Economic Development Board 1 South Australia

ECONOMIC DEVELOPMENT BOARD 1 SOUTH AUSTRALIA

3 August 2015

Rear Admiral the Honourable Kevin Sca rce AC CSC RAN (Rtd) Roya l Commissioner for the Nuclear Fuel Cycle Royal Commission Level 5, 50 Grenfell Street Adelaide SA 5000

Dear Commissioner

RE: Nuclear fuel Cycle Royal Commission

I write to provide a discussion paper prepared by ThinkCiimate for the Economic Development Board (EDB), that responds to the four issues papers released by the Nuclear Fuel Cycle Roya l Commission on: Exploration, Extraction and Milling; Further Processing and Manufacture; Electricity Generation; and Management, Storage and Disposal of Waste.

In October 2014, in the absence of reliable and cu rrent data and evidence on the nuclear value chain, the EDB commissioned ThinkCiimate Consulting to prepare a discussion paper. The purpose of the discussion paper was to explore the opportunities for an expanded role for South Australia in the nuclear value chain and to provide a high level business case to indicate if there is sufficient economic potential to warrant a more thorough investigation.

The discussion paper, provided to you as Attachment 1 to this letter, explores the economic opportunities for South Australia at each point in the nuclear value cha in and, therefore, responds to the four Issues Papers released.

The discussion paper concludes that:

• There is potentially a major economic opportunity for South Australia in the safe management of spent nuclear fuel based on merging mature Intermediate Spent Fuel Storage Installation (ISFI) technology with Generation IV recycling and reactor technology. • Further a preliminary project assessment finds that a proposed configuration of an ISFSI and Integrated Fast Reactor (IFR) technology would utilise up to approximately 99% of the stored fuel to generate electricity as a low-cost, emissions free baseload with potentially significant economic benefits to South Australia within a relatively short timeframe.

Office of the Economic Development Board - The Conservatory, Level 9, 131 Grenfell Street, ADELAIDE SA 5000 SOUTH www.economicdevelopmentboardsa.com.au -AUSTAAL I A

 Further analysis is clearly warranted, but early indications are that the wholesale cost of electricity under this scenario should be very low, delivering substantial benefits to South Australia’s existing and future industrial, commercial and domestic consumers while supporting Australia’s drive towards its low carbon emission targets. This low electricity cost would also increase South Australia’s attractiveness as a location for energy intensive industries and hence contribute to the state’s economy through accelerated direct inward investment.  A comprehensive cost-benefit and risk analysis of these potential opportunities to verify the preliminary results is recommended.

The discussion paper suggests that:

 There may be an opportunity to convert spent Generation III nuclear fuel with very long radioactive half-life into short half-life radioactive waste that can be stored using existing technology through the use of a generation IV reactor. This “waste treatment” business opportunity may be a highly profitable opportunity. There also seem to be sufficient amounts of spent Generation III fuel that is causing storage issues around the world, and specifically in Asia, to provide a sustainable business opportunity.  In addition it might be possible to change the export model for uranium (ore and yellow cake) to a “sale-and-return” model to secure an in- perpetuity business. The EDB feels that the following issues, at a minimum, need to be further addressed in addition to the ones raised in the report: o The technological readiness of Generation IV reactors and the likely time line until South Australia could become the second customer to potentially procure, erect and commission such a reactor, since a first mover customer role would likely entail to high technological, and hence financial, risk. o The modeling of such a waste management system from a technological, employment, economic, logistics (including location), information flow, legal, environmental and security perspective with identified unknowns and risks over a long time horizon including the building, commissioning, operating and decommissioning phase o The volumes and economic impact of the electricity provided as a side output from the waste management system. This economic impact would also have to model the volumes and type of energy intensive industries that might be attracted due to such a low energy cost as well as the impact on the present electricity generation and distribution system.

In presenting the paper, the EDB would like to raise a potential issue that was not specifically addressed in the discussion paper. Should the South Australian Government consider a commitment to the importation of existing used nuclear fuel, there should be no obligation to commence importation until there is proven commercial viability of Generation IV reactor technology (or subsequent advanced technology). This is to ensure that the waste imported has a viable pathway to energy production and to reducing the half-life of the residual material for permanent storage.

The discussion paper has been peer reviewed by industry experts Dr Ian Duncan and Mr Martin Thomas, who were recommended by the Australian Academy of Technological Sciences and Engineering, and Professor Markus Olin of VTT in Finland. Brief biographies of the peer reviewers are included in the discussion paper.

I look forward with interest to hearing the outcome and recommendations of the Nuclear Fuel Cycle Royal Commission.

Kind regards

Raymond Spencer Chair Economic Development Board

Critical Conversations

A Discussion Paper examining opportunities for rapid industrial development and revenue generation for South Australia through expanded involvement in the nuclear value chain CONFIDENTIAL DISCUSSION PAPER

Final, March 23, 2015 ThinkClimate Consulting

Lead researcher and author

Mr Ben Heard, Director – ThinkClimate Consulting Master of Corporate Environmental and Sustainability Management (Monash); Doctoral candidate (University of Adelaide)

Ben Heard is an independent environmental consultant. He has been providing analysis and strategy to government and industry in South Australia for the last six years. Prior to that he worked in the climate change team for AECOM and in stakeholder consultation/risk communication with GHD. He has progressively specialised in matters of climate change, energy and nuclear technology. He is the lead author of the 2012 report Zero Carbon Options: An economic mix for an environmental outcome which compared options for the replacement of the Port Augusta coal-fired power stations. He is currently undertaking doctoral studies at the University of Adelaide examining pathways for optimal decarbonisation of Australian electricity supplies to 2050 with a mix of nuclear and renewable technologies. His latest paper, Beyond wind: Further development of clean energy in South Australia, will be published in the upcoming Climate Change Special Edition of Transactions of the Royal Society of South Australia.

Acknowledgements

Supporting economics contributor Mr James Brown- Bachelor of Economics; Master of International Economics and Finance Mr James Brown researches the economic costs and benefits of further developing Australia’s uranium resources and nuclear industry supply chain capabilities. He has published papers on Australia’s future nuclear workforce requirements, economic policy considerations for the deployment in Australia of small modular and large reactors, economic modelling of uranium enrichment, and is currently producing research papers on economic analysis of uranium conversion and radioactive waste repositories in Australia. James prepared the commercial assessment for low, intermediate and high level waste repositories.

Consultation Sincere thanks to all parties who generously gave their time for consultation on various matters considered in this Discussion Paper.

Peer Review Thanks to expert peer reviewers for their valuable feedback.

Mr Martin Thomas Chairman, The Australian Academy of Technological Sciences and Engineering – Energy Forum Martin Thomas has had a lifetime career in energy consulting, concluding as a Principal of Sinclair Knight Merz. He was the founding Managing Director of the Cooperative Research Centre for Renewable Energy (ACRE). From 2007 to 2014 he served as inaugural chair of the ATSE Energy Forum. In this role he has either led or contributed to a number of ATSE energy sector reports and papers aimed to contribute to the Government’s energy policy formation. In 2013 he was Convenor of the ATSE Conference “Nuclear Energy for Australia?”

Dr Ian Duncan Independent consultant, former President WMC, PhD Oxford University Dr Ian J Duncan FTSE, FIEAust, (Fellow of Australian Academy of Technology and Engineering (ATSE), Fellow Engineers Australia). His Doctoral (Oxford) research was in the field of ‘the interface between society and the disposal of radioactive waste’. This encompassed both the sociology and technology of the subject. Ian Duncan’s career in the resource industry with Western Mining Corporation Limited included exploration for minerals, metals and hydrocarbons. During this period the company discovered the Yeelirrie Uranium deposit and the Olympic Dam copper, uranium, gold and silver project in South Australia and became General Manager and Director of the WMC Olympic Dam companies. Ian is currently a member of ATSE Energy and Minerals Forums and recently was appointed Independent Advisor to Radioactive Waste Management, Resources Division, Department of Industry and Science.

Professor Markus Olin Research Professor, VTT Technical Research Centre of Finland, Espoo Professor Markus Olin is currently Research Professor at VTT in Finland. Markus’ field of research is modelling of spent nuclear fuel disposal. In this role he also mentors and trains the next generation of nuclear waste management scientists in Finland.

Site Visit Thanks to Mr James Hardiman and all other ANSTO staff for the comprehensive tour of the Lucas Heights facility including the OPAL reactor.

Document Record

Date Version 1 December 2014 Draft 1 16 December 2014 Draft 2 27 January 2015 First Review Draft 23 February Second Review Draft 27 February 2015 Third Review Draft 23 March 2015 Final

Disclaimer ThinkCiimate Consulting 2015

The information contained in this document produced by ThinkCiimate Consulting is solely for the use of the Client for the purpose for which it has been prepared. ThinkCiimate Consluting undertakes no duty to or accepts any responsibility to any third party who may rely upon this document.

All rights reserved. No section or element of this document may be removed from this document, reproduced, electronically stored or transmitted in any form without the written permission of Think Climate Consulting.

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Acronyms and Abbreviations

ANSTO Australian Nuclear Science and Technology Organisation ARPANS Act Australian Radiation Protection and Nuclear Safety Act 1998 ARPANSA Australian Radiation Protection and Nuclear Safety Agency DCF Discounted Cash Flow DECC Department of Energy and Climate Change ENRESA Empresa Nacional de Residuos Radiactivos SA ENSA Equipos Nucleares SA EPBC Act Environmental Protection and Biodiversity Conservation Act 1999 GE General Electric Gen IV Generation IV (advanced nuclear reactors) GWe Gigawatts electric HIFAR High Flux Australian Reactor HLW High Level Waste IAEA International Atomic Energy Agency

IFR Integral Fast Reactor IFRC Integrated Fuel Recycling Centre ILW Intermediate Level Waste ISFSI Intermediate Spent Fuel Storage Installation kgHM Kilograms of Heavy Metal kW Kilowatt kWh Kilowatt hour

LLILW Long-lived Intermediate Level Waste LLW Low-level Waste MtHM Metric tons of Heavy Metal MWe Megawatts electric MWh Megawatt hour NEA Nuclear Energy Agency NPV Net Present Value OPAL Open Pool Australian Light Water reactor PNRI Philippine National Research Institute PRISM Power Reactor Innovative Small Module

SA South Australia SCGI Science Council for Global Initiatives SNF Spent Nuclear Fuel U235 Uranium-235 U238 Uranium-238 UAE United Arab Emirates

UF6 Uranium hexafluoride

Contents Executive Summary ...... 8 Recommendations ...... 15 1. Introduction: The global nuclear sector and Australia’s role ...... 17 1.1 Nuclear energy ...... 17 1.2 Nuclear medicine technologies ...... 18 1.3 Australian institutional support ...... 19 2. Nuclear fuel cycle overview ...... 21 2.1 Mining ...... 21 2.2 Conversion ...... 22 2.3 Enrichment ...... 23 2.4 Fuel fabrication ...... 24 2.5 Power generation ...... 24 2.7 Spent-fuel management and nuclear waste management...... 25 3. Low and intermediate level waste ...... 28 3.1 The Australian situation: siting a national repository...... 28 3.2 Regional opportunities: The Asia-Pacific ...... 30 4. Commercial assessment...... 33 4.1 Summary of assessment methodology ...... 33 4.2 Findings of the commercial assessment ...... 33 4.3 Discussion of findings ...... 36 5. Non-traditional approaches to management of Spent Nuclear Fuel ...... 37 5.1 Independent spent fuel storage installation ...... 38 5.2 Oxide-to-metal spent fuel conversion ...... 43 5.3 Fast reactor with integrated fuel recycling centre (Integral Fast Reactor) ...... 43 5.4 Deep borehole disposal ...... 52 6. Business Case for ISFSI+IFR ...... 53 6.1 Base Case assumptions ...... 53 6.2 Low-price case ...... 57 6.3 High-price case ...... 58 6.4 High-cost case ...... 58 6.5 Challenge case ...... 59 6.6 Discussion of findings ...... 61 7. Legal and institutional interactions ...... 63 7.1 Interaction with guidance from international institutions ...... 63 7.2 Interaction with Australian legislation ...... 65 7.3 Other ...... 67 8.Recommendations ...... 68 References ...... 71 Appendix A: Detailed commercial assessment methodology ...... 78 Appendix B: Consultation record ...... 91 Appendix C: Peer review ...... 92

Executive Summary This Discussion Paper explores the potential for the creation of a new opportunity for South Australia’s industrial development. It postulates SA’s further engagement in the nuclear industry; generating investment, jobs and offering low-cost electricity while yielding large environmental benefits, both locally and globally. Against the backdrop of SA’s worsening economic conditions it identifies an opportunity for rapid revenue generation using SA’s unique skills and resources.

Nuclear energy globally is entering a phase of expansion based on new, advanced and yet safer technologies. Both nuclear power and nuclear medicine are experiencing strong demand growth from economically empowered and fast growing populations – notably China and India - with rapidly improving standards of living. Carbon mitigation policies underpin nuclear energy growth although projections suggest that, even without these, world nuclear energy capacity will grow around 60% by 2040.

Australia, and significantly South Australia, is already a highly-trusted supplier of raw material to the international nuclear power market. Australia is the world’s third largest supplier of uranium and has the world’s largest known economically recoverable deposits. Mining and export of uranium oxide as yellowcake adds from one quarter to one half the total value of fabricated nuclear fuel. Australia is already strongly positioned in one of the most profitable stages of the nuclear fuel cycle.

Other value-adding stages of the cycle, notably conversion, enrichment and fabrication, are characterised by concentrated markets, high technological barriers to entry and surplus global capacity. Recent assessments reinforce the 2006 UMPNER report findings that, considered independently, none of these intermediate stages currently offer an economically justifiable point of entry for Australia. The entry case could be improved were Australia to embrace the full cycle including domestic nuclear power generation.

However the management of spent nuclear fuel (SNF), generally although perhaps misleadingly called high level waste (HLW), offers another opportunity entirely. The potential for its safe management and further use on a multinational basis is still lacking competition. Each nuclear nation currently self- manages its SNF inventory, in some cases with increasing difficulty through community reluctance or constrained space or facilities. Barriers to entry to the SNF management stage are low with some nations evidently keen to contract out SNF management to others. Indeed most nuclear nations have substantial unspent SNF management budgets currently quarantined, likely approaching $100 billion worldwide and growing, much of it in the Asia-Pacific region. This offers an opportunity for South Australia, further discussed below. (Refer also Section 2.7).

CONCLUSION 1: A major economic opportunity for SA lies in the safe management of spent nuclear fuel.

Low and intermediate level nuclear wastes (LLW and ILW) are managed worldwide to a variety of well- demonstrated and proven standards. Evaluation of the potential for importing and managing the LLW and ILW of other nations does not suggest that the economic case is clearly positive, and hence this is not an attractive business to enter. More attractive is the option to export Australia’s proven approaches to waste minimisation, conditioning, compaction and containment, including Synroc technology, to nations with intractable LLW and ILW challenges. Synroc significantly reduces waste volumes and permanently encapsulates unwanted material. Export of Synroc technology is the more likely pathway to servicing this market; however it does not answer the challenge of developing a substantial and sustainable business for South Australia (Refer Section 3). Australia’s own LLW and ILW challenge presents an opportunity for investment in the state in the hundreds of millions of dollars, but little commercial prospects beyond this. It is a facility of necessity, being designed and sited by the Federal government with no ongoing commercial outcomes in mind.

CONCLUSION 2: Management of LLW and ILW, while offering opportunities for exporting Australian technology, will at best provide a modest economic opportunity for South Australia in the event of location of an Australian facility within the State.

Returning to the potential commercial opportunities offered by SNF management, there are broadly two prospective pathways. The first, deep permanent geological disposal, has for many years been the pathway of choice for nuclear nations. Finland, Sweden, the United States, France, Korea and others are all at stages of developing their own deep permanent repositories. Deep disposal technology will undoubtedly achieve the objective of industry creation; the costs however are massive and the investment unlikely to be other than modestly profitable, relying on competitive tolls. Moreover project construction times, following the experience of other nations, are likely to be substantial (Refer Section 4).

CONCLUSION 3: A deep geological SNF repository would undoubtedly require the massive investment of possibly billions of dollars. It would generate substantial jobs and hard rock mining is an Australian strength. However the investment does not appear, prima facie, to offer the prospect of substantial profitability or possibly even commercial viability to Australia.

A second SNF pathway, of much lower cost than deep geological disposal, is interim dry cask storage. This retains the unused fuel resource in today’s SNF for eventual deep disposal or, potentially, future power generation. The accumulated SNF of the world’s Generation II (and soon its Generation III) reactors represents a massive available but unused energy resource. While the fissile U235 isotope of

the uranium fuel (between 1-5%) is indeed mostly ‘spent’ in today’s reactor fleet, the energy potential of the unused U238 (around 96%) is not. While unusable in a Generation III reactor it offers a near limitless fuel resource for the emerging Generation IV fast neutron reactors, anticipated available for commercial service within five to ten years (Refer Section 5.3).

Accordingly the Discussion Paper has examined a non-traditional yet technologically feasible and proven pathway for SNF management. This pathway provides for the initial SNF storage in dry casks, as at present practiced by most nuclear enabled nations and finds this a potentially highly attractive industry development option for South Australia.

The interim storage of SNF in commercially proven, relatively low-cost dry casks is referred to in literature as an Intermediate Spent Fuel Storage Installation (ISFSI). For the purposes of the Paper the ISFSI storage capacity is taken as 40,000 metric tons of heavy metal (MtHM). At this size, and even independent of additional recycling and reactor technology, the ISFSI offers potential for substantial revenue in its own right. Some nuclear powered nations, due to lack of suitable space for either dry cask or deep geological disposal pathways, are actively seeking alternative sites for their SNF management for which they are prepared to pay. Moreover the disposal demand will grow substantially as more Asia- Pacific region nations commit to Generation III generation. The ISFSI pathway has decades of well- recorded safe operational experience behind it, with assured low costs and high certainty of reliable outcome.

