U.S. and South Korean Cooperation in
the
World Nuclear Energy Market: Major
Policy
Considerations
Mark Holt
Specialist in Energy Policy
January 28, 2013
Congressional Research Service
7-5700
www.crs.gov
R41032
CRS Report for Congress
Prepared for Members and
Committees of Congress
U.S. and South Korean Cooperation in the World Nuclear
Energy Market
Summary
A South Korean consortium
recently signed a contract to provide four commercial nuclear reactors to the
United Arab Emirates (UAE), signaling a new role for South Korea in the world
nuclear energy market. The $20 billion deal indicates that South Korea has
completed the transition from passive purchaser of turn-key nuclear plants in
the 1970s to major nuclear technology supplier, capable of competing with the
largest and most experienced nuclear technology companies in the world. The
South Korean government reportedly has established a goal for South Korea to
capture 20% of the world nuclear power plant market during the next 20 years,
and the importance placed by Seoul on the UAE contract was underscored by South
Korean President Lee Myung-bak’s presence at the signing ceremony in the UAE.
In the 1970s, South Korea
launched its nuclear power program through the government-owned Korea Electric
Company (now Korea Electric Power Corporation, KEPCO), which purchased the
country’s first nuclear power units from Westinghouse. In the early years of
the Korean nuclear program, Westinghouse and other foreign suppliers delivered
completed plants with minimal Korean industry input. After the first three
units, Korean firms took over the construction work on subsequent plants,
although the reactor systems, turbine-generators, and architect/engineering
services continued to be provided primarily by non-Korean companies. In 1987,
KEPCO embarked on an effort to establish a standard Korean design, selecting
the System 80 design from the U.S. firm Combustion Engineering as the basis.
Combustion Engineering won the competition for the Korean standard design
contract by agreeing to full technology transfer, according to KEPCO. The
technology transfer program resulted in the development of the APR-1400 power
plant, which is the design purchased by the UAE.
In
the UAE deal, the South Korean consortium is headed by KEPCO and includes other
major Korean industrial companies that are involved in Korea’s rapidly growing
domestic nuclear power plant construction program. The consortium also includes
Pittsburgh-based Westinghouse Electric Company, which currently owns the U.S.
design on which the Korean design is based, and the Japanese industrial conglomerate
Toshiba, which now owns most of Westinghouse. Because the AP-1400 is based on a
U.S. design, U.S. export controls will continue to apply.
U.S.-Korean
nuclear energy cooperation is conducted under a “123 agreement” required by
Section 123 of the Atomic Energy Act of 1954. The current agreement was signed
in 1973 and will expire on March 19, 2014. A new 123 agreement does not require
congressional approval, but it must lie before Congress for 90 days of
continuous session before going into effect.
As with most U.S. 123 agreements,
the existing U.S.-Korean agreement requires U.S. consent for any reprocessing
or enrichment activities related to U.S. -supplied materials and technology.
Korea is requesting that the new 123 agreement include U.S. advance consent for
future Korean civilian reprocessing and enrichment activities. The United
States has opposed the idea, on grounds of general nonproliferation policy and
the complications that such activities might pose for other security issues on
the Korean peninsula. To comply with the 90 -day congressional review
requirement, a new agreement probably needs to be submitted to Congress by
spring 2013. Any lapse in the agreement could affect exports of U.S. nuclear
materials and reactor components to Korea, potentially affecting ongoing
construction of the UAE project.
Congressional Research Service
U.S. and South Korean Cooperation in the World Nuclear
Energy Market
Contents |
|
Introduction:
South Korea’s New World Role
................................................................................. |
1 |
Domestic
South Korean Nuclear Energy Program
.......................................................................... |
2 |
South Korean
Nuclear Plant Export
Program.................................................................................. |
6 |
UAE Reactor
Contract............................................................................................................... |
6 |
Korean and
U.S. Partnership
..................................................................................................... |
7 |
Outlook for Korean Exports
...................................................................................................... |
8 |
Research and Development
Cooperation....................................................................................... |
10 |
Renewal of U.S.-ROK 123
Agreement.......................................................................................... |
12 |
U.S. Policy Considerations
............................................................................................................ |
15 |
Figures |
|
Figure 1.
South Korean Nuclear Power Units
................................................................................. |
4 |
Tables |
|
Table 1.NRC
Specific Licenses for Nuclear Exports to ROK (illustrative)
.................................. |
13 |
Contacts |
|
Author Contact
Information........................................................................................................... |
18 |
Congressional Research Service
U.S. and South Korean Cooperation in the World Nuclear
Energy Market
Introduction: South Korea’s New World Role
The December 2009 contract by a
South Korean consortium to provide four commercial nuclear reactors to the
United Arab Emirates (UAE) signaled a new role for South Korea in the world
nuclear energy market. The $20 billion deal indicates that South Korea (the
Republic of Korea, ROK) has completed the transition from passive purchaser of
turn-key nuclear plants in the 1970s to major nuclear technology supplier, now
capable of competing with the largest and most experienced nuclear technology
companies in the world.
Because the plants being exported
by South Korea are based on a U.S. design, U.S. export controls will continue
to apply. Westinghouse obtained the necessary authorization in March 2010 from
the U.S. Department of Energy (DOE) to transfer information related to the
technology to the UAE.1 A December 2009 peaceful nuclear
cooperation agreement between the UAE and the United States, required for
nuclear trade by Section 123 of the Atomic Energy Act, was intended to ease
weapons proliferation concerns by stipulating that the UAE would not develop
fuel cycle facilities to support its planned nuclear power program. The UAE
program may establish a precedent for U.S. policy on future Korean exports to
non-nuclear power nations, which is likely to be of continuing congressional
interest.
South Korea’s growing status in
the world nuclear market is an important consideration in the renewal of the
existing U.S.-Korea nuclear cooperation agreement, which expires in March 2014.
South Korea wants the new agreement to include advance U.S. consent for
reprocessing of spent nuclear fuel and enrichment of uranium—sensitive fuel
cycle technologies that are not currently permitted. The Korean Minister of the
Knowledge Economy called for Korea to achieve “peaceful nuclear sovereignty”
under future U.S. agreements.2 Korea contends that it needs to
be able to offer full fuel cycle services to potential nuclear reactor
customers in order to compete worldwide. The United States is concerned about
the nuclear weapons proliferation implications of such an expansion of
enrichment and reprocessing, along with its potential impact on other security
issues on the Korean peninsula. Congress will have an opportunity to review any
new agreement before it takes effect.
South Korea’s nuclear technology
progression has been similar to the earlier nuclear paths of France and Japan,
which appear likely to be followed in the future by China. France, Japan, and
now South Korea developed their nuclear power industries with technology and
designs licensed from U.S. companies to supply domestic energy needs. In each
case, the licensees assumed progressively greater responsibility for
construction of the U.S.-designed units and eventually the engineering and
design as well. The foreign firms now compete for nuclear plant contracts
throughout the world, including the United States, either in consortia with
their former U.S. licensors or independently.
