EnBW Opens Latest Chapter in Germany's Nuclear Energy

UNCLAS FRANKFURT 000258

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ENRG SENV PGOV GM
SUBJECT: EnBW Opens Latest Chapter in Germany's Nuclear Energy
Phase-Out

REF: A) 2005 Frankfurt 4506, B) 2005 Berlin 2395


1. SUMMARY: With its request to lengthen the life of
thirty-year-old nuclear power plant Neckarwestheim I (scheduled for
decommissioning in 2008),EnBW -- southwest Germany's largest energy
supplier -- is posing an indirect challenge to the "Nuclear
Phase-Out" plan legislated by Germany's then
SPD/Social-Democratic-Greens government in 2002 and endorsed by the
current ruling coalition. Conservative state politicians expressed
support for EnBW's request to "borrow" time from the newer
Neckarwestheim II reactor -- as they did for RWE's request to
lengthen the lifespan of Hesse's controversial Biblis A reactor --
but recognize that only the SPD-controlled federal Environment
Ministry can approve the extensions. Both requests are stirring the
debate over nuclear phase-out in a time of high energy prices,
questionable energy security, and climate change concerns -- all of
which may be softening German public opinion. END SUMMARY.

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Background On Nuclear Phase-Out
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2. In June 2000, the SPD-Greens federal government and
representatives of Germany's leading power suppliers agreed to
decommission the country's 19 nuclear power plants over two decades
(following an average of 32 years of operation, measured in terms of
total electricity output). The phase-out agreement, codified into
law two years later, forbids the construction of new plants and
mandates on-site storage of nuclear waste pending establishment of a
permanent storage facility. In return, the "Red-Green" government
committed to support reactor operations -- essentially buying peace
against massive demonstrations which hampered spent fuel shipments
in the 1980s and 1990s.


3. Germany relies on nuclear power for about thirty percent of its
electricity needs (putting it just over the EU average). The state
of Baden-Wuerttemberg is much more dependent on nuclear power (over
half of total consumption),as home to both older plants (such as
Obrigheim, closed in May 2005) and some of Germany's newest reactors
including Neckarwestheim II (which would be the last plant
decommissioned under the current agreement, in about 2021).

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ENBW / Neckarwestheim: Buying Time Until The Next Government?
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4. In December, regional energy supplier EnBW applied to transfer
electricity output from Neckarwestheim II (built in 1988) to
Neckarwestheim I (built in 1976 and one of Germany's oldest
operating reactors) -- allowing EnBW to keep Neckarwestheim I
(currently scheduled for decommissioning in 2008) running until

2017. EnBW argues that keeping both plants in operation offers
positive synergy effects, but the request, which would create a
precedent, is forcing larger issues: the 2000 phaseout agreement
allows for shifting energy quantities, but transfers were supposed
to benefit newer plants and promote the earlier decommissioning of
older reactors. SPD, Greens, and environmental representatives
argue that the EnBW request is solely intended to buy time for older
reactors in the hope that the next federal government will reverse
the nuclear phase-out. Conservatives, including Baden-Wuerttemberg
Minister-President Guenther Oettinger (CDU),support EnBW and say
that decommissioning operating reactors would damage the German
economy, raise prices, and exacerbate climate change. CDU and FDP
representatives say that if reactors were unsafe, they wouldn't be
operating today.

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Biblis: Defending An Unpopular Reactor
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5. Even more controversial is the request by RWE (Germany's largest
energy supplier) to delay the decommissioning of Biblis A from 2007
to 2011 by transferring energy quantities from an already
decommissioned nuclear power plant (Muehlheim-Kaerlich). Built in
1974, Biblis A is one of the oldest nuclear power plants in Germany
(Biblis B, built in 1976, is scheduled to cease operations in 2009).
Biblis A, which produces one-third of the electricity needs of the
state of Hesse, has gained notoriety over the years because of
numerous safety incidents and expert opinions that it could not
reliably withstand a terrorist attack using a commercial aircraft.
RWE counters that upgrades totaling over EUR 500 million have made
Biblis comparable to newer nuclear power plants and that shutting it
down would undermine Germany's electricity supply, adding that the
transfer will give a reasonable timeframe to discuss Germany's
future energy supply before taking irreversible steps to
decommission large reactors.

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Looking Ahead
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6. COMMENT: While conservative state governments are supportive,
the authority to transfer electricity operation credits (and thereby
extend reactor life) lies with federal Environment Minister Sigmar
Gabriel (SPD) -- a vocal proponent of continued "phaseout" -- along
with the federal Economic ministry and Chancellery, which both
unofficially oppose decommissioning. The decision puts German
politicians in a bind, since the EU's latest move to demand greater
CO2 reductions in Germany (allowing only 453 million tons between
2008 and 2012 instead of 465 million) speaks against phasing out
nuclear energy; experts say additional CO2 reduction is impossible
without nuclear power plants.


7. Utilities argue that existing nuclear reactors represent the
most cost-effective and cleanest energy source in Germany (while
opponents point to tax breaks and decommissioning/disposal costs).
As a leading center for export-oriented manufacturing --
Baden-Wuerttemberg is home to Daimler-Chrysler, Bosch (the world's
largest automotive supplier),and BASF (Europe's largest chemical
concern) -- the state's large industrial enterprises want nuclear
power as a means to help hold the line on energy costs (a factor in
economic competitiveness and future investment decisions).


8. German public opinion may be "warming up" slowly to the
continued operation of existing reactors. Though a majority has
consistently favored the eventual phaseout of nuclear power, in a
January 2007 FORSA poll, 61 percent of Germans polled said they
would only support decommissioning reactors after alternative
sources (wind, solar) can offer comparable output. This poll (which
found cautious majorities among FDP, CDU, and SPD voters) reflects
recent remarks by Chancellor Merkel and Economics Minister Glos, who
have called on the anti-nuclear lobby to offer realistic
alternatives which meet climate change concerns. Nuclear energy
proponents have also raised this issue recently, seeking to
capitalize on concerns over the security of Germany's energy supply
from Russia in the wake of Gazprom's recent dispute with Belarus.
END COMMENT.


9. This message was coordinated with Embassy Berlin.

POWELL