CZECH REPUBLIC: ALL CONFLICTED ABOUT NUCLEAR ENERGY

UNCLAS SECTION 01 OF 02 PRAGUE 000112 SIPDIS SIPDIS SENSITIVE E.O. 12958: N/A TAGS: ENRG ECON PGOV PREL EZ SUBJECT: CZECH REPUBLIC: ALL CONFLICTED ABOUT NUCLEAR ENERGY REF: A. PRAGUE 992 ¶B. PRAGUE 256 ¶C. PRAGUE 77 ¶1. (SBU) SUMMARY AND COMMENT: It is difficult to imagine how the Czech Republic will meet its future electricity demand AND new EU CO2 emissions cuts without expanding its nuclear power plants. At the same time, nuclear energy is arguably the one issue that could cause the Green Party to walk and bring down the government coalition. Reflecting this reality, Czech nuclear energy policy is guided by two conflicting policy guidelines: (1) the coalition agreement, prohibiting expansion or even planning for expansion of existing nuclear facilities; (2) the Czech Energy Concept Paper for 2005-2030 approved by the previous government, that calls for construction of two additional nuclear reactors. In practice, implementing government Ministries and institutions are doing as much as possible, as silently as possible, to pave the way for nuclear expansion by 2020, when domestic demand is expected to outpace domestic supply. However, there is only so much that can be done silently to ensure timely expansion of nuclear energy to meet future energy demands. The government could be forced to reconcile the two conflicting policy documents in the latter part of 2008 when an updated Czech Energy Concept paper is due for government approval. Unlike most other contentious issues in the Czech Republic, government consensus is the key obstacle whereas Parliamentary support is overwhelmingly for expansion of nuclear energy. END SUMMARY AND COMMENT. THE NUCLEAR APPEAL -------------- ¶2. (U) As reported in ref A, the unified message from the Czech energy industry is that nuclear generation is the only option available to the Czech Republic that reduces carbon emissions, increases energy security, and effectively meets growing domestic demand. Even though the Czech Republic is supposed to increase its use of renewable energy assets from the current 3% to 13.5% by 2020 under new EU regulations, this is widely regarded -- even among some members of the Green Party -- as pure science fiction. CEZ - the Czech electricity monopoly that is 66.7% owned by the government -- currently generates 64% of electricity via 16 coal power plants, 30% with two nuclear power plants, and the remainder via gas and renewables. ¶3. (U) Nuclear energy makes sense for the Czech Republic not �00A;just in terms of energy efficiency and emissions control, but also because the GOCR has faced less popular and Parliamentary opposition to nuclear energy expansion than its neighbors Germany or Austria. In terms of public acceptance to the two existing nuclear plants, 80% of local residents support Dukovany whereas 50% of local residents support Temelin, despite the superior safety and security features at Temelin. Temelin Communications Department Head Milan Musak believes this is explained by local economic conditions. Dukovany is in an extremely poor area, where people's livelihoods and jobs depend more heavily on Dukovany than is the case in the relatively prosperous region around Temelin. NUCLEAR EXPANSION TIMELINE -------------- ¶4. (SBU) According to CEZ Executive Director for Power Generation Vladimir Hlavinka, domestic electricity demand will exceed supply somewhere around 2020. Regarding the timeline required for expanding nuclear energy, he explained that the construction and test phase takes seven years, territorial approval three years, the environmental impact assessment (EIA) two years, and the EU public tender process also two years. Given that both the EIA and the public tender process must be completed before a territorial approval can be requested, the two processes must begin in ¶2008. Hlavinka told emboff that he does not/not need government permission per se to begin the EIA. However, CEZ management believes starting the EIA could trigger a government crisis, which is not good for its majority shareholder -- the Czech government. GREEN PARTY "CRAZY TALK" -------------- ¶5. (SBU) The political dilemma stems almost completely from the presence in the governing coalition of the Green Party, which is strongly anti-nuclear and anti-coal. For those responsible for ensuring adequate electricity supply to enable the Czech economy to keep growing, the Greens' policy is crazy talk. The current coalition agreement prohibits expanding or even planning for the expansion of nuclear power plants. The same coalition agreement also puts restrictions on coal mining expansion. According to Ministry of Industry and Trade (MPO) experts, to be against coal and against nuclear at the same time for the Czech Republic is "technical PRAGUE 00000112 002 OF 002 nonsense." ¶6. (SBU) Consequently, there are many, especially within MPO, who simply disregard the current coalition agreement on nuclear energy. These bureaucrats point out that PM Topolanek himself has said publicly that nuclear energy is essential to meeting future Czech energy demands. Still other argue that the Czech Energy Concept paper was approved by the previous government so unless the current government actively overturns it -- which they have not -- then the paper stands. One MPO contact even insisted, "our obligation is to the Czech State, not temporary politicians." Another MPO contact admitted, "we pretend we didn't notice (the coalition agreement) and we stick to this material (the energy concept paper)." ¶7. (SBU) Instead of nuclear and coal, the Greens believe gas is the answer for the future. Although gas power plants can be built relatively quickly (2-3 years),both from the economic (increasing prices) and energy security (increasing dependence on Russia) perspectives, this is far from desirable. Martin Bursik, Deputy Prime Minister, Minister of Environment, and the Green Party Chairman, seemed to discount the concerns regarding energy dependence when he recently told the Ambassador that Russia has been a stable strategic partner. In his view, Europe's relationship with Russia in the areas of energy had to be resolved by the EU as a whole, not by the Czech Republic alone. PACES COMMISSION: THE HONEST BROKER? -------------- ¶8. (SBU) As mandated by Czech law, the Czech energy concept paper must be updated every five years. The next draft is due by end-2008, which must then be presented to government for approval. MPO indicates that the substance will largely be based on the findings of the Paces Commission. Head of the Czech Academy of Sciences Vaclav Paces has been given the dubious honor of assessing future Czech energy needs. There are conflicting expectations about whether the Commission will "only" assess the domestic energy needs or also make a policy recommendation explicitly supporting nuclear energy expansion. Still, others expect the Commission to "punt" and postpone the problem as long as possible by submitting various scenarios for energy demand. While the Commission's endorsement of nuclear energy expansion would be helpful, the CEZ Executive Director for Power Generation said that alone would not trigger CEZ starting its environmental impact assessment for nuclear power expansion. CZECH NUCLEAR ENERGY ASSETS -------------- ¶9. (U) In 2006, nuclear generated electricity accounted for 42% of total CEZ electricity generation (26 TWh out of 62 TWh total). CEZ is the second largest exporter of electricity in Europe after EDF of France. There are currently six nuclear reactors at two nuclear energy plants in the Czech Republic. The older Dukovany plant (est. 1985) in southern Moravia has four VVER 440 reactors of Soviet design and technology. Temelin (est. 2004) in south Bohemia close to Austria, has two VVER 1000 reactors of Russian technology and American control system. Graber