain full ownership of the project and bears most of its construction risks.CLIMATE CHANGE AND NUCLEAR POWER31
187、Financing new nuclear in China New build NPPs in China Nuclear power,a clean and low carbon energy source,is strongly supported by the Government of China.Therefore,NPP projects can proceed sustainably with continuous construction.Chinas nuclear technology has become increasingly mature in design,co
188、nstruction and operation through serial construction efforts.Additionally the design,equipment supply and construction of NPP projects in China generally follow a relatively centralized approach.This ensures continuous improvement of professional expertise across teams and drives ongoing optimizatio
189、n,effectively managing overall construction costs and risks.Financing Methods In China,the total funds for an NPP project mainly come from two sources:equity capital and debt financing,with the proportion of equity capital generally not falling below 20%.Equity capital is provided to the project com
190、pany by its shareholders through a capital contribution agreement.In this agreement,shareholders agree to contribute funds based on their respective shareholding ratios and according to the planned investment schedule.Shareholder entities of the NPP project company mainly include power enterprises t
191、hat are subordinate to nuclear power groups as well as local investment institutions.Debt financing is mainly sourced through commercial bank loans.Given that NPP projects are strongly supported by the State,and the project companies are all affiliated with large State-owned groups,which inherently
192、have a low risk of defaulting on debts,domestic banking institutions are generally willing to participate in financing these projects.Therefore,the contracted interest rate can be set at a level below the loan prime rate.However,due to the substantial amount of required funds,project loans are often
193、 arranged as syndicated loans or joint loans involving multiple large State-owned banks.During the preliminary feasibility study phase of the NPP projects,the interest rate on commercial loans is assumed to be fixed based on the benchmark loan prime rate.During the construction and operational phase
194、s of the project,the interest rates on commercial loans can fluctuate with the loan prime rate depending on the fluctuation of the economy.Repayment usually spans 15 years,commencing from the month when the project enters commercial operation.Additionally,debt financing for some NPPs also includes m
195、ethods such as corporate bonds and export credits.Export credits are primarily utilized within import projects,for instance,when importing large-scale equipment like the French EPR project in China.BOX 7:CONTRIBUTION FROM CHINA NUCLEAR POWER ENGINEERING CO.LTDCLIMATE CHANGE AND NUCLEAR POWER32 BOX 7
196、:CONTRIBUTION FROM CHINA NUCLEAR POWER ENGINEERING CO.LTDChallenges and Strategies PROJECT SCHEDULE OVERRUNS Nuclear power plant investments are considerable,and any extension of the construction period not only adds to the financial costs,escalating the total project completion expense,but also pos
197、tpones revenue streams,thereby complicating repayment obligations.China possesses strong capabilities and rich experience in ensuring that NPPs are completed on schedule.Taking the HPR1000 reactor as an example,the construction duration has gradually decreased from approximately 68 months for the FO
198、AK unit(Fuqing Unit 5)to around 60 months(e.g.Zhangzhou Unit 3,currently under construction).Factors contributing to this improvement include ongoing design optimizations,maturing construction management workflow and incentives for shortening schedules.INTEREST RATE CHANGES Throughout the long perio
199、ds of NPP construction and loan repayment,unpredictable shifts may transpire within both domestic and international economic environments.When interest rates climb,this results in escalated financing costs for the project and exacerbated strain on loan repayments.As a common practice,a contingency p
200、rovision is set in cost estimates and financial arrangements to manage this type of risk and any other unforeseen risks.EXCHANGE RATE RISK In light of the difference between the currencies of electricity sales and foreign currency debt,project companies must carefully consider exchange rate risk.In
201、earlier projects,effective measures were taken by using forward foreign exchange contracts to hedge against future currency risks associated with debt repayment cash flows over several years.This strategy resulted in positive outcomes through effective foreign exchange hedging and has safeguarded ag
202、ainst adverse impacts from currency movements.CLIMATE CHANGE AND NUCLEAR POWER33Historical experience shows that strong support from governments will still be needed in the next decades to ensure a sufficient and sustained deployment of nuclear power.Governmental support is essential to establish a
203、robust nuclear energy supply chain,mitigate construction and price risk and ensure that energy markets permit investments in low carbon technologies.3.1.1.1.Export credit agencies(ECAs)ECAs are financial institutions or agencies established by governments to support the export of capital goods and s
204、ervices and to promote jobs in their economies.ECAs provide financial instruments and services with the objective of removing or mitigating some of the political or commercial risks faced by the seller of technology when exporting,in exchange for a premium.There are two main forms of support:officia