In
the UAE deal, the South Korean consortium is headed by government-owned Korea
Electric Power Corporation (KEPCO) and includes other major Korean industrial
companies that are involved in Korea’s rapidly growing domestic nuclear power
plant construction program. The consortium also includes Pittsburgh-based
Westinghouse Electric Company, which currently
1 Presentation by
Westinghouse Electric Company President Aris Candris, December 1, 2011.
2 “Seoul Wants
‘Sovereignty’ in Peaceful Nuclear Development,” Chosun Ilbo, December 31,
2009.
Congressional
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U.S. and South Korean Cooperation in the World Nuclear
Energy Market
owns the U.S. design on which the
Korean design is based, and the Japanese industrial conglomerate Toshiba, now
the majority owner of Westinghouse.
Although Korean companies now
take the lead on design and construction of Korea’s nuclear power plants,
Westinghouse still provides support under the design license. Such support
typically includes components, instrumentation and control equipment, and
technical and engineering services. The Korean plant to be built in the UAE,
the APR-1400 model, is a modified version of the System 80+ design developed by
the U.S. firm Combustion Engineering (C -E), which was later acquired by
Westinghouse. The total value of components and services to be provided for the
UAE project by Westinghouse and other U.S. companies is estimated at about $2
billion, according to a financial package approved in September 2012 by the
U.S. Export-Import Bank.3
Domestic South Korean Nuclear Energy Program
When the construction of South
Korea’s first commercial nuclear power plant began in 1972, the South Korean
economy was about 7.5% the size of Japan’s, and the country’s per-capita income
was slightly lower than that of North Korea.4 With such a relatively small
industrial base, South Korea’s plans to finance and operate a fleet of nuclear
power plants could have been considered overly ambitious, and its long-term
plans to master the new technology might have seemed unrealistic. But the
subsequent growth of the South Korean economy—with per-capita income now
rivaling other developed nations and GDP nearly 20% of Japan’s—turned out to be
more than sufficient to sustain the country’s planned nuclear power
development.
South Korea launched its nuclear
power program through the government-owned Korea Electric Company (now Korea
Electric Power Corporation, KEPCO), which purchased the country’s first nuclear
power units from Westinghouse. Those first plants were ordered on a turn-key
basis, in which the foreign supplier delivered a completed plant with minimal
Korean industry input. As shown in Figure 1, the first of these turn-key
units, Kori 1, began operating in 1978. Westinghouse supplied the reactor and
other components of the nuclear steam supply system (NSSS) and constructed the
plant, and other western firms provided the turbine-generator and
architect/engineering services. Wolsong 1 and Kori 2, coming on line in 1983,
were also turn-key units, with all major components and construction services
provided primarily by non-Korean companies.
After
those first three units, Korean firms took over the construction work on
subsequent plants, beginning with Kori 3, which began commercial operation in
1985. However, the NSSS, turbine-generators, and architect/engineering services
continued to be provided primarily by non-Korean companies, including
Westinghouse, Atomic Energy of Canada Limited (AECL), and the French firm
Framatome, which had previously licensed its design from Westinghouse. That
arrangement continued for the next six units, which came on line from
1995-1999.
3
Freebairn,
William, “U.S. Portion of UAE Project Grew Due to Long-Term Funds, Rates:
Ex-Im,”
Nucleonics
Week,
December
6, 2012.
4
Angus
Maddison,
The
World Economy: Historical Statistics, Organization for
Economic Cooperation and Development, 2006, pp.
298-306.
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U.S. and South Korean Cooperation in the World Nuclear
Energy Market
In 1987, KEPCO embarked on an
effort to establish a standard Korean design, selecting the System 80 design
from the U.S. firm Combustion Engineering (C -E) as the basis.5 The System 80 design had been
used for three identical units nearing completion at Palo Verde, AZ.
5
World
Nuclear Association, “South Korea Country Report,” December 2012,
http://www.world-nuclear.org/info/ inf81.html.
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U.S. and South Korean Cooperation in the World Nuclear
Energy Market
Figure 1.
South Korean Nuclear Power Units
Major Categories of Work Conducted By Domestic and Foreign Companies
Combustion
Engineering won the competition for the Korean standard design contract by
agreeing to full technology transfer, according to KEPCO. A 10-year technology
license agreement was signed in 1987 and extended for 10 more years in 1997.
The U.S. contractors for
Congressional
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U.S. and South Korean Cooperation in the World Nuclear
Energy Market
the turbine-generators (General
Electric) and architect/engineering services (Sargent & Lundy) agreed to
transfer key technology as well.
All of the major U.S. companies
working on the new C-E plants agreed to serve as subcontractors to Korean
firms: Combustion Engineering to Hanjung (now Doosan), General Electric (GE)
also to Hanjung, and Sargent & Lundy (S&L) to Korea Power Engineering
Company (KOPEC), which is majority owned by KEPCO.6 Yonggwang 3 and 4 and Ulchin 3
and 4, which began operating from 1995 to 1999, were constructed under that
arrangement. A similar partnership was formed with Atomic Energy of Canada
Limited (AECL) to build Wolsong 2-4, completed during 1997 through 1999. Plant
construction continued to be carried out by Korean companies. Components and
work shared by Korean and foreign firms are shown in Figure 1.
Korean reactor designers worked
with C-E, which became part of Westinghouse in 2000, to develop a standard
Korean design from the System 80 model. This effort resulted in the 1,000
megawatt Optimized Power Reactor (OPR-1000) . The seven OPR-1000 units that
have been completed since 1999 were built and constructed almost entirely by
Korean firms. However, some key components continued to be supplied or heavily
supported by non-Korean firms, constituting a small percentage of each nuclear
unit’s total cost.
Development of a larger and more
advanced model of the Korean standard design was based on the C-E System 80+
design that received U.S. standard design certification from the Nuclear
Regulatory Commission (NRC) in May 1997. The Korea Atomic Energy Research
Institute (KAERI) helped develop the U.S. design,7 complementing work on the Korean
version of the design that began in 1992. The Korean design was largely
completed by 1999 and was designated the APR-1400.8
South
Korea currently has four nuclear units under construction, one OPR-1000 and
three APR-1400s, to be completed between 2013 and 2017. Five more APR-1400s are
planned to be completed between 2018 and 2021. That construction program would
increase the country’s nuclear power reactors from 23 to 32, and nuclear power
generating capacity from 20,800 megawatts to 32,500 megawatts.9 South Korea’s long-term electricity
plan calls for increasing nuclear capacity to 42,700 megawatts by 2030, the
equivalent of about seven additional APR-1400s after 2021.10 South Korea generated 35% of its
electricity from nuclear plants in 201111 and plans to increase that share
to 59% by 2030.12
Ever
since South Korea completed the first nuclear unit in which Korean firms
participated in all phases of development—Yonggwang 3 in 1995—the country has
opened an average of about one
6
Gary
Baker and Shin Ho-Chul, “Korean Utility and Three U.S. Firms Ink Nuclear
Building Deal,” Nucleonics Week,
April
16, 1987, p. 5.
