Australia: Nuclear power under consideration by South Australian government

In brief - Royal Commission into nuclear fuel cycle expansion releases key findings

Using nuclear fuels to generate base load electricity to address increasing electricity prices, as well as the need to reduce carbon emissions, is being considered by the South Australian government who established a Royal Commission to investigate the possibilities. The Commission has found that while expanding the nuclear fuel cycle in that state may be possible, bipartisan support federally for making the necessary legislative changes will be a crucial factor.

Increasing electricity prices a factor for considering nuclear alternative

Recent press reports have focused on the spike in electricity prices in South Australia, that is argued by some to be caused by an over-reliance on renewable energy in that state. There is also constant discussion as to whether a combination of factors, including production from export-oriented LNG plants in Queensland, dwindling oil and gas reserves in fields such as Bass Strait, and the banning of onshore oil and gas exploration in Victoria and New South Wales due to perceived environmental concerns, will lead to increased electricity prices in the rapidly growing population centres of south-east Australia. Against that background, the question is whether generating base load electricity from nuclear fuels is a viable option. The South Australian government has been leading the way in considering that alternative, along with a number of other issues related to the possible expansion of the nuclear fuel industry.

Nuclear fuel cycle expansion investigated by Royal Commission

The Nuclear Fuel Cycle Royal Commission was established by the South Australian government on 19 March 2015 to undertake an independent and comprehensive investigation into the potential for increasing South Australia's participation in the following four areas of the nuclear fuel cycle:

  1. expanded exploration, extraction and milling of minerals containing radioactive materials
  2. the further processing of minerals and the processing and manufacture of materials containing radioactive and nuclear substances
  3. the use of nuclear fuels for electricity generation
  4. the establishment of facilities for the storage and disposal of used radioactive and nuclear fuel

As part of its investigation, the Commission was tasked with preparing a report that addressed the feasibility, viability, risks and opportunities associated with a potential expansion of the nuclear fuel cycle. It did this by collecting evidence from written submission, oral evidence given in public sessions, its own research and commissioned studies.

The information was then drawn together in the Commission's Tentative Findings which were published on 15 February 2016. The Commission then invited responses in order to better inform the Final Report which was delivered to the South Australian government on 6 May 2016.

Key findings of the Nuclear Fuel Cycle Royal Commission

Expanded exploration, extraction and milling of minerals containing radioactive materials

The Commission found that the administrative and regulatory processes that manage current exploration and mining operations could safely support an expansion in this area. However, the existing regulatory processes for new uranium mines were considered unnecessarily duplicative at the state and federal level. Therefore, the Commission recommended that the South Australian government should pursue a simplification of state and federal mining approval requirements.

The Commission also found that while there is good reason to believe new commercial deposits of uranium could be found in South Australia, there are significant barriers preventing further investment in exploration. To help remedy this, the Commission recommended that the South Australian government integrate and make available any geophysical data it already has, and undertake further geophysical surveys in priority areas. It also recommended that the government commit to increased, long-term, counter-cyclical investment programs to encourage and support further industry investment in exploration.

The Commission warned, though, that while the lessons learned from legacy sites in Port Pirie and Radium Hill have now been incorporated in contemporary regulatory standards, the South Australian government should nevertheless ensure that the full costs of decommissioning and remediation with respect to radioactive ore mining projects are secured in advance of any further exploration, extraction and milling.

Nuclear fuel leasing may make further processing of materials containing radioactive and nuclear substances viable

The Commission found the most significant environmental and safety risks associated with further processing are a result of the chemicals used in the process rather than the radioactivity of the material itself. While many of these chemicals are already used and safely managed in Australia, some risks would require a new regulatory framework. While such a framework could be implemented, there are significant barriers to entering these processing markets as they are currently over-supplied. Consequently, the Commission considered that further processing of materials containing radioactive and nuclear substances would not be viable for South Australia in the next decade.

Further processing, however, may become viable if it was linked with a guarantee to take the used fuel back for permanent disposal. This process, known as fuel leasing, involves an arrangement whereby locally mined uranium would be processed locally then leased to other countries on the basis that the resulting used fuel would be returned to South Australia for permanent disposal. The Commission said that fuel leasing would not only make it easier for South Australia to enter the market, but would give the state a competitive advantage. Consequently, the Commission recommended that the South Australian government remove existing prohibitions on the licensing of further processing activities and pursue removal of similar bans at federal level.

