Memorandum by Greenpeace
1. In BNFL's Annual Report and Accounts
(2001-2), the Company's Chief Executive, Norman Askew says the
Liabilities Management Authority (LMA) ". . . will remove
a substantial proportion of our net liabilities from the balance
sheet. We therefore stand on the threshold of fundamental change
within our company." The report makes it clear that the Company
now plans to concentrate on building new reactors, designed by
its subsidiary Westinghouse, in Britain and around the world.
"Specifically we expect our expertise in new reactor design
to pave the way for our participation in the resurgent global
nuclear energy market," says Askew.
2. Clearly the LMA will free BNFL to fulfil
its ambitions to become a major player in any new UK reactor building
programme, creating yet more nuclear waste, whilst a solution
to the problem of what to do with the waste remains elusive.
3. Greenpeace believes that the LMA will
fail to inspire the public confidence it requires when one of
its effects could be the re-start of a reactor building programme
in the UKeven if this is an unintended side-effect. BNFL
should be concentrating on building its business in clean-up and
decommissioning, not adding to the problems it has been so prominent
in creating. BNFL's Westinghouse division, for example, is ideally
placed to supply nuclear waste storage systems to nuclear utilities
around the globe.
4. If the LMA's aim is to develop "competitive
markets for clean-up contracts [and] to stimulate innovation and
improvements in safety", the structure of the new BNFL should
reflect this too. A company owned (or perhaps eventually partly
owned) by the UK Government, should have no truck with "the
resurgent global nuclear energy market." Under the current
proposals, the new BNFL, instead of having responsibility to clear
up the nuclear mess will now be profiting from it as being one
of the few contractors available in the short term to the LMA
to provide clean-up services. As it stands, this proposal for
an LMA restructuring provides all the legal and institutional
framework to provide a further financial platform for BNFL to
perpetuate nuclear waste creation.
5. The establishment of the LMA threatens
to be a missed opportunity by the Government to rectify the problems
caused by the nuclear industry over the last 50 years by breaking
the cycle of "nuclear entrapment" whereby new nuclear
projects are promoted in the hope of solving problems caused by
earlier mistakes. But in their turn these projects end up losing
money and increasing liabilities. This industry self-perpetuation
and the associated secrecy must end.
6. Greenpeace is opposed to both the reprocessing
of spent nuclear waste fuel and the unnecessary taxpayer subsidisation
of the nuclear sector. While we see the establishment of the LMA,
as an ideal opportunity to end this dangerous and environmentally
damaging process, we would oppose any moves by the LMA to subsidise,
directly or indirectly, the unnecessary perpetuation of reprocessing
or the continued operation of uneconomic Magnox reactors.
7. Poor throughputs in BNFL's two reprocessing
plants over recent years and the poor performance of the waste
vitrification plants have cast serious doubt on Sellafield's future
business plans. There is growing evidence that there is no use
for plutoniumthe main product of reprocessing. In fact,
in the words of the House of Commons Trade and Industry Select
Committee, plutonium ". . . is increasingly regarded as a
positively dangerous waste product".
8. The Magnox cycle appears to be losing
money at an alarming rate. Urgent efforts need to be made to stem
this outflow of funds, by closing down the Magnox reactors as
soon as possible. Payment of a management fee as proposed by BNFL
to British Energy is not an acceptable solution. This would likely
increase the running costs and further delay the implementation
of the only rational solution.
9. The LMA's remit should be formulated
along the lines suggested by the PIU's new energy policy ie where
decisions about waste management involve trade offs with other
objectives, environmental and sustainability concerns must take
precedence. All LMA activities should be directed by environmental
and sustainability concerns, rather than commercial or economic
ones. The LMA should operate solely in the public interestin
ensuring a sustainable long-term strategy for waste management.
It should not subsidise or in any other way support the nuclear
power industry. The LMA should have full control over all the
existing assets as well as existing liabilities.
10. All decisions about the future direction
and development of the LMA should be made openly and transparently.
There should be a radical transparency policy, which allows for
complete transparency in the accounts, public access to information
and influence on the future programme. There is no excuse for
any sort of commercial confidentiality in the public sector. This
must include complete transparency for all current operations
at Sellafield and the Magnox sites.
11. The LMA's operation should be geared
towards on site above ground storage at the site of production.
Issues relating to the dumping of waste (or not) should be outside
the LMA's remit. Including waste disposal in the remit would create
an organisation with too little transparency, too many unaccountable
vested interests, and a tendency to only look at the short-term.
A separate organisation, entirely independent of the nuclear industry
will be required to look at the long-term issues connected with
how best to contain and isolate nuclear waste.