7
National
Academy of Sciences, Nuclear Power: Technical
and Institutional Options for the Future, Washington, DC,
1992,
p. 100.
8
World
Nuclear Association, “South Korean Country Report,” op. cit.
9 World Nuclear Association, “South Korean Country
Report,” op. cit.
10 Korea Atomic
Energy Research Institute, Nuclear Power and
R&D Programs in Korea, Presentation to CRS visitors,
Daejeon,
South Korea, July 27, 2009, pp. 11-12.
11 World Nuclear
Association, “Nuclear Share Figures, 2001-2011,”
http://www.world-nuclear.org/info/nshare.html.
12
Jae-min
Ahn, “Industry Perspectives on Korean Nuclear Program,” Presentation to
U.S.-ROK Workshop on Nuclear Energy and
Nonproliferation, Washington, DC, January 20, 2010.
Congressional
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U.S. and South Korean Cooperation in the World Nuclear
Energy Market
unit every 18 months. Starting
after the most recent reactor, Shin Wolsong 1, began commercial operation in
July 2012, South Korea plans to complete an average of about one reactor per
year through 2030. With the planned rate of domestic nuclear plant construction
remaining fairly stable, it would appear that any significant expansion of
South Korea’s nuclear engineering and construction industry would depend on
exports.
South Korean Nuclear Plant Export Program
The
South Korean government expects KEPCO’s reactor sale to the UAE to constitute
the leading edge of a much larger nuclear power marketing effort throughout the
world. According to news media reports, the Ministry of Knowledge Economy
(MKE), which is responsible for industrial and trade policy, has established a
goal for South Korea to capture 20% of the world nuclear power plant market
during the next 20 years. Based on an estimated world market of about 400 large
commercial reactors through 2030, a 20% penetration would result in South
Korean exports of 80 reactors during the next 20 years, with an estimated value
of $400 billion.13
UAE Reactor Contract
As
South Korea’s first foreign reactor sale, the UAE contract for the four-unit
Barakah plant is likely to establish a template for future exports. The
companies involved in the UAE project appear to be the same ones that are
currently building Korean domestic nuclear plants and are likely to play
similar roles in the export program. The importance placed by the ROK
government on the contract was underscored by the presence of South Korean
President Lee Myung-bak at the signing ceremony in the UAE December 27, 2009,
along with UAE President Sheikh Khalifa bin Zayed al-Nahayan.14
Construction of the first Barakah reactor officially began in July 2012.15
The selection of the KEPCO
consortium was made by the Emirates Nuclear Energy Corporation (ENEC), which
will oversee the contract’s implementation. According to a statement issued by
ENEC, the contract includes the following major provisions:16
•
The
KEPCO consortium will design, build, help operate and maintain, and provide
initial fuel for four APR-1400 nuclear units at a total cost of about $20
billion. A “high percentage of the contract” will be under a fixed price.
•
Korean
investors will have an equity interest in the UAE plants.
•
The
first unit is to begin commercial operation in 2017, with the other three to be
completed by 2020.
14
World Nuclear News. “South Korea Weeks
to Boost Reactor Exports,” January 13, 2010,
http://www.world-nuclear-news.org/NP-South_Korea_seeks_to_boost_reactor_exports-1301104.html.
15 Amena Bakr, “South
Korean Group Wins $40bn UAE Nuclear Deal,” Arabian Business.com,
December 27, 2009.
16
World Nuclear Association, “Nuclear
Power in the United Arab Emirates,” September 2012,
http://www.world-nuclear.org/info/UAE_nuclear_power_inf123.html.
17 Emirates
Nuclear Energy Corporation, “UAE Selects Korea Electric Power Corp. Team as
Prime Contractor for Peaceful Nuclear Power Program,” press release, December
27, 2009,
http://www.enec.gov.ae/news/uae-selects-korea-electric-power-corp-team-as-prime-contractor-f/.
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U.S. and South Korean Cooperation in the World Nuclear
Energy Market
•
Extensive
training, human resources development, and education is to be provided to allow
UAE to eventually provide most of the nuclear plant staffing and develop
commercial infrastructure and support businesses.
•
A
potential follow-on contract for long-term operation and maintenance of the
Barakah plant, worth as much as another $20 billion over 60 years,17 is under discussion with KEPCO
and other vendors.
The Korean consortium was
selected over two other proposals, from Areva and General Electric-Hitachi.
According to media reports, the decision was strongly affected by price. One
report indicated that the KEPCO total of $20 billion was 30% lower than the
Areva bid, which in turn was lower than the GE-Hitachi offer.18 Another report described KEPCO’s
price as $16 billion lower than Areva’s.19 KEPCO’s bid averages out to $5
billion per reactor, which is higher than a reported estimate of $3.15 billion
for each of two APR-1400s being built at the Shin-Kori site in Korea, with the
difference ascribed to the additional costs of operating in a country with no
previous nuclear experience.20 The $20 billion cost of 5,600
megawatts of electric generating capacity works out to $3,571 per kilowatt,
excluding financing costs, substantially lower than the most recent estimate of
$5,339 per kilowatt for U.S. reactors by the Energy Information Administration.21
Korean and U.S. Partnership
As noted above, the Korean and
U.S. companies involved in the UAE project have worked together extensively in
the past on the domestic Korean nuclear power program, with Korean firms
gradually taking over most of the work. U.S. participation in future domestic
Korean nuclear plants is expected to be very small, but it may be larger in
Korean reactor exports such as Barakah. Below are the members of the KEPCO
consortium and their roles in the UAE project:
•
KEPCO. Prime contractor and project
integration.
•
Korea
Hydro and Nuclear Power Company (KHNP). Operating company for Korean nuclear power
plants. To serve as engineering, procurement, and construction contractor and
operator. KEPCO subsidiary.
•
KOPEC. Nuclear power plant
architect/engineering services. Majority owned by KEPCO.
•
Korea
Nuclear Fuel Company (KNF).
Initial nuclear fuel loads.
•
Korea
Plant Service and Engineering Company (KPS). Plant maintenance.22
Majority
owned by KEPCO.
18 Bakr, op. cit.
19
Chris Stanton, “Nuclear Bid to Be
Industry Norm,” The National, December 28, 2009,
http://www.thenational.ae/
apps/pbcs.dll/article?AID=/20091228/BUSINESS/712289928.
