Summary of Session 2.C. Funding approaches and strategies

Full text: While there is a need to find and use decommissioning strategies and techniques that are cost effective as well as safe, decommissioning is not possible without sufficient funds.Whatever funding arrangements are adopted, their aim is to ensure, with a high degree of confidence, that sufficient funds are available when they are needed to meet all nuclear liabilities. This requires a high degree of competence and care on the part of whoever is responsible for managing the funds, backed up by some form of independent review or oversight. Three main types of funding arrangement are being used: direct funding from government; funds managed internally within operating organizations (sometimes segregated from operating funds, sometimes not); and externally administered funds specifically established for the purpose (or, in some cases, for the broader purpose of radioactive waste management). Within the European Union, systems of both internal and external types are operating successfully at present. Accurate and robust estimation of the cost of decommissioning is the fundamental basis for planning funding.This requires not only that initial cost estimates are careful and thorough, but that estimates are regularly and frequently reviewed to ensure that they remain the best possible estimates. Similarly, the adequacy of funds should be checked regularly and frequently against updated cost estimates. Nevertheless, it must be recognized that even the most careful estimates will be subject to some uncertainty, particularly in relation to unforeseeable factors beyond the control of the operator or fund managers, such as changes in staff or equipment costs, regulatory requirements or government priorities and policies. These uncertainties must be taken into account in planning reliable funding arrangements. A typical approach to technical uncertainties is to add a contingency to the cost estimates, but there may be other possible approaches, such as obtaining insurance against such unforeseen changes. Similarly, even with the most careful investment planning, there will be some uncertainty about whether the funding arrangements will turn out to be sufficient to meet the costs when they arise, particularly in relation to unexpected changes in market conditions. Some States require that financial provisions are made on the basis of undiscounted costs (i.e. assuming that the value of the funds will keep pace with inflation but the real value will not increase), while others permit discounting of cost estimates. Although discounting has a sound economic basis, the assumption of continuing economic growth over a period of several decades may be considered a further source of uncertainty. One way of minimizing the uncertainty would be to complete decommissioning as early as possible. However, this benefit of early dismantling must be balanced against the many other factors that influence the choice of decommissioning strategy. This might be expressed as follows: decommissioning should be carried out 'as soon as reasonably practicable', taking due account of all the circumstances. At present, an important source of uncertainty is the lack of clear and stable definitions of 'boundary conditions', particularly the disposal routes for radioactive wastes and criteria for the release of materials, buildings and sites from regulatory control.The absence of such arrangements in many States is a significant impediment to the reliable planning of funding, and inconsistencies between the arrangements in different States may create difficulties in terms of trade and commercial competition. In relation to clearance criteria, international agreement on criteria would be the best solution. (The European Commission has published advisory clearance criteria for its member States.) The provision of disposal routes, however, is primarily a function of national governments. Clear and definite programmes for the construction of repositories would be of major assistance in planning financial provisions for safe decommissioning. Some States simply do not have the resources to fund their nuclear liabilities or to carry out decommissioning, and have to seek funding and expertise through bilateral, multilateral or international arrangements. In such cases, the IAEA can play an important role, for example by facilitating co-ordination of activities between the different national and international organizations involved, by working with States to identify the best decommissioning strategies for their national circumstances, and by promoting the international sharing of experience. (author)