12. Funds already accumulated by BNFL for
decommissioning and waste management must be segregated and completely
ring-fenced so that they cannot be used in any way that contributes
to current operations.
13. There should be no subsidies from the
LMA to support BNFL's existing operations. There must be no incentive
for BNFL to sign new contracts for reprocessing or MOX fuel fabrication.
The LMA should initiate discussions with BNFL's existing reprocessing
customers, including British Energy, to evaluate the potential
for renegotiating the contracts. This should not be left to BNFL.
14. The rump of BNFL must not be "freed"
to concentrate on selling new reactors. If the LMA is to inspire
public confidence, its structure should not be one which gives
BNFL a new lease of life to start a new reactor building programme
in the UK or elsewhere. It should develop instead its clean-up
and decommissioning business, and make the most of its Westinghouse
division's expertise in the storage of waste.
15. We believe that any departure from these
principles would seriously undermine the public acceptability
of the LMA.
16. BNFL has "made a commitment to
cease reprocessing through the Sellafield Magnox reprocessing
plant by about 2012 in order to meet national OSPAR commitments".
BNFL insists that Magnox spent nuclear waste fuel must be reprocessed.
As a consequence:
"The operation of Magnox reactors is inextricably
linked to the associated fuel cycle".
17. The company has, therefore, also announced
a timetable for the closure of its Magnox stations, which would
see them all closed by 2009.
18. There is currently a stock of around
7,000 tonnes of Magnox spent fuel, either in the station cores,
the station ponds or at Sellafield. Continuing to operate the
stations according to BNFL's programme will produce around an
additional 4-5,000 tonnes. The total amount expected to be reprocessed
between now and 2012 is projected to be around 11-12,000 tonnes.
This means that the reprocessing plant will be required to reprocess
over 1,000 tonnes per year between now and the end of 2012.
19. Throughputs in B205 since 1996 have
averaged less than 500 tonnes per year. In 2001-02 the throughput
was 786 tonnes, and a target has been set for the current year
of 800 tonnes. In contrast, a February 2000 BNFL submission to
the Environment Agency projected that B205's throughput would
have increased to 1,200 tonnes per year by now.
20. Cash is haemorrhaging from the Magnox
cycle at an alarming rate.
As a result of issues raised by Greenpeace, the Environment Agency,
during its review of Magnox station discharge authorisations,
asked BNFL to seek an opinion from independent financial experts.
BNFL refused. The Agency described this situation as not "fully
resolved to its satisfaction".
21. These reactors need to be closed down
as soon as possible. Continuing to operate them according to BNFL's
programme is simply adding to the liabilities which the LMA will
have to deal with. BNFL is already in danger of failing to meet
its own deadline for the closure of the Magnox reprocessing plant,
because the throughput at the plant has been so poor.
22. In addition to the economic arguments,
the Magnox reactors are all suffering from a string of safety
problems, mainly due to ageing, which should also require their
23. Payment of a management fee as proposed
by BNFL to British Energy is not a solution, would surely increase
running costs, and further delay the implementation of the only
24. The deal has been presented as a way
of settling the dispute between British Energy and BNFL on reprocessing
contracts. It appears to be simply a way of subsidising BE's reprocessing
contracts, which may amount to illegal state aid. This is exactly
the kind of transaction which the LMA must avoid. In addition,
as BNFL is a publicly owned energy undertaking, it may well be
subject to the Public Utilities Procurement Regulations and related
EC public utilities procurement directives and therefore should
put service contracts out to tender.
25. The UK is committed to achieving concentrations
in the environment "close to zero" by 2020. This doesn't
mean that discharges have to be "close to zero" by 2020,
it means that concentrations in the environment have to be "close
to zero" by that date. The UK should therefore be making
dramatic reductions in discharges now, not in 10-15 years. Any
increase in discharges from B205 as a result of increasing throughputs
is likely to be strongly opposed by other OSPAR states.
26. Likewise, any delay beyond 2012, in
the closure of B205 is also likely to elicit protests, especially
since there is a five-year time lag before some discharges cease.
Earlier closure of the Magnox reactors, would allow earlier closure
of B205, and would have the added advantage of improving the UK's
image with neighbouring OSPAR countries.
27. If the LMA's remit were the environmental
and sustainable management of nuclear waste, it would become clear
very quickly that the storage of spent nuclear waste fuel is a
far better option than continuing with reprocessing. In addition,
the customers and the LMA/BNFL would probably make financial savings
by moving to storage. The history of THORP also illustrates the
need for the LMA's exposure to BNFL liabilities to be severely
circumscribedlimited to past liabilities and not covering
future commercial blunders.