20 Bakr, op. cit.
21 Stanton, op. cit.
22
U.S. Energy Information Administration,
“Updated Capital Cost Estimates for Electricity Generation Plants,” Table 2,
November 2010, http://www.eia.gov/oiaf/beck_plantcosts/index.html.
23
“KEPCO to Provide Design, Construction
and Maintenance of Nuclear Reactors,” Khaleej Times Online, December 28,
2009.
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U.S. and South Korean Cooperation in the World Nuclear
Energy Market
•
Doosan
Heavy Industries & Construction.
Fabrication of nuclear steam supply system and other major components.
•
Samsung
C&T Corporation.
Plant construction.
•
Hyundai
Engineering and Construction.
Plant construction.
•
Westinghouse
Electric Company.
Technical and engineering support services and various components.
•
Toshiba
Corporation.
Majority owner of Westinghouse. Role unspecified. Possible component
supply and technical consulting.
Westinghouse and other U.S.
companies are now expected to carry out about 10% of the work on the Barakah
project, double the initial estimates. The Export-Import Bank of the United
States in September 2012 approved $2 billion in financing for U.S. equipment
and services for Barakah, mostly to be provided by Westinghouse and its U.S.
sub-suppliers. “The Barakah project will allow us to maintain about 600 U.S.
jobs,” Westinghouse said after the Ex-Im Bank financing approval. The Ex-Im
Bank estimated that, overall, the $2 billion in financing would “support
approximately 5,000 American jobs across 17 states.” Items to be supplied by
Westinghouse and other U.S. companies include reactor coolant pumps, reactor
components, controls, engineering services, and training.23
Although most of the U.S.
technology involved in the Korean standard reactor designs (OPR-1000 and
APR-1400) has been successfully transferred to Korean firms as called for by
the initial C-E licensing agreement in 1987, Westinghouse still considers the
Korean reactors to be Westinghouse-licensed products. As a result, Korean
exports of the APR-1400, such as the UAE project, will be subject to U.S.
export control requirements.24 In addition, certain marketing
restrictions under the Westinghouse licensing arrangement have no expiration,
and so they have continued under the “business cooperation agreement” that
succeeded the original technology license in 2007. The provisions of the
business cooperation agreement were applied to the UAE project.25
Westinghouse is also partnering
with Korean industry to produce control element assemblies for C-E reactor
designs, including U.S. and Korean nuclear power plants, as well as the UAE
plants and other potential Korean exports. The joint venture between Westinghouse
and KNF is being located at the KNF fuel fabrication plant in Daejeon, Korea,
and will be 55% owned by Westinghouse.26
Outlook for Korean Exports
The goal set by the Korean
Ministry of Knowledge Economy for a 20% South Korean share of the global
nuclear power plant market would place South Korea about equal to Russia and
behind
23 Export
-Import Bank of the United States, “Ex-Im Approves $2 Billion in Financing for
Nuclear Power Plant in U.A.E.,” news release,
September 7, 2012, http://www.exim.gov/newsandevents/releases/2012/ex-im-approves-2-billion-in-financing-for-nuclear-power-plant-in-u-a-e.cfm.
24 Lopatto, op. cit.
25
Doosan
Senior Vice President Jeong-Yong Park, December 1, 2011.
26
April
Murelio, “Westinghouse, KNF Team to Manufacture Control Element Assemblies,”
Nuclear
Power Industry News,
February 9, 2009.
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U.S. and South Korean Cooperation in the World Nuclear
Energy Market
only France and the United States
in the nuclear market, according to a ministry report to President Lee.
“Nuclear power-related business will be the most profitable market after
automobiles, semiconductors, and shipbuilding,” the report said. MKE also
called for South Korean firms to expand their share of the estimated $78
billion world market for operation, maintenance, and repair of nuclear power
plants.27
The UAE contract added
substantial credibility to MKE’s export goals and changed the dynamics of the
world nuclear power market. Kuwaiti officials were paraphrased as saying the
UAE price “is likely to become a benchmark for atomic energy technology across
the region.”28 After losing the UAE contract, Areva was reported
to be examining ways to modify its plant design to cut costs, such as by
cutting the number of steam generators from four to two by making them larger,
as in the Korean design.29
Other potential Korean export
deals are under consideration in Indonesia and the United States,
Westinghouse’s home market. Other countries that have been mentioned in the
news media include Vietnam, Malaysia, Thailand, and Middle East neighbors of
the UAE.30
A Korean consortium has reportedly been selected by Jordan to build the
kingdom’s first research reactor.31 KNHP signed a preliminary
agreement with Indonesian energy firm Medco Energi in July 2007 to build
Korean-design reactors in Indonesia. However, Japanese firms are reportedly
also under consideration.32 A U.S. energy development
company, Alternate Energy Holdings Incorporated (AEHI), announced in January
2010 that it was negotiating with South Korean officials on an agreement to
build APR-1400 nuclear units at proposed sites in Idaho and Colorado. An AEHI
news release said, “We expect the agreement to be similar to the UAE agreement
announced last week. Such technology should give AEHI a serious competitive
advantage.”33 Plans for financing for the proposed projects are
unknown, however.
KEPCO took an early step toward exporting the
APR-1400 to the United States by meeting with the U.S. NRC November 18, 2009,
on possible standard design certification for the reactor. At the “initial
pre-application meeting,” KEPCO gave a presentation on the Korean nuclear industry,
the U.S. and Korean work on developing the System 80+ and the APR-1400, and
differences between the two designs. Prospects for NRC certification of the
APR-1400 could presumably be helped by its similarity to the previously
certified System 80+. However, NRC officials stressed that “this meeting did
not initiate the review of the APR-1400 design certification.”34
NRC’s most recent
27 World Nuclear
News, op. cit.
28
Stanton,
op. cit.
29
Ann
MacLachlan, “Areva Considering Ways of Cutting Costs of EPR Nuclear Reactor,”
Platts
Commodity News, January
11, 2010.
30
Global Collaborative, “KEPCO/KHNP,”
http://www.globalcollab.org/Nautilus/australia/reframing/aust-ind-nuclear/
ind-np/muria/countries/kepco.
31 Taylor Luck, “S.
Korean Bidder to Build Nuclear Research Reactor in Jordan,” Jordan Times,
April 12, 2009.
32 “S. Korea,
Indonesia Sign Nuclear Cooperation Deal,” Reuters, July 25, 2007.
33 Alternate
Energy Holdings Incorporated, “AEHI Expects to Close Deal to Import Korean
Reactors in Early 2010,” press release, January 4, 2010,
http://www.alternateenergyholdings.com/LinkClick.aspx?fileticket=
gVVisrNAzgI%3d&tabid=1979.
34
Nuclear Regulatory Commission, Korea
Electric Power Corporation APR-1400 Presentation, ML093430109, December 9,
2009, http://adamswebsearch.nrc.gov/scripts/securelogin.pl.
