LITHUANIAN PLANS TO EXTEND IGNALINA NUCLEAR POWER

C O N F I D E N T I A L SECTION 01 OF 02 VILNIUS 000306

SIPDIS

SIPDIS

E.O. 12958: DECL: 05/01/2017
TAGS: ENRG PREL ECON EUN XG LH
SUBJECT: LITHUANIAN PLANS TO EXTEND IGNALINA NUCLEAR POWER
PLANT (INPP) OPERATION

REF: A. VILNIUS 77

B. VILNIUS 239

Classified By: Political/Economic Section Chief Rebecca Dunham for reas
ons 1.4 (b) and (d).


1. (C) Summary: The GOL may ask the EU to approve extending
the life of Ignalina Nuclear Power Plant's (INPP) second
unit, which is scheduled to be shut down no later than
December 31, 2009 in accordance with Lithuania's EU accession
treaty. (Note: Unit One was shut down in 2004.) The GOL and
members of the Seimas (parliament) differ on how to approach
the EU on this sensitive issue in the wake of European
Commission President Barroso's March 29 warning to the Seimas
that an extension is not feasible. The GOL plans to present
the EU with studies evaluating the negative economic impact
of the scheduled shutdown. Parliamentarians prefer a more
political approach that emphasizes the need for Lithuania to
avoid over-dependence on Russian energy. End summary.

The EU's preemptive "no" to extension . . .
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2. (U) Jose Manuel Barroso, president of the European
Commission, addressed a March 29 session of the Seimas
commemorating the 50th anniversary of the Treaty of Rome.
Responding to an MP's question about the possibility of
extending the operation of Ignalina's second reactor, Barroso
was firmly negative. Barroso stated that he sees no
possibilities for Lithuania to extend Ignalina's operation
past 2009, and reminded the Seimas that Lithuania pledged to
shut down and decommission the nuclear plant as part of its
EU accession treaty. He said that attempts to change the
terms of the treaty to extend Ignalina would require
Lithuania to get the agreement of every EU member state,
which he evaluated as impossible. Barroso urged Lithuania to
abide by the terms laid out in the accession treaty and told
the lawmakers that the sanctity of EU treaties is part of
what allows the EU to function.


3. (U) Prime Minister Kirkilas also spoke out in early April
against the parliament's draft legislation to extend the life
of INPP Unit Two and warned that if it continued functioning,
Lithuania would face EU sanctions. Kirkilas opined that it
would not be possible to get the assent of all other EU
member states, particularly Germany and Austria, required to
change the EU accession treaty. Kirkilas also warned that if
Ignalina is not shut down on schedule, Lithuania would have
to repay the EU funds allocated for the plant's
decommissioning and would subsequently have to pay these
costs out of its own pocket. Kirkilas allowed that if the
parliament votes to approach the EU on extending Ignalina's
operation, the GOL would start consultations, but said that
he doubted that consultations would bring any new answers.
President Adamkus also warned in early April that extending
the life of Ignalina's second reactor past 2009 would violate
Lithuania's international obligations and could have
"unpredictable consequences," including harming Lithuania's
reputation as a reliable partner.

But Eurocrats unlikely to stop Lithuania from trying
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4. (C) Despite the Prime Minister's public condemnation of
parliament's plans, both the Seimas and GOL support appealing
to the EU to allow Lithuania to extend the life of Ignalina's
second reactor until 2015, when a new nuclear power plant is
scheduled to come online. Prime Ministerial energy advisor
Saulius Specius told us March 28 that the extension is not as
dead an issue as the EU wants to think it is. He said that
the GOL believes that it has the legal right to apply for an
extension based on Article 37 in Protocol 4 of its EU
Accession Treaty.


5. (U) Article 37 states: "If, until the end of a period of
up to three years after accession, difficulties arise which
are serious and liable to persist in any sector of the
economy or which could bring about serious deterioration in
the economic situation of a given area, a new Member State
may apply for authorization to take protective measures in
order to rectify the situation and adjust the sector
concerned to the economy of the common market...The measures
authorized . . . may involve derogations from the rules of
the EC Treaty and from this Act to such an extent and for
such periods as are strictly necessary in order to attain the
objectives. . .. Priority shall be given to such measures as
will least disturb the functioning of the common market."


