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?” 2 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