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U.S. and South Korean Cooperation in the World Nuclear
Energy Market
licensing schedule shows the
KEPCO design certification review beginning in mid-2013, with no completion
date scheduled.35
The capacity of the Korean
nuclear industry would apparently need to expand to meet MKE’s export goals. As
noted above, Korea plans to complete an average of about one reactor per year
for the domestic market. In addition, Doosan and other firms have been
producing major reactor components for non -Korean reactors, such as the four
Westinghouse AP-1000 units being built in China. To export 80 units by 2030, as
implied by the MKE goal, the Korean industry would have to complete an
additional four units per year, a substantial increase over the current rate.
However, the total implied construction rate of about five units per year has
been achieved by other countries in the past, such as France during the 1980s.36
To expand Korea’s nuclear plant
construction and service capacity, MKE has announced plans to train 2,800
nuclear technical staff by 2011 and invest $350 million in further design
improvements, including an increase in research and development personnel.
Under the MKE plan, South Korea was to be completely self-sufficient in nuclear
reactor technology by 2012.37
Research and Development Cooperation
Nuclear R&D cooperation
between the United States and the Republic of Korea dates to the beginning of
President Eisenhower’s Atoms for Peace program. The first major U.S.-ROK
nuclear project, a 100 kilowatt research reactor, began operating in 1962 and
was later upgraded to 250 kilowatts and finally to two megawatts. These joint
activities were carried out under a series of peaceful nuclear cooperation
agreements signed between 1956 and 1965.38
Joint research on the nuclear
fuel cycle has proved more problematic. Fuel cycle technologies, such as
reprocessing spent nuclear fuel to separate plutonium and uranium to make new
fuel, can potentially be used to make weapons materials. The current peaceful
nuclear cooperation agreement, signed in 1972, requires U.S. consent before
South Korea can reprocess spent fuel (Article VIII F).
The United States opposed Korean proposals in the
1970s to develop a conventional chemical reprocessing plant and conduct related
R&D. In the 1980s, Korea proposed to develop the TANDEM fuel cycle, in
which spent fuel from Westinghouse and other light water reactors would be
dissolved to make fuel for CANDU heavy water reactors, without fully separating
weapons-useable plutonium. However, the United States opposed this plan as
well, on the grounds that only one further step would be needed to achieve
complete plutonium separation. In the 1990s, the Korea Atomic Energy Research
Institute (KAERI) conducted a joint research program with
35
Nuclear
Regulatory Commission, “New Reactor Licensing Applications,” December 6, 2012,
http://www.nrc.gov/ reactors/new-reactors/new-licensing-files/new-rx-licensing-app-legend.pdf.
36
Arnulf
Grubler,
An
Assessment of the Costs of the French Nuclear PWR Program 1970-2000,
International Institute for Applied Systems
Analysis, IR-09-036, Laxenburg, Austria, October 6, 2009, p. 8,
http://www.docstoc.com/docs/
19721910/Interim-Report-IR-09-036-An-assessment-of-th.
37 World Nuclear
News, op. cit.
38
Seongho
Sheen, “Nuclear Sovereignty versus Nuclear Security: Renewing the ROK-U.S.
Atomic Energy Agreement,” Korean Journal of
Defense Analysis, Vol. 23, No. 2, June 2011, pp. 273–288,
http://www.brookings.edu/ ~/media/research/files/papers/2011/8/nuclear%20korea%20sheen/08_nuclear_korea_sheen.pdf.
Congressional
Research Service 10
U.S. and South Korean Cooperation in the World Nuclear
Energy Market
DOE
national laboratories and Atomic Energy of Canada Limited on the DUPIC fuel
cycle (direct use of PWR spent fuel in Candu), in which light water reactor
spent fuel would be made into Candu fuel without reprocessing. However, KEPCO
showed little interest in using the technology.39
In the 2000s, KAERI began
focusing on another spent fuel recycling technology, pyroprocessing, as a way
to handle its growing spent fuel inventory while minimizing proliferation
issues. Pyproprocessing is an electrometallurgical process in which spent fuel
is dissolved in molten salt, and uranium, plutonium, and other higher elements
are partially separated though electrodeposition on a cathode. Supporters of
the process contend that it is proliferation-resistant because, unlike in
conventional chemical reprocessing plants, pyroprocessing facilities cannot
separate pure plutonium.40
The George W. Bush Administration
initially agreed that pyroprocessing would be an appropriate technology for
South Korea to pursue, signing an R&D agreement in 2002 under the U.S.
Department of Energy (DOE) International Nuclear Energy Research Initiative
(I-NERI). In cooperation with various DOE national laboratories, KAERI began
developing a continuous pyroprocessing system that it hoped could be economical
for commercial-scale operation. As a first step, the Advanced Conditioning
Pyroprocess Facility (ACPF) was constructed in a shielded “hot cell” at KAERI
to reduce oxide spent fuel to the metal form needed for pyroprocessing.
However, before KAERI could begin
operating the ACPF, the Bush Administration decided in 2008 to withhold
permission under the U.S.-ROK nuclear cooperation agreement for any spent fuel
separation work in Korea, including oxide fuel reduction to metal. Critics of
the program had contended that pyroprocessing would violate the 1992 Joint
Declaration on Denuclearization of the Korean Peninsula, which forbids nuclear
reprocessing. 41 KAERI had contended that pryoprocessing did not
constitute “reprocessing,” because of the lack of complete plutonium separation,
but the Bush Administration decided otherwise.42
As an alternative, the Bush Administration suggested
a joint R&D program in which all spent fuel separation work would be
carried out in the United States, particularly at DOE’s Idaho National
Laboratory (INL), which already has pyroprocessing equipment. South Korea
strongly objected to the proposal and began sponsoring seminars and other
informational activities in Washington, DC, in support of its pyroprocessing
program. However, U.S. policy did not change, and South Korea agreed to a
10-year Joint Fuel Cycle Study in 2011 in which KAERI scientists would conduct
spent fuel separation work at INL and other U.S. facilities, while work in
Korea would be restricted to simulated material. Operation of KAERI’s ACPF is
reportedly still under discussion.
39 Jungmin Kang and
H.A. Feiveson, “South Korea’s Shifting and Controversial Interest in Spent Fuel
Reprocessing,”
Nonproliferation
Review,
spring 2001, p. 70.
40
Pyroprocessing
is also referred to as “electrorefining” or “dry” processing, as opposed to
“wet” or “aqueous” conventional processing
with water-based chemicals. The most widely used conventional reprocessing
technology is called PUREX, for plutonium-uranium extraction.
41
North
Korea subsequently carried out reprocessing and other forbidden nuclear
activities, but the United States has urged
the North to return to compliance. See Nuclear Threat Initiative, at
http://www.nti.org/treaties-and-regimes/joint-declaration-south-and-north-korea-denuclearization-korean-peninsula/.