The near-term establishment of an ISFSI in South Australia, albeit a challenging prospect, nevertheless offers the prospect of secured high revenues within a relatively short time while keeping open the potential for substantial future value addition to the fuel resource through Generation IV fast reactors (see following sections and refer section 5.2 and 5.3). Operationally it would be expected to have around a 20- year loading period followed by a longer, low-cost caretaker period.

CONCLUSION 4: A medium-sized ISFSI could, even in isolation, meet the challenge of this Discussion Paper for South Australia. It offers a low-cost, high-revenue pathway with significant future potential and, subject to acceptable social, legal and regulatory licence, could be established relatively rapidly.

It is concluded above that an ISFSI, in isolation, could be a singularly attractive investment for South Australia, well-meeting the objectives of this Discussion Paper. However South Australia has the potential to participate much more significantly and profitably in the nuclear fuel cycle through the use of accumulated revenue from the ISFSI. This revenue could be used to invest in Integrated Fast Reactor (IFR) technology that would utilise up to approximately 99% of the stored SNF as fuel to generate

10 electricity that is low-cost, emissions-free baseload. The very small flow of fission product waste, being far shorter-lived than the source SNF, would be permanently and progressively disposed of using well proven and low-cost deep borehole drilling techniques.

Today's most highly developed Integral Fast Reactor, used as the technology base for this Discussion Paper, is the near-commercially available Power Reactor Innovative Small Module (PRISM) reactor from GE-Hitachi Nuclear Energy. PRISM is an inherently safe, sodium-cooled, pool-type fast reactor with reactor modules each having a power generation capacity of 311 megawatt-electric (MWe). The fuiiiFR configuration proposed would include an Integrated Fuel Recycling Centre (IFRC), well described in the references to this Paper. The diagram below sets out in simplified form the fuiiiSFSI - IFR concept.

Large, growing and long-term market High-willingness to pay Large uncommitted budgets Low barriers to entry PROFITABLE STORAGE Short-term, medium sized capex Mature, established, high technical certainty Rapid construction Compact and highly scalable Probable high margins Potentialfor direct investment

Medium term, medium sized capex --lilt.. Early demonstration of commercialisation ....,.. Leading fuel-cycle technology Potential for co-investment VALUE EXTRACTION and DISPOSAL Long term, Iorge capex .....IIi... Newly commercial technology M INIM ISATION ....,.. Leading reactor andfuel cycle technology Potential direct investment or co-investment Production ofclean baseload electricity

Short-medium term, low

Section 6 of the Discussion Paper evaluates, in preliminary form, the economics of five illustrative cases, each based on a 40,000 MtHM ISFSI storage facility associated with a twin reactor IFR of 622 MWe electrical output, configured as in the diagram above. Each case is selected to evaluate economic sensitivity of this configuration to base, high and low capital and operating cost estimates. These were

11 initially evaluated on an undiscounted basis, followed by evaluations at 5% and 10% respectively. The selected base case results are shown below.

Base Case present value, 30 year project life, 0%, 5 %and 10% discount rate

$35,000,000,000

$30,000,1)00,000

$25,000,000,000

$20,000,000,000

Net Present Value $15,000,000,000

$5,000,000,000 $10,000,000,000 i,.,...,.-!!'!~~~~======:::::::::: $0 1 2 3 4 5 6 7 8 9 W U U U U H U D U H ~ ll D H M 8 U H U H ~ ·$5,000,000,000 Pro)ed Ye•

The above preliminary analysis suggests that the net present benefits to South Australia could be large; many billions of dollars. Economic prudence however urges that due caution be applied to all estimates and likewise to the speed with which the various licences and approvals can be obtained, however attractive the apparent outcome may be.

CONCLUSION 5: Preliminary project assessment finds that the proposed ISFSI- IFR configuration promises significant economic benefits to South Australia within a relatively short time frame. Further analysis is clearly warranted, but early indications are that the wholesale cost of electricity should be very low, delivering substantial benefits to South Australia's industrial, commercial and domestic consumers while supporting Australia's crucial drive towards its low carbon emissions targets.

Analysis of these simplified business cases for the proposed ISFSI - IFR configuration provides strong support for more detailed economic analysis. The major economic inputs, for which the range of variables needs to be narrowed, include most importantly the following :

1. The realistic market price payable for the custody of internationally sourced SNF within the proposed ISFSI; 2. The capital and operating costs for SNF dry-cask deployment and their loading; 3. The transportation of SNF from the nation of origin to the South Australian ISFSI; 4. The full capital costs, including royalties if payable, of the proposed IFR, including the SNF conversion facility and the IFRC (see diagram above);

5. The acceptance of PRISM as the most feasible and best proven IFR technology; 6. The ongoing operational costs for PRISM and its associated plant; and 7. The costs and feasibility of final deep borehole disposal of the remaining wastes.

A number of these questions are being studied by the UK at the present time with an international partnership with the USA envisaged as a strong possibility. Essentially the USA can offer the technology while the UK has a profound but potentially attractive need to use its massive unresolved plutonium stockpile profitably for the generation of clean electricity. Should South Australia decide to travel the ISFSI – IFR pathway then it would be well advised to consider a cooperative relationship with the USA and the UK.

CONCLUSION 6: The Generation IV IFR, exemplified by the PRISM reactor including its ancillary fuel conditioning facilities, represents leading-edge development in the nuclear power industry. Notwithstanding the massive engineering design investment to date, as well as demonstrated proof of concept, PRISM has yet to be deployed and proven commercially. Thus it calls for longer lead times to overcome its outstanding technical and economic uncertainties than the technologically well-proven ISFSI. Accordingly, full implementation of the ISFSI – IFR concept is likely to be a generational process requiring long-term commitments and strong bi-partisan political support. It will likewise need a parallel program of community engagement to achieve its necessary social licence to operate. Nevertheless, depending on the evolution of current USA – UK negotiations, this process could possibly commence as early as 2015.

A high-level review was undertaken of the interaction of the concept with international joint-conventions, national legislation and state legislation. Support from relevant international regulatory agencies could be expected for the establishment of the proposed ISFSI, including valuable guidance on the establishment of multi-national spent fuel repositories. More extensive review is required.

Based on consultations to date for this Discussion Paper a mixed response may be anticipated for the development of advanced fuel cycles and fast reactors in South Australia. Nevertheless support has been expressed from United States and United Kingdom parties, working to advance IFR technology commercialisation, for the prospect of inclusion of a third nation, Australia. Reservations have been expressed however by other international bodies as to the wisdom of moving directly to deployment of advanced Generation IV technologies, by-passing the better established and proven Generation III.

Irrespective of the choice of technology, (South) Australia would need to assess its own position in relation to the International Atomic Energy Agency’s (IAEA) Milestones in the Development of a National Infrastructure for Nuclear Power and plan accordingly. The process is lengthy although it could provide a

reasonable match for full commercialisation of PRISM technology. ISFSI development would however need to be accelerated to meet the challenge of this Discussion Paper. Much more probing analysis is needed of the program if the project is to be a commercial success for South Australia.

CONCLUSION 7: Project timeframes and challenges must be understood and acknowledged, while allowing for alternative nuclear generation investments should they prove more attractive. South Australia must be measured in its take up of any project within the nuclear fuel cycle, avoiding being charged with trying to ‘run before it can walk’. Nevertheless a degree of considered boldness could open the way for South Australia to become a fast follower/early adopter of advanced nuclear technologies that deliver economic, social and environmental benefits to its people.

At the Federal level amendment or repeal will be required of sections of the ARPANS Act (1998) and the EPBC Act (1999). At the South Australian level the Nuclear Waste Storage Facility (Prohibition) Act 2000 (SA) would likely be put to the test. This Discussion Paper argues that this legislation poses no insurmountable barrier to the ISFSI concept as spent nuclear fuel that has not been declared waste, but instead is regarded as a fuel resource, does not meet the definitions provided for nuclear waste in the Act.

CONCLUSION 8: Substantial Federal legislative barriers currently exist. Other legislative barriers may exist at the State level. The legislative and regulatory surround for the full ISFSI – IFR concept needs to be thoroughly addressed with a view to enabling the project while providing all rational protections to the community.

In conclusion there are opportunities in the nuclear fuel cycle for substantial economic, social and environmental benefits for South Australia. These opportunities lie in the take up of advanced near- commercial technologies within the nuclear fuel cycle. South Australia is well-placed, having a relatively clean slate in nuclear technologies. It is pertinent to ask the question:

If the USA, UK, France or Japan were today seriously considering investments in the nuclear fuel cycle, with no historical impediments of established policies or practices and having sound managerial, regulatory, technological, scientific capabilities, together with access to all the benefits of acquired knowledge, learning and experience over the past 60 years, what type of nuclear fuel cycle would they select?

That is the challenging position in which South Australia finds itself in 2015. The opportunity, if not soon grasped, will slip away to be taken by others.

Recommendations Refer Section 8 for more detailed recommendations. 1. Cost benefit analysis using net-present value assessment of a multinational ISFSI It is recommended that a comprehensive cost-benefit analysis to establish the net-present value of the construction and operation of an ISFSI is undertaken.

2. Cost benefit analysis using net-present value assessment of advanced nuclear fuel recycling It is recommended that South Australia undertakes a comprehensive cost-benefit analysis to establish the net-present value of the construction and operation of infrastructure for the advanced recycling of spent nuclear fuel, including an oxide-to-metal fuel conversion plant and a combined fast reactor and fuel recycling facility (Integral Fast Reactor/PRISM).

3. State-wide economic impact analysis It is recommended that South Australia undertake an analysis of the impact of the proposed ISFSI and advanced nuclear fuel recycling infrastructure on the overall state economy against economic indicators such as employment, gross state product, household income and industry value added.

4. Comprehensive legal review It is recommended that South Australia commissions a comprehensive legal review relating to the concept outlined in this discussion paper.

5. Position for Generation IV nuclear technology It is recommended that South Australia takes steps to lay the foundation for rapid action with generation IV technology should the findings of cost-benefit analysis and state-wide economic impact analysis be favourable.

6. Build relationships and dialogue with key Australian nuclear stakeholders It is recommended that South Australia:  Opens relationships with Australian Nuclear Science and Technology Organisation (ANSTO), via Chief Executive Dr Adi Patterson.  Opens relationships with the Australian Radiation Protection and Nuclear Safety Agency, via Chief Executive Dr Carl Magnus-Larson.  Opens relationships with the Australian Safeguards and Non-proliferation Office, via Director General Dr Robert Floyd.

7. Assess current standing against IAEA Milestones and plan further action accordingly South Australia should assess the State’s current position and standing against the IAEA Milestones in the Development of a National Infrastructure for Nuclear Power.

8. Open relationships with key stakeholders for rapid nuclear development It is recommended that South Australia forms relationships and opens dialogue with:  the Republic of Korea (South Korea), potentially the strongest opportunity for international partnership  entities responsible for current successful fast-track nuclear developments in the United Arab Emirates

1. Introduction: The global nuclear sector and Australia’s role Nuclear technologies are in use globally for the production of electricity, the making of pharmaceuticals and for various other lines of research and industrial activity. Over several decades many stakeholders have posited that further engagement in the nuclear fuel cycle offers a potentially beneficial opportunity for South Australia. Investigation of this potential opportunity is the subject of this Discussion Paper.

This Paper is being prepared against a backdrop of worsening economic conditions in South Australia. The touch-point therefore the opportunity for rapid generation of new revenue streams through the nuclear value chain.

We firstly consider the current and potential future size of the global nuclear industry. We examine the prospects for both nuclear power and nuclear medicine as suitable proxies for nuclear technologies overall. We also examine, at a high level, existing institutional support within Australia.

1.1 Nuclear energy At the end of 2013 there were 434 nuclear power reactors in operation worldwide, with a total capacity of 371.7 gigawatts-electric (GW(e)). This represents a decrease of approximately 1.3 GW(e) in total capacity compared to 2012. There were four new grid connections, while six reactors were officially declared permanently shut down in 20131. However At the end of 2014, the commissioning of new reactors had increased global capacity to 377.3 MW(e).

Nuclear power plants provided approximately 10.9 % of global electricity supply in 20122. As a proportion of total electricity supply, nuclear technology has been trending slowly downward recently3 from as high as 14 % in 20094. This fall in share can be explained by:  Recent high rates of overall global energy growth, particularly in developing economies, that has been delivered largely from coal and gas  Replacement of aging reactors that are decommissioned  Ongoing challenges for nuclear power as a high capital-cost energy investment  Short-term low prices of natural gas in some developed nation markets especially the USA  Interruption and subsequent moderation of a resurgence in new build by the Fukushima Daichi nuclear accident5

1 (International Atomic Energy Agency 2014a, p. 11) 2 (International Energy Agency 2014) 3 (International Energy Agency 2013) 4 (Nuclear Energy Agency and the International Energy Agency 2010) 5 (International Atomic Energy Agency 2014a; Nuclear Energy Agency 2012)

Despite the accident Fukushima Daichi nuclear accident, the fundamental advantages of nuclear power remain critically important in many markets in the context of continued population growth and electricity demand growth6. Overall, global capacity in nuclear is expected to grow, with revised forecasts approximately 5 % to 10 % lower than pre-Fukushima7.

There is good agreement between energy scenarios to 2030 from major energy forecasting agencies8 suggesting nuclear power generation would increase to around 800 GW(e) under policies of ambitious control of greenhouse gases. Absent such policy commitments, agreement among scenarios was strong for growth in nuclear to around 600 GW(e) by 2030.

The International Atomic Energy Agency (2014a) posits a lower plausible outcome of around 400 GW(e) in 2030, an increase of 23 GW(e) on today’s levels. This seems highly conservative; the completion of just China’s current build program with no further closures would meet this level.

1.2 Nuclear medicine technologies Nuclear medicine is deployed in over 100,000 hospitals worldwide, with 90 % of procedures for the purpose of diagnosis9. Approximately 2 % of citizens in developed nations receive a nuclear medicine treatment every year10. Australia manufactures radiopharmaceuticals at the Open Pool Australian Lightwater (OPAL) reactor at Lucas Heights in Sydney11. Commissioned in 2007, the OPAL reactor is regarded as one of the best research reactors in the world12, making it well-positioned to help meet growing demand. Nuclear medicine is currently exported to the United States, Europe and Asia13.

The global market in nuclear medicine is currently valued at around $4.8 billion14. It is growing at approximately 10 % per year and poised to reach $8 billion in value by 201715. To meet this demand, production of nuclear medicine from the OPAL reactor will be tripled16 with OPAL helping meet the gap left by retirement of other aging facilities17

6 (International Atomic Energy Agency 2014a; Nuclear Energy Agency 2012) 7 (Nuclear Energy Agency 2012) 8 (Nuclear Energy Agency 2012) 9 (World Nuclear Association) 10 (World Nuclear Association) 11 (Australian Nuclear Science and Technology Organisation 2008) 12 (Australian Nuclear Science and Technology Organisation Undated) 13 (Australian Nuclear Science and Technology Organisation 2008) 14 (World Nuclear Association) 15 (World Nuclear Association) 16 (Australian Nuclear Science and Technology Organisation 2014) 17 (MacFarlane 2014b)

Figure 1 The Open Pool Australian Lightwater reactor, Lucas Heights

1.3 Australian institutional support Key organisations support Australia’s mature industrial and medical nuclear industry:

Australian Nuclear Science and Technology Organisation (ANSTO) ANSTO is a “corporate Commonwealth entity responsible for delivering specialised advice, scientific services and products to government, industry, academic and other research organisations” through the application of nuclear technologies. ANSTO operates the flagship OPAL reactor at Lucas Heights. As well as the production of important medicine, ANSTO also meets global market demand for high-end doped silicon, and uses the OPAL reactor to investigate areas such as materials, life sciences, climate change, mining and engineering18.

Australian Radiation Protection and Nuclear Safety Agency (ARPANSA) ARPANSA is the chief regulatory body for nuclear activities within Australia. ARPANSA also undertakes research, provides services and “promotes national uniformity and the implementation of international best-practice”19.

Australian Safeguards and Non-proliferation Office (ASNO) ASNO ensures that “Australia's international obligations are met under the Nuclear Non-Proliferation Treaty (NPT), Australia's NPT safeguards agreement with the International Atomic Energy Agency (IAEA), the Convention on the Physical Protection of Nuclear Material (CPPNM) and Australia's various bilateral safeguards agreements”. 20

18 To learn more please visit the ANSTO website 19 To learn more please visit the ARPANSA website 20 To learn more please visit the ASNO website

Many stakeholders in South Australia, and nationally, appear keen to increase serious consideration of further engagement with the nuclear fuel cycle. Business SA recently favoured informed debate on the benefits, costs and risks of establishing a nuclear industry in the State21. The Academy of Technological Sciences and Engineering concluded that nuclear is a viable candidate to replace coal-fired power stations and that there was no reason to omit its consideration in the generation mix22. University of Adelaide climate scientist Tom Wigley recently joined international colleagues in an open letter to environmental organisations calling for an embrace of nuclear power to tackle climate change23.Professor Ove Hoegh-Guldberg, Director of the Global Change Institute at the University of Queensland, issued a public statement calling for the deployment of nuclear power as “the one real option to significantly reduce global carbon emissions”24. Random polling of > 1200 South Australians recently showed much higher support for nuclear power (48 %) than opposition (32.6 %), with strong support outweighing strong opposition (29 and 20 %, respectively)25 .