205、l financing support,which includes direct credits to foreign buyers,refinancing and interest-rate support,and pure cover support,which encompasses export credit insurance and guarantee cover for credits issued by private financial institutions.Since 1978,the Organization for Economic Co-operation an
206、d Development(OECD)has provided a standardized financial framework for export credit,the Arrangement on Officially Supported Export Credits(the Arrangement)4 51,to ensure fair competition among OECD exporting countries.The Arrangement provides guidelines and terms of export credit finance;it defines
207、 the terms of aloan(drawing and repayment periods,maximal loan term,commercial interest reference rates,etc.)and the principles for calculating the insurance premiums.For several sectors,including nuclear power,specific guidelines and regulations are established by sector understandings.The Sector U
208、nderstanding on Export Credits for Nuclear Power Plants(the NSU)51 was established by the OECD in 1984 and contains more flexible terms and conditions for officially supported export credits intended for financing nuclear power projects.The latest update of the NSU in 2023 introduced extended maximu
209、m repayment terms and additional repayment flexibilities.The maximum repayment term under the NSU is aligned with the maximum repayment term under the Sector Understanding on Export Credits for Climate Change,which was updated in 2023,as well 51.The main characteristics of financial arrangements for
210、 nuclear projects are summarized below,and a schematic example of an ECA agreement is given in Fig.9.4 The participants in the Arrangement as of April 2024 are Australia,Canada,the European Union,Japan,the Republic of Korea,New Zealand,Norway,Switzerland,Trkiye,the UK and the USA.CLIMATE CHANGE AND
211、NUCLEAR POWER34Enrichment NF first load NF disposal NF subsequent loads Spent fuel managementNPP constructionNPP modernization SDR 80 millionMaximum years of repayment0 1 2 3 4 5/15/22FuelConstruction and modernization Scope of application:Export of complete NPPs or parts thereof,comprising all comp
212、onents,equipment,materials and services,including the training of personnel directly required for construction and commissioning Modernization of existing NPPs Supply of nuclear fuel and enrichment Provision of spent fuel managementNot applicable XItems located outside of NPP site(infrastructure dev
213、elopment)XDecommissioning of NPPTerms and conditions:Export cost to be covered up to 85%of export contract valueDown payment minimum 15%of export contract valueLocal costs to be covered up to 4050%of export contract valueRepayment amount=Principal sum of an export credit+CIRR5+MPR6Repayment terms5 C
214、IRR commercial interest reference rates,which are fixed for each currency of participants to the Arrangement and reviewed every month.6 MPR minimum premium rates,which are charged for the credit risk in addition to CIRR.MPR depend on the level of risk,which includes the country risk(rules set for ca
215、lculation),time at risk(horizon of risk)and political/commercial risks.FIG.8.Repayment terms established by the Sector Understanding on Export Credits for Nuclear Power Plants 51.Main characteristics of ECA financial arrangements for nuclear projectsCLIMATE CHANGE AND NUCLEAR POWER3540%Domestic cont
216、ract60%Export contract(EC)30%ECA10%Not covered by ECA Export Credit Agency (85%of EC=51%)Down payment (15%of EC=9%)FIG.9.Example of an export credit agency supported facility agreement 51.Export credit backed by ECAs has become increasingly important for all parties involved in nuclear energy projec
217、ts.For technology exporters,the ability to provide financial solutions has become a critical competitive advantage,especially in new or emerging markets that lack the access to the large funding required in nuclear energy projects.For lenders,insurance against political risk and commercial risk(inso
218、lvency or default by the debtor,etc.)are critical features to be able to commit funding on a long term basis.Recent examples include support from the ECAs in France and Sweden in providing loan guarantees for the Olkiluoto-3 NPP construction project in Finland 52,while ECAs from the Republic of Kore
219、a provided financing for the Barakah NPP construction project in the United Arab Emirates 53.Japans ECA has special consideration in place for supporting nuclear sector projects 54.3.1.2.Publicprivate partnershipsNuclear power projects have the potential to be attractive to private investors,given t
220、heir long term stability and predictability in energy generation,which can deliver consistent revenue.Although private investors have historically been averse to the unique risks of nuclear energy projects,several financial mechanisms may provide additional risk mitigation to make nuclear projects m
221、ore attractive to private sector capital.These include loan guarantees that could come from project sponsors(typically host or vendor governments as described in Section 3.1.1)or multilateral financing institutions,and insurance coverage from ECAs or the private insurance market,for example with pol
222、itical risk insurance.CLIMATE CHANGE AND NUCLEAR POWER36BOX 8:CONTRIBUTION FROM THE INTERNATIONAL BANK FOR NUCLEAR INFRASTRUCTURE Scaling nuclear energy for a sustainable and secure net zero world Multilateral international financing institutions can play a critical role in providing supplemental po
223、oled and blended funding and financing solutions that bridge the gaps between public/government support for nuclear and the global financial markets.These institutions can play a unique role in promoting early dialogues between policy makers,industry and financial markets that enable frameworks to u
