An Uncertain Future for International Fuel Banks

Abstract

An IAEA-controlled nuclear fuel bank has stalled as developing states refuse to allow the agency to even consider proposals for it. To move forward, these states' justifiable concerns must be addressed.

For decades now, various states have sought international oversight to prevent nuclear energy programs from being used to develop nuclear weapons by proposing various institutional arrangements. Their ideas have ranged from nuclear fuel supply guarantees to a grand plan that would internationalize the entire fuel cycle. However, none of these arrangements has ever gained traction–until now. 1

On March 29, the International Atomic Energy Agency (IAEA) signed an agreement with Moscow to establish a low-enriched uranium (LEU) fuel bank on Russian territory and to make fuel available to IAEA member states should their supply be disrupted for political reasons. The agreement can be seen as a victory for the IAEA's long-standing effort to move toward internationalization, a goal that former Director-General Mohamed ElBaradei started campaigning for in 2003.

The Russian unilateral initiative, however, falls far short of setting up a truly international fuel bank owned and operated by the IAEA, an action that the agency's developing-nation member states continue to block. A closer look at their resistance reveals their deep-rooted skepticism to the idea of an IAEA-run fuel bank, which they fear could be used to further widen the divide between themselves and the advanced nuclear nations.

Settling for a fuel bank. ElBaradei's 2003 vision was to increase control of proliferation-sensitive technologies by limiting the number of states that have such capabilities and eventually centralizing all nuclear activities under international control. 2 Yet current proposals, such as Russia's fuel bank, have a more modest aim: to discourage development of additional state-owned facilities for uranium enrichment, one of the most sensitive nuclear technologies from a proliferation point of view, by setting up a system of assured nuclear fuel supply. The hope is that the availability of such a fuel supply would remove any motivation by non-enriching states to develop their own facilities.

Over the years, the proposal that has gained the most interest among member states has been a fuel bank owned and managed by the IAEA. (Such a fuel bank would be physically located in a member state's territory; so far, only Kazakhstan has offered to host such a facility.) The bank would hold a stockpile of LEU to serve as a backup should a recipient state experience a disruption of regular fuel deliveries specifically caused by politically motivated reasons.

Yet one would be hard-pressed to find an example of this type of disruption to a nuclear power program. In the past, there have been international concerns regarding the reliability of fuel supply, such as after India's nuclear test in 1974, when Canada and the United States responded with a series of changes in their nuclear technology and material export policies. 3 And outside of the nuclear realm, energy supplies have certainly been used politically; for example, Russia's disputes with Ukraine have led to natural gas shut-offs. Nonetheless, a 2008 Russian-U.S. study noted that no nuclear power reactor had ever been shut down due to a lack of fuel. 4

The Russian fuel reserve initiative is based on principles similar to the IAEA-controlled proposal. Moscow intends to establish a physical reserve of 120 metric tons of uranium enriched to 4.95 percent, which could be drawn upon by IAEA member states in good standing should they experience a nuclear fuel disruption (again, for political reasons only). In practice, a state would make a fuel request to the IAEA, and the director-general would assess whether the state fulfills the eligibility requirements. If the state is eligible, the director-general would request LEU from Russia, which would deliver it to a port in St. Petersburg, where the recipient state would be responsible for paying prevailing market prices for it and shipping the fuel home. The main drawback of this initiative is that the bank is owned and managed by Russia, a fuel supplier state, making it not that different of an option from the current fuel market situation.

Developing nations' suspicions. While the Russian fuel reserve initiative has now been agreed to, the larger plan for an IAEA-owned fuel bank hit a snag after a June 2009 board meeting and has not yet made it back on the agenda. At that meeting, the IAEA Secretariat presented an initial report outlining the main principles of an IAEA-controlled bank and requested approval to produce a more detailed proposal. Nuclear supplier states strongly favored moving forward, while a number of developing states, most notably a block of Group of 77 (G-77) and non-aligned movement states, voiced their reservations, preventing a vote from even taking place.

For developing states, the proposals for an international nuclear fuel bank simply do not offer enough to entice them to give up their rights to develop nuclear technologies, if they so choose.