28. Poor throughputs have also plagued the
THORP reprocessing plant, and are causing a growing disquiet amongst
BNFL's overseas reprocessing customers. There is now serious doubt
over the profit projections originally used to justify THORP.
On the other hand, if throughputs were to increase, so would the
environmental impact of reprocessing.
29. In documents leaked to Greenpeace, BNFL
customers recently stated that: ". . . the next business
plan will result in another increase of more than 10 per cent
in operating costs, mainly due to the projected eleventh year
of operation of THORP. . . such cost increases and uncertainties
are commercially highly unsatisfactory and make it impossible
to manage our own fuel cycle business economically, given the
cost pressures we are under".
30. It is highly unlikely that THORP will
complete its baseload contracts within 11 years. The NII reports
that BNFL's Business Plan shows completion of the baseload contracts
in 2006-07 ie after 13 years.
THORP's average throughput since it opened has been around 450
tonnesyet it was supposed to reprocess 7,000 tonnes during
its first 10 years of operation. The Sellafield Newsletter of
15 March 2002 reported that the plant has met and exceeded its
734 tonne target for the 2001-02 financial year. The NII has confirmed
that THORP has been forced to reduce throughput because high level
waste tanks were in danger of being filled to above the maximum
31. The original THORP cost-plus contracts,
written in the 1970s, were designed to provide a profit to BNFL
even after providing for full decommissioning costs over the first
10 years of operation. However, it is clear that baseload customers
will not be paying the full cost of the extra years of operation
at THORP. Having expressed their displeasure at increasing costs
in spring 2001, the foreign customers were reported in October
2001 to have agreed on new contract terms. Although the customers
will pay more than originally anticipated, the extra cost has
been described as "not unreasonable", suggesting that
BNFL must have agreed to pay some of the costs of operating THORP
for extra baseload years. Above all, customers were said to be
satisfied to have limited their exposure to delays in vitrification
of high-level waste at Sellafield, and clarified that they would
not be billed for THORP decommissioning costs.
What is not clear yet, is whether the customers have been told
that the baseload period will almost certainly extend to 13 years
or more, or what proportion of the 30 per cent increase in operating
will be funded by BNFL. BNFL's proposals for funding three extra
baseload years of THORP's operation urgently need to be clarified,
and it should be made clear that this will not fall to the LMA.
32. In January 2001, the Nuclear Installations
Inspectorate issued BNFL with a specification requiring the current
1575m3 stock of Magnox and Oxide derived High Level Liquid Waste
held in tanks, to be reduced by defined annual reductions to a
"strategic stock" of around 200m3 by the year 2015.
In practice this means BNFL can add no more Highly Active Liquid
(HAL) to the tanks from reprocessing than they can extract by
vitrification, whilst also observing the annual reduction figure
imposed by NII. Meeting the reduction targets will depend on the
Waste Vitrification Plant (WVP) working properly.
33. BNFL is commissioning a third vitrification
production line which is expected to increase throughput capacity
by approximately 50 per cent. BNFL has projected that WVP will
produce 600 cans of vitrified product per year. The NII, however,
believes a figure of 475 is more realistic.
In their latest Sellafield Quarterly Report (1 October-31 December
2001) the NII has confirmed that THORP's reprocessing throughput
is being severely limited by poor performance in Sellafield's
Waste Vitrification Plant. Commenting on THORP's operations, the
NII report that:
"We are of the view that unless performance
of the vitrification plants improves, the future THORP reprocessing
throughput will be significantly affected".
34. In view of the substantial threat arising
from the storage of high-level waste, particularly in the post-September
11 security environment, the LMA should take urgent action to
reduce stocks much more quickly than the NII's 2015 deadline.
The quickest way to do this would be to end reprocessing.
35. The projected economic benefits, which
were originally used to justify THORP, are now very unlikely to
materialise. However, Sadnicki et al estimate that the
early ending of THORP reprocessing would most probably save all
parties a substantial sum of money, varying between £224
million and £526 million for the German contracts alone,
depending on the precise form of the new storage arrangements
and their timing.
36. BNFL's customers cannot exactly be described
as enthusiastic consumers of the services for which they have
contracted. Unfortunately, their contracts were signed in the
late 1970s, before the economics of reprocessing became clear.
37. Sellafield's second largest customer,
after the Japanese utilities, is British Energy. BE recently called
for an end to reprocessing. A BE spokesman stated that
"We simply do not believe in reprocessing
because of its huge costs and we want to renegotiate this contract.