224、ltimately promote bankability in the nuclear sector:Provider and catalysts of long term patient capital bridge the near term funding,financing and risk gaps Largest global issuer and global benchmark for high grade nuclear-specific bonds and other securities creating and broadening markets and deepe
225、ning liquidity across sustainable and environmental social governance(ESG)nuclear financing markets Enabler and accelerator of nuclear infrastructure and technologies facilitating rapid global nuclear market expansion and providing supplemental funding,financing,services,resources and other support
226、Global demand aggregator for nuclear generation technologies and their global supply chains enabling accelerated bankability Global aggregator of harmonized nuclear specific standards,criteria and frameworks promoting a high degree of standardization and harmonization of policy,regulatory,market,ESG
227、/financing,commercial,contractual and risk allocation frameworks To this end,an initiative exists to establish a new,nuclear-specific international financing institution called the International Bank for Nuclear Infrastructure(IBNI)55.IBNIs exclusive focus and role would be to provide multidimension
228、al solutions,including specialized nuclear funding and financing.This support could help enable global nuclear generation capacities to grow at the speed and scale necessary to attain global net zero by 2050 and complimentary policy aims 56.CLIMATE CHANGE AND NUCLEAR POWER37BOX 9:CONTRIBUTION FROM T
229、HE EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT EBRDs nuclear financing strategy in a shifting energy landscapeIn 2023 the European Bank for Reconstruction and Development(EBRD)engaged in extensive consultations on its energy sector strategy with shareholders and the public.EBRD will continue to
230、 consider financing for nuclear safety improvements,decommissioning of nuclear installations and the management of radioactive waste,building on the 30 years of experience in managing large nuclear safety donor funds.EBRD has taken note of statements of some shareholders,including countries of opera
231、tion,which wish to start,continue or increase the use of nuclear energy as part of their net zero commitments and energy security considerations.Safety will remain of paramount importance in all of these scenarios,in particular with regard to the long term operation of existing nuclear power plants.
232、EBRD is committed to actively monitoring developments in the nuclear sector,including new technologies.Any financing of new nuclear capacity would,however,require explicit approval of the Banks shareholders.3.1.3.Offtake contractsOfftake contracts that exchange early financial contributions for decr
233、eased project cost are crucial for financing new nuclear energy projects and can have large benefits for long term operations of nuclear projects.These contracts provide revenue certainty and mitigate financial risk during operations.Offtake agreements during operations,such as power purchase agreem
234、ents,may also act as a guarantee for future revenues to be used to secure additional sources of funding.These short or long term agreements offer many benefits that enhance project bankability.By establishing fixed or indexed pricing mechanisms,these contracts insulate nuclear power projects from me
235、rchant market turbulence,ensuring predictable revenue streams and financial stability.“To realize our net zero goals by 2050,the US and 24 other countries launched the Declaration to Triple Nuclear Energy at COP28,inviting shareholders of the World Bank and international financial institutions to en
236、courage the inclusion of nuclear energy in energy lending policies.The United States government prioritizes activities that expand international nuclear energy cooperation to enable a more sustainable,equitable,and reliable energy system.”KATHRYN HUFFFormer Assistant Secretary for Nuclear Energy,US
237、Department of EnergyCLIMATE CHANGE AND NUCLEAR POWER38Tripling Nuclear Energy by 2050,Net Zero Nuclear Event,at COP28,Expo City Dubai,United Arab Emirates.This risk mitigation not only safeguards investors interests but also incentivizes a broader spectrum of private finance such as pension funds to
238、 participate in nuclear energy ventures,reassured by the prospect of steady returns and reduced exposure to market risks.This stability enables nuclear energy developers to secure financing at competitive rates,unlocking access to private capital and fostering sustainable project development.While r
239、enewable energy technologies offer lower upfront cost and shorter construction times,nuclear power offers unique advantages,offering low carbon,reliable and scalable energy.Demonstrating the value proposition of nuclear energy projects can help to attract potential offtakers.Offtakers with high ener
240、gy needs should be engaged early in the development process,allowing developers to understand the offtakers energy needs,preferences and risk tolerance,facilitating the design of tailored offtake agreements.Providing offtake contracts that account for price risk for example,with indexed prices that
241、can rise with inflation or commensurate with the spot market price for electricity can help to facilitate long term contracts,assuring stable cash flows and isolating the project price from market fluctuations.CLIMATE CHANGE AND NUCLEAR POWER39 Recent experience with offtake agreements in the UK:the