21 (Business SA 2014) 22 (Australian Academy of Technological Sciences and Engineering 2014; The Academy of Technological Sciences and Engineering 2013) 23 (Hansen, Caldiera & Emanuel 2013) 24 (Hoegh-Guldberg & McFarland 2014) 25 (South Australian Chamber of Mines and Energy 2014)

2. Nuclear fuel cycle overview The major stages of the nuclear fuel cycle are shown in Figure 2. We provide an overview of the global market, Australia’s level of participation and the barriers to entry.

Figure 2 The nuclear fuel cycle26

2.1 Mining

The nuclear fuel cycle begins with the mining and milling of uranium oxide (U3O8), the raw material of nuclear fuel, known as “yellowcake”. Australia is the third largest global supplier with an 11 % share of global production. This is despite possessing approximately 31 % of the known global resource, giving Australia the lowest production-to-resource index of major producing nations27.

Demand for uranium is expected to rise. The extent of demand growth is sensitive to the range of growth for nuclear energy (Section 1)28. Higher uranium prices in the longer term will prove valuable to the South Australian economy. Exploration and development in Australia has been constrained by low uranium prices, with exploration expenditures falling from US$198 million in 2011 to US$99 million in 2012 and forecast $93 million for 201329.

Demand for mined uranium is also affected by the efficiency of enrichment. Lower-cost centrifuge enrichment delivers greater useable product per unit of mined uranium. This depresses demand for

26 (Commonwealth of Australia 2006) 27 (Angwin 2013) 28 (Nuclear Energy Agency and the International Atomic Energy Agency 2014) 29 (Nuclear Energy Agency and the International Atomic Energy Agency 2014)

mined uranium30. Furthermore much global demand growth, such as that from China, may increasingly by-pass the international spot-market in favour of nationalised, non-domestic production31.

Australian uranium exports are worth approximately $600 million per annum; a relatively small Australian mineral export. Under a strong global demand scenario with an increase in market share, the total value of uranium exports from Australia may remain under $1 billion per annum for the foreseeable future.

Yellowcake exports comprise greater than one quarter and up to one half of the total component cost per kilogram of uranium as enriched reactor fuel (Figure 3). A competitive uranium mining export industry already delivers much of the potential value of the nuclear fuel.

Figure 3 Component cost of 1 kg uranium as enriched reactor fuel32

2.2 Conversion The second major step in the nuclear fuel cycle is the conversion of the uranium oxide into uranium hexafluoride (UF6). The conversion removes impurities and creates UF6 gas which is then pressurised, cooled and drained into cylinders33.

This is a highly concentrated market with four companies providing approximately 80 % of global 34 conversion services . There is nearly 25,000 t U as UF6 of available capacity with established providers.

30 (Kidd 2014) 31 (Kidd 2014) 32 (Commonwealth of Australia 2006) 33 (United States Nuclear Regulatory Commission 2014b) 34 (Commonwealth of Australia 2006)

Table 1 Global providers of uranium conversion35 Approx Approximate Nameplate Capacity (tonnes Company capacity utilisation available capacity U as UF6) 2013 (tU as UF6) Cameco, Port Hope, Ont, Canada 12,500 70% 3,750 JSC Enrichment & Conversion Co (Atomenergoprom), Irkutsk & Seversk, Russia 25,000 55% 11,250 Comurhex (Areva), Malvesi (UF4) & Tricastin (UF6), France 15,000 70% 4,500 Converdyn, Metropolis, USA 15,000 70% 4,500 CNNC, Lanzhou, China* 3,650 - IPEN, Brazil 40 70% 12 World Total 71,190 24,012

The 2006 UMPNER Review36 expressed reservation regarding the potential for Australia to value-add through conversion. A large uranium conversion facility in Australia would be expected to deliver services at the higher end of the international cost range37. Conversion is likely to be more economically attractive if established as part of a broader program of value-adding within Australia38. As shown in Figure 3, conversion is the smallest component cost of enriched nuclear fuel.

2.3 Enrichment Uranium enrichment is the process of increasing the proportion of uranium-235 (the fissile isotope), to uranium-238 (the fertile, non-fissile isotope). Whereas U-235 exists as about 0.7 % of natural uranium, most nuclear reactors require fuel enriched to 3-5 % U-235 to sustain a chain reaction39.

Four firms provide 96 % of global enrichment services40. The enrichment market is characterised by high barriers-to-entry including limited and costly access to technology, trade restrictions and proliferation concerns relating to undeclared centrifuge enrichment plants capable of producing weapon-grade enriched uranium. The levelised cost of enrichment in Australia is likely to be greater than the high end of current international prices (Figure 4) 41. There is agreement that enrichment is likely to have a stronger economic case as part of a larger expansion of nuclear activity in Australia.

35 (Adapted from World Nuclear Association 2014a) 36 (Commonwealth of Australia 2006, p. 4) 37 (Brown 2014, pp. 13-14) 38 (Brown 2014) 39 (United States Nuclear Regulatory Commission 2014c) 40 (Rothwell 2009) 41 (Brown, Simons & Owen 2013)

Figure 4 Benchmarking Australian enrichment costs42

2.4 Fuel fabrication 43 Fuel fabrication converts enriched UF6 into fuel for nuclear reactors . Fabrication typically comprises 10- 20 % of the component cost of enriched nuclear fuel (Figure 3).

Nuclear fuel assemblies are highly engineered products that must meet individual specifications. As such the industry is capital, skill and knowledge intensive44,45. There are now also several globally competing suppliers46. Global capacity in fuel fabrication to be considerably in excess of demand and likely to provide “no bottleneck in the foreseeable future for any nuclear renaissance”47.

2.5 Power generation The generation of electricity using nuclear technology is a mature global industry. Nuclear power plants are highly capital-cost intensive48. Thus development of nuclear generating technology in South Australia would lead to substantial levels of investment.

42 (Brown, Simons & Owen 2013) 43 (United States Nuclear Regulatory Commission 2014a) 44 (Kazakevitch 2013); 45(World Nuclear Association 2014b) 46 (World Nuclear Association 2014b) 47 (World Nuclear Association 2014b) 48 (Owen 2011)

Currently there is little driver for such investment. Falling demand for electricity over the last approximately three years has contributed to conditions of oversupply in Australia’s National Electricity Market with no new supply needed for the next ten years49. This imbalance of supply and demand has been exacerbated by an influx of new generation from wind power and, to a lesser extent, solar PV on the back of the Renewable Energy Target (RET)50. Nuclear power would likely provide electricity at a higher cost than new wind power51, though with far greater network reliability52. On a market-basis, a similar system of financial incentive would be required to spur the necessary investment in nuclear as has occurred for wind53.

Australia continues to operate around 30 GW of baseload coal generation as well as a large portfolio of gas generation. From a greenhouse-mitigation perspective, there is a clear role for technology like nuclear power in Australia54. Absent strong policy, investments in nuclear power plants likely present a net economic cost in the short-term. Furthermore, on the basis of the IAEA Milestones55 approach and the findings of the 2006 UMPNER report56, the construction of nuclear power plants is unlikely to be achieved within the timeframes under consideration in this Discussion Paper.

2.7 Spent-fuel management and nuclear waste management When fuel assemblies have completed a cycle in a nuclear reactor they are removed from the core and become spent nuclear fuel (SNF). SNF contains intensely radioactive fission products as well as less intensely radioactive but longer-lived elements like plutonium and other heavier actinides. SNF therefore requires careful management. After cooling in water it may be transferred to dry storage. The intention, in most jurisdictions, is to eventually move to some form of deep geological disposal.

At the end of 2009 there was approximately 240,000 metric tons of heavy metal (MtHM) of spent nuclear fuel in storage worldwide57. Approximately 10,500 MtHM of SNF are accumulating each year58. This will increase in line with future growth in nuclear energy worldwide. In 2040 there will likely be 705,000 MtHM in storage globally, currently with little prospect of permanent disposal59.

49 (Australian Energy Market Operator Ltd 2014) 50 (Heard, Bradshaw & Brook 2015) 51 (Syed (BREE) 2013) 52 (Heard, Bradshaw & Brook 2015) 53 (Heard, B & Brook, B 2014) 54 (Heard, Bradshaw & Brook 2015) 55 (International Atomic Energy Agency 2007) 56 (Commonwealth of Australia 2006) 57 (Feiveson et al. 2011) 58 (Feiveson et al. 2011) 59 (Cronshaw 2014)

Currently no country has indefinite plans to keep SNF at above ground reactor sites. Nor does any country have a licenced, operating facility for deep geological disposal of SNF from the civilian nuclear sector (though construction for the Finnish disposal has commenced)60.

No country has yet come forward with a proposal for a multi-national spent fuel repository61. The IAEA states that a disposal service for spent fuel would “certainly be an attractive proposition”62 for smaller nuclear nations and new market entrants. Thirteen of the thirty current nuclear nations have fewer than five nuclear reactors.

Larger nuclear nations may also seek to take advantage of a multinational solution and possibly fuel leasing schemes63. Budgets for the management of SNF and high-level waste are gathered and quarantined during the life of the nuclear power plant. The failure to establish final disposal options means there are growing budgets with no outlet. Japan has accumulated $35 billion for the construction and operation of a nuclear repository64. The unspent nuclear waste fund of the United States is approximately $25 billion with revenues of $750 million per year65. The US Department of Energy is now paying compensation to utilities for the failure to establish a centralised repository, with the cost of this compensation expected to rise to $500 million per year66. South Korea faces impending shortages of licensed storage space for spent nuclear fuel67 and expresses an urgent need for more storage68. Taiwan, Malaysia and Singapore are expected to face similar challenges in future69. China is expected to accumulate around 30,000 MtHM of SNF by 2030 and will require off-site storage options to manage this inventory70,71.

This appears to be a strong commercial opportunity in a growing, uncontested market with strong need in the Asia-Pacific region. While a form of competition exists in the reprocessing undertaken in less than half a dozen nations, these processes provide limited volume reductions and create streams of high level waste that typically must still be disposed of by the nation from whom the original material was received. It is a substandard solution that cannot keep pace with the challenge of spent fuel. Global reprocessing

60 (Feiveson et al. 2011) 61 (Feiveson et al. 2011) 62(International Atomic Energy Agency 2013) 63 (Pentz & Stoll 2007; Sharpe 2014) 64 (World Nuclear Association 2014d) 65 (Feiveson et al. 2011) 66 (Werner 2012) 67 (Cho 2014; Dalnoki-Veress et al. 2013) 68 (Kook 2013) 69 (Rosner & Goldberg 2013) 70(Zhou 2011) 71 A major research program in the 1990s by Pangea Resources identified Australia as the optimal siting for a multinational geological waste repository for spent nuclear fuel. The proposal failed to find support among the Australian Government and public and was abandoned. For more information visit the World Nuclear Association webpage International Nuclear Waste Disposal Concepts.

26 capacity is around 35 % of the annual production of spent nuclear fuel at current levels and exists in 72 nations with indigenous inventories of SNF •

Box 1 Classification of radioactive waste73

Radioactive waste arises from the industrial, medical and research use of radioactive materials.

Waste is classified according to the degree of containment and isolation required to ensure its safety in the long term, with consideration given to the hazard potential of different types of waste.

The parameters used in the classification scheme are: • the activity content of the waste (which can be expressed in terms of activity concentration, specific activity or total activity of the waste); the half-lives of the radionuclides contained in the waste; the hazards posed by different radionuclides; and • the types of radiation emitted.

These parameters are not used to present precise quantitative boundaries between waste classes. Rather, they are used to provide an indication of the severity of the hazard posed by specific types of waste.

Six classes of waste are derived and used as the basis for the Australian classification scheme: (1) Exempt waste (EW): Waste that meets the criteria for exemption from regulatory control for radiation protection purposes. (2) Very short lived waste (VSLW): Waste that can be stored for decay over a limited period of up to a few years and subsequently exempted from regulatory control for uncontrolled disposal, use or discharge. (3) Very low level waste (VLLW): Waste that does not meet the criteria of EW, but does need a moderate level of containment and isolation and therefore is suitable for disposal in a near surface, industrial or commercial, landfill type facility with limited regulatory control. (4) Low Level waste (LLW): Waste that is above exemption levels, but with limited amounts of long lived radionuclides. Such waste requires robust isolation and containment for periods of up to a few hundred years and is suitable for disposal in engineered near surface facilities. (5) Intermediate level waste (ILW) Waste that. because of its content, particularly of long lived radionuclides, requires a greater degree of containment and isolation than that provided by near surface disposal. However, ILW needs little or no provision for heat dissipation during its storage and disposal. (6) High level waste (HLW) Waste with activity concentration levels high enough to generate significant quantities of heat by the radioactive decay process or waste with large amounts of long lived radionuclides that need to be considered in the design of a disposal facility for such waste. Disposal in deep, stable geological formations usually several hundred metres or more below the surface is the generally recognised option for disposal of HLW.

Spent nuclear fuel (SNF) possesses the characteristics of HLW however need not be classified as HLW if further use if foreseen for the material. For example, the spent fuel from the ANSTO reactors "contains residual 235U which could be potentially recovered for reuse and therefore is not classified as radioactive waste whilst in transit from Australia".

72 (World Nuclear Association 2014g) 73 (Australian Radiation Protection and Nuclear Safety Agency 2010)

3. Low and intermediate level waste 3.1 The Australian situation: siting a national repository Australia has accumulated approximately 4,000 m3 of low and short-lived intermediate level radioactive waste over fifty years74. About 3,800 m3 are Commonwealth material with the remainder a responsibility of the States and Territories75. Total annual additional waste streams are low by international standards, with approximately 40-45 m3 produced annually, mostly from the operations at ANSTO76. In 2015 Australia will receive a canister of intermediate level waste of dimensions approximately 7 m high with 3 m diameter from France. This one-off delivery represents the repatriation of waste from the reprocessing of spent fuel of the now-decommissioned HIFAR reactor which operated between 1958 and 200477.

Currently ANSTO treats and contains low-level solid waste on site, with a focus on volume minimisation and meeting regulatory guidelines for radiation78. Some of this waste will degrade and become exempt waste and can be disposed in municipal landfills79. Other drums will be further conditioned for transport and eventual disposal via a new facility for sorting, super-compaction and over-stacking (containment)80. This material, when conditioned, will then require permanent disposal.

Short-lived intermediate level waste will be conditioned using ANSTO’s synroc technology. The liquid waste is mixed with specially formulated granules to form a slurry which is then dried and decanted into an a-symetrical 30 L drum. The drum is sealed and placed inside a hot isostatic press which is then filled with argon. Under high temperature and uniform pressure, the dried mixture forms synthetic rock and the can is reduced to a uniform 10 L., trapping the radioactive material in the matrix of the rock81. This process achieves large volume reductions and is resistent to leaching and breakdown for hundreds of millions of years82. This material will then require interim centralised storage and eventually geological disposal83.

Currently Australia does not have a central storage or disposal facility for low and intermediate level waste84. While regarded as safe, the existing distributed storages are not ideal, not built for purpose and in some cases nearing capacity. This must change in order for Australia to meet obligations under the

74 (Australian Nuclear Science and Technology Organisation 2011) 75 (Australian Nuclear Science and Technology Organisation 2011) 76 (Australian Nuclear Science and Technology Organisation 2011) 77 (Donlevy 2014) 78 (Hardiman, Griffiths & Kemp 2014) 79 (Hardiman, Griffiths & Kemp 2014) 80 (Hardiman, Griffiths & Kemp 2014) 81 (Hardiman, Griffiths & Kemp 2014) 82 (Hardiman, Griffiths & Kemp 2014) 83 (Australian Nuclear Science and Technology Organisation 2011) 84 (Australian Nuclear Science and Technology Organisation 2011)

relevant Joint Convention85 . Currently, temporary storage is being constructed at ANSTO to house repatriated waste from France that is due for return in 201586. A centralised national facility is required.

Sharpe (2014) describes “high level politics of low level waste”, with an inability of successive Governments to site a suitable facility since the 1970s. Most recently, the nomination of Muckaty Station in the Northern Territory by the Northern Land Council was withdrawn after a challenge from other traditional land owners87.

On December 12 2014, Minister Macfarlane MP, announced that the Australian Government will begin a nationwide voluntary site nomination process for a radioactive waste management facility. Expressions of interest from landowners will be sought in March 201588 . The desired outcome is perhaps a dozen or more clear expressions of interest for further assessment89.

The Department of Industry confirmed that the siting of a repository is a cost-driven process of necessity90. There is a wide range of possible designs from a relatively simple facility such as Vaalputs in South Africa (Figure 5) to a heavily engineered facility such as El Cabril in Spain (Figure 6)91. The facility is likely to be a near-surface facility for disposal of low-level waste and an interim storage facility for synroc92.

Figure 5 Vaalputs radioactive waste disposal facility

85 (Australian Nuclear Science and Technology Organisation 2011) 86 (Donlevy 2014) 87 (Sharpe 2014) 88 (Sheldrick 2015) 89 (Sheldrick & Stohr 2014) 90 (Sheldrick & Stohr 2014) 91 (Sheldrick & Stohr 2014) 92 (Australian Nuclear Science and Technology Organisation 2011)

Figure 6 El Cabril radioactive waste disposal facility

A comprehensive strategy for the management of low and intermediate level waste as a “vital aspect” to the exploration of other opportunities in the nuclear fuel cycle93. Minister MacFarlane stated unequivocally that the resolution of a centralised national repository for Australia’s low and intermediate level waste was the current political priority in relation to nuclear activities94. However recent statements from the Deputy Prime Minister, Julie Bishop, calling for a reopening of the debate on nuclear power for Australia, suggests the Federal Government may now regard further developments in nuclear as more politically favourable than previously considered95.

3.2 Regional opportunities: The Asia-Pacific For most countries with major nuclear programs the licensing and operation of low and intermediate level waste repositories is a mature industrial activity with routine operations96,97. Several other nations remain either without mature and established disposal facilities or operate facilities under conditions that do not represent best-practice. These nations represent potential markets for services in waste management and disposal for South Australia. Three examples of differing national situations in the Asia-Pacific are provided below.