Carbon emission reductions may lead to use of nuclear fuels for electricity generation, but requires removal of prohibitions federally

The Commission found that while it is not commercially viable to develop a nuclear power plant under existing market conditions, there will in coming decades be a need to significantly reduce carbon emissions, and as a result decarbonise Australia's electricity sector. Given nuclear power is low carbon it may become required and would be unable to play a role unless action is taken now. Accordingly, the Commission recommended that the South Australian government should pursue the removal of existing prohibition on nuclear power generation at the federal level.

Given the prospect that nuclear power may one day be integrated into the Australian electricity network, the Commission also recommended that the South Australian government collaborate with the federal government to commission expert monitoring and reporting on the commercialisation of new nuclear reactor designs.

Underlying the above considerations were concerns about reactor safety. The Commission found that while those concerns are legitimate, there is sufficient evidence of safe operation and improvements such that nuclear power should not be discounted as an energy option on the basis of safety.

Deep geological disposal facility possible but requires amending Nuclear Waste Storage Facility (Prohibition) Act

The Commission found that South Australia has the necessary attributes and capabilities to develop a world-class used radioactive and nuclear fuel disposal facility, and to do so safely. The safest way to dispose of used radioactive and nuclear fuel is deep geological disposal. Deep geological disposal involves isolating used nuclear fuel deep inside a suitable rock volume to ensure that no harmful quantities of radioactivity ever reach the surface. There are already advanced programs for deep geological disposal underway in a number of countries, some of which will be able to store used nuclear fuel for up to one million years.

Deep geological disposal is essential given used nuclear fuel generates heat and is highly radioactive and hazardous. The hazard level reduces over time with radiation levels decreasing rapidly in the first 30 to 50 years of storage, with most radioactive elements decaying in the first 500 years. However, the less radioactive but some of the longer lived elements of nuclear fuel require containment and isolation for at least 100,000 years.

The Commission also assessed the viability of a deep geological disposal facility. In determining the viability the Commission took a cautious and conservative approach in judging used nuclear fuel inventories and potential global interest in an international used nuclear fuel disposal facility. Based on those inputs, it was found that a deep geological disposal facility could generate $51 billion during its operation. Further analysis indicated that by accumulating all operating profits in a State Wealth Fund, and annually reinvesting half the interest generated, a fund of $445 billion could be generated over 70 years.

The Commission outlined a range of complex and important steps that would need to be taken to progress such a proposal, including:

  • defining a concept for the storage and disposal of international used nuclear fuel and intermediate level waste in South Australia, on which the views of the South Australian community be sought
  • establishing a dedicated agency to undertake community engagement to assess whether there is a social consent to proceed
  • seeking the support and cooperation of the federal government and determining whether and on what basis client nations would be willing to commit

Accordingly, the Commission recommended that the South Australian government remove the legislative constraint in section 13 of the Nuclear Waste Storage Facility (Prohibition) Act 2000 which provides that no public money may be appropriated, expended or advanced to any person for the purpose of encouraging or financing any activity associated with the construction or operation of a nuclear waste storage facility.

Federal government may support legislation changes if South Australia decides to develop nuclear industry

The Nuclear Fuel Cycle Royal Commission indicates that there is an appetite for increased participation in the nuclear fuel cycle. This appetite is being led by South Australia, with Premier Jay Weatherill set to reveal the state's formal position on whether it will pursue the industry by the end of the year.

While any approval given by the South Australian government will need to be matched with bipartisan political support federally, early indicators suggest that the federal government will help facilitate changes to national law if South Australia decides it wants to develop a nuclear industry.

This news would no doubt be welcomed by the Minerals Council of Australia who had called on "state governments around the country as well as the federal government, to heed the call by this Royal Commission for regulatory reform to enable an expanded uranium and potential nuclear industries to flourish - facilitating jobs and growth at home, and more low emissions energy globally."

Andrew Komesaroff
Energy and resources
Colin Biggers & Paisley

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