We are paying six times as much to deal with our spent fuel as
American generators do at a time when electricity costs have fallen
BE has also stated that reprocessing ". . . has left us with
a service we don't need, for a product we don't want, and at a
price we cannot afford".
38. British Energy's executive chairman
Robin Jeffrey announced in February that the company was putting
on hold a move to refer its reprocessing contracts with BNFL to
the Office of Fair Trading.
It does not, however, mean that BE would not welcome a switch
from reprocessing to storage of spent nuclear waste fuel.
39. In view of the pressing need for a reduction
in the stocks of high-level liquid waste; the escalating costs
of reprocessing; the lack of demand for, and hazardous nature
of plutonium; and the reluctance on the part of many customers
to continue with reprocessing; the LMA should initiate discussions
with BNFL's existing reprocessing customers, including British
Energy, to evaluate the potential for renegotiating the contracts.
This should not be left to BNFL. In the run-up to the establishment
of the LMA, no new deals between BNFL and BE which trade-off a
management fee for running the Magnox stations against an agreement
to continue with reprocessing should be allowed to go ahead and
pre-empt options for the LMA to seek renegotiation.
40. The disagreements between Greenpeace
and the Government concerning the economics of the Sellafield
MOX Plant have been well rehearsed during recent public consultations
and in Court.
41. Nuclear utilities with reprocessing
contracts with BNFL are bound by those contracts to take back
their plutonium. This does not necessarily mean they will be enthusiastic
purchasers of MOX. The only options which BNFL offer to its customers
are to receive their plutonium back as plutonium oxide, or in
the form of MOX fuel. An alternative way of dealing with the plutonium
we have already created would be to immobilise it as a proliferation-resistant
waste-form, and store it in secure stores which meet with strict
anti-proliferation and security requirements. The LMA should continue
the work started by BNFL on plutonium immobilisation and offer
immobilisation as a service to BNFL's customers who have already
had their spent nuclear waste fuel reprocessed.
42. MOX will not "use up" the
existing stockpile of plutonium at Sellafield. Most of the plutonium
that BNFL wishes to turn into MOX has not yet been separated in
THORP. The economic case BNFL has claimed or the SMP rests on
future reprocessing in THORP separating yet more plutonium from
foreign nuclear waste fuel. BNFL expects its biggest customer
to be Japan.
Table 3: Separated Plutonium Stocks
held at Sellafield (Te) 
||Other UK||Overseas Customers
|Projected from contractual commitments to reprocessing
43. As can be seen from the above table, ending reprocessing
now would reduce the total amount of plutonium requiring storage
to around 50 per cent of the projected stockpile.
44. As a result, partly of the data falsification scandal,
BNFL has failed to secure any contracts for MOX fuel in Japan.
Despite dropping the portion of our Court action concerning the
lack of Japanese contracts, Greenpeace still belives BNFL is unlikely
to secure any contracts with Japan. Satoshi Azumi, manager for
nuclear fuel engineering at Kansai Electric, the company which
took delivery of the faulty MOX from BNFL in 1999, told the
New York Times on 5 July 2002, that ". . . we have no
plans for a return shipment from BNFL. BNFL destroyed the trust
between us, and until their reputation is restored and the people
can trust them, there are no more plans to buy more MOX pellets
from them" .
45. The estimated £200 million profit also relies
on customers signing contracts that do not yet exist. BNFL describe
an agreement with a Swedish nuclear utility as a "contract"
in its Press Release of 8 May 2001yet the reactor in question
does not even have government permission to use MOX. BNFL will
need Japanese contracts if SMP is to make a profiteven
after the capital costs of building the plant have been disregarded.
46. BNFL is set to lose at least £270 million from
building and operating the SMP. With only its existing firm contracts
it will lose far more. These costs probably do not include the
full costs of dealing with the nuclear wastes that will be produced,
since details of these costs have been kept secret.
47. The prospect of British Energy using Sizewell B to
burn 30 per cent MOX is poor. Sadnicki and Barker estimate that
the conversion costs would make a negative return. Nor is there
an economic case for 100 per cent MOX burn in a new generation
48. SMP is rapidly turning into a financial blackhole.
BNFL recently increased the amount it wanted to "write-off"
on SMP from £300 million to £472 million, while increasing
its estimate for decommissioning from £50 million to £92
million, an amount that is likely to rise further. Any losses
should fall on BNFL and not the LMA.
49. We note that, in the first instance the risks arising
from the material that the new police authority are guarding would
be much reduced were the considerable quantities of plutonium
(see above) eliminated by appropriate immobilisation technologies.
