For three decades the United States has been a key strategic market for the French atomic energy giant AREVA. The firm strongly supported the Bush administration’s efforts to revive the nuclear industry in 2005 and is now taking advantage of the Obama administration’s investments in nuclear energy.
AREVA, owned by the French government, is a world leader in the nuclear sector with a commercial presence in 100 countries, almost 50,000 employees around the world, and $12.57 billion in revenues in 2010.
Better positioned than any of its competitors, AREVA is one of the main beneficiaries of the “nuclear renaissance” in the United States. Created in 2001 from the merger of two companies, Cogema and Framatome, it deals with the whole “nuclear fuel cycle” from uranium mining to fuel enrichment, reactor design and used fuel recycling. It is chaired by the powerful CEO Anne Lauvergeon – called “Atomic Anne” by the French press – and its main shareholder is the French public-sector company CEA (“Commissariat à l’Energie Atomique”) which owns 78 percent. (The CEA’s mission is similar to that of the U.S. Department of Energy.) The French State owns in total 87 percent, including the shares owned by the CEA. The rest is divided among essentially the “Caisse des Dépôts et Consignations,” EDF group, Total group. Last December, shareholders approved a capital increase of the company, mainly a $794 million investment by the Kuwait Investment Authority, a Kuwait sovereign fund. It acquired a 4.8% stake in AREVA and became the third largest shareholder after the CEA and the French State.
The North American market has been particularly interesting for the French company. According to AREVA’s vice president of communication in the United States, Laurence Pernot, “Americans are the biggest consumers of energy around the world and the U.S. has the most important nuclear fleet with 104 reactors so, of course, for AREVA it is a very strategic market.” With approximately 6,000 U.S. employees in 36 locations in 20 states, AREVA Inc. – the U.S. branch of AREVA Group – generated $2.5 billion in revenues in 2009 and represents “10 to 12 percent of the global revenue of the firm.”
The French company is working with the management of current reactors and is a leader in the U.S. market for nuclear products and services. It receives millions of American taxpayer dollars for projects, and its sales revenue has tripled in the last five years.
Following this event, many reactors similar to the one used at Three Mile Island were cancelled. After the far worse accident in Chernobyl, Ukraine, in 1986, the United States stopped building new nuclear power plants and focused, instead, on remediating existing nuclear waste and securing safe nuclear storage sites. Regardless, Cogema managed to remain active in the U.S. and focused its activities on the mining process and then on the marketing of nuclear services for the existing reactors and the management of spent fuel. To Laurence Pernot, the 1976 election of Jimmy Carter, a nuclear engineer, was another explanation for the decline of the U.S. nuclear industry in the 1980s because, in her opinion, he brought a pro-environmental policy to the White House. “He was probably the most ecological president of the whole history of the United States,” she said.
Not only did Carter slow down the growth of the U.S. nuclear program, he also ended nuclear reprocessing, the recycling of spent fuel. In 1976, in a speech in San Diego, Carter raised his concern about proliferation and promised that he would stop reprocessing until it was really needed and safe. Carter’s policy was designed to set an example for the rest of the world to turn away from technologies that could lead to further nuclear weapons proliferation. (Nuclear reprocessing separates core bomb-making components, like uranium and plutonium, from the fission products and other radioactive waste in spent nuclear fuel from nuclear reactors. India used material from reprocessing to build its first nuclear bomb in 1974.)
The policy against reprocessing to contain nuclear proliferation survived successive administrations. In 1982, Ronald Reagan tried to gain approval for reprocessing but the industrial momentum was gone and no serious efforts to revive reprocessing emerged.
In March 1999, however, the U.S. Department of Energy (DOE) reversed its own policy because, in the framework of the Strategic Arms Reduction Treaty (START I) between the U.S. and Russia, both countries committed to dispose of 34 metric tons of their surplus weapons plutonium. In this regard, the DOE signed a contract with a consortium of Duke Energy, Cogema, and Stone & Webster to design and operate a Mixed Oxide (MOX) fuel fabrication facility at Savannah River Site near Aiken, South Carolina. The construction began in October 2005 and is still ongoing.
This same year, in June, the nuclear renaissance started in earnest when President George W. Bush went to the Calvert Cliffs nuclear power plant, on the Chesapeake Bay in Maryland, to encourage the construction of new reactors. “His visit had symbolic value,” Pernot explains. “It was the first time in 26 years a president visited a power plant and sent a public message about his determination to revive the civil nuclear program.” Bush believed nuclear power was necessary to reduce dependency on foreign oil and to help reduce carbon emissions that contribute to global climate change. He also thought that it was “one of America’s safest sources of energy.”
A couple of weeks later, Congress passed the Energy Policy Act and President Bush signed it into law at the Sandia National Laboratories in Albuquerque, New Mexico. This new law encouraged investments in non-carbon-dioxide emitting technologies and created incentives for utilities to build new nuclear reactors. These incentives included, for example, federal tax credits and loan guarantees for the first six reactors built, as well as insurance against “regulatory risks” caused by licensing delays for any new project. It also created a simpler and faster licensing process for reactor construction and operation. In 2006, the Bush administration went further and launched the Global Nuclear Energy Partnership (GNEP) which formed an international partnership to promote the use of nuclear power and “close the nuclear fuel cycle,” meaning substantially reducing or eliminating nuclear waste.
All along, AREVA was supporting the U.S. government’s efforts to revive the nuclear industry. If Laurence Pernot acknowledges that Bush made the “first step” in favor of the nuclear renaissance, she takes note that the Energy Policy Act was full of good intentions on paper: “Bush initiated a couple of things to create a favorable ground to the revival of the nuclear program. For example, he completely reshuffled the system of authorization of construction and exploitation of a reactor to make it faster, safer and more efficient. The Nuclear Regulatory Commission (NRC) also accepted to extend the lifetime of many reactors in the U.S. But President Bush didn’t launch the construction of new reactors.”
Indeed, during the Bush administration, many electricity companies involved in nuclear projects received authorization from the NRC to build new reactors. (The authorization remains valid for twenty years). But no company started building new nuclear power plants. One reason is the $18.5 billion in loan guarantees were never appropriated for the utilities. This changed with President Barack Obama’s election in 2008.
From Illinois, a state with the largest number of nuclear power plants in the country, during his presidential campaign Obama expressed his support of nuclear energy. But “once elected, he was far more discrete on this issue,” Pernot said. “The real change appeared in his speech on the state of the Union, in January 2010, when he said that he wanted the nuclear to be part of the energy mix and to come back in the political agenda.”
The current presidential team is putting so much more money on nuclear expansion, that U.S. Republican Senator from South Carolina Lindsey Graham remarked in January that the Democratic Obama administration “has had a good vision for the development of commercial nuclear power; they have put on the table loan guarantees more robust than under the Bush administration.” Energy Secretary Steven Chu recently said that new reactors “have to be a very important part of our clean energy mix in the coming decades… We are working hard to restart the American nuclear power industry.” These and other comments make AREVA believe that the nuclear renaissance in the United States is “very promising.”