242、 Contract for Difference scheme and Regulated Asset Base model The Contract for Difference(CfD)scheme and Regulated Asset Base(RAB)mechanism have been used to finance recent nuclear energy projects in the UK.Both aim to provide financial stability for nuclear energy projects.However,they differ in h
243、ow they distribute costs,manage risks and impact consumers electricity bills.Hinkley Point C was financed under a CfD arrangement,under which the UK government agrees to pay the nuclear energy project operator the difference between a predetermined strike price and the market price for electricity.F
244、or Hinkley Point C,the CfD strike price was set at the approximate equivalent of US$150/MWh 57,compared to the average UK day-ahead wholesale price of US$121/MWh in 2023 58).Shifting policy in Europe:The European Electricity Market Reform The nuclear CfD developed for HPC has not since been replicat
245、ed,but it may now be replaced by an adapted mechanism.The 2024 European Market Reform is the EUs long term response to the energy crisis experienced in 2022 59.A key element of the reform is the introduction of the two-way CfDs,which will provide more stable revenue for power producers of wind energ
246、y,solar energy,geothermal energy and hydropower(without reservoir).Importantly,after much debate,nuclear energy has been included in this list.This will likely be the way new nuclear is funded in the EU,given a condition in the reform that states that the two-way CfD will be mandatory for all public
247、ally funded projects.BOX 10:CONTRIBUTION FROM KPMG FIG.10.Representative example of a two-way Contract for Differencestrike pricesthe generator pays back the diferencethe generator receives the diferencemarket pricesCLIMATE CHANGE AND NUCLEAR POWER40 Recent experience with offtake agreements in the
248、UK:the Contract for Difference scheme and Regulated Asset Base model The Contract for Difference(CfD)scheme and Regulated Asset Base(RAB)mechanism have been used to finance recent nuclear energy projects in the UK.Both aim to provide financial stability for nuclear energy projects.However,they diffe
249、r in how they distribute costs,manage risks and impact consumers electricity bills.Hinkley Point C was financed under a CfD arrangement,under which the UK government agrees to pay the nuclear energy project operator the difference between a predetermined strike price and the market price for electri
250、city.For Hinkley Point C,the CfD strike price was set at the approximate equivalent of US$150/MWh 57,compared to the average UK day-ahead wholesale price of US$121/MWh in 2023 58).Shifting policy in Europe:The European Electricity Market Reform The nuclear CfD developed for HPC has not since been re
251、plicated,but it may now be replaced by an adapted mechanism.The 2024 European Market Reform is the EUs long term response to the energy crisis experienced in 2022 59.A key element of the reform is the introduction of the two-way CfDs,which will provide more stable revenue for power producers of wind
252、 energy,solar energy,geothermal energy and hydropower(without reservoir).Importantly,after much debate,nuclear energy has been included in this list.This will likely be the way new nuclear is funded in the EU,given a condition in the reform that states that the two-way CfD will be mandatory for all
253、publically funded projects.BOX 10:CONTRIBUTION FROM KPMG Under a two-way CfD,the generator sells the electricity on the market but then settles the difference between the market price and the strike price agreed in advance with the public entity.Any excess revenues are distributed to final customers
254、,with some flexibility for member states (see Fig.10).The first application of this model to nuclear new builds is the Dukovany II project in the Czech Republic,the latest new nuclear plant to receive EU State aid approval 60.The remuneration mechanism will provide revenue stability and limit excess
255、 remuneration through a yearly ex-post settlement.This contract will last for 40 years,with a clawback mechanism that lasts the duration of the operational life to mitigate the risk of overcompensation by the beneficiary(EZ a.s.).The presence of additional state aid mechanisms suggests that future n
256、uclear developments will continue to need additional state support in addition to offtake contracts in order to reach financial close.RAB for new nuclear Sizewell C is intended to be the first project to use the RAB financing mechanism,in which the projects capital interest payments during construct
257、ion are included in the rate base used to calculate electricity tariffs 57.The Nuclear Energy(Financing)Act 2022 introduces the RAB model as a potential tool used to finance new nuclear projects 61.This model allows investors to share some of the schemes construction and operating risks with the con
258、sumers,which will reduce the overall cost of a scheme,as it avoids a build-up of interest.This method allows for the recovery of both capital and operating costs along with a regulated return on investment.Consumers ultimately bear the costs through their electricity bills,but the RAB mechanism prov
259、ides stability and predictability in financing.Risks associated with cost overruns and delays may be transferred to consumers through capped tariff adjustments similar to the regular reassessments of the CfD strike price 57.The RAB approach proposed for Sizewell differs from the CfD model that was u
260、sed for Hinkley Point C.Under the CfD,the developer agrees to pay the construction costs and takes on all the construction risks in return for an agreed fixed price during operation.Analysis by the Department for Business,Energy&Industrial Strategy has shown that the use of the RAB model should prod