93 (Sharpe 2014) 94 (MacFarlane 2014a) 95 (Bourke 2014) 96 (Nuclear Energy Agency 2013) 97 Low and intermediate level waste repositories are licenced, operational or under construction Czech Republic, Finland, France, Germany, Hungary, Japan, South Korea, Slovak Republic, Spain, Sweden, United Kingdom and United States.

Taiwan Between 1982 and 1996, Taiwan operated the Lan-Yu Storage site for disposal of low-level waste. The site holds 100,000 drums of low-level waste (Atomic Energy Council 2014a)(Atomic Energy Council 2014a)(Atomic Energy Council 2014a)(Atomic Energy Council 2014a)(Atomic Energy Council 2014a)(Atomic Energy Council 2014a)(Atomic Energy Council 2014a)(Atomic Energy Council 2014a)(Atomic Energy Council 2014a)(Atomic Energy Council 2014a) on the south-east tip of Orchid Island in exposed, above ground storage, adjacent to the ocean (see Figure 7). This has resulted in some decomposition and deformation of the storage barrels98. Such environmental conditions would be in conflict with Australia’s relevant Code of Practice99. Figure 7 Lan-Yu Storage Site, Orchid Island, Taiwan

From 2007 to 2011 the Taiwanese Atomic Energy Council replaced corroded drums100. New streams of low-level waste will be accommodated adjacent to nuclear power stations on Taiwan101. The site remains a focus of anti-nuclear and anti-Government sentiment from the inhabitants of Lan-Yu, which includes a majority of indigenous Tao102. The Taiwanese Government is yet to establish a plan for the relocation of the material103.

Taiwan imports nearly 100 % of its energy and nuclear power provides approximately 25 % of the baseload power supply104. Any move away from nuclear power would result in escalation in imported fuel costs, as observed in Japan following the indefinite shuttering of the nuclear sector105.

98 (International Atomic Energy Agency 2013) 99 (National Health and Medical Research Council 1993) 100 (Atomic Energy Council 2014a) 101 (Atomic Energy Council 2014b) 102 (Synder 2013) 103 (I-chia 2013) 104 (World Nuclear Association 2014f) 105 (US Energy Information Administration 2014)

Taiwan may present a strong opportunity for service provision in best-practice waste management and disposal, with strong economic and political drivers to find resolution to the Lan-Yu Storage Site.

Philippines The Philippine National Research Institute (PNRI) oversees a small program of nuclear research and development106. The Philippines is considering resuming plans for development of nuclear power so this sector may expand. Philippines has accumulated approximately 66 m3 of low-level waste and 13 m3 of intermediate-level waste107 which is currently held in interim storage108,109.

The Philippines is seeking to site a geologic repository for this material. The seismic and volcanic activity in the region provides particular design challenges for the proposed site110. There may be interest in a regional, best- practice facility for waste management and disposal.

South Korea South Korea has an existing inventory of approximately 25,000 m3 of low and intermediate level waste awaiting disposal111. A shallow geologic disposal facility has been completed and will be licensed at the end of 2014112. Initial capacity is for 100,000 drums with scope to expand to 700,000 drums. On this basis there is little prospect of providing LILW waste management services to South Korea.

From the perspective of ANSTO experts, this regional market in LLW/ILW waste management is unlikely to materialise. Both the high-tech sorting, conditioning and super-compaction approaches for LLW and the Synroc conditioning facility for ILW are relatively low in capital cost, portable and easily deployed. From the point of view of consulting for service provision, a service ANSTO offers on a commercial basis, the deployment of such technologies locally with a view to better local disposal is the likely outcome, as opposed to highly lucrative import of waste for Australian disposal113.

106 (Forum for Nuclear Cooperation in Asia 2007) 107 (IAEA Net-Enabled Radioactive Waste Management Database 2008) 108 (Palattao Undated) 109 (Forum for Nuclear Cooperation in Asia 2007) 110 (Aurelio et al. 2013) 111(IAEA Net-Enabled Radioactive Waste Management Database 2011) 112 (World Nuclear Association 2014e) 113 (Hardiman, Griffiths & Kemp 2014)

4. Commercial assessment 4.1 Summary of assessment methodology An assessment was undertaken to consider the economics of a broad range of radioactive waste facilities in South Australia. We examined the average cost of near-surface facilities, facilities at intermediate depth, and geological repository facilities for low-level waste (LLW), intermediate-level waste (ILW) and high-level waste (HLW). Given the finding that management of regional LLW and ILW is unlikely to present economic opportunity (refer section 3), we focus here on the outcomes in relation to HLW/SNF.

The opportunities were estimated using discounted cash flow modelling, comparing the average costs of each type of facility with the estimated waste price range i.e. the willingness to pay on the part of those possessing waste materials to a service provider for a solution. The methodology is described in detail in Appendix A.

Table 2: Estimated waste price range Facility type $ per kgHM HLW Near-surface facility 200-300 HLW Intermediate depth facility 350-560 HLW Deep geological repository 570-860

4.2 Findings of the commercial assessment Figure 8 and Figure 9 show the major outcomes of the commercial assessment. The two horizontal lines represent the low and mid-range waste prices used in the assessment. The vertical bars represent the low, mid-range and high average overnight repository costs for each capacity size facility. The 5 % discount rate outcomes are shown as the base-case.

Where the estimated average facility cost (vertical bars) falls below the low waste price line, the assessment suggests there is a strong case for more detailed consideration and analysis. Facility costs (vertical bars) falling between the low and mid-range waste prices may represent a viable commercial case under conditions of strong Government support including clear and consistent policy. Facility costs that fall above the mid-range price line are not expected to be competitive.

33 Figure 8: Estimated HLW intermediate depth facility cost per kgHM and HLW waste price range

HLW intermediate depth facility ($/kgHM), 5% discount rate

1,200 1,150 1,100 1,050 1,000 950 ~ 900 ::1: 850 ~ '! 800 .. 750 E 700 ~ .."' 650 .r; 600 0 -.. 550 E E 500 "';;;, 450 .2 :;;: 400 ~ 350 ..,.8. 300 250 200 150 100 50 0 8 8 0 8 8 0 8 8 0 C!. 0 8 C!. 0 8 0 C!. 8 0 o· 0 0 0 0 0 N N N Ill Ill Ill 8 8 0 t; t; t; ...... 0 0 0 8 8 ~ t; t; u u u u u u 0 0 8 QJ .r; .r; u u u ~ 01) ~ g:, 01) .r; _,0 c _,0 c ~ .. 'f"" 'f _,0 ""c .!!P E E "' ::1: -6 -6 ~ ~ ~ ~ Figure 9: Estimated HLW geological repository cost per kgHM and HLW waste price range

HLW geological repository ($/kgHM), 5% discount rate

2,400 2,300 2,200 2,100 2,000 1,900 1,800 iV 1,700 ~ 1,600 ~ 1,500 : 1,400 .s:: 0 1,300 e1,2oo E 1,100 ..:;;, 1,000 ~ :l< 900 •••••••••••••••••• Gl -c. 800 "' 700 600 500 1 400 I 300 .I 200 I 100 0 0 0 0 0 0 0 8 8 0 8 8 0. 8 0. 8 8 0. 0 0 0 0 o' N N N 11'1 ~ 8 0 8 t; t; t; t; rl rl rl 0 '§ 0 0 0 t; t; t; v v v v v 0 0 0 ~ Gl .s:: ~ .s:: v v v _,0 c .!!!) _,0 .!lll ~ GJ .s:: "" ::t: ::t: _,0 ~ .!lll -o~ "'.,. ::t: ~ "0 ~

As shown in Figure 8, under a low-cost scenario, a high-capacity facility of intermediate depth for HLW presents a reasonable case for further, more detailed consideration, and a medium-sized facility may be commercial in conditions of Government support and policy certainty.

Under a mid-range cost scenario a large facility of intermediate depth for HLW may be commercial under conditions of Government support and policy certainty.

As shown in Figure 9, this assessment found no strong case for further consideration of a high-level waste geological repository. Only under a low-cost scenario, and with Government support and policy certainty, is this likely to present a commercial proposition.

4.3 Discussion of findings In aggregate, the commercial assessment presents a relatively weak case for seeking commercial outcomes through the management of HLW based on the traditional approach of direct disposal.

This represents a cost-driven market where what is known about willingness-to-pay is largely a reflection of costs. The management of HLW is an industry of necessity which has, to date, developed around highly conservative safety cases and exceedingly low regulatory (and societal) tolerance for any future exposure of people or ecosystems to industrial sources of radiation. This erodes the prospect for strong commercial returns.

In any scenario, were the funding for the establishment of a facility to originate from outside of South Australia this would represent a large investment. This assessment estimates that a near surface or intermediate depth LLW and ILW storage facility would likely generate $117-$1,120 million in new investment depending on its size, with around 30 to 160 direct jobs. A HLW intermediate depth facility would likely generate between $2-$12 billion in new investment, with around 600 to 1,000 direct jobs. Depending on the size of a HLW geological repository it would likely generate $5-$35 billion in new investment, with around 700 to 1,300 direct jobs. Employment would be expected to almost double during peak construction. These are positive outcomes. However the evidence of profitability, as opposed to mere viability, is lacking. In terms of timeframe, an HLW repository is virtually certain to exceed the parameters under consideration in this Discussion Paper.

The establishment of such a facility within South Australia would provide important supporting infrastructure for any proposed future expansion of activities within the nuclear fuel cycle. This, along with the direct investment benefits, may themselves provide a compelling case for more detailed investigation in future.

5. Non-traditional approaches to management of Spent Nuclear Fuel Existing nuclear nations have been forming and revising policy and practices for over 50 years, reflecting evolving knowledge, evidence and understanding as well as prevailing political and geopolitical considerations. This has resulted in heterogeneity of policies and plans around the world114. We argue none of the current fuel-cycle approaches are optimal economically, environmentally, socially or in relation to concerns about proliferation. There is little argument for copying approaches that have failed on one or many fronts.

We now outline a non-traditional concept for the management of SNF that still meets key requirements of global nuclear industry standards. The concept is based around the establishment of an above ground, dry cask storage facility known as an Intermediate Spent Fuel Storage Installation, to be synergistically developed with modern, full fuel recycling Generation IV fast nuclear reactors and low-cost, high-certainty disposal techniques for eventual waste streams. In this synergy we identify a pathway to large, near-term profits for South Australia and medium-term development of globally leading new industry.

This new portfolio approach is achieved through the combination of the following technologies and approaches ( Figure 10), which will be described in turn: 1. Independent spent fuel storage installation 2. Oxide-to-metal spent fuel conversion 3. Fast reactor with integrated fuel recycling centre (Integral Fast Reactor) 4. Deep borehole disposal

114 (Högselius 2009)

Figure 10 A portfolio of non-traditional options for profitable expansion into the nuclear fuel cycle

Medium term, medium sized capex ...... 111... Early demonstration of commercialisation ....,.. Leadingfuel-cycle technology Potentialfor co-investment VALUE EXTRACTION

and DISPOSAL Long term, Iorge capex ...... Newly commercial technology MINIMISATION ....,. Leading reactor andfuel cycle technology Potential direct investment or co-investment Production ofclean baseload electricity t

Short-medium term, medium sized investment LOW-COST ...... Early demonstration of commercialisation Deep Borehole repository ....,. Long term, medium capital expenditure in disposal DISPOSAL Potentia/leading low-cost disposal technology Incremental, progressive expenditures

5.1 Independent spent fuel storage installation Independent spent fuel storage installations (ISFSis) have been established in many nations to provide 115 storage of spent nuclear fuel for a period of decades, typically as a necessary response in the absence 116 of accessible long-term spent fuel repositories . In the United States there are 55 ISFSis using dry storage117 . Germany operates a single centralised ISFSI at Gorleben 118.

115 (Casey Durst 2012) 116 (Casey Durst 2012) 117 (Casey Durst 2012). 16 ' (Kazimi, Moniz & Fosberg 201 1)

Figure 11 Cut away of a dry cask containing a spent fuel assembly. A simple, robust, shielded container with no moving parts

Evidence of the performance and safety of these facilities has been accumulating for more than 25 years in the US alone119. The US Nuclear Regulatory Commission recently ruled spent nuclear fuel may be safely stored for up to 60 years in dry cask storage post the closure of the reactor120. Given a conservative expected reactor life of 40 years, spent nuclear fuel may be legally stored in an ISFSI for around 100 years.

Figure 12 Independent spent fuel storage installation, Connecticut, USA

Scientifically sound methods exist to manage spent nuclear fuel and furthermore decisions must be taken in the context of a century timescale for managed storage121. Spanish nuclear supplier ENSA122 query

119 (Werner 2012) 120 (Werner 2012). 121(Kazimi, Moniz & Fosberg 2011) 122Equipos Nucleares S.A 2014

whether the spent nuclear fuel challenge can be considered to be “resolved for the next 60-100 years” based on ISFSI.

Storage times in such locations may be increased or decreased based on “policy considerations”123. South Australia might therefore institute policy, at the outset, that recognises the capability of such facilities for the purposes of storage for up to a century or more.

The radioactivity of SNF that has been in storage for a decade will have fallen by approximately 100-fold from the point of one week post core-removal, such that a serious accident involving the material can no longer happen124. Such “pre-aged” material would be a suitable candidate for a multinational ISFSI.

A recent inclusive125 capital cost estimate for a 40,000 MtHM facility is US $560 million126. This compares favourably to estimates of between $5 billion and $35 billion for the establishment of a deep geological repository in Australia. Loading and unloading periods have estimated operational costs of $290 million per year, however that includes the cost of dual-purpose storage canisters and overpacks127. The caretaker period has operational costs of $4 million per year128.

An alternative costing from a US consortium suggested lower capital costs ($118 million) and operational costs for loading and unloading of US $8.8 million per year, under the assumption that the waste canisters and overpacks are shipped with the spent nuclear fuel from the existing site129.

While there are necessarily limits to the applicability these US-based estimates, it is clear that a multinational ISFSI sited in South Australia could provide access to the highest market prices (that of spent nuclear fuel) at capital costs in the order of 10-70 times lower than a deep geological repository. The potential for handsome commercial returns is obvious. Storage and disposal costs may be a “fraction of the willingness to pay leaving substantial room for profit”; one estimate suggests a 10,000 MtHM facility would draw total revenues of $15 billion against costs of $4 billion for providing the service130.

123 (Kazimi, Moniz & Fosberg 2011) 124 (Kazimi, Moniz & Fosberg 2011) 125design, licensing, construction of storage pad, cask handling systems, extensive rail infrastructure 126(Kazimi, Moniz & Fosberg 2011) 127(Kazimi, Moniz & Fosberg 2011) 128(Kazimi, Moniz & Fosberg 2011) 129 (Kazimi, Moniz & Fosberg 2011) 130 (Bunn et al. 2001)

Box 2: Case study, Taiwan spent nuclear fuel reprocessing 131

On February 17 2015, Taiwan Power Co. sought public bids worth US$356 million for offshore spent nuclear fuel reprocessing services for its Chinshan and Kuoshen plants. The contract will be awarded based on the lowest tender, and bids will be received until March 2017.

Taiwan nuclear spokesman Frank Lin Der-fvvu stated that dealing responsibly with the material "is a problem that exists regardless of whether we continue to use nuclear power or whether the existing nuclear power plants are decommissioned or have their operating lives extended."

The tender calls for reprocessing of 1200 bundles of spent nuclear fuel. Taiwan Power Co. is seeking an inclusive service of "transport casks delivery, loading used fuel into the casks, transport and shipment of the loaded transport casks, reprocessing of the used fuel, management and retransfer of the materials arising from the reprocessing of the used fuel." II

This initial tender is a "small scale pilot project" to "test the feasibility of offshore reprocessing and offer more diverse options and flexibility for long-term domestic nuclear spent fuel treatment."

According to Atomic Energy Council data, as of January 1 2015, Taiwan's three operating nuclear plants had accumulated a total of 17,036 bundles (3,502 metric tons) of spent nuclear fuel. The pilot program of 1, 200 bundles would account for just over 7% of the bundles. On the basis of this tender, the willingness to pay for an inclusive spent nuclear fuel reprocessing service is nearly US$1500 kgHM-1 and the potential market in just existing material from Taiwan alone is approximately $US5 billion. This approximately accords with Taiwan's existing Nuclear Back-End fund of $US7.6 billion.

Under the conditions of this tender, and typical of reprocessing arrangements Taiwan will need to receive high-level waste at the conclusion of the reprocessing. A superior service could be offered to this market that incorporates full custody of the material, responsibility for fission product waste and preparation ofthe material for use in advanced fuel-recycling reactors. ~------1 1 Creating this market quickly would rely on South Australia offering a service in permanent custody, rather than disposal. From the point of view of the customer, the result is the same: responsibility for the material has been discharged. Rosner and Goldberg (2013, p. 59) articulate the many advantages this approach may hold:

"Consolidated dry cask storage at regional sites that accept waste from multiple power plants and even multiple countries would provide an interim solution that nuclear electricity producers could use while nuclear industry stakeholders develop technological solutions and nuclear nations make political decisions. This storage concept thus provides breathing room, giving current research and development activities in permanent storage and advanced fuel cycle technology time to mature. This interim storage system a/so would allow nuclear producers access to used

131 (Platts 2015)

41 fuel, should reprocessing technology advance, making what had been waste into an energy asset".

Open-ended commitments to the custody of SNF may not find favour either domestically or internationally. Clear indications would be needed of the intended pathways for the material, even over a century timescale. New technologies allowing such a pathway are discussed in the following sections.