The G-77/non-aligned movement block's reservations can be understood as a fear that such a bank would maintain the control of nuclear fuel supplier states over the nuclear fuel cycle. They associate these proposals with past attempts to regulate the international spread of nuclear technology as embodied by the Nuclear Non-Proliferation Treaty, in which non-weapon states pledged to forgo nuclear arms in return for promised concessions from the five declared weapon states–Britain, China, France, Russia, and the United States–for which they're still waiting.

Fuel bank skeptics are not one monolithic group; they can be divided into two broad categories. The fuel bank opposition is led by a group of states with nuclear power programs that have ambitions to one day enter the nuclear fuel market (e.g., Argentina, Brazil, India, Pakistan, and South Africa). These states do not want the fuel bank or other multilateral nuclear approaches to be rushed through without assurances that they will not be closed out of the commercial nuclear fuel market. A second group of skeptics consists of states that do not yet have nuclear power programs but aspire to one day establish them, albeit to varying degrees (e.g., Egypt, Malaysia, Indonesia, Turkey, and Vietnam). These states are currently asking themselves basic questions such as how many reactors they might need and are not ready to make decisions on multilateral approaches that might limit their future energy options.

To take a step back, developing states tend to view this discussion within a broader context of access to, and control of, energy and technology. For them, the IAEA's fuel bank proposal simply does not offer enough to entice them to give up their rights to develop nuclear technologies in favor of an internationally controlled system. In a conversation with a coauthor of this article, a developing nation diplomat worried that an international fuel bank could be used to deny developing nations access to nuclear technology.

Additionally, current proposals are not well suited to the realities of the nuclear fuel market. In fact, diplomats from both supplier and recipient states agree that current LEU bank proposals do not really ensure fuel supply because LEU must first be fabricated into fuel designed for specific reactors before it can be used. Moreover, fabrication itself would be susceptible to politically motivated disruptions–even if promises are made against that eventuality. Another negative: Reactors using non-enriched uranium (such as India's CANDU reactors) would not be covered by an LEU-only bank. This reinforces the idea that an assured fuel supply must consist of a network of multinational nuclear fuel production facilities covering many different types of reactor fuels and several stages of the production cycle.

Further concerns were raised by potential recipient states regarding eligibility criteria to access backup LEU. A state would have to fulfill several nonproliferation conditions, one being that the IAEA Board of Governors is not considering a report related to the safeguards implementation in that state. Several countries take issue with this criterion, arguing that a nation could be referred to the board for political reasons, based on specious allegations, effectively blocking it from the bank. One also could envision a scenario in which a supplier state discontinues fuel deliveries for what it claims are technical reasons related to the fuel fabrication process, whereas the recipient state argues that the disruption is politically motivated. Arbitrating such conflicting claims would fall to the IAEA director-general, which would put the agency and its chief in the middle of a potential political maelstrom.

The impact of leadership change. While ElBaradei vigorously championed the international fuel bank proposal, current Director-General Yukiya Amano has been rather tepid on the issue. Amano, who took over from ElBaradei in December 2009, mentioned supply assurances in his first policy address, promising to “facilitate follow-up discussions … with a view to achieving a framework acceptable to all.” 5 Amano's opening statement to the Board of Governors' meeting in early March provided additional signals to his position. While he addressed assurance of fuel supply, noting that the agency was the appropriate forum for such discussions, he did not mention ongoing efforts to implement an IAEA fuel bank. Instead, he stressed that it was up to member states to decide on specific fuel assurance measures, which could be interpreted as a lack of support for the bank.

ElBaradei sought board consensus for the fuel bank project so that it would be accepted as truly international in nature. Yet securing such support from nuclear have-nots will only be possible if they see the fuel bank as protecting their interests and as only the first step toward the grand plan of centralizing all nuclear activities under international control.

A good way to start calming developing nations' fears would be to include in any future proposals language that not only envisions but also lays out a concrete plan for implementing a credible system of nuclear fuel assurances. Such a system would consist of a network of fuel banks hosted by a broad set of countries covering many types of power reactors. Ownership and management could be handled by a combination of national and international consortia and also the IAEA.

Furthermore, proposals should include language looking deeper into the future beyond mere fuel assurances, laying out a theoretical framework introducing the next step in the internationalization of the fuel cycle: a more centralized system with multinational nuclear fuel production facilities covering a wide range of reactors, as well as fuel storage and waste management. Such forward-looking documents would provide greater confidence that fuel bank initiatives are sincere and would benefit the entire international community and not just the advanced nuclear countries.