261、uce a cost saving of between US$38 billion and$102billion for the new nuclear programme compared with the CfD approach 62.CLIMATE CHANGE AND NUCLEAR POWER413.1.3.1.Fostering collective investments Collaborative financing models,such as consortia based funding and joint ventures,are gaining prominenc
262、e in the nuclear energy industry.By pooling resources,sharing risks and leveraging complementary expertise,multiple stakeholders can collectively invest in nuclear energy projects,spreading financial burdens and enhancing project feasibility.These shared financing models foster collaboration,diversi
263、fy funding sources and expedite project development,thereby facilitating greater access to private capital and optimizing project economics.For example,the Mankala model is an ownership arrangement deployed primarily in Finland to facilitate investments and shared ownership in large,capital intensiv
264、e assets such as electricity generation plants.Currently about two thirds of nuclear electricity production in Finland is based on the Mankala model.7 For such projects,a group of investors,typically large energy consumers such as energy wholesalers,electricity intensive companies and municipalities
265、,form a cooperative entity where capital is pooled to finance the development of a power plant.Shareholders are committed to bearing the fixed and variable operating costs of the Mankala company and,in exchange,receive the power and heat generated“at cost”,which they can use for their own operations
266、 or sell to the market.One of the key strengths of the Mankala model lies in its ability to distribute risk and rewards among investors,allowing shareholders to undertake and finance aproject together that would be too large or too risky for any of them individually.The Mankala structure also provid
267、es shareholders with the benefits of lower and stable electricity prices,thus providing a long term hedge against electricity price volatility while ensuring revenue certainty for the project company.Also,many institutional financers perceive a Mankala company as less risky,as all shareholders are c
268、ollectively liable for debts,and are therefore likely to provide third-party finance on more favourable terms 63.In Poland,the SaHo model has been proposed as one option for innovative nuclear financing.Under this framework,governments collaborate with private investors to finance nuclear power proj
269、ects.The government typically provides funding support,regulatory oversight and guarantees,while private investors contribute capital and expertise.The SaHo model relies on publicprivate partnerships without an equity contribution and involves a centralized approach with government involvement 64.7
270、A publication on this subject is currently in preparation.CLIMATE CHANGE AND NUCLEAR POWER42The SaHo model capitalizes on the strengths of both public and private sectors,leveraging governmental stability and resources alongside private sector efficiency and innovation.By spreading the financial bur
271、den between public and private entities,it minimizes investment risks and ensures the alignment of interests towards achieving common objectives 64.Additionally,the involvement of government entities enhances credibility and fosters public trust in the project.BOX 11:CONTRIBUTION FROM EDF Powering p
272、artnerships:EDFs innovative approach to nuclear energy collaboration in Europe In the 1970s and 1980s,EDF signed several power purchasing agreements with European energy companies.EDF created production allocation contracts by which a portion of the French nuclear fleets capacity was reserved for pa
273、rtners,who in turn assumed a proportional share of fixed costs,encompassing construction,operational expenses,decommissioning and relevant taxes.In turn,these partners recieved a corresponding fraction of the energy generated by the reactors at the variable fuel cost over the lifespan of the units.A
274、s of 31 December 2023,some portion of ten of EDFs nuclear units were covered by this type of contract,with total contracted capacity of up to 1GW.Noteworthy partnerships included EnBWs share in Cattenom units 1-2(5%);lectricit de Laufenbourgs stake in Bugey 2-3(17.5%);Electrabels share of Tricastin
275、1-4(12.5%);and Luminus,EDFs Belgian subsidiary,in Chooz B1-B2(3.3%).Expanding beyond this model,EDF engaged in a second type of agreement centered on a fleet of power plants with capacity of around 2 GW.While fixed costs and contract durations remained tied to specific units,the volume of energy sol
276、d at variable fuel cost was determined by the contract share as a percentage of the total availability of the broader reference fleet.This second type of contract is applicable for Electrabels stake in Chooz B1-B2(21.7%)in addition to the Electricit de Laufenbourg(7.8%)and Swiss electricity group CN
277、P(21.8%)shares of Cattenom 3-4 65.This diversified approach allows for a sharing of industrial risks during fleet development.Despite assuming no operational role for EDFs partners,these alliances underscore a collaborative commitment toward advancing nuclear energy in Europe,fostering innovation an
278、d collectively addressing industry needs.In the future,EDF could sign long term nuclear power offtake contracts like power purchase agreements or contracts for difference to private sector companies with significant energy needs.CLIMATE CHANGE AND NUCLEAR POWER433.1.3.2.Collaborative financing initi