6. (C) Specius said that the GOL wants to make the extension

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a technical issue rather than a political issue. GOL legal
experts believe that the legal language in the EU Accession
treaty allows Lithuania to apply to continue operating INPP
if the alternative would seriously damage the economy. To
that end, said Specius, the government is calculating
Lithuania's energy needs during the expected "energy gap:"
the period between closing INPP Unit Two and bringing a new
nuclear plant on line. Specius said that the GOL is fully
aware they will have to convince a skeptical audience in the
EU, but believes that technical evidence of an impending
crisis will be enough -- both legally and politically -- to
change hearts and minds in Brussels. He also said that if
the GOL's analysis shows that Lithuania would not be harmed
by closing Unit Two, then "we won't ask" to extend its life.
He was uncertain about when the GOL would complete its study.


Parliament paving a different route to the same goal
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7. (C) Meanwhile, the parliament has opted for a noisier,
more populist approach. On April 3, parliament held a
session to discuss the consequences of closing INPP Unit Two
in 2009 as part of an effort to rally members of parliament
to vote in favor of requesting the extension. Several
scientific luminaries presented arguments for extending
INPP's life. They argued that INPP's extensive safety
upgrades now rendered the EU's original concerns about the
facility anachronistic. (Note: This assessment stands in
stark contrast to the assessment we were given by a Lawrence
Livermore National Lab nuclear physicist who sat on the
international steering committee that oversaw the security
and safety upgrades of INPP. In his opinion, though INPP is
now probably as safe as it can be, its "fundamentally crappy
design" means that it can never meet western safety
standards.) Some also cited the economic damage clause of
Protocol 4 of the EU Accession Treaty, highlighting the
potential harmful consequences to Lithuania from increased
energy prices. Several also cautioned against relying even
more on an increasingly unpredictable Russia for electricity.



8. (U) Minister of Economy Vytas Navickas acknowledged at the
Seimas session that Lithuania will probably see a 39 percent
increase in the price of electricity after Unit Two's
shutdown. He cautioned, however, that if Lithuania reneged
on its pledge to close it, the GOL might have to return the
EUR 80 million in EU funds it has already received for INPP's
decommissioning.


9. (U) Parliament continues to debate the issue. Opposed by
many in the governing coalition, but heavily favored by the
opposition, parliamentary leaders have repeatedly managed to
prevent this draft legislation from coming to the floor for a
final vote.

Comment
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10. (C) There is no imminent energy shortage in Lithuania.
Rhetoric from politicians about a looming "energy gap"
reflects fears that Lithuania will become more dependent on
Russian energy after Ignalina shuts down, as well as
disquiet over the loss of revenue from exporting excess
electricity. Planned projects that could provide
alternatives to Russian electricity imports, like links to
the western European energy grids via Poland and/or Sweden
(ref A),will not be available until 2011 at the earliest. A
new nuclear power plant (ref B) won't be ready before 2015,
and probably not until later.


11. (C) But Lithuania can already produce enough energy to
cover its needs by increasing output from traditional (and
soon-to-be-upgraded) gas-fired plants or it can import
electricity from Russia. Both options involve increasing
reliance on Russian energy sources; gas-fired plants such as
Elektrenai will require substantial increases in natural gas
imports from Russia. Projections of the increased cost of
post-Ignalina electricity from the Minister of Economy,
National Energy Strategy, and the Lithuanian Energy Institute
range from 40 to 100 percent higher. It is nearly impossible
to make accurate estimates in part because the price of
Russian natural gas in the 2010-11 timeframe is nearly
unknowable. Regardless of the financial costs, the prospect
of long-term reliance on Russia for yet another source of
energy appears galling (and perhaps even dangerous) to the
many Lithuanians who believe that Russia already uses energy
exports as a political tool to achieve the Kremlin's goals.
CLOUD