Box 3 Community acceptance: Learning from the Finnish example132 Community acceptance for nuclear activities remains a challenging area both in Australia and globally. In recent history, the experience of the Pangea in Australia provides evidence of a proposal that may have had technical and environmental merits but failed to secure meaningful community and political support. More recently the withdrawal of Muckaty Station as a potential site for LLW and ILW storage and disposal demonstrated the challenges in siting even essential infrastructure for less challenging waste streams.

Latterly, authorities around the world are demonstrating a growing appreciation that technically and environmentally sound solutions do not alone suffice: success in these matters depends as much (or on matters of fairness, prior informed consent, equitable sharing of benefits and transparent processes.

Among global experience the efforts of Finland stand out as a success story through the efforts of its specifically mandated entity, Posiva Oy. Finland have now commenced construction of the Onkalo waste repository that will become home to that nations high level nuclear waste. Of critical importance to this process, the Eurajoki Council had clear veto rights over the decision of the national Parliament. Had they not supported it, it would not have been forced upon them. This was proven; the local community initially rejected the use of the location by referendum. Posiva Oy needed to work on an improved benefits package and providing clear undertakings in relation to the performance of the site. The subsequent effort won strong community support, with the Council of Eurajoki supporting the facility in a vote 20:7 in favour.

Encouragingly, there are signs Australian authorities are embracing these bottom-up and consultative practices. The renewed effort to site Australia's LLW/ILW repository and store is predicated on voluntary engagement, from landowners with clear tenure, to express interest in hosting the facility with no obligation. Criteria and weightings for subsequent site assessment are emphasising, from the outset, the importance of both local community support and the potential for local community benefit in selecting a preferred site. A period of engagement, consultation and education features strongly across the process, and principles of equity and consent are preeminent. The process is supported by ten experts drawn from relevant professions across Australia to assist the Department of Industry to craft and deliver a sound process.

Both international experiences and the implementation of the current Australian process will provide vital lessons. Close attention to these issues will be required upon should South Australia seek further engagement with the nuclear fuel cycle.

132 (Aikas 2013; Heard, B & Brook, BW 2014; Nuclear Energy Institute 2014; World Nuclear Association 2014c)

5.2 Oxide-to-metal spent fuel conversion Existing stockpiles of spent nuclear fuel are metal-oxide. Nearly all of the material (approximately 97 %) is uranium-238, the isotope of uranium that does not undergo fission under neutron absorption. The remainder includes small amounts of uranium-235, other heavier elements and lighter, highly radioactive elements called fission products.

All of the spent nuclear fuel material other than fission products can be downgraded in a fast-neutron reactor, with the generation of zero-carbon electricity occurring as a consequence (see section 6.3 for more detail). The first step is to convert the spent nuclear fuel from a metal-oxide into an alloy i.e. all metal.

This is achieved through oxide-reduction of the spent fuel pellets. The viability of this electro-reduction process chemistry was established many years ago at the level of high-capacity testing133. Currently, researchers are working at on a design for a commercial-scale facility with throughput of 100 t of spent nuclear fuel per year134. This project will be completed in 2015 and capital costs are narrowing to approximately US$300 million135.

An opportunity exists for South Australia to partner with US-based stakeholders and become one of the first locations for deployment of a commercial-scale oxide-metal spent fuel conversion facility. This would enable South Australia to extract enormous further value from the spent nuclear fuel through the application of the Integral Fast Reactor (refer section 5.3).

Note, a conversion facility of 100 Mt per year would be well in excess of South Australian-only fuel requirements. Note also, as well as conversion from oxide-to-metal, this facility is for the purpose of fuel fabrication (refer section 2.4). In constructing this facility, South Australia would expand into the fuel fabrication business, but with a new standard of fuel that requires no mining, conversion or enrichment of raw uranium. This would provide industrial capacity for export of metallic nuclear fuel both nationally and internationally. Based on current prices for fabricated fuel136, the facility may produce $300 million worth of export product per year.

5.3 Fast reactor with integrated fuel recycling centre (Integral Fast Reactor) Nearly all commercial nuclear reactors up to the current generation (Generation III) use fuel based on the rare isotope uranium-235. The rest of the fuel rod (approximately 97 %) consists of plentiful, non-fissile uranium-238.

133 (Argonne National Laboratories/ US Department of Energy Undated) 134 (Blees 2014) 135 (Blees 2014) 136 (World Nuclear Association 2015)

A generation IV fast reactor (so-called because, in the absence of a moderator, the neutrons remain fast) is capable of consuming all fissile plutonium and higher actinides, and transmuting all uranium-238 into fissile material137 . In effect, fast reactors run on spent nuclear fuel from current reactors and breed their own new fuel. Such reactors are thus often referred to as breeder reactors. It is well-understood within the nuclear industry that proven conversion ratio of one or greater (i.e. breeding as much or more fuel as is consumed), means a fast reactor is a sustainable large-scale energy source, in principle for tens of thousands of years138.

Figure 13 Transmutation of non-fissile uranium-238 into fissile plutonium-239. Under irradiation from fast neutrons, U-238 absorbs a neutron, undergoes two subsequent beta-decays and becomes Pu-239. In this way, 99 % of spent nuclear fuel can be turned into new reactor fuel in a fast reactor.

Many reactor designs with advanced fuel cycles have been proposed and are under development at various stages of completion139. This discussion focusses on the Integral Fast Reactor as the key technology for the following reasons: 1. All aspects of the technology have been comprehensively proven in laboratory conditions with a prototype reactor140 and various aspects has been documented in detail in scientific literature (see further discussion) 2. The technology is now commercially available from a major supplier (GE-Hitachi)

137 (Till & Chang 2011) 138 (Kazimi, Moniz & Fosberg 2011) 139 (Nordhaus, Lovering & Shellenberger 2013) 140 (Till & Chang 2011)

Following a fuel cycle an advanced, electro-chemical fuel recycling process called pyroprocessing removes impurities, enabling the metal fuel to be re-cast into new fuel slugs141. The physical integration of the reactor and fuel recycling leads to the term Integral Fast Reactor (IFR).

Figure 14 A pyroprocessing hot-cell at Argonne National Laboratories, USA. The spent fuel is so radioactive is must be handled remotely, and so easy to work with that it can be recycled with remote handling. An ideal situation for complete, proliferation-resistant disposition of 99 % of spent fuel

After successive cycles of fission and recycling, the original material is almost wholly transmuted to fission products. The fission products are highly radioactive but with only a medium-term half-life of 30 years. This means that within approximately 300 years, the radioactivity has returned to the levels of natural uranium ore. Longer-lived actinides can be expected to remain in trace amounts142. This fission product material would likely be immobilised in zeolite and vitrified (turned into glass) for final disposal143. During these successive cycles, new uranium feedstock from the spent nuclear fuel is introduced as “make-up” material for that which has been turned into fission products.

141 (Argonne National Laboratories/ US Department of Energy Undated) 142 (Todd 2015) 143 (Brook et al. 2014)

Figure 15 Simplified pyroprocessing flow sheet144

144 (Argonne National Laboratories/ US Department of Energy Undated) Figure 16 Conceptual flow sheet for the treatment of used light water reactor fuel145

Figure 17 Conceptual flowsheet for the treatment of used (metallic) fast reactor fuel146

145 (Williamson & Willit 2011) 146 (Williamson & Willit 2011)

Figure 18 Plutonium fission produces energy and fission products. Fission products are the “true” nuclear waste

Figure 19 Mass-flow diagram for an electrorefining-pyroprocessing facility using light water reactor waste to provide fuel for a gigawatt-sized integral fast reactor (IFR) operating in closed cycle mode. Note the annual mass flow produces fission product waste at the low rate of 1 ton per year147

147 (Brook et al. 2014)

There may be a cascade of benefits from a commitment to develop and operate the IFR: 1. It presents a certain and permanent disposal pathway for spent nuclear fuel. A commitment to the future commercialisation of the technology in partnership with international stakeholders will facilitate the near-term development of an ISFSI with the associated positive flows of revenues. 2. The spent nuclear fuel material is reduced in heat load and half-life such that disposal is simpler and cheaper. Existing United States Environmental Protection Agency standards will be met a priori at many sites148. 3. The much-reduced volume of material for disposal, at a rate of approximately 1 ton of material per year in the case of a 1 GW reactor, enables lower-cost interim storage and deferral of eventual disposal costs. 4. The operation of the disposal system provides, as a virtual side-effect, 311 MWe149 of zero- carbon150 electricity generation.

Each integral fast reactor development (an installation of twin, compact power modules) would add 622 MWe of dispatchable, zero-carbon generation for either consumption or export to the National Energy Market. This could improve South Australia’s role in meeting the 50 % projected increase in Australian electricity demand to 2050151. A 622 MWe PRISM facility would cut greenhouse gas emissions from the -1152 National Electricity Market by over 5 million tCO2-e year .Taking custody of, for example, 10,000 MtHM of spent nuclear fuel would secure South Australia’s energy independence for many centuries. The small size of the generating units (311 MWe) means additional transmission and network requirements would be negligible.

Both the reactor and fuel-recycling technologies have been extensively and successfully demonstrated over 30 years of operation and development153. The design, layout and operations of the PRISM reactor, including the various fuel configurations, have been described in detail154 as has the coupled fuel- recycling technology (known as pyroprocessing)155 and the characteristics of the different metal fuel options156. All technical characteristics of the technology have been summarised in non-specialist formats157 and the requirements for eventual waste storage have been elaborated in persuasive technical detail 158.

148 (Till & Chang 2011) 149 For context, the largest single generating unit at Port Augusta is 260 MWe. It is currently expected that PRISM reactors will be built as a “twin-pack” with a total of 622 MWe peak generating capacity 150 With the exclusion of mining from the lifecycle and the highly efficient metal fuel recycling, full lifecycle greenhouse gas emissions from IFR are likely to be the lowest of any electricity generating technology including wind and solar 151 (Syed 2012) 152 -1 At assumed 95 % capacity factor and based on current NEM-average emission factor of 1 kgCO2-e kwh 153 (Till & Chang 2011) 154 (Triplett, Loewen & Dooies 2010) 155 (Argonne National Laboratories/ US Department of Energy Undated; Till & Chang 2011; Williamson & Willit 2011; Yoo et al. 2008) 156(Carmack et al. 2009); (Crawford, Porter & Hayes 2007) 157(Archambeau et al. 2011; Blees 2008) 158 (Till & Chang 2011)

The IFR is commercially available as the PRISM reactor from GE-Hitachi159. The PRISM reactor is under serious consideration for construction in the UK with the purpose of downgrade and disposal of unwanted plutonium stockpiles160. In the USA, PRISM reactors are under consideration for continued downgrade of former Russian nuclear warheads161. Confidential discussions are underway regarding the potential for the UK and the US to come to simultaneous agreement for the construction of the first four PRISM reactors, as a means of boosting confidence and lowering first-mover costs for each nation162. Blees (2014) affirmed that a conditional commitment for a third location for the development of the fifth and sixth PRISM reactors would be strongly welcomed by the US and UK.

PRISM represents a single reactor design from one provider. South Australia need not commit explicitly to this reactor. However it carries “the necessary design attributes of a successful sustainable nuclear energy system- one that could be feasibly deployed within this decade”163. The concept outlined thus far is the strongly preferred option of Republic of Korea, termed the KIEP-21 solution (Figure 20)164. However the Republic of Korea is prevented from implementing this solution by the existing U.S-R.O.K Agreement for Peaceful Nuclear Cooperation165.

Figure 20 The preferred spent-fuel option for Republic of Korea merges the technologies discussed in this paper166

Despite a compelling body of evidence, uncertainties remain. The level of confidence in the readiness of this technology varies among reputable sources. A 2013 report suggests that sodium-cooled fast reactors

159 (GE Hitachi 2014) 160 (GE Hitachi 2014) 161 (Blees 2014) 162 (Blees 2014) 163 (Brook et al. 2014) 164 (Dalnoki-Veress et al. 2013) 165 U.S Department of State 2014 166(Kook 2013)

(of which the IFR/PRISM is the quintessential example) is positioned as the primary research direction for major nuclear nations such as France, Japan and South Korea167. However the same report highlights several remaining challenges in fuels and materials research as well as the effectiveness of the pyroprocessing for fuel recycling.

Similarly the 2014 report of the Gen IV International Forum provides a positive impression of the prospects of this class of technology, stating:

“The SFR technology is more mature than other fast reactor technologies and thus is deployable in the very near-term for actinide management. With innovations to reduce capital cost, the SFR also aims to be economically competitive in future electricity markets”.168

Nonetheless a range of necessary projects and developments are highlighted as necessary to furthering this technology, with a suggested timeline of demonstration post-2022. This report makes no specific mention of the PRISM developments, and many of the issues raised as challenges by some authors appear to be well addressed in literature169.

An analyst from within the World Nuclear Association simply advised against Australia seeking to construct and operate a generation IV reactor prior to constructing and operating more conventional designs, stating Australia needed to “run before it can walk”170. Other consultation agreed that the “jump from storage to a fully-closed fuel cycle –using fast reactors to burn actinides, is a very large jump in technology, capability, infrastructure and cost”171. Todd (2015) noted that “perhaps an incremental move into the closed fuel cycle would be advisable”.

Consultation with a US-based fuel conversion expert additionally cautioned that the pyroprocessing step itself produces additional high-level waste streams in the form of a ceramic from the salt solution and metal forms from the cladding taken from the spent fuel172 (see Figure 15 and Figure 16). These waste streams require further investigation to understand, with greater certainty, local disposal responsibilities. There will also be accumulation of new streams of LLW and perhaps ILW as an expected consequence of any new activities in the nuclear fuel cycle. For example this would include, though not be limited to, the decontamination products from used dry-casks173. As Australia is yet to site a centralised LLW/ILW repository and temporary ILW store (refer section 3.1), understanding of these waste streams will also require further consideration in future.

167 (Nordhaus, Lovering & Shellenberger 2013) 168 (Gen IV International Forum 2014, p. 35) 169 (Till & Chang 2011; Triplett, Loewen & Dooies 2010) 170 (Hess 2015) 171 (Todd 2015) 172 (Todd 2015) 173 (Howard & Akker Undated)

5.4 Deep borehole disposal The three technologies described above would both reduce and defer the need for final disposal of radioactive material. However material will eventually require safe disposal. A lower-cost option may be found in deep-borehole disposal. Deep-borehole disposal consists of drilling a borehole, or array of boreholes, into deep rock (5,000 m), emplacing waste in the lower 2,000 m and sealing the upper 3,000 m with a carefully engineered borehole seal system 174. In the case of disposal of shorter lived fission products the material could be placed in even smaller diameter and potentially shallower boreholes that will be simpler and less costly to drill175.Each borehole ranges in diameter from 0.91 m at surface to 0.43 m in the lower 2000 m176.There are numerous advantages to this approach over traditional mined repository approaches:  The deposition area is several times deeper than mined repository, resulting in greater natural isolation and protection by the rock environment.  The disposal can be developed incrementally, permitting spreading and deferral of capital expenditure.  The required rock formations are common at the depth in question. Suitable sites are numerous.  It is low-cost per unit disposed material, with current estimates of US$158 kgHM-1. These costs could be reduced further with centralised repacking of material for final disposal177.

The deep-borehole repository concept is not field-tested and a full-scale demonstration of feasibility is required178. However it is also “expected to be reliably achievable in crystalline rocks with currently available commercial drilling technology, and there are no known technical issues that present unreasonable barriers to drilling to this diameter at depth”179.

The United States Department of Energy is proposing a multi-year deep-borehole field test to “confirm the safety and feasibility of the concept before proceeding further with implementation”180. They are expressly proposing to seek “international collaboration with other nations that have expressed interest in deep borehole disposal concept”181. SUMMARY On balance, since so few “traditional” disposal options for nucelar material have been implemented globally, the proposed “non-traditional” approach arguably holds greater technical certainty. It inarguably holds greater commercial potential for South Australia and warrants commercial investigation.

174 (Brady et al. 2012) 175 (United States Department of Energy 2014) 176 (Brady et al. 2012) 177 (Brady et al. 2012) 178 (Brady et al. 2012) 179 (United States Department of Energy 2014, p. 26) 180 (United States Nuclear Regulatory Commission 2014b, p. 14) 181 (United States Department of Energy 2014, p. 26)

6. Business Case for ISFSI+IFR This section presents a simplified business case for the concept outlined in section 5. Initially all costs and revenues are undiscounted for the full life of the project (100 years) i.e. the business case assumes all costs are incurred and all revenues are earned tomorrow. Outcomes are therefore intended to guide recommendations for undertaking a full, discounted net-present value assessment of the concept outlined in Figure 13. For illustrative purposes, the Base Case has then been assessed against discount rates of zero, five and ten per cent for a project life of 30 years.

The business case was first tested across a range of different spent fuel capacities for the ISFSI, from 10,000 MtHM to 60,000 MtHM. Within that range a 40,000 MtHM facility has been selected for five illustrative cases: base case, low-price case, high-cost case, high-price case and challenge case.

Capital and operating costs for each step is shown in Figure 21 and have been sourced through documented references (refer sections 6.1-6.5) and direct consultation with relevant parties.

6.1 Base Case assumptions Price received for spent fuel custody The base case applies a spent-fuel price of $1000 kgHM-1. This figure is considered a “rough rule of thumb” for price for disposal services182. This is below the $1500 kgHM-1 currently offered for reprocessing services from Taiwan (refer Box 2, p 41), and below quoted ranges183 of $1200- $2000 kgHM-1. Conversely consultation suggested a price of $400 kgHM-1 was approximately accurate based on current rates of saving in the US nuclear power industry184. As such the base case attempts to be conservative on price paid by customers for the service and acknowledges that funding levels and willingness to pay will vary from market to market. A low-price case has been devised to test the lower end of the range also. For the base case, at a price of $1000 kgHM-1 total spent fuel custody revenues are $40 billion.