279、atives for first-of-a-kind projectsThe collaborative financing landscape for FOAK projects is rapidly evolving,marked by innovative partnerships and initiatives aimed at accelerating the transition to advanced clean electricity technologies.Both public and private sector entities have the potential
280、to aggregate their demand and resources to support the advancement of FOAK and early commercial projects while addressing critical aspects essential for their successful implementation.These initiatives provide insights into the evolving landscape of sustainable energy development and the pivotal ro
281、le of collaborative efforts in driving innovation and progress.Technology companies like Microsoft and Google plan to utilize all clean energy technologies in order to achieve 24/7 carbon free or annual carbon negative targets by 2030 66,67.As electricity consumption by data centres,cryptocurrencies
282、 and artificial intelligence companies is expected to double from 2022 to 2026 68,these companies are seeking the next generation of clean energy technologies that can help to meet their goals.“At Microsoft,we know a 100%decarbonized grid will require firm,dispatchable clean electricity sources.Yet,
283、these advanced clean electricity projects face challenges in getting built fast enough,in part because some of these early projects are FOAK or have risks that make it difficult to secure the necessary financing.“In March 2024,Microsoft,Google,and Nucor announced a collaboration to accelerate the de
284、ployment of advanced clean electricity projects,including advanced nuclear.These technologies can provide firm,dispatchable power that can fill the gaps in wind and solar production and help decarbonize the grid.“We are at a moment of truth for advanced clean electricity:there is alot of exciting te
285、chnological progress and new policy thinking,but that needs to translate into long term,sustainable commercial success.This advanced market commitment is a demonstration of how companies across multiple industries can come together to aggregate demand for carbon free electricity,support the developm
286、ent of new business models,and seek to reduce the risks and costs for early commercial projects.”MELANIE NAKAGAWACorporate Vice President and Chief Sustainability Officer,Microsoft CLIMATE CHANGE AND NUCLEAR POWER44The EFI Foundation presents a comprehensive policy framework intended to facilitate t
287、he development of SMR designs,addressing critical aspects essential for their successful implementation(see Section 4 for more information on SMRs).The EFI framework outlines key elements designed to streamline the process and mitigate risks associated with SMR projects.Central to this proposal is t
288、he establishment of a FOAK orderbook for multiple builds of aspecific SMR design,ensuring a steady pipeline of projects.Additionally,the framework advocates for the creation of a special purpose vehicle to facilitate collective undivided ownership,with capital contributions from project sponsors in
289、the form of a mix of equity and debt.Cost containment measures are proposed through an integrated project delivery agreement,incorporating a shared incentive structure to align stakeholder interests.The framework suggests a tiered cost-sharing mechanism,where project sponsors bear initial costs,foll
290、owed by funds to address estimated contingencies and,finally,a government-provided backstop through a credit facility allocated to the special purpose vehicle.This government backstop agreement is envisioned as a loan with flexible repayment terms,subject to negotiation,further bolstering investor c
291、onfidence and project viability 69.3.1.4.Other financing instrumentsEmerging financial instruments,such as green bonds designed to support environmentally sustainable projects,can also play a role.Global issuance of such sustainable finance instruments8,including the ESG-focused loans and bonds have
292、 grown fiftyfold in the past ten years,reaching over US2022$1.5 trillion in 2022 with aslight increase in 2023 70.3.1.4.1.Sustainable financing mechanismsWhile renewable energy projects have traditionally been the primary recipients of energy sector sustainable finance,sustainable loans and bonds ar
293、e being successfully deployed to finance a growing number of nuclear energy projects.Sustainability linked finance brings many benefits ranging from broadening access to capital and investor support to helping to gain trust from stakeholders and demonstrating alignment with Sustainable Development G
294、oals,among others.Some of the first examples of sustainable loans for nuclear projects include the ESG-linked loans provided by two Russian commercial banks in 2021 for the construction of the Akkuyu NPP in Trkiye(totalling US2021$800 million)71 and the bilateral green loan provided by Crdit Agricol
295、e CIB to EDF in 2022 to finance the maintenance of the nuclear energy fleet in France(1 billion,or US2022$1.1billion)72.More recently,in May 2024,EDF signed green loans with several major international banks for a total amount of 5.8 billion(US2024$6.3 billion)73.8 Sustainable finance instruments in
296、clude green,social,sustainability,sustainability-linked and transitional financing.CLIMATE CHANGE AND NUCLEAR POWER450200400600800100012002014201520162017201820192020202120222023Sustainable bond market value(US$billion)GreenSustainabilitySocialSustainability-linkedTransitionalOutside of Europe,two l
297、eading Emirati banks provided AED 8.89 billion(US2024$2.24 billion)as a green loan facility for refinancing the Barakah NPP construction project in March 2024 74.“The recent refinancing of Barakah having been verified as meeting Green Loan status requirements firmly establishes the essential role of