50. Further, although the institutional structure of
the new police force may be an improvement on that existing, it
remains of concern that the police authority to whom they are
accountable will continue to have site licensees in the majority
of positions. How will the constabulary respond when it identifies
security problems that could only be remedied by significant interruption/cost
to on-site operation? Whether these exist or not there is a perceived
conflict of interest which will not allow public confidence to
1. It is uneconomic to continue operating the Magnox
reactors. For economic and safety reasons they should be closed
down as quickly as possible.
2. For environmental reasons, B205 also needs to be closed
down as soon as possible. Given the poor throughput of B205 in
recent years, Magnox reactors need to be closed down urgently,
rather than according to BNFL's proposed closure timetable. The
proposed deal between BNFL and BE should not be allowed to pre-empt
decisions by the LMA.
3. BNFL's contracts with its reprocessing customers should
be renegotiated in order to facilitate the early closure of THORP.
The LMA should initiate these discussions and not leave it to
4. The LMA should continue investigations into plutonium
5. Ending reprocessing in BNFL's two reprocessing plants
as soon as possible will:
(a) Facilitate the early vitrification of dangerous high
level liquid waste stocks.
(b) Reduce plutonium stockpiles requiring expensive processing
and secure storage by as much as 50 per cent.
(c) Assist the UK in meeting its commitments under the
OSPAR Treaty and improve international relations, and
(d) Minimise the exposure of UK taxpayers to escalating
6. The creation and remit of the LMA must be clearly
confined to dealing with past liabilities not future ones: otherwise
the setting up of the LMA will amount to little more than handing
over a blank cheque to the nuclear sector.
7. If the LMA is to inspire public confidence, the rump
BNFL must concentrate on clean-up and decommissioning work, and
not be involved in new reactor build, whether in the UK or elsewhere.
House of Commons Trade and Industry Select Committee "BNFL
Public-Private Partnership" (May 2000). Back
See for example "Responses from BNFL to specific questions
and propositions in PIU nuclear scoping note" ie the UK Energy
BNFL (2001) Responses from BNFL to Specific Questions and Propositions
in PIU Scoping Note. Back
Originally announced May 2000 but modified by BNFL (2001) Annual
Report and Accounts 2001. The announcement that Chapelcross and
Calder Hall will close early brings the date forward by one year
to 2009. Back
BNFL National Stakeholder Dialogue, Spent Fuel Management Working
Group, Appendix 8 & 9 July 2002. Back
See CORE Briefing 27 June 2002 "Magnox Reprocessing
Failures, Threaten More UK Power Stations". Back
Sadnicki (12 March 2002) Examination of BNFL Reports and Accounts.
A report for Nuala Ahern MEP. Back
See for example "Review of Ageing Processes and their
influence on Safety and Performance of Wylfa Power Station"
Large and Associates, 14 March 2001. Back
See leaked minutes of meetings between BNFL and its Overseas
Baseload Customers at www.britishnuclearfuels.com Back
HSE (August 2001) The storage of liquid high level waste at BNFL
Sellafield. Addendum to February 2000 report. Para 114. Back
Sellafield waste tanks "pose an undue risk" Paul Brown,
The Guardian, Wednesday July 3, 2002. Back
Nuclear Fuel 15 October 2001. "BNFL overseas customers agree
on new reprocessing contract terms". Back
HSE News Release EO15:01 31 January 2001. Back
14 HSE Report (February 2000) "The Storage of Liquid High-Level
Waste at Sellafield". Back
Quoted in CORE (14 Feb 2002) Briefing 02/02 "Calder Hall
Accident and THORP Waste Problems". Back
Sadnicki, Barker and MacKerron, "THORP: The Case for Contract
Renegotiation", Friends of the Earth June 1999. Back
Herald (2001) Nuclear Giant in Spent Fuel Switch. James Freeman
and Catherine MacLeod. 15 November. Back
Nucleonics Week (2002) BE Blames Reprocessing Charges for Higher
UK Operating Costs. Vol. 42 No. 46. page 6. 15 November. Back
See For Example Reuters (26 Feb 2002) "Brit Energy,
BNFL look at replacing nuke reactors", By Matthew Jones. Back
Reproduced from BNFL National Stakeholder Dialogue, Plutonium
Working Group (10 November 2000) Draft Interim Report. Back
"Japanese Shipment of Nuclear Fuel Raises Security Fears"
by Howard French, New York Times, 5 July 2002. Back
Barker and Sadnicki, "The Disposition of Civil Plutonium
in the UK", April 2001. Back