Price received for sold electricity All illustrative cases apply a wholesale electricity price of $50 MWh-1, which is below the average wholesale price of $74 MWh-1 for 2012/13 in South Australia185. This recent wholesale price may have been abnormally high as market participants adjusted operations in response to changing supply and demand conditions186. NEM-wide, a wholesale electricity price of $50 MWh-1 appears to be representative

182 (Hoare-Lacey 2015) 183 (Bunn et al. 2001) 184 (Wigley 2015) 185 (Australian Energy Regulator 2013) 186 (Australian Energy Regulator 2013)

of recent pricing187. At this price, total revenues from electricity generation over the lifetime of the reactor (assumed 60 years) are $15 billion.

Capital costs of ISFSI Capital costs for the ISFSI are based on figures cited in Kazimi, Moniz and Fosberg (2011) of $600 million. These costs may be conservatively high, based on the much lower capital cost estimates from Private Fuel Storage Company cited in Kazimi, Moniz and Fosberg (2011, p. 49) of $118 million. However until more detailed assumptions can be developed for local conditions the higher cost estimate has been adopted.

Operational costs (loading) of ISFSI Operational costs for the loading period of the ISFSI are based on annual loading costs for a 40,000 MtHM facility the figure from Private Fuel Storage Company cited in Kazimi, Moniz and Fosberg (2011) of $8.8 million. This cost figure excludes the cost of the casks and overpack. This has been considered separately. A total loading period of 20 years has been assumed irrespective of facility size to determine total operational costs for the loading period.

Purchase and loading of casks An authoritative 2001 estimate of the cost to purchase and load dry-casks suggested $60-$80 kgHM-1 188. This assessment has assumed $100 kgHM-1 in 2014 Australian dollars. For the 40,000 MtHM facility this cost is $4 billion. This cost may be avoidable on a case-by-case basis. Much spent nuclear fuel is already in suitable dry-cask storage including multi-purpose containers for transportation. Here, it is assumed that South Australia must absorb the cost of cask purchase and loading, consistent with the conditions of recently released tender from Taiwan (refer Box 2, p 41).

Transportation Cost estimates for transportation vary widely. Bunn et al. (2001) suggest transport costs of $55 kgHM-1 for on-shore transport of material to the Yucca Mountain repository in the US. They suggest overseas transportation would be “somewhat more expensive”189. They also highlight that costs may be as little as $7 kgHM-1 in situtions such as Japan where all infrastructure already exists. Furthermore a portion of these costs may already have been captured in the inclusive capital cost estiamte for the ISFSI. As this is an uncertain area a figure of $100 kgHM-1 has been applied for this assessment.

187 (See Figure 5 Australian Energy Regulator 2013, p. 9) 188 (Bunn et al. 2001) 189 (Bunn et al. 2001, p. 22)

Operational costs (caretaker) of ISFSI Annual operational costs of $4 million for the caretaker period of the 40,000 MtHM facility ISFSI are taken from Kazimi, Moniz and Fosberg (2011).

Oxide-to-metal conversion plant (Capital) Capital cost for the development of a 100 t per annum oxide-to-metal spent fuel conversion plant are taken from consultation with Blees (2014)and set at $300 million. The suggested level of throughput is (more than) adequate to meet the needs of the proposed PRISM reactor twin pack.

Oxide-to-metal throughput plant (Operational) At the time of writing a referenced estimate for operational costs of the oxide-to-metal conversion plant has not been located. As a placeholder, operational costs of approximately $12 million per annum have been assumed based on scaling operational costs for the PRISM reactors based on the different capital costs of the facilities. For a 60 year reactor lifetime total lifetime operational costs of approximately $736 million are assumed.

PRISM Twin Pack (NOAK capital) This commercial assessment assumes South Australia does not proceed on PRISM development as global first-of-a-kind but instead in partnership with US and UK for a potential 5th and 6th unit. Capital costs are therefore assumed to be approaching Nth-of-a-kind (NOAK). NOAK cost of AU$1.5 billion per 311 MWe unit are assumed for total cost of 2014 AU$3 billion for 622 MWe190. This equates to capital cost of approximately $4800 per kilowatt installed, which is below the capital cost for gigawatt-scale nuclear light water reactor in 2020 for nuclear construction in Australia191. This competitive cost level is attributed to the merits of inherent safety systems and simplified construction of reactors operating at atmospheric pressure compared to Generation III reactors. Nonetheless this is an area of both sensitivity and uncertainty and therefore a high-cost illustrative scenario has also been developed.

PRISM Twin pack (operational) Annual operational costs for the PRISM twin pack are based on figures from the US Energy Information Administration operating costs for nuclear power plants in the United States192. Operating costs have been assumed identical to currently operating plants with the exception of the fuel component of costs. This has been reduced by 75 % to account for the onsite production of fuel for the PRISM from spent nuclear fuel inputs. Operational costs of $0.02 per kWh are assumed. For the 622 MWe twin pack, capacity factor of 95 % is assumed, for production of 4.9 billion kWh. This gives total annual operational costs of $123 million. Assuming 60 year design life, total operational costs of $7.4 billion are assumed.

190 (Blees 2014) 191 (Syed (BREE) 2013, p. 17 Table 1) 192 (US Energy Information Administration 2013)

Deep borehole disposal Brady et al. (2012) provides a cost estimate for deep borehole disposal of spent nuclear fuel of $158 kg-1. We have assumed a disposal cost of $100 kg-1 for disposal of conditioned fission products that are separated from the fuel recycling process. This accounts for the much shorter half-life of the material permitting shallower drilling in a wider range of conditions to achieve the required disposal outcomes. Fission products are produced at a rate of approximately 1 kg MWyear-1 193. Therefore approximately 622 kg of fission products are produced per year for the PRISM twin pack. Annual disposal costs are therefore $62,200 and lifetime disposal costs from the PRISM twin pack are $3.7 million.

Total base-case costs As shown in Figure 21 total project lifetime costs for the base case are estimated $20.5 billion. Total project costs are sensitive to the capital cost of the PRISM reactor twin pack, cask purchase and loading, transportation, and the operational cost of the PRISM reactor twin pack.

Capital and operating costs of the ISFSI facility, capital costs of the oxide-to-metal conversion and operational costs of deep-borehole disposal, irrespective of facility size, are relatively inconsequential to total project costs. A doubling of all costs associated with the ISFSI and oxide-metal conversion facility would add approximately $1.5 billion to total lifetime project costs.

193 (based on figure from Carmack et al. 2009)

Figure 21 Disaggregated costs, base case

Oisa ggregated c osts for 40,000 MtHM ISFSI

- Transp o rtation 1:1 Cask p u rchase and loading 1111 PRISM Twin pack operation at lifetime - PRISM Twin pack capital (NOAK) 1:::1 Oxi de-metal conversion p lant operational - Oxide-met a l conversion plant cap i ta l - Operationai i SFS I (caretaker) - Ope ra tiona i iSFSI (loading) - Capit ai i SFS I 1::::1 0 e ep- borehol e disp osal

$25 billion · · · · ··• · ·· · · ··• · · · · · · ·• ·· · · · · ••·· · · ··• •

ISFSI fa cility size (M tH M )

6.2 Low-price case 1 The low-price scenario lowers the price paid by customers to $500 kgHM- . This is just above the lowest end of the range identified in literature and consultation relating to services in custody and reprocessing of spent nuclear fuel. All other assumptions are as for the base-case. This price is considered unlikely to occur in conjunction with the inclusive and conservative costs that have been considered in this assessment. Lower prices might, for example, be a trade-off resulting from the need for a customer to cover transportation or packing costs. These costs have been incorporated into this assessment.

57 6.3 High-price case 1 The high-price case raises the price paid by customers to $1500 kgHM- , consistent with the recently 194 released tender from Taiwan (Refer Box 2, p 41 ). This figure remains below other referenced ranges . However given the convergence of pressures on Taiwan relating to management of spent nuclear fuel, this figure may be an accurate representation of the higher-end of the willingness to pay in this market. All other assumptions are as for the base case. As shown in Figure 22, the price received for spent fuel is highly material to total spent fuel revenues. Total revenues for the illustrative 40,000 MtHM facility vary from $20 billion to $60 billion.

Figure 22 Spent fuel revenues by fuel price for illustrative ISFSI

Spent f uel r e v e nues by price (40,000 M tH M f acility)

80 High .price case

;- .. 60 ! ... Base c ase c 2 ..= :! l o w price case 0 !:! 1 • 40 ."c > ..~ 1 :!" ~ 20 0 >-

1 Spent Fuel Price ($ kgHM- )

6.4 High-cost case The high-cost scenario doubles the cost of construction of the PRISM reactor twin pack from the base case assumption to $6 billion, or $9,600 kW-1 installed. All other assumptions are as for the base case.

94 ' (Bunn et al. 2001)

58 6.5 Challenge case The challenge case combines the price assumption of the low price case with the cost assumption of the high-cost case to provide a challenging scenario for the development of the concept.

Figure 23 compares the undiscounted costs and revenues across the five illustrative cases. Under the high-price scenario we find total undiscounted net benefits of approximately $55 billion. Under the base case, we find undiscounted net benefits of approximately $35 billion. The low-price case delivers undiscounted net benefits of under $15 billion. The high-cost case delivers undiscounted net benefits of approximately $31.5 billion . Under the challenge case the project delivers undiscounted net benefits of $11.5 billion. The five illustrative scenarios in this assessment indicate considerable economic upside for South Australia from this concept.

Figure 23 Undiscounted costs and revenues of illustrative cases

Cost and revenues comparison, illustrative cases (40,000 MtHM)

8.0x10 10

$75 billion

- Costs - Spent fuel custody revenues ED Electricity revenues

$55 billion · · · · ·

:::> < ..... ~ 0 N $35 billion · · · · ·

$20 billion

59 The Guidelines for the evaluation of public sector initiatives 195 applies a 30 year project life for major construction proposals and a real discount rate of 5 %, representing medium market risk. Given the certainty identified in this report as to the market in custody of spent nuclear fuel, the 5 % real discount rate is likely conservative. Under these conditions the project base case has net present value of $16.5 billion with a benefit:cost ratio of 2.8. Discount rates of 0% and 10% are also shown (Figure 24). Under a 10% real discount rate, net-present value is $9.3 billion with a benefit:cost ratio of 2.5.

Figure 24 Net benefits over time, base case, 30 year project life, 0 %, 5 % and 10 % discount rate

Base Case present value, 30 year project life, 0%, 5 %and 10% discount rate

$35,000,000,000

$30,000.000,000

$25,000,000,000

$20,000,000,000

Net Present Value $15,000,000,000

$5,000,000,000 $10,000,000,000 i,.,...,.a~'!~~~~====::::::::::::: $0 1 2 3 4 5 6 7 8 9 W H U U U U U D U H ~ ll D H M 8 U H U H m ·$5,000,000,000 Pro)edYea<

Net-present value and benefit:cost ratio for all illustrative scenarios are shown in Table 3 below for discount rates of 5 % and 10 %

Table 3 Net present value and benefit:cost for all illustrative cases, 5% and 10% discounting

Scenario NPVS% Benefit:Cost 5% NPV 10% Benefit:Cost 10 %

Base Case $16,500,000,000 2.8 $9, 300,000,000 2.5

High Price Case $28,200,000,000 4.1 $16,500,000,000 3.7

low Price Case $4,200,000,000 1.5 $1, 600,000, 000 1.4

High Cost Case $14,400,000,000 2.3 $7, 600,000, 000 2.0

Challenge Case $2,400,000,000 1.2 $400,000, 000 1.1

95 ' (Department of Treasury and Finance 2014)

6.6 Discussion of findings The simplified business case suggests that there is a strong case for progressing to more detailed analysis. The assessment finds multi-billion dollar NPV in the base case even at 10 % discount rate. The challenge case that merged a low price for spent fuel with a doubled cost estimate for the PRISM reactor maintains net benefits of $2.4 billion (at 5 % discount rate). Given the efforts to be inclusive and conservative in all assumptions of costs and revenues, this challenge case seems an unlikely scenario.

It should also be noted that an equivalent, more optimistic case was not provided. Based on forecasts of spent fuel inventories it is possible that a facility of 60,000 MtHM or greater could be fully subscribed, at high prices, over the next few decades. Many of the costs identified may turn out to be lower than assumed in this assessment. Revenues from sales of fabricated metal reactor fuel, potentially worth $300 million per year, were excluded (refer section 5.2). Consequently, scenarios with NPV of >$20 billion are also credible. These outcomes should also remain in view as to whether they might be ruled in or must be ruled out.

The recent tender from Taiwan (refer Box 2, 41) as well as consultation with a senior analyst for World Nuclear Association provides confidence in spent fuel custody price estimates centring around $1000 kgHM-1. Some targeted research and consultation may be able to constrain this price range further compared to the range applied in this analysis. This would greatly reduce the range of possible economic outcomes.

Further research is required to improve on cost estimates, particularly capital and operational costs for the PRISM reactor. A range of cost estimates for capital and operations should be modelled.

Greater certainty is also required in relation to containment of spent nuclear fuel including for transportation. The need to implement new dry-cask storage for all spent nuclear fuel for an Australian ISFSI has the potential to add considerable cost to the overall project, equivalent in impact to perhaps $100 kgHM-1. Costs of new packing may cross-over with costs currently covered under transportation. This must be understood in more detail. Transportation itself also warrants independent investigation. If all new capital needs to be invested in ships, rail and associated infrastructure, the increased cost is equivalent to perhaps $100 kgHM-1. This range of uncertainty needs to be constrained in further assessments. However even taking full account of these costs the assessment of this concept presents a highly profitable pathway.

Overall, business case outcomes are not sensitive to other cost components. However greater certainty in those areas is also desirable. In particular, costs for establishment of an ISFSI in South Australia should be considered separately in further detail, as this is essential infrastructure that must be

established early. Nonetheless the impact of a doubling of these costs for a 40,000 MtHM facility (approximately $1.5 billion) is as material to the overall outcome as varying the spent fuel price by just $35 kg-1. The challenge in the establishment of a multinational ISFSI in South Australia therefore appears socio-political, not economic.

7. Legal and institutional interactions 7.1 Interaction with guidance from international institutions The global use of nuclear technology for peaceful purposes is overseen by the International Atomic Energy Agency (IAEA). Australia was a founding member of the IAEA in 1957 and the organisation now comprises 162 member-nations196. It is important to understand the interaction between any further fuel- cycle developments in South Australia and the standards and directive of the IAEA. Consistent with the findings of section 2, and 6 this discussion focusses on the potential for taking custody of, and extracting value from, spent nuclear fuel.

The IAEA expressly acknowledges the potentially important role of multi-national spent fuel repositories. While recognising the important principle that nations benefitting from nuclear technology ought to take responsibility for waste, IAEA clarifies the application of the principle by acknowledging that the safe and responsible management of waste may be best delivered via a multi-national approach:

“This principle, however, does not necessarily imply that each country should exclusively develop its own national repositories, regardless of the technical, economic, financial and institutional implications. What is required is for each country to fully accept its national responsibility and to manage waste safely to the best of its ability in the most feasible manner, including international collaboration”.197

To this end the IAEA has prepared guidance relating to the establishment of multi-national spent fuel repositories198 as well as specific guidance for nations with small nuclear programs199. IAEA is clear that the development of multinational solutions is chiefly the responsibility of the countries involved, that international organisations cannot take a direct lead and that the IAEA has “expressed readiness to support countries that consider joint solutions for the final disposal of nuclear waste” 200.

There have been numerous specific initiatives for multinational approaches to management of spent nuclear fuel over the last thirty years201. IAEA highlights the importance of adherence to the Joint Convention on the Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management (Joint Convention). Australia has ratified the Joint Convention, which is the primary international legal framework concerning back-end nuclear fuel cycle activities202. This convention also acknowledges the potential value in multi-national approaches stating that:

196 (International Atomic Energy Agency 2014b) 197 (International Atomic Energy Agency 2004) 198 (International Atomic Energy Agency 2004) 199 (International Atomic Energy Agency 2013) 200 (International Atomic Energy Agency 2013) 201 (International Atomic Energy Agency 2013) 202 (Sharpe 2014)

“in certain circumstances, safe and efficient management of spent fuel and radioactive waste might be fostered through agreements among Contracting Parties to use facilities in one of them for the benefit of the other Parties, particularly where waste originates from joint projects”.203

The Joint Convention addresses three main issues: 1. The requirement to manage spent nuclear fuel and radioactive waste beyond present generations; 2. That one State’s radioactive ‘waste’ may be another State’s ‘resource’; and 3. Those States who reprocess nuclear fuel generally regard SNF as a resource, whilst those who don’t consider SNF radioactive waste.204

Sharpe (2014) highlights that the difference between ‘waste’ and ‘resource’ (i.e. SNF) classification is significant in that there are two exemptions afforded to SNF under the Joint Convention. Article 2(o) affirms that national or international off-site transportation is subject to “existing standards relating to the safety of the transport of nuclear materials”, and held to the same transport requirements as waste.