298、 nuclear energy in the clean energy transition and its bankability for finance and investment organizations.We are breaking new ground as one of the first nuclear plants globally to be backed by Green Loan funding,paving the way for others,as we continue to offer a new model as an example for new nu
299、clear programs globally.”The inclusion of nuclear power in sustainable taxonomies(e.g.the EU Taxonomy 75)and national sustainable bond frameworks(e.g.Canada 76 and Japan 77)is further boosting acceptance of nuclear energy technologies and reassuring ESG-conscious investors.These developments support
300、 increasing recognition and growth in the number and volume of green bonds for nuclear energy projects in the broader burgeoning sustainable bond9 market 78(see Table 2).Green bond issuance has more than doubled over the past five years to US2023$575 billion 79 and now makes up about 60%of sustainab
301、le bonds on offer(see Figs 11 and 12).MOHAMED AL HAMMADIManaging Director and Chief Executive Officer,Emirates Nuclear Energy Corporation 9 Sustainable bonds include green,social,sustainability,sustainability-linked and transitional bonds.FIG.11.Sustainable bond market value,20142023 78CLIMATE CHANG
302、E AND NUCLEAR POWER46Akkuyu nuclear power plant,Trkiye.Courtesy of Akkuyu Nuclear Joint Stock Company23%Energy12%Buildings15%Transport50%Other10 These include the Japan Credit Rating Agency,DNV Business Assurance Japan and the Russian Analytical Credit Rating Agency,alongside global entities like Su
303、stainalytics,S&P Global Ratings,ISS Corporate Solutions and Climate Bond Initiative.FIG.12.Green bond proceeds by sector(US2023$)78Nuclear energy industry corporates are also playing their part,with many adopting their own corporate green bond frameworks under the technology-neutral Green Bond Princ
304、iples(GBP)established by the International Capital Market Association(an association of financial institutions)in 2021 and revised in 2022 80(see Fig.13 for a representation of key players and the green bond issuing process).Companies such as Bruce Power 81 and Ontario Power Generation 82 in Canada,
305、Teollisuuden Voima Oyj in Finland 83,EDF 84 in France,the Russian State Development Corporation VEB.RF 85 and Constellation 86 in the USA are among the trailblazers adopting green bond frameworks to provide transparency and accountability for environmentally minded investors,underpinned by stringent
306、 compliance procedures and second party opinions independent evaluation by rating agencies.10 Although some issuers claim that green labels on their bonds help them lower the cost of borrowing,data show that the discount is rare 87.The so called greenium the interest rate premium for green bonds ove
307、r conventional bonds is limited 88.Nevertheless,green bonds appear to be a promising instrument to attract financing,providing a straightforward option for institutional investors to achieve ESG objectives across their portfolios along with reputational benefits for both issuers and investors.CLIMAT
308、E CHANGE AND NUCLEAR POWER47Issuer(Govt,Company,Bank)(1)Green taxonomy or similar policy document+(2)ICMA Green Bond Principles Green projects Funding Funding“Greenium”Regular payments with interest ESG-conscious investors(Pension Funds,Investment Funds,Exchange Traded Funds,Stock Market)Green Bond
309、Framework GREEN BONDS Recent developments in regulatory standards have further paved the way for nuclear energy to expand in the green bond arena.In 2023,the European Union introduced a new regulation establishing the European Green Bond(EGB)standard 89,under which nuclear energy deployment can qual
310、ify as environmentally sustainable if compliant with transparency requirements in the EU Taxonomy 75.The EU Taxonomy also informs national European policies,for example the French Ministry of Ecological Transition and Ministry for Energy Transition revised the Greenfin label,which establishes criter
311、ia for labelling investment funds as green,to include funding activities enabling nuclear technologies 90.KEY PLAYERS:Government(establishing national regulatory framework)Issuer(developing Green Bond Framework,providing information about the projects to be financed,requesting second party opinion)S
312、econd party opinion provider(providing an independent assessment of a bond in terms of accuracy and integrity)Bookrunner(underwriting or coordinating a bonds issuance)Investor(willing to invest in climate-related projects)FIG.13.Representation of key players and the green bond issuing process.CLIMAT
313、E CHANGE AND NUCLEAR POWER48TABLE 2.Sustainable bonds11 issued for nuclear energy.COUNTRYISSUERBOND TYPEFRAMEWORK ESTABLISHMENT DATEISSUANCE DATEVOLUMECOUPONALLOCATION OF PROCEEDSArgentinaNucleoelctrica Argentina SASustainability-linkedestablished 2023January 2023US$30 mn2%(4 years)Long term operati
314、ons of Atucha I;construction of the second dry storage facility for spent nuclear fuel at the Atucha site.April 2023 US$80 mn5%(10 years)July 2023 US$69 mn5%12(10 years)CanadaGovernment of CanadaGreenestablished 2022,updated 2023February 2024$C 4 bn (US$2.96 bn)3.5%(10 years)Eligible uses of proceed
315、s include measures supporting the deployment of nuclear energy to generate electricity and/or heat,such as:1)investments in new NPPs;2)refurbishments of existing NPPs;3)research and development;4)some supply chain activities.Canada expects to allocate proceeds from this bond to eligible nuclear acti
