Cablegate: Nuclear Energy Phase-Out Continues Amid Uncertainty

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 FRANKFURT 004506

SIPDIS

E.O. 12958: N/A
TAGS: ENRG ECON SENV PGOV GM
SUBJECT: Nuclear Energy Phase-Out Continues Amid Uncertainty

1. SUMMARY: The phase-out of nuclear power in Germany took a
major step in mid-May with the decommissioning of the country's
oldest nuclear power plant at Obrigheim in the state of Baden-
Wuerttemberg. While Green party leaders and environmental groups
celebrated the move with a "phase-out festival," new Baden-
Wuerttemberg Minister-President Guenther Oettinger (CDU/Christian
Democrats) and leading energy producer EnBW (Energie Baden-
Wuerttemberg) warned the phase-out would have negative effects on
global warming, energy security, and export competitiveness.
Market watchers foresee an extended lease on life for Baden-
Wuerttemberg's remaining reactors should conservatives prevail in
national elections this September. END SUMMARY.

BACKGROUND ON NUCLEAR PHASE-OUT
-------------------------------

2. In June 2000, the Social Democratic-Greens national
government and representatives of Germany's leading power
suppliers concluded an agreement to decommission the country's 19
nuclear power plants over two decades. In the accord, producers
agreed to decommission plants following an average of 32 years of
operation (measured in terms of total electricity output). The
phase-out agreement forbids the establishment of new plants and
mandates on-site storage of nuclear waste pending establishment
of a permanent storage facility. In return, the government
promised reactor operations would not be disrupted, as happened
with massive demonstrations against spent fuel shipments in the
80s and 90s, during their remaining life cycle.

3. Germany relies on nuclear power for about one-third of its
electricity needs (putting it just over the EU average). The
state of Baden-Wuerttemberg is much more dependent on nuclear
power (almost 60% of total consumption), as home to Germany's
oldest power plant (at Obrigheim) and several of its newest
plants including Neckarwestheim II (which would be the last plant
decommissioned under the agreement, in about 2021). Other EnBW
reactors -- Neckarwestheim I and Philippsburg I -- are slated to
be shut down by 2012 under current plans.

RECENT DEVELOPMENTS
-------------------

4. On May 11, Energie Baden-Wuerttemberg (EnBW) decommissioned
its 340-megawatt Obrigheim reactor after 37 years of operation
(EnBW says decommissioning will cost it EUR 500 million / USD 625
million in lost revenue). Obrigheim is the second reactor shut
down in the phase-out after the Stade reactor near Hamburg was
closed in November 2003. On April 25 (perhaps not
coincidentally, the day before the 19th anniversary of the
Chernobyl disaster), Federal Environment Minister Juergen
Trittin, Economics State Secretary Rezzo Schlauch, and Bundestag
Deputy Fritz Kuhn (all Greens politicians) joined environmental
groups at a "phase-out festival" in neighboring Mosbach. Calling
the plant's decommissioning the "victory of the century," Trittin
predicted that Germany's technological lead in alternative energy
and incentives created by emissions trading would lead to new
employment and sufficient production capacity to cover Germany's
needs. "The future belongs to ... energy conservation, energy
efficiency and renewable energies," Trittin said.

5. At recent public discussions attended by a Consulate
representative, EnBW CEO Dr. Utz Claassen characterized the
Greens' "phase-out festival" as an insult to the hundreds of
Obrigheim residents left unemployed by the shutdown (250 will
lose their jobs at the plant itself). Claassen affirmed that the
industry would comply with the phase-out agreement, warning,
however, that Germany's resultant dependence on gas and coal
would exacerbate global warming. Citing the developing world's
growing need for electricity, Claassen argued that only nuclear
power can avert devastating effects on the earth's climate
through increased use of fossil fuels.

6. Sharing a public forum with Claassen, Minister-President
Oettinger said he respected the official process that led to the
decommissioning of Obrigheim but vowed to push for extension of
operations at the state's other nuclear power plants. Oettinger
termed nuclear power a "transitional" energy source but cautioned
that the timeframe for phasing out Baden-Wuerttemberg's remaining
reactors was too short, arguing that the current phase-out plan
would damage Germany's energy security and competitiveness,
making energy more expensive and less reliable.

7. The German public generally supports phasing out nuclear
energy. According to Forsa (a well-respected polling
organization), 77% of Germans approve of the phase-out agreement,
14% support extending the life of current reactors, and only 18%
oppose the phase-out altogether. Over eighty percent of Germans
polled consider nuclear power a security threat (44% see it as a
major threat). Many are not well informed: in a Eurobarometer
poll, for instance, most German respondents called nuclear energy
a significant contributor to global warming.

COMMENT: LOOKING AHEAD
----------------------

8. Utilities argue nuclear power is the most cost-efficient
energy source in Germany although there is debate whether it is
so inexpensive if tax breaks, waste disposal and decommissioning
costs are included. As a leading center for manufacturing --
Baden-Wuerttemberg is home to Daimler-Chrysler, Bosch (the
world's largest automotive supplier), and other export-oriented
companies -- the state's large industrial enterprises want to
hold the line on energy costs (a factor in economic
competitiveness and future investment decisions) and will support
nuclear energy if it can keep costs down.
9. Chancellor Schroeder's call for early elections has rekindled
discussion about whether a conservative government will prolong
the nuclear phase-out. CDU (Christian Democratic Union)
chancellor candidate Angela Merkel told a utilities association
June 7 she would support extending reactor licenses. Even some
Greens privately say extending nuclear plant lives may be the
only way to meet Kyoto commitments, but as noted in para 7,
public support for the phase-out appears strong. While many
industry representatives remain mum on the issue, leading energy
stock prices rose after Merkel's announcement on speculation of
extended lifespans for existing reactors. Given the tension
between political considerations and economic/climate-change
concerns, current policy towards nuclear energy may be anything
but final. END COMMENT.

10. This message was coordinated with Embassy Berlin.

BODDE

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