Article 3.1 provides that if spent nuclear fuel is considered to be part of an active reprocessing activity, it will not fall within the scope of the Convention. Sharpe (2014) highlights the positive implications for the potential return of spent nuclear fuel to Australia under a nuclear fuel leasing model:

Taken together, the effect of Articles 2(o) and 3.1 mean that there are less legal barriers to the off-site domestic or international movement of SNF than for radioactive waste. In the context of examining the legal merits of (nuclear fuel leasing) NFL as a SNF management strategy, the IAEA provides that “there are no legal hurdles, provided that returned spent leased fuel is not regarded as a waste import”. This classification means that the transport, import/export, and management of SNF is acceptable – so long as it may be viewed as a ‘resource’ – based on the current practice, previous practice, or intention of recycling the reusable material that remains in SNF.205

203 (Joint Convention on the Safety of Spent Fuel Management and n the Safey of Radioactive Waste Management cited in International Atomic Energy Agency 2004, p. 2) 204 (Stoiber et al. 2003, p. 79 cited in Sharpe 2014) 205 (Nuclear Energy Agency and the International Atomic Energy Agency 2014, p. 28 ephasis added)

Summary: Any proposal for the establishment of a South Australian multi-national repository of spent nuclear fuel:  Would have international precedent as such approaches have been considered over the last 40 years  Would need to proceed as negotiations lead by interested nations  Could be expected to receive the institutional support of the IAEA  Must proceed with reference to the requirements of the Joint Convention  Must demonstrate that safety and security expectations are met  Must operate under and satisfy the IAEA safeguards system  Will be eased by clear classification of the material as a resource and not waste

7.2 Interaction with Australian legislation Commonwealth Australian classification of radioactive waste repeats the distinction between spent nuclear fuel and nuclear waste, stating that radioactive material is waste when “no further use is foreseen”206. Again, there would be far reaching positive consequences from the classification of spent nuclear fuel for importation as a resource rather than a waste and the annunciation, from the outset, of an intended path for reuse.

Radioactive substances are a controlled import207 . The responsibility of approving or rejecting an import permit falls to the CEO of ANSTO. There is no specific Commonwealth restriction on the importation of spent nuclear fuel beyond that already applied to radioactive materials208. However current bi-partisan policy exists against the importation of nuclear materials arising from the activities of other countries209.

Section 10 of the ARPANS Act (1998) states the following:

10 Prohibition on certain nuclear installations (1) Nothing in this Act is to be taken to authorise the construction or operation of any of the following nuclear installations: (a) a nuclear fuel fabrication plant; (b) a nuclear power plant; (c) an enrichment plant; (d) a reprocessing facility;

206 (Australian Radiation Protection and Nuclear Safety Agency 2010) 207 Australian Government ComLaw 1956 208 (Sharpe 2014) 209 (Sharpe 2014)

(2) The CEO must not issue a licence under section 32 in respect of any facility mentioned in subsection (1)210 This section is mimicked in the Environmental Protection and Biodiversity Conservation Act (1999), Section 140 A211. In this case the Act specifies that the Minister “must not approve” any facility of the type listed (a)-(d) above.

On the presumption that the developments discussed in this report were referred under the Environmental Protection and Biodiversity Act (1998), this Act would need to be amended.

The ARPANS Act (1998) would require amendment on the presumption that ARPANSA would remain the regulatory body overseeing expanded fuel cycle activities in Australia. Otherwise, new legislation would be required granting authority to a new regulatory body to authorise the construction and operation of facilities including fuel recycling, fuel fabrication, fuel conversion and nuclear power generation.

South Australian legislation South Australia has passed the Nuclear Waste Storage Facility (Prohibition) Act 2000 (SA). This Act prohibits the construction or operation of any nuclear waste storage facility and prohibits the importation or transportation of nuclear waste to such a facility212.

However “Nuclear waste” is defined in the Act as:

(a) Category A, Category B or Category C radioactive waste as defined in the Code of Practice; or (b) any waste material that contains a radioactive substance and is derived from— (i) the operations or decommissioning of— (A) a nuclear reactor; or (B) a nuclear weapons facility; or (C) a radioisotope production facility; or (D) a uranium enrichment plant; or (ii) the testing, use or decommissioning of nuclear weapons; or (iii) the conditioning or reprocessing of spent nuclear fuel; 213

The relevant Code of Practice referred to in (a) above is the Code of practice for the near-surface disposal of radioactive waste in Australia (1992)214. Categories A, B and C do not refer directly to spent

210 Australian Government ComLaw 1998 211 Australian Government ComLaw 1999 212 (South Australian Legislation 2000) 213 (South Australian Legislation 2000)

nuclear fuel and the definitions of categories A, B and C are wholly incompatible with spent nuclear fuel215. Nothing referred to in (b) above covers spent nuclear fuel.

Was South Australia to class spent nuclear fuel as a resource for the purposes of importation the Nuclear Waste Storage Facility (Prohibition) Act 2000 (SA) may not pose a legal barrier in its current form. Further advice should be sought on this matter.

7.3 Other Many other matters of a legal nature will, ultimately, require careful consideration. These include and are not limited to:  Proposed corporate structures  Ownership of operating companies  Ownership of resources,  Ownership of short-lived and long-lived wastes  Ownership of electricity generated  Short and long-term liabilities particular in relation to new waste streams  Interaction with other international treaties Resolution of such matters is outside the scope of this Discussion Paper, however must be considered in future.

214 (National Health and Medical Research Council 1993) 215 (National Health and Medical Research Council 1993)

8. Recommendations 8.1 Cost benefit analysis using net-present value assessment of a multinational ISFSI It is recommended that South Australia undertakes a comprehensive cost benefit analysis to establish the net-present value of the construction and operation of an ISFSI. This assessment should  Reference net social benefits to the community as a whole  Provide outputs across credible range of scenarios for waste price and facility size  Undertake the necessary research and consultation to constrain the credible range of figures for key modelling inputs including: o waste-prices o cask purchase and loading o transportation costs  Include a range of hypothetical siting options in order to test infrastructure capabilities, cost additional infrastructure requirements and assess for local conditions

8.2 Cost benefit analysis using net-present value assessment of advanced nuclear fuel recycling It is recommended that South Australia undertakes a comprehensive cost benefit analysis to establish the net-present value of the construction and operation of infrastructure for the advanced recycling of spent nuclear fuel, including an oxide-to-metal fuel conversion plant and a combined fast reactor and fuel recycling facility (Integral Fast Reactor/PRISM). This assessment could be undertaken concurrently with the assessment for the ISFSI. This assessment should:  Provide outputs across a credible range of scenarios for the capital and operational costs of the PRISM reactor  Undertake the necessary research and consultation to improve the certainty of the capital and operational cost assumptions for o The PRISM reactor o the oxide-to-metal fuel conversion facility  Include a range of hypothetical siting options within South Australia, including co-location with the ISFSI to test infrastructure capabilities and to cost additional infrastructure requirements and assess for local conditions

8.3 State-wide economic impact analysis It is recommended that South Australia undertake an analysis of the impact of the proposed ISFSI and advanced nuclear fuel recycling infrastructure on the overall state economy. This analysis should  provide understanding of the distribution of impacts (both positive and negative) associated with the change.

 be undertaken using standard economic impact methods (such as computable general equilibrium (CGE) or extended input-output (EIO) models) to study the economic changes across detailed industry groups, government and consumers.  generate a range of economic indicators such as employment, gross state product, household income and industry value added.

8.4 Comprehensive legal review It is recommended that the South Australia commissions a comprehensive legal review relating to the concept outlined in this discussion paper. This must cover (not limited to):  Commonwealth legislation  State legislation  Local government and relevant laws  Transnational transportation of radioactive material including licensing of domestic facilities  Interaction of the concept with relevant international treaties and other obligations  Other as identified by relevant experts

8.5 Position for Generation IV nuclear technology It is recommended that the South Australia takes, or supports other relevant organisations in taking, the following steps to lay the foundation for rapid action with generation IV technology should the findings of cost-benefit analysis and state-wide economic impact analysis be favourable:  Ensure the inclusion of Australian engineers in the design certification process for PRISM reactors in the UK.  Become an active member of the Gen IV International Forum with strong links, and preferably direct representation, from South Australians in this effort.  Open relationships and dialogue with the Science Council for Global Initiatives (SCGI), via Mr Tom Blees.

8.6 Build relationships and dialogue with key Australian nuclear stakeholders It is recommended that the South Australia:  Opens relationships with Australian Nuclear Science and Technology Organisation (ANSTO), via Chief Executive Dr Adi Patterson.  Opens relationships with the Australian Radiation Protection and Nuclear Safety Agency, via Chief Executive Dr Carl Magnus-Larson.  Opens relationships with the Australian Safeguards and Non-proliferation Office, via Director General Dr Robert Floyd.

8.7 Assess current standing against IAEA Milestones and plan further action accordingly South Australia should assess the State’s current position and standing against the IAEA Milestones in the Development of a National Infrastructure for Nuclear Power.

8.8 Open relationships with key stakeholders for rapid nuclear development It is recommended that South Australia forms relationships and opens dialogue with:  the Republic of Korea (South Korea), potentially the strongest opportunity for international partnership in the rapid development of both a multinational ISFSI and infrastructure for advanced recycling of spent nuclear fuel.  entities responsible for current successful fast-track nuclear developments in the United Arab Emirates. It is recommended this takes place via Dr Kenneth Petrunik, project manager at Barrakah nuclear project in the UAE.

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Appendix A: Detailed commercial assessment methodology

This assessment prepared by: Supporting economics contributor Mr James Brown- Bachelor of Economics; Master of International Economics and Finance Mr James Brown researches the economic costs and benefits of further developing Australia’s uranium resources and nuclear industry supply chain capabilities. He has published papers on Australia’s future nuclear workforce requirements, economic policy considerations for the deployment in Australia of small modular and large reactors, economic modelling of uranium enrichment, and is currently producing research papers on economic analysis of uranium conversion and radioactive waste repositories in Australia.

This assessment considers the economics of a broad range of radioactive waste facilities in South Australia using common assumptions in the economic modelling in order for the results to be comparable. The long-run average cost of near-surface facilities, facilities at intermediate depth, and geological repository facilities for low-level waste (LLW), intermediate-level waste (ILW) and high-level waste (HLW) are estimated using discounted cash flow (DCF) modelling and economic impacts are provided for a range of radioactive waste scenarios in South Australia.

As this high-level analysis combines various LLW, ILW and HLW waste models, caution must be exercised when considering the measure of waste in tHM or m³ for different types of LLW, ILW and HLW waste facilities. In general cubic metres (m³) are applied to the LLW and ILW facilities and tonnes of heavy metals (tHM) or kilogrammes of heavy metal (kgHM) are applied to HLW facilities. While the m³ and tHM input data is entered in a similar manner for consistency in the DCF models, the results are separated out for analysis as there is no precise relationship between the LLW and ILW measured in m³ and the HLW measured in tHM across all the different types of nuclear fuel cycles and their waste facilities considered in this analysis.

The modelling involves estimating the long-run average cost of nuclear waste disposal services over a 60 year period for a range of low, mid-range and high cost facility scenarios. The modelling is in real terms pre-tax, involves 2013-14 Australian dollars, and includes a discount rate range of 1%-10% (similar to the NEA range of 0%-10%). The long-run average cost of nuclear waste disposal services is estimated by comparing its total financing, construction, inputs and operating costs with the total amount waste treated over its life. The long-run average cost formula is

Average cost =

−푡 ∑푡 [(퐶퐼푛푣 + 퐶푂푚 + 퐶푑 )(1 + 푟) ] 퐶 = 푡 푡 푡 퐿푟 −푡 ∑푡 [퐶푊푎푠푡푡(1 + 푟) ] (1)

Where: “r” = rate used for discounting both costs and benefits; “t” = the year in which the sale of production or the cost disbursement takes place; “Inv” = investment and licensing costs in year “t”; “Om” = operations and maintenance costs in year “t”; “d” = closure and post-closure costs in year “t”; and “Wast” = amount of waste treated in year “t”.

In order to achieve a meaningful cost comparison with other waste facilities a similar set of assumptions used in international assessments have been incorporated into the modelling. The base case includes similar assumptions for the planning and licensing costs, capital costs, operations and maintenance costs, closure costs, post-closure costs and a discount rate of 5% used in NEA’s analysis of radioactive waste facilities and Rothwell’s analysis of other nuclear fuel cycle investment [13]. The sensitivity analysis considers a broader discount rate range of 1%-10% (similar to the NEA range of 0%-10%). An average exchange rate of A$1 = US$1 has been applied throughout the analysis. All dollars quoted in this paper are A$, unless indicated otherwise.

The levelised cost analysis involves adjusting the assumptions used in international comparisons of waste facility costs, for the size of plants likely required for Australia in order to determine the average waste costs range in tHM, kgHM and cubic metres (m³).

Assumptions The assumptions are largely derived from NEA’s current estimates of costs of geological repositories and are based on a range of different scenarios, locations, geological conditions (e.g. disposal in granite, clay or salt) and regulatory frameworks [2]. The NEA states that as no civilian DGR is in operation to date, the DGR cost estimates can only be ultimately verified as facilities are constructed [2]. The NEA assumes a linear law for the parameterisation of the estimates of the overnight investment and operations and maintenance costs [2].

Facility size Adjustments are made for the size of the waste facility likely required in Australia in order to determine the average waste storage and disposal costs for a range of hypothetical LLW, ILW and HLW scenarios in Australia.

Table 1: Estimated capacity range Estimated capacity range for facilities, thousand m³ or tHM Facility Low Mid-range High LLW & ILW Near-surface facility 20 50 100 LLW & ILW Intermediate depth facility 20 50 100 LLW & ILW Deep geological repository 20 50 100 HLW Near-surface facility 20 50 100 HLW Intermediate depth facility 20 50 100 HLW Deep geological repository 20 50 100

Planning and licensing costs In order to account for economies of scale the licensing costs, per thousand m³ or tHM, are multiplied by a scaling factor of 1.0 for small facilities, 0.9 for mid-sized facilities, and 0.7 for large facilities.

Table 2: Estimated planning and licensing costs range Estimated cost range for facilities, $m cost per thousand m³ or tHM Facility Low Mid-range High LLW & ILW Near-surface facility 0.1 0.2 2.6 LLW & ILW Intermediate depth facility 0.1 2.2 3.5 LLW & ILW Deep geological repository 0.3 2.4 3.5 HLW Near-surface facility 0.1 0.2 2.6 HLW Intermediate depth facility 0.1 2.2 6.7 HLW Deep geological repository 0.3 2.4 6.7

Capital costs For the purposes of estimating a broad range for the capital cost of the first large radioactive waste facility in Australia a slightly higher end of the international capital cost spectrum is applied to the modelling cost assumptions. This is done in order to allow for differences in experience and the related FOAK issues, and to sufficiently compensate for Australian specific capital cost factors related to local labour, materials and construction costs. In order to account for economies of scale the capital costs, per thousand m³ or tHM, are multiplied by a scaling factor of 1.0 for small facilities, 0.9 for mid-sized facilities, and 0.7 for large facilities. The capital costs estimates include data from the NEA. The NEA’s fixed component of the overnight investment cost corresponds to the investment in surface facilities, shaft construction and other costs independent of the capacity of the repository [2]. While, the variable component is proportional to

the volume of material excavated underground, and the closure costs were assumed to be independent of the repository capacity [2]. Table 3: Estimated capital costs range Estimated cost range for facilities, $m cost per thousand m³ or tHM Facility Low Mid-range High LLW & ILW Near-surface facility 5.9 8.3 13.0 LLW & ILW Intermediate depth facility 6.6 9.1 16.0 LLW & ILW Deep geological repository 10.0 15.6 24.0 HLW Near-surface facility 42.1 54.3 72.0 HLW Intermediate depth facility 105.3 135.5 180.5 HLW Deep geological repository 289.6 372.3 496.5

Operations and maintenance costs Table 4: Estimated operations and maintenance costs range Estimated cost range for facilities, $m cost per thousand m³ or tHM Facility Low Mid-range High LLW & ILW Near-surface facility 1.3 1.8 2.9 LLW & ILW Intermediate depth facility 2.6 3.1 4.7 LLW & ILW Deep geological repository 3.6 5.8 6.4 HLW Near-surface facility 1.3 1.6 2.0 HLW Intermediate depth facility 1.7 2.8 4.4 HLW Deep geological repository 2.8 5.7 10.0

Closure costs Table 5: Estimated closure costs range Estimated cost range for facilities, $m cost per thousand m³ or tHM Facility Low Mid-range High LLW & ILW Near-surface facility 1.0 1.0 1.0 LLW & ILW Intermediate depth facility 1.4 1.4 1.4 LLW & ILW Deep geological repository 1.4 1.4 1.4 HLW Near-surface facility 1.7 5.0 10.0 HLW Intermediate depth facility 3.3 10.0 20.0 HLW Deep geological repository 10.0 30.0 60.0

Post-closure costs Table 6: Estimated post-closure costs range Estimated cost range for facilities, $m cost per thousand m³ or tHM Facility Low Mid-range High LLW & ILW Near-surface facility 1.0 1.0 1.0 LLW & ILW Intermediate depth facility 1.4 1.4 1.4 LLW & ILW Deep geological repository 1.4 1.4 1.4 HLW Near-surface facility 3.9 10.2 23.1 HLW Intermediate depth facility 3.9 10.2 23.1 HLW Deep geological repository 3.9 10.2 50.4

Sensitivity analysis The DCF modelling is undertaken in order to consider the impact on the cost of waste facilities when incorporating a broader range of construction capital costs, operational and maintenance costs, closure costs and post-closure costs in Australian dollars using a discount rate range of 1%-5% (similar to the NEA range of 0%-5%).

Results As there is considerable variation in the estimated costs of international waste facilities depending on the type of waste, how it is stored, the technology used for encapsulation, storage and disposal, geology, life of facility and regulatory requirements, a broad range waste facility costs are selected for this analysis. In Table 7, the results of the levelised cost of LLW and ILW facilities are provided in $ thousands per m³, while HLW facility comparisons are provided in $ per kgHM in order to determine how a waste facility of the size Australia may require, would compare with the estimated waste price range for waste in other jurisdictions.