316、vities but has not committed specific amounts.Province of Ontario Greenestablished 2014,updated 2024February 2024$C 1.5 bn (US$1.1 bn)4.1%(9 years)Eligible uses of proceeds include measures supporting the deployment of nuclear energy to generate electricity and/or heat.No nuclear projects have been
317、funded to date.Bruce PowerGreenestablished 2021,updated 2023November 2021$C 500 mn(US$397 mn)2.68%(85 months)Extending the life and increasing efficiency of the nuclear generation facility,Finance or refinance new/existing green investments and expenditures.March 2023$C 300 mn(US$220 mn)4.70%(57 mon
318、ths)$C 300 mn(US$220 mn)4.99%(117 months)March 2024$C 600 mn(US$444 mn)4.7%(87 months)Ontario Power GenerationGreenestablished 2018,updated 2024July 2022$C 300 mn(US$230 mn)4.92%(10 years)Eligible uses of proceeds include maintenance and/or refurbishment of existing nuclear energy facilities.11 Sust
319、ainable bonds include green,social,sustainability,sustainability-linked and transition bonds.12 Interest rate reduction of 1.5%subject to incentives.CLIMATE CHANGE AND NUCLEAR POWER49TABLE 2.Sustainable bonds issued for nuclear energy.COUNTRYISSUERBOND TYPEFRAMEWORK ESTABLISHMENT DATEISSUANCE DATEVO
320、LUMECOUPONALLOCATION OF PROCEEDSFinlandTeollisuuden Voima OyjGreenestablished 2023December 202313105 mn(US$115 mn)5.19%(10 years)Financing or refinancing of construction and safe operation of new NPPs,electricity generation from existing NPPs.85 mn(US$93 mn)5.30%(12 years)90 mn(US$98 mn)5.40%(15 yea
321、rs)May 2024600 mn(US$650 mn)4.25%(7 years)FranceElectricit de FranceGreenestablished 2016,updated 2022December 20231 bn(US$1.08 bn)3.75%(3.5 years)EU taxonomy aligned nuclear energy capital expenditures in existing French nuclear reactors in relation to their lifetime extension.June 20241 bn(US$1.07
322、 bn)4.125%(7 years)750 mn(US$802 mn)4.375%(12 years)1.25 bn(US$1.34 bn)4.750%(20 years)JapanKyushu Electric Power Co.Transitionestablished 2022May 2024JPY 10 bn(US$63.63 mn)0.858%(5 years)Refinancing of investments in safety measures for existing nuclear power plants.JPY 20 bn(US$127.253 mn)1.425%(1
323、0 years)Russian FederationState Development Corporation VEB.RFGreenestablished 2022November 2023RUB 40 bn(US$470 mn)floating rate (6.5 years)Climate change adaptation projects,including refinancing construction of an NPP.USAConstellation Energy Generation LLCGreenestablished 2024March 2024US$900 mn5
324、.75%(30 years)incl.Maintenance,expansion and life extensions of facilities licensed by the US Nuclear Regulatory Commission14.13 The issue was done in US Private Placement format.14 Not all proceeds are expected to be invested in nuclear energy projects.Olkiluoto nuclear power plant,Finland.CLIMATE
325、CHANGE AND NUCLEAR POWER50In February 2024,the Government of Japan issued 10-year Japan Climate Transition Bonds and 5-year Japan Climate Transition Bonds(Japans GX bonds)in the amount of JPY 800 billion(US$5.5 billion)each 91.Japans GX bonds can be used for R&D of fast nuclear reactors and high-tem
326、perature gas reactors(pink hydrogen)92.BOX 12:CONTRIBUTION FROM ROSATOM Refinancing of an NPP construction using green bonds In 2013 the Russian development bank VEB RF provided a credit for the construction of an NPP in Belarus in the amount of US$500 million(16 billion RUB in 2013),which was carri
327、ed out by ROSATOM.The major amount of financing for the project was structured as an intergovernmental credit from the Russian Federation to Belarus in the amount of US$10 billion.Later in 2023 VEB RF issued green bonds on the Moscow Exchange(MOEX)amounting to RUB 40 billion(US$470 million in 2023)f
328、or the purpose of refinancing green related credits,including a residual sum of credit for the Belarus NPP.The issue was verified by the independent agency AKRA on compliance with the Russian taxonomy of green projects,which includes nuclear power 93.The conclusion of the verifier highlights that th
329、e green effect of the NPP project is a decline in GHG emissions by 8.7 million tons of CO2eq per year or 522 million tons of CO2eq for the operating lifecycle 94.3.1.4.2.Carbon marketsCarbon pricing is an economic signal to GHG emitters that facilitates global energy transition and takes different f
330、orms.Compliance mechanisms are administrated by governments and take the form of emissions trading systems and carbon taxes.Such mechanisms operate at every level of government in cities,provinces and states,countries and at the supranational level 95.Each government sets its own regulations regardi
331、ng carbon allowances for direct GHG emissions(scope 1):sectors covered,allocation approached,price rate established,etc.The power sector is included in almost all emissions trading systems around the globe,as the sector is well-suited for facilitating the clean energy transition via this mechanism.A
332、llowance cost is reflected in the price for end consumers;hence,carbon-intensive goods become more expensive and low carbon alternative more attractive.However,such incentives of carbon pricing usually cannot be fully implemented,as energy markets are often regulated,partially or fully 96(see Fig.14
333、).CLIMATE CHANGE AND NUCLEAR POWER510%5%10%15%20%02550751002014201520162017201820192020202120222023Share of global emissions Price(US$)Price rangeShare of global emissions covered by Emissions Trading SystemsFIG.14.Emissions trading system price ranges and share of global GHG emissions covered,20182023 (US$/tCO2eq)95.The voluntary carbon markets(VCMs)set up a crediting mechanism,which allows compa
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