Brexit and nuclear – important steps towards a new framework

Posted in Energy

On the 12 July 2018, the Government published its White Paper on Brexit, detailing the UK’s future relationship with the EU. Included in the White Paper are the Government’s proposals concerning the civil nuclear industry, as the commencement of the Article 50 withdrawal process on 29 March 2017 also initiated withdrawal from the European Atomic Energy Community (Euratom) which provides the legal framework for safeguarding arrangements for civil nuclear power generation and radioactive waste management for members of the EU, as well as organizing mutual cooperation between the member states in the development of the civil nuclear industry.

The White Paper makes clear that the UK is seeking to establish a close association with Euratom, one which is broader than any agreement between Euratom and a third country currently. To achieve this, the UK has proposed a new relationship based on a comprehensive Nuclear Cooperation Agreement (NCA) between the UK and Euratom. The White Paper asserts that the NCA should:

  • establish a cooperation procedure between the Office for Nuclear Regulation (ONR), the UK regulator for the new nuclear safeguards regime, and Euratom;
  • allow for the UK’s association with the Euratom Research and Training Programme;
  • ensure that contractual arrangements for the supply of nuclear material continue, by allowing existing contracts to retain their validity after the UK’s exit or allowing for their re-approval prior to the UK’s exit;
  • simplify and minimise barriers relating to export control arrangements of nuclear materials, equipment and technology between the UK and the Euratom community; and
  • allow for technical cooperation on nuclear safety through UK participation in EU systems, such as the European Community Urgent Radiological Exchange (ECURIE) and the European Radiological Dara Exchange Platform (EURDEP), and continued cooperation with the European Observatory on the Supply of Medical Radioisotopes.

Whilst some countries require NCAs to be in place in order to allow trade in the civil nuclear sector (notably the USA, Japan, Canada and Australia, the so called priority countries discussed below), an NCA is not specifically required by either the UK or Euratom in order for trade in the civil nuclear sector to continue between the UK and Euratom[1]. Instead, this NCA will be a bespoke instrument to address uncertainties arising out of the UK’s exit from Euratom and its existing international agreements and to facilitate continued close cooperation between the UK and Euratom in areas such as research and development.  However, the time required to agree such a bespoke NCA with Euratom would likely require the transition period to be agreed, if this new NCA is to be in place before the UK leaves the existing Euratom arrangements.

Separately, the Department for Business, Energy & Industrial Strategy (BEIS) is also engaged in establishing the framework for the new domestic nuclear safeguards regime which will apply after the UK’s withdrawal from Euratom. On 7 July, BEIS released its consultation paper on proposed Nuclear Safeguards Regulations and is seeking feedback on the operability of the proposals put forward. The regulations are to operate independently from Euratom with the oversight of the ONR and will be made under enabling powers contained in the Nuclear Safeguards Act 2018 and the Energy Act 2013 (as amended). Responses are to be submitted before the deadline on the 14 September 2018. The consultation paper and draft regulations are available here.

The Government has committed that the new regime will be equivalent to the protections provided for by Euratom both in terms of coverage and effectiveness. To minimize disruption to operators, BEIS has sought broadly to reflect the requirements of EU Regulation on the application of Euratom safeguards (302/2005 (the Euratom Regulation). Although the objective of minimizing disruption will be welcomed by the industry, the extent to which this has been achieved in terms of the practical requirements on the industry will be under scrutiny during this consultation phase. Industry will also be interested in input from the ONR on how it intends to implement its new responsibilities, for example in terms of the ONR’s expectations for the new Accounting and Control Plans required under draft regulation 7. The Government is also proposing to include transitional provisions in the Nuclear Safeguards Regulations. These have not yet been included, but are discussed in the consultation document and will be drafted following receipt of responses to the consultation.

In June, shortly after signature of a new bilateral UK-US Nuclear Cooperation Agreement on 4 May 2018, the UK successfully negotiated with the International Atomic Energy Agency (IAEA) bilateral safeguards agreements which will replace the current, trilateral arrangements between the UK, IAEA and Euratom. The Nuclear Safeguards Regulations will also give effect to the UK’s obligations under these new bilateral agreements with the IAEA as well as seeking to ensure that the UK can meet its obligations with the ‘priority countries’ (Australia, Canada, Japan and the USA).

The draft Nuclear Safeguards Regulations do not include a fees regime to cover the costs of the new framework, but the consultation does request views on the introduction of a fees regime to enable these costs to be recovered from industry, rather than being paid out of central Government funds (as the safeguarding costs have been to date under the UK’s membership of the Euratom regime). The Government will decide whether to introduce a fees regime following responses to the current consultation. However, any fees regime is expected to be the subject of its own consultation (perhaps when the Government undertaking to cover these costs expires in March 2019). BEIS are also seeking views on the removal of the cost recovery regime for ‘special services’ associated with certain safeguards, which are currently recoverable by operators under the Euratom Regulation but not under the current draft Nuclear Safeguards Regulations.

In summary, publishing the White Paper and the consultation relating to the Nuclear Safeguards Regulations are both important steps towards establishing the framework for nuclear trade, cooperation and safeguards after the UK’s withdrawal from the EU, but also highlight the scale of the undertaking if the UK is to exit Euratom smoothly with minimal impact on the civil nuclear sector.

 

[1] Department for Business, Energy & Industrial Strategy, Euratom Factsheet,: Nuclear Cooperation Agreement, June 2018

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