42
Kyle
Fishman, “IAEA South Korean Concerns Resolved,” Arms Control Association,
http://www.armscontrol.org/ print/3115.
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Research Service 11
U.S. and South Korean Cooperation in the World Nuclear
Energy Market
In addition to bilateral research
projects, South Korea and the United States work together in several
international R&D organizations. The two countries are jointly involved in
projects on advanced reactors under the Generation IV International Forum (GIF)
and the International Atomic Energy Agency’s International Project on
Innovative Nuclear Reactors and Fuel Cycles (INPRO). Both are also members of
the International Framework on Nuclear Energy Cooperation (IFNEC), focusing on
the development of international “reliable comprehensive fuel service
arrangements” and R&D priorities. To provide a forum for U.S.-ROK views on
nuclear research and other nuclear energy issues, the Joint Standing Committee
on Nuclear Energy Cooperation (JSCNEC) has met once a year since 1980.
Renewal of U.S.-ROK 123 Agreement
Under Section 123 of the Atomic
Energy Act of 1954 (42 U.S.C. 2153), the United States cannot conduct nuclear
energy activities with another country without an agreement on nuclear
cooperation, or “123 agreement.” The current U.S.-Korea 123 agreement was
signed in 1973 and will expire on March 19, 2014. Negotiators from the two
countries are working to overcome substantial disagreements about the
provisions of a new agreement so that it can take effect before the expiration
date.
A new 123 agreement does not
require congressional approval, but it must lie before Congress for 90 days of
continuous session before going into effect. This gives Congress time to hold
hearings on the agreement and potentially pass a disapproval resolution, which,
if signed by the President or enacted over his veto, would block the new
agreement. Because of the 90-day requirement, a new U.S.-Korea 123 agreement
would probably have to be presented to Congress sometime in spring 2013 to
avoid a lapse in March 2014.
If the U.S.-ROK agreement
expired, NRC would be prohibited from issuing export licenses for nuclear
reactors or major components to Korea, and existing licenses would be
suspended. NRC also could not issue licenses to export nuclear materials, such
as enriched uranium for reactor fuel. Also prohibited would be direct supply of
nuclear material by the U.S. government, as well as U.S. government R&D
cooperation, such as the 10-year pyroprocessing study.
Under NRC regulations (10 CFR
110, Appendix A), major reactor components that need specific licenses for
export, as well as an active 123 agreement, are:
•
Reactor
pressure vessels,
•
On-line
fuel changing equipment (for heavy water reactors),
•
Complete
reactor control rod systems,
•
Reactor
primary coolant pumps, and
•
Essentially
complete nuclear facilities.
Minor reactor components can be
exported under a general NRC license that does not require a 123 agreement,
although “generic assurances” must be provided that such components are for
peaceful purposes. Minor components include specific components listed in the
NRC regulations, plus any other components or subcomponents especially designed
for a reactor. NRC regulations at 10 CFR 110.26(b) provide a list of countries
to which minor reactor components can be exported under a general license. The
Republic of Korea is currently included in the list, although
Congressional
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U.S. and South Korean Cooperation in the
World Nuclear
Energy Market
it is
possible that its status could change if the U.S.-ROK 123 agreement lapses.
If
South Korea were dropped from the general license list, exporters of minor components could apply for
specific licenses, still without the need for a 123 agreement.43
Minor reactor components or subcomponents that are not specifically designed for reactor purposes
do not need NRC licenses
and so would not be directly affected
by a lapse in the U.S.- Korea 123 agreement. However, Commerce Department export regulations
would continue to apply.
“Special nuclear material,” such as fissile isotopes of uranium and other reactor fuel, must have a specific license from NRC for shipments of
more than 1 gram. Uranium
and other nuclear
materials also must have specific licenses for exports above certain levels. Specific licenses for
nuclear materials exports
cannot be issued without a 123 agreement. Exports
below
the specified levels can use
a general NRC license and
do not require a 123 agreement.
Such exports cannot
go to a country on NRC’s
embargo list,
which does not include South
Korea.44
Table 1
shows an illustrative list of current NRC
specific licenses for
U.S. exports to South
Korea. Major exports include essentially complete pressurized water reactors (PWRs) from Westinghouse, which took over from the original exporter Combustion
Engineering,
reactor components, and nuclear materials. Most of the licenses expire on
March
18, 2014, immediately before the expiration of the U.S.-ROK 123
agreement.
Table 1.NRC Specific Licenses for Nuclear Exports to ROK (illustrative)
Applicant |
Commodity |
End Use |
Date Received |
Expiration Date |
H.C.
Starck Inc. |
Molybdenum-
Lanthanum (Mo-La) sheets - 1,500 kg |
Amend to: increase the quantity of Mo-La
sheets by 1,500 kg to
a new cumulative total of 2,500 kg |
18-Jun-12 |
31-Aug-14 |
Westinghouse |
PWR, 950 MWe, 2 |
Yonggwang 3 & 4, Change licensee
from C-E to Westinghouse, pursuant to corporate acquisition |
07-Mar-01 |
18-Mar-14 |
Westinghouse |
PWR, 950 MWe, 2 |
Ulchin 3 & 4, Change licensee to Westinghouse |
07-Mar-01 |
18-Mar-14 |
Westinghouse |
PWR, 1000 MWe, 2 |
Yonggwang 5 & 6, Change licensee to Westinghouse |
07-Mar-01 |
18-Mar-14 |
Westinghouse |
PWR, 1000 MWe, 2 |
Ulchin 5 & 6, Change licensee to Westinghouse |
07-Mar-01 |
18-Mar-14 |
Westinghouse |
Reactor internals;
coolant
pumps; & App
A (5)-(9) Components |
Shin Kori 1 &
2, Shin Wolsong 1 & 2 |
16-Dec-02 |
18-Mar-14 |
Westinghouse |
App A
(1)
-(4) Components |
Shin Kori 3 & 4 |
26-Feb-07 |
18-Mar-14 |
Westinghouse |
LEU, 5.00%, & Nat U
in various forms |
Change licensee to
Westinghouse |
07-Mar-01 |
18-Mar-14 |
43 David Decker, NRC Office
of Congressional Affairs, email relaying staff comments, January 8, 2013.
44 10 CFR 110.21, 110.22, 110.23, and 110.28.