Table 7: Radioactive Waste Disposal Requirements

Estimated levelised cost range for facilities (adjusted for 2014 $ prices), $/kgHM or $ ('000) m3 Discount rate 0% Low cost Mid cost High cost Low cost Mid cost High cost Low cost Mid cost High cost Mid-range cost High cost Mid-range cost High cost Low cost Mid-range cost High cost Low cost 20,000 20,000 20,000 Low cost 50,000 50,000 50,000 100,000 100,000 100,000 LLW & ILW Near-surface facility 82.1 102.0 135.6 81.6 101.1 134.1 80.4 99.4 130.9 LLW & ILW Intermediate depth facility 111.7 179.4 281.9 111.1 178.2 279.9 109.7 176.0 276.0 LLW & ILW Deep geological repository 180.9 355.7 617.3 179.8 353.9 614.6 177.7 350.3 609.1 HLW Near-surface facility 122.0 161.2 225.7 117.7 155.7 218.2 109.3 144.8 203.3 HLW Intermediate depth facility 214.9 323.2 489.9 204.4 309.4 471.1 183.3 281.8 433.7 HLW Deep geological repository 471.5 749.7 1,200.6 442.5 712.2 1,150.3 384.5 637.3 1,049.6

Estimated levelised cost range for facilities (adjusted for 2014 $ prices), $/kgHM or $ ('000) m3 Discount rate 1% Low cost Mid cost High cost Low cost Mid cost High cost Low cost Mid cost High cost

Mid-range cost High cost Mid-range cost High cost Low cost Mid-range cost High cost Low cost 20,000 20,000 20,000 Low cost 50,000 50,000 50,000 100,000 100,000 100,000 LLW & ILW Near-surface facility 83.9 104.7 140.8 83.1 103.6 138.8 81.6 101.3 134.6 LLW & ILW Intermediate depth facility 113.7 183.2 288.8 112.8 181.7 286.2 111.0 178.6 281.0 LLW & ILW Deep geological repository 184.3 362.5 628.4 183.0 360.1 624.8 180.2 355.2 617.4 HLW Near-surface facility 134.9 175.8 242.4 129.3 168.5 232.5 118.0 153.9 212.6 HLW Intermediate depth facility 248.7 364.6 542.2 234.7 346.2 517.2 206.5 309.5 467.3 HLW Deep geological repository 565.6 865.9 1,342.3 526.9 815.9 1,275.2 449.5 715.9 1,140.9

Estimated levelised cost range for facilities (adjusted for 2014 $ prices), $/kgHM or $ ('000) m3 Discount rate 3% Low cost Mid cost High cost Low cost Mid cost High cost Low cost Mid cost High cost Mid-range cost High cost Mid-range cost High cost Low cost Mid-range cost High cost Low cost 20,000 20,000 20,000 Low cost 50,000 50,000 50,000 100,000 100,000 100,000 LLW & ILW Near-surface facility 88.6 111.6 153.9 87.3 109.8 150.5 84.7 106.1 143.7 LLW & ILW Intermediate depth facility 118.8 192.7 305.7 117.4 190.2 301.4 114.5 185.3 293.0 LLW & ILW Deep geological repository 193.0 378.5 653.9 190.8 374.6 648.0 186.3 366.8 636.1 HLW Near-surface facility 168.4 216.2 293.2 159.3 204.3 277.0 141.0 180.7 244.7 HLW Intermediate depth facility 334.6 473.0 684.0 311.7 443.1 643.4 266.0 383.4 562.3 HLW Deep geological repository 803.1 1,165.4 1,724.8 740.3 1,084.2 1,615.7 614.6 921.8 1,397.5

Estimated levelised cost range for facilities (adjusted for 2014 $ prices), $/kgHM or $ ('000) m3 Discount rate 5% Low cost Mid cost High cost Low cost Mid cost High cost Low cost Mid cost High cost Mid-range cost High cost Mid-range cost High cost Low cost Mid-range cost High cost Low cost 20,000 20,000 20,000 Low cost 50,000 50,000 50,000 100,000 100,000 100,000 LLW & ILW Near-surface facility 94.4 120.1 169.5 92.5 117.4 164.6 88.7 112.0 154.7 LLW & ILW Intermediate depth facility 125.3 204.0 325.5 123.1 200.4 319.3 118.9 193.2 307.0 LLW & ILW Deep geological repository 203.4 397.2 682.9 200.1 391.4 674.2 193.5 380.0 656.7 HLW Near-surface facility 209.8 268.0 361.8 196.4 250.7 338.2 169.7 216.2 290.9 HLW Intermediate depth facility 439.1 607.5 863.8 405.6 563.9 804.5 338.8 476.5 685.8 HLW Deep geological repository 1,091.4 1,533.8 2,208.9 999.5 1,415.1 2,049.4 815.7 1,177.6 1,730.5

Estimated levelised cost range for facilities (adjusted for 2014 $ prices), $/kgHM or $ ('000) m3 Discount rate 10% Low cost Mid cost High cost Low cost Mid cost High cost Low cost Mid cost High cost Mid-range cost High cost Mid-range cost High cost Low cost Mid-range cost High cost Low cost 20,000 20,000 20,000 Low cost 50,000 50,000 50,000 100,000 100,000 100,000 LLW & ILW Near-surface facility 111.1 144.3 214.1 107.5 139.2 204.7 100.4 128.9 185.8 LLW & ILW Intermediate depth facility 144.0 236.5 381.2 140.0 229.6 369.5 132.0 215.9 346.1 LLW & ILW Deep geological repository 233.1 449.0 762.3 226.8 438.1 745.7 214.3 416.4 712.6 HLW Near-surface facility 329.2 421.3 569.8 303.9 388.5 524.9 253.1 322.9 435.1 HLW Intermediate depth facility 738.7 997.4 1,391.5 675.2 914.5 1,278.8 548.3 748.7 1,053.5 HLW Deep geological repository 1,916.0 2,596.4 3,627.9 1,741.5 2,370.9 3,325.0 1,392.4 1,919.8 2,719.2

The overnight HLW repository costs for different capacities at 0% discount rate range from $109/kgHM for 100,000tHM to $1,200/kgHM for 20,000tHM (similar to the NEA estimates of $119/kgHM for 120,000tHM to $1,152/kgHM for 20,000tHM [2]). The overnight LLW and ILW near-surface and intermediate depth

storage costs for different capacities at 0% discount rate range from $80,400 per m³ for 100,000 m³ capacity to $281,900 per m³ for 20,000 m³.

For the purposes of this high-level analysis of a broad range of different LLW, ILW and HLW facilities the estimated waste price range for waste is derived from average waste costs or prices from a variety of sources including the IAEA, NEA, DECC and independent experts and adjusted for cost escalation and exchange rate differences [14]. While it would not be practical to determine detailed waste prices for each type of radioactive waste scenario in the Asia Pacific region at this stage, more detailed analysis of the waste prices for each specific waste type should be undertaken during detailed cost benefit analysis of individual waste facility projects. In table 8, the LLW and ILW waste prices are in $ per m³, while HLW waste prices are provided in $ per kgHM.

Table 8: Estimated waste price range Estimated waste price range for facilities, per m³ or kgHM Estimated Price Range ($) LLW & ILW Near-surface facility 47,000-88,000 LLW & ILW Intermediate depth facility 84,000-100,000 LLW & ILW Deep geological repository 122,000-145,000 HLW Near-surface facility 200-300 HLW Intermediate depth facility 350-560 HLW Deep geological repository 570-860

The low to mid-range waste prices are depicted in between the two lines in the estimated average facility cost charts below (see Figures 1, 2 and 3), representing the expected waste price range. The low, mid- range and high average overnight repository cost bar for each capacity size facility are provided for specific discount rates (with 5% discount rate provided as the base case). Where the estimated average facility costs is below the low waste price line there is a strong case for more detailed economic analysis of this type of facility. While average costs within the estimated waste price range suggest that under certain conditions, with Government intervention, there may be a case for more detailed consideration of this waste facility type. Facility costs above the estimated waste price range are not considered for further economic analysis as they are not expected to be competitive.

Figure 1: Estimated near-surface facility cost thousands per cubic metre and LLW and ILW waste price range

LLW and ILW near-surface facility ($'000 per m3}, 5% discount rate

250 240 230 220 210 200 190 . 180 ~ 170 E 160 150 l 140 & 130 120 ! 110 1 100 90 ! 80 "' 70 60 so 40 30 20 10 0 0 0 0 § a § § a § § 8 § :<:' :;: ~ 5i 0 g § § ~ ~ "'~ t; ~ ~ 8 8 ~ 8 8 § § ~ ~ 8 .9 ~ ~ .9 ~ ~ .. :i> I! " " ! ~ ~ " i ~ ~

At 5% discount rate the cost of a near-surface LLW and ILW facility with a capacity of around 100,000 m3 is expected to average within the waste price range under the low cost scenario only.

86 Figure 2: Estimated HLW intermediate depth facility cost per kgHM and HLW waste price range

HLW intermediate depth facility ($/kgHM), 5% discount rat e

1,200 1,150 1,100 1,050 1,000 950 i' 900 850 !,. 800 i 750 t 700 .! 650 0 600 550 e 500 450 R! JZ 400 350 l 300 "' 250 200 150 100 so

~ 8 § ~ § 8 § 8 8 ~ ~ ~- ~ Sf sf §' g § g N N g ~ ~ § § g ~ ~ ... t:. ~ ~ ~ :J: ~ ..:J: ~ e ~ .9 :J: :il :il t ::;; ::;; -b ~

At 5% discount rate the cost of HLW intermediate depth facilities with a capacity of 20,000tHM are expected to average within the estimated waste price range under the low cost scenario, while facilities with capacities ranging from 50,000tHM to 100,000tHM are expected to average within the estimated waste price range under the low and mid-range cost scenarios.

87 Figure 3: Estimated HLW geological repository cost per kgHM and HLW waste price range

HLW geological repository ($/kgHM), 5% discount rate 2,400 ,------2,300 +------2,200 +------2,100 +------2,000 +------1,900 +------1,800 +------! 1,700 +------ e1 ,600 +------ ~ 1,500 +------.. 1,400 +------~ 1,300 +----- e1 ,200 +----- ~ 1,100 +----==-- j1,000 lZ 900 :. 800 ~ 700 600 500 400 300 200 100 0

At 5% discount rate the cost of a HLW geological repository with a capacity of around 100,000 tHM is expected to average within the estimated waste price range under the low cost scenario only.

Discussion While the estimated domestic waste facility costs compared to the average international costs may not result in significantly different average radioactive waste storage or disposal costs, there would be benefits in expanding the nuclear fuel cycle domestically and facilitating a low-emission base-load nuclear energy fuel supply. In light of this, there may be sufficient overriding economic, environmental and security of supply justifications for a domestic nuclear industry to pay higher radioactive waste storage and disposal costs in order to support a domestic nuclear fuel cycle industry.

Conclusion This paper has been written in order to inform Australian policymakers and other stakeholders on the economic costs of a range of different radioactive waste facilities in Australia assuming all the political, technology and trade agreements are addressed and the key milestones of developing an international radioactive waste facility have been met. While this paper does not attempt to predict the costs of a specific facility at a future point in time when either domestic demand or the international market is sufficient to require such facilities in Australia, it does however provide a starting point for more detailed discussions in relation to developing a domestic radioactive waste industry. This paper should be read in

the context of requiring a near-surface or intermediate depth storage facility in the short term, and a geological repository in the long term, as developing a back-end nuclear fuel cycle would take many years, involve seeking international agreements and approvals, negotiating sensitive technology partnerships and licences, and working with the IAEA to address safeguards.

Using DCF analysis, based on average international waste facility costs, the levelised cost of waste storage or disposal for a broad range of near-surface facilities, intermediate depth facilities and geological repositories is estimated to range in capacity from a minimum of 20,000 m³ to a maximum of 100,000 m³. The average repository costs for HLW are estimated to range from $109/kgHM for 100,000tHM to $1,200/kgHM for 20,000tHM which is similar to the range estimated by the NEA. The overnight LLW and ILW near-surface and intermediate depth storage costs for different capacities at 0% discount rate range from $80,400 per m³ for 100,000 m³ to $281,900 per m³ for 20,000 m³.

At 5% discount rate the cost of a near-surface LLW and ILW facility with a capacity of around 100,000 m³ is expected to average within the waste price range under the low cost scenario only.

A broader range of costs of HLW intermediate depth facilities (that may be suitable for long-term storage coupled with spent fuel reprocessing and recycling with fast reactors) are expected to fall within the estimated waste price range. Facilities with capacities of 20,000tHM are expected to average within the estimated waste price range under the low cost scenarios, and capacities ranging from 50,000tHM to 100,000tHM are expected to average within the estimated waste price range under the low and mid- range cost scenarios. As the average costs of some of the intermediate depth facilities are within the estimated waste price range it is suggested that there may be a case for more detailed economic analysis of these types of waste facilities.

A HLW geological repository with a capacity of around 100,000 tHM is expected to average within the estimated waste price range under the low cost scenario only. In addition to undertaking more detailed cost benefit analysis of specific waste facilities a number of other issues will also need to be addressed before it can determined whether a waste facility can be developed within the required timeframes. For a domestic HLW facility to be built in Australia, significant legislative, regulatory, workforce and nonproliferation issues will also need to be addressed.

References [1] Nuclear Energy Agency (NEA) (1999), Low-Level Radioactive Waste Repositories: An Analysis of Costs Nuclear Development, OECD, pp.9-179. [2] Nuclear Energy Agency (NEA), The Economics of the Back End of the Nuclear Fuel Cycle, OECD, 2013, pp.9-182. [3] International Atomic Energy Agency (2011) “Workforce planning for new nuclear power programmes”, Nuclear Energy Series No. NG-T-3.10, pp.1-99. [4] Australian Nuclear Science and Technology Organisation (ANSTO) (2011) “Management of Radioactive Waste in Australia”, ANSTO, pp.2-22. [5] Department of Resources, Energy and Tourism (RET) (2013) “Radioactive waste management in Australia”,http://www.ret.gov.au/resources/radioactive_waste/waste_mgt_in_aust/Pages/RadioactiveWast eManagementinAustralia.aspx [6] Parsons Brinckerhoff Australia (2009) “Proposed Commonwealth Radioactive Waste Management Facility, Northern Territory: SYNTHESIS REPORT”, Department of Resources, Energy and Tourism (DRET), pp.3-118. [7] Oregon Department of Energy (2013) “Naval Nuclear Reactor Compartment Shipments on the Columbia River”, Oregon Department of Energy, pp.1-2. [8] Ma, C. and Von Hippel, F. (2001) “Ending the Production of Highly Enriched Uranium for Naval Reactors”, The Nonproliferation Review, Spring 2001, pp.86-101. [9] Nuclear Decommissioning Authority (NDA) (2009) “Geological Disposal, Generic Design Assessment: Summary of Disposability Assessment for Wastes and Spent Fuel arising from Operation of the Westinghouse AP1000”, NDA Technical Note no. 11339711, pp.1-26. [10] International Atomic Energy Agency (IAEA) (2011) “Design Lessons Drawn from the Decommissioning of Nuclear Facilities”, IAEA-TECDOC-1657, pp.2-87. [11] U.S. Nuclear Regulatory Commission (NRC) (2008) “Final Environmental Impact Statement for an Early Site Permit (ESP) at the Vogtle Electric Generating Plant Site Final Report”, Office of New Reactors, NUREG-1872, Vol. 1, p.11-16 – 11-20. [12] International Energy Agency (IEA) and Nuclear Energy Agency (NEA) (2010) “Projected Cost of Generating Electricity 2010 Edition”, Organisation for Economic Co-Operation and Development, pp.43- 51. [13] Rothwell G. (2009) “Market Power in Uranium Enrichment”, Science & Global Security, Taylor & Francis Group, pp. 132–154. [14] Department of Energy and Climate Change (DECC) (2010) “Consultation on an updated Waste Transfer Pricing Methodology for the disposal of higher activity waste from new nuclear power stations”, December 2010, p.6.

Appendix 8: Consultation record

This report was informed by consultation undertaken with the following parties:

Name Affiliation

MrTom Blees Chairman, Science Council for Global Initiatives, California, USA

Dr Therese DonIevey Strategic Projects Officer, Nuclear Operations, ANSTO, Sydney

Ms Kirsty Gogan Co-founder, Energy for Humanity

Mr Hefin Griffiths Head of Nuclear Services and Chief Nuclear Officer, ANSTO, Sydney

Mr James Hardiman Project Transitions Leader, ANSTO, Sydney

Mr David Hess Nuclear Analyst, World Nuclear Association, London, UK

Mr lan Hoare-Lacey Senior Research Analyst, World Nuclear Association, London UK

Mr Duncan Kemp Manager, Waste Management Services, ANSTO, Sydney

Mr lan McFarlane MP The office of Industry Minister lan MacFarlane MP

General Manager, Uranium and R&E International Branch, Resources Mr Michael Sheldrick Division, Department of Industry, Canberra Senior Policy Office, Radioactive Waste Management Section, Department of Ms Rebecca Stohr Industry, Canberra

Professor Jeff Terry Associate Professor of Physics, Illinois Institute of Technology

Manager, Aqueous Separations and Radiochemistry Department, Idaho Dr Terry A. Todd National Laboratories, USA

Professor Tom Wigley University of Adelaide

91 Appendix C: Peer review

This report was peer reviewed by the following reviewers:

Name Affiliation(s) Response

FIRST ROUND Independent consultant, former President WMC, Dr lan Duncan Returned for changes PhD Oxford University Professor Markus Olin Research Professor, VTI, Helsinki Accept with changes Chairman, The Australian Academy of Mr Martin Thomas Technological Sciences and Engineering -Energy Accept with changes Forum SECOND ROUND University of Tasmania; Science Council for Global Professor Barry Brook Accept Initiatives· Global Energy Prize Independent consultant, former President WMC, Dr lan Duncan Accept PhD Oxford University