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U.S. and South Korean Cooperation in the World Nuclear Energy Market
Applicant |
Commodity |
End Use |
Date Received |
Expiration Date |
Westinghouse |
LEU, 5.00%, & Nat U, in various forms |
Yonggwang 5 & 6 -
Change licensee to Westinghouse |
07-Mar-01 |
18-Mar-14 |
Westinghouse |
LEU, 5.00%, & Nat U, in various forms |
Change licensee to
Westinghouse |
07-Mar-01 |
18-Mar-14 |
Thermo Fisher Scientific |
HEU, 94.0% in fission chambers -
281
g |
Neutron Flux Monitoring System - Shin Kori
Units 1, 2, 3, &
4; & Shin- Wolsong Units 1 & 2 |
22-Oct-08 |
15-Jan-14 |
DOE -
Oak Ridge |
LEU, 19.95% as broken
metal - 322 kg |
LEU Targets - Hanaro
Research Reactor |
10-Sep-09 |
31-Dec-12 |
Manufacturing Sciences
Corporation |
DU, as unalloyed
metal - 800 kg |
Fabrication experiments & R&D of
fuel for sodium-cooled fast reactors - KAERI |
28-Apr-11 |
31-Dec-14 |
Source: NRC
Note: PWR=pressurized water reactor; LEU=low-enriched uranium;
HEU=highly enriched uranium;
DU=depleted
uranium.
In addition to
NRC licenses for exporting nuclear materials and
reactor components, U.S. companies conducting nuclear-related business abroad may require authorization from DOE under
10 CFR Part 810,
which implements Section 57b of
the
Atomic Energy Act.
Section 57b requires DOE authorization for any company or person who
wants to “directly or indirectly engage in
the production of any special nuclear material outside of the United States.” These activities usually involve nuclear technology transfer and engineering and consulting services.
For example, an 810 authorization was required for the transfer of Westinghouse reactor technology from South Korea to the UAE.
The value of U.S.
nuclear exports that could be dependent
on the extension of the U.S.-ROK 123
agreement extension is difficult to estimate. The United Nations Commodity Trade Statistics Database (Comtrade) shows U.S. exports to Korea of nuclear components and fuel elements totaling a modest
$181.8 million from 2001
through 2010. However, some of the large exports under the licenses listed in Table 1, such as reactors and major components,
are
estimated to have
a value of up to $200 million
apiece.45 Therefore, it appears that the total value of those exports is
higher than shown in the
Comtrade data base search.
In
the nuclear materials area, the major U.S.
uranium enrichment company, USEC, signed a
contract in October 2007 totaling $400
million with South Korea through 2013.
The contract included new
and existing delivery commitments
and averages about $67
million per
year.46 U.S.
exports of natural uranium to Korea appear to be substantially smaller,
since exports of U.S.-
origin uranium to all countries averaged only $19 million from 2007-2011.47
45 E-mail from Daniel Lipman, Nuclear Energy Institute, October 16, 2012.
46 USEC Inc., “USEC, Korea
Hydro &
Nuclear Power Sign New Fuel Supply Contract,”
news release, October 24,
2007.
47 Energy Information Administration, “Foreign Sales of Uranium
from U.S. Suppliers and Owners
and Operators of U.S. Civilian Nuclear Power Reactors by Origin and Delivery Year, 2007-2011,” 2011 Uranium
Marketing Annual
Report, May 2, 2012, http://www.eia.gov/uranium/marketing/pdf/umartable21figure19.pdf.
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U.S. and South Korean Cooperation in the World Nuclear Energy Market
The UAE Barakah plant is the largest current Korean-U.S. nuclear project that could be affected by a
lapse in the U.S.-ROK 123
agreement. As discussed above,
about $2 billion of work on
Barakah is expected to
go to
U.S. companies. Much of that work will consist
of
U.S.-made components exported directly to
the UAE, which has its own 123 agreement with
the United States, so those exports would
probably not be directly affected by the
U.S.-ROK agreement.
However, some components
and subcomponents will be exported
to Korea
for further fabrication
and subsequent shipment
to the UAE. Any of those components
requiring NRC specific
licenses
could not be exported without a 123
agreement. Most of the subcomponents
being sent to Korea
are probably covered by the NRC general license or need
no NRC license. As discussed above, the effect of a lapse on general license exports is less
clear. Also
uncertain would be the effect of
a lapse on the
DOE 810 authorizations for
technology transfer associated with the project. Because of the importance of the Barakah project for South Korea’s nuclear export plans, any
uncertainty and potential for delay related to the status of the 123 agreement would undoubtedly be a major source of concern for all parties.
Other major U.S.-Korean nuclear projects that could be affected are four reactors being built at two sites in China,
Sanmen and Haiyang. The Chinese reactors are the first Westinghouse
AP1000s, the company’s most
advanced design, incorporating “passive” safety features and
modular construction techniques.
Because major components
for these reactors are being made in South
Korea, some of
the same uncertainties faced by the UAE project could
apply to subcomponents from the
United States.
Lapses in 123 agreements have occurred in the past.
One
major example was
the
expiration of the
U.S. agreement with the European Atomic Energy Community (Euratom) at the end of 1995. A new 123 agreement had
been negotiated when the old one
expired, but it had
been
submitted for
congressional review
on November 29, 1995, too late for the required
90 days of continuous session. NRC suspended specific and
general licenses for
most Euratom countries on January 4,
1996, allowing exports to continue only to four countries that had submitted bilateral
nonproliferation assurances.48 However, additional assurances were supplied in
time to
prevent a significant interruption in U.S. exports to Euratom, and, despite some congressional controversy, the new agreement took effect in March
1996.49
U.S. Policy
Considerations
The future direction
of
U.S.-South Korean cooperation in
world
nuclear energy markets poses a number of near- and long-term policy
considerations for the United States. U.S. policymakers
will face decisions related to U.S. nuclear energy cooperation with Korea that will affect broader
U.S. policy goals. In turn, U.S. decisions based
on broad
policy goals will have an
effect on Korean involvement with the
U.S. nuclear industry.
The most
immediate challenge
facing U.S.-ROK nuclear
cooperation is the renewal of the
123 agreement, as discussed above. As with most U.S.
nuclear cooperation agreements, the existing
Korean agreement requires U.S. consent for any reprocessing or enrichment activities related to U.S.-supplied
materials and technology.
Korea is requesting that the new 123
agreement include
48 “U.S.-Euratom
Agreement Beneficiary of Budget Stalemate
in Washington,” NuclearFuel, January 15, 1996, p. 16.
49 Kathleen Hart, “Challenges
to
U.S.-Euratom Accord Fade
as Congress’ Review Concludes,”
NuclearFuel,
March 11,
1996, p. 9.
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U.S. and South Korean Cooperation in the World Nuclear Energy Market
U.S. advance consent for future Korean civilian reprocessing and enrichment activities. The
United States has reacted skeptically to the idea, on grounds of general nonproliferation policy
and
the complications that such activities might pose for other security issues on
the Korean
peninsula. The outlook for a new
123 agreement is further complicated by the February 25
change in presidential administrations in South Korea. Although the ruling conservative party
remains in power, the negotiating positions of new ROK President
Park
Geun-hye on this issue
are unclear.
The degree to which the United
States retains control over the
South Korean nuclear program has led
to proposals for
South Korean “nuclear sovereignty.” As reported in the Korean
news media, the term has
been
applied to restrictions ranging from the current U.S. restrictions on
South Korean spent
fuel
reprocessing to approvals of technology exports,
such as the UAE sale.
South Korean Minister of Knowledge
Economy Choi Kyung-hwan in late 2009 clarified that the term
does not refer to nuclear weapons
development by using the phrase “peaceful nuclear
sovereignty.” Choi called the current U.S. restrictions on Korean spent fuel reprocessing
“excessive,” and pointed to the UAE
sale
as evidence of, as paraphrased in a Korean news report,
“global confidence in South Korea’s ability to handle the task.”50 Koreans regularly note that the United States for decades has granted advance consent for reprocessing to the Euratom countries
and Japan, and
argue that Korea, with its well-developed nuclear power program, should be
treated equivalently.
U.S. recognition of South
Korea’s rights to engage in all peaceful nuclear fuel
cycle activities, whether or not it chooses to actually do so, appears to be an element of the
nuclear sovereignty concept.
Korean officials contend that their nuclear industry must reprocess its spent fuel to forestall a looming waste storage crisis. The Korean nuclear industry had previously estimated that spent fuel
pools at some sites would run out of space beginning in 2016. A recent analysis calculates
that,
if
spent fuel from older storage pools can be shifted
to newer pools
at
each plant site, that
date could be pushed
back
to the early 2020s, starting at the Yonggwang site. Expansion of
non- pool “dry” storage facilities is considered politically and legally problematic in South Korea. KAERI’s program to develop pyroprocessing technology,
as discussed above, could allow uranium and plutonium from spent fuel to
be recycled in fast reactors (reactors
whose neutrons have not been
slowed by water or other moderators), which also must
be
developed. Although
such a “closed” fuel cycle could not be implemented before existing spent fuel pools run out of
space, supporters contend that it would increase public acceptance of the necessary additional
waste storage facilities.51 Supporters of a
closed fuel cycle also
say it could provide a secure, domestic energy source by extracting plutonium and uranium for multiple recycling in fast
reactors.
Korea’s
request for advance
consent on uranium enrichment is based
on its desire to provide full
fuel supply contracts to potential reactor customers, to better compete in the world market with such
rivals as the French firm Areva. Critics of that argument have pointed out that Korea won
the UAE reactor contract in direct competition
with Areva. However, the Korean industry may be
calculating that it would not have to offer
deep
discounts, as reportedly was
the case with the
UAE, if it could provide complete fuel supply services as part of its reactor sales. Korea would
also like to reduce its reliance on foreign uranium enrichment providers, to
which it pays about
50 “Seoul Wants
‘Sovereignty’ in Peaceful Nuclear
Development,”
Chosun Ilbo, December
31,
2009.
51 Jungmin Kang, Korea
Advanced Institute of Science and Technology, “The ROK’s
Nuclear Energy Development and Spent Fuel Management Plans
and Options,”
2012.
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U.S. and South Korean Cooperation in the World Nuclear Energy Market
$300 million per year.52 An enrichment plant in Korea might be based on the “black box” model, in
which a foreign country constructs a plant without revealing key information about the technology to the host country.
U.S. policy has
long opposed the expansion of
enrichment and reprocessing to additional countries, because of concern that the technology, even if initially for civilian purposes, can be
used to make weapons
materials. Granting advance consent to South Korea could undermine that policy by encouraging other countries to make similar requests in the future and making it harder for
the United States to turn them down. There are also U.S. concerns that granting consent for
enrichment and reprocessing in South
Korea could complicate efforts to persuade North Korea to
adhere to the Korean
Peninsula denuclearization
agreement and
give up
its nuclear weapons
program.
Because of the strongly differing views between the United States and South Korea on
reprocessing and enrichment, negotiations on renewing the 123 agreement are likely to prove
challenging. If neither side is willing to fully give in,
several potential compromise approaches could
be available:
• Short-term
agreement. Existing restrictions on reprocessing and enrichment could
be continued in a relatively short agreement, perhaps coinciding with the completion of the 10-year joint pyroprocessing feasibility study. Decisions on
advance consent, taking into account the results of the study,
would then need to be made
in a
subsequent agreement.
• Advance
consent with conditions.
A new agreement could provide advance
consent for reprocessing and enrichment, but South Korea would agree not to exercise that right until certain conditions were met. For example, milestones might need to be met regarding the Korean Peninsula denuclearization
agreement.
• Advance
consent for limited
activities. The
United States could
grant advance
consent for a limited set of fuel cycle activities. An example might be the operation of KAERI’s Advanced
Conditioning Pyroprocess Facility, which
reduces oxide spent fuel to metal form for pyroprocessing. This reduction process results in relatively little separation of plutonium and uranium.
In addition to the 123 agreement, Korea’s ambitious plans for future reactor exports would
require further DOE 810 authorizations for the transfer of
U.S.-based technology. Under Section
57b, the Secretary of Energy
must
determine that each proposed technology export “will not be inimical to the interest of the United States” with the concurrence of the Department of State and
after consultation with
NRC and the Departments of Commerce and Defense. Such reviews
would examine U.S.
interests
in the relevant region and throughout the
world, such as
controls on
the re-transfer of U.S.-origin nuclear technology after it is exported by Korea.
Future growth
of
South Korea’s
nuclear energy technology export program would
offer
opportunities for the U.S. nuclear industry as well as significant challenges. As
the
KEPCO-UAE sale makes clear, U.S. companies can directly benefit from participation in Korean export
projects, in this case an estimated $2 billion for Westinghouse and its subcontractors. But the
52 Seongho Sheen, “Nuclear Sovereignty versus
Nuclear Security: Renewing the ROK-U.S. Atomic
Energy
Agreement,” Korean Journal of Defense Analysis,
Vol. 23, No. 2, June 2011, pp. 273-288.
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U.S. and South Korean Cooperation in the World Nuclear Energy Market
UAE project also illustrates the potential competition that U.S. nuclear suppliers may face from
Korea, which overcame a GE-Hitachi
bid in the final round and an earlier Westinghouse
proposal. As the South Korean nuclear industry develops more
reactor
components
of
indigenous design,
the opportunities for U.S. participation in South Korean export projects may diminish. Government ownership of KEPCO may also be a competitive concern for
U.S. industry. A World
Nuclear Association report notes that South Korea may develop a large, exportable reactor design
based on
the
APR-1400 with indigenous
components by 2015,
“though Westinghouse is not
likely to let it compete in
main
markets such as USA and China without KEPCO
buying the rights to the design.”53 Such issues related to South Korean “peaceful nuclear sovereignty” are likely to be a topic
of continuing U.S.-ROK discussion.
Author Contact
Information
Mark
Holt
Specialist in Energy Policy mholt@crs.loc.gov, 7-1704
53 World Nuclear
Association, “Nuclear Power in South Korea,”
op.
cit.
Congressional Research
Service 18