Leaving Euratom: disaster or opportunity?

Since the announcement in on 29 March that as well as exiting the EU, the UK would also be withdrawing from Euratom, the European Atomic Energy Community, there has been much consternation, with fears ranging from the UK potentially being barred from importing nuclear material, to Brexit threatening cancer treatments. So what is the story with exiting Euratom: does it herald disaster or are there opportunities lurking in the background?

What is Euratom?

Euratom was established with the European Atomic Energy Community Treaty in 1957 to regulate the nuclear industry in Europe, covering the transport of nuclear materials, disposal of waste, and conduct of research. It acted as a “nuclear common market” enabling the free movement of nuclear workers and materials between member states.

Euratom covers a number of Directives relating to nuclear safety, radioactive waste and decommissioning, radiation protection, nuclear fusion, proper use of materials and safeguards, nuclear security and nuclear fuel supply security. In the UK, Euratom performs four distinct functions:

It enables a single market of goods and services for nuclear build, ongoing generation, research and development and decommissioning in Europe.
It provides funding for nuclear fusion research being undertaken by UKAEA at Culham in Oxfordshire and it provides access to the European R&D community.
It provides safeguards regime to ensure UK compliance with the non-proliferation treaty including inspection, reporting and accounting.
It manages and develops the Nuclear Cooperation Agreements (NCAs) with non-EU countries on behalf of Euratom members.

The UK joined Euratom in 1973 when it became a member of the EEC. Although Euratom is a separate legal entity from the EU, it is tied in with its laws and institutions and is subject to the jurisdiction of the European Court of Justice (“ECJ”). Euratom reports to the International Atomic Energy Agency (the “IAEA”) – when the UK leaves Euratom it will need to formalise a new arrangement with the IAEA.

There are some differences of opinion as to whether a country could leave the EU and retain full membership of Euratom, however, the Government believes that leaving Euratom is necessary:

“The triggering of Article 50 on Euratom is not because we have a fundamental critique of the way that it works. It was because it was a concomitant decision that was required in triggering Article 50,”
– David Davis, Brexit Secretary.

The European Parliament’s Brexit co-ordinator, Guy Verhofstadt, agrees:

“In my opinion, since in the Lisbon Treaty Euratom and the EU are fully interlinked, you cannot be fully part of Euratom and not part of the European Union.”

He went on to suggest that the UK could sign an association agreement allowing Euratom to continue its functions with regard to Britain following its departure from the EU.

The Government is also determined to end the authority of the ECJ in the UK, adding a further motivation for leaving – this could also impact the approach to any association agreement.

Consequences of leaving Euratom without an association agreement

In last week’s Parliamentary debate on Euratom, MPs outlined the implications of leaving Euratom:

The supply of nuclear fuel to UK power stations could be disrupted since Euratom is the legal owner of all nuclear material, and is the legal purchaser, certifier and guarantor of nuclear materials and technologies that the UK purchases;
Leaving Euratom would require the UK to create its own safeguarding regime – something the UK’s Office for Nuclear Regulation has apparently confirmed as impossible by the nominal EU withdrawal date in 2019;
All nuclear co-operation agreements that Euratom has entered into with third party countries on behalf of the UK would need to be re-negotiated on a bilateral basis – each such agreements can take three years to agree, and without them, the UK could be isolated from the legitimate international nuclear community;
The UK could experience the loss of or reduction in access to Euratom nuclear research and research funding;
The Hinkley Point C CfD arrangements may need to be re-opened due to change of law provisions (according to the National Audit Office);
Access to the supply of medical radioactive material for cancer treatments among other things could be at risk or delayed as these are supplied by the Euratom Supply Agency.

Ed Davey, the former Secretary of State for Energy and Climate Change, told Utility Week there are risks to the UK’s access to nuclear fuels for power stations due to limited storage capacity and long supply lead times:

“As soon as you come out of Euratom it would be illegal for the French to export fuel for the plants that EDF own and run [in the UK] i.e all of our nuclear plants at the moment. If we are out of Euratom, there is going to be a period – possibly two years – when we run out of fuel for our nuclear power stations which in the early or mid-2020s is going to be about 20 per cent of our power supply.”

There are similar concerns regarding the supply of nuclear materials for medical purposes. The common radioisotopes used in nuclear medicine are Technetium-99m (Tc99m) and Molybdenum-99 (Mo-99) which both decay very quickly – Tc-99m has a half-life of 6h, while Mo-99 has a half-life is 66h. This means that transport and storage of these materials is important, and supply disruptions could have serious consequences, particularly since the UK does not currently produce and of these isotopes itself.

The Government asserts that medical radio isotopes are not fissile materials and therefore not covered by Euratom, so there should be no disruption to their supplies after leaving Euratom.

Alternative arrangements

The UK may seek to enter into transitional arrangements to avoid a falling off a nuclear “cliff” at the end of the two-year notice period in April 2019. Beyond that, any new arrangements such as an association agreement would require the UK to introduce its own nuclear material safeguards regime, negotiate continued involvement in the Fusion 4 Energy program into the development of nuclear fusion, and enter into or update nuclear co-operation agreements with a number of other countries.

The UK essentially has three options: remaining in Euratom, associate membership, and third-country membership.

Remaining in Euratom seems unlikely for the reasons described above. Associate membership, such as that enjoyed by Switzerland, could also be problematic since it would probably involve submitting to the jurisdiction of the ECJ. While there may be good arguments for making an exception in this narrow case, the current Conservative government could find this to be politically unpalatable.

That would leave third-country membership arrangements similar to those with the US and Australia. Under these agreements, the non-EU countries help to fund projects such as the International Thermonuclear Experimental Reactor (“ITER”) in France. The challenge here would be transitioning from the current status quo where the UK’s nuclear activity is highly integrated with Euratom, to a looser arrangement.

After leaving Euratom, the UK would need to enter into its own Nuclear Co-operation Agreements. In fact the UK already has a number of NCAs with countries including India and the UAE, however they may need to be amended to take account of the changes to the UK’s safeguarding regime outside Euratom.

The UK would also need to replicate on a bilateral basis the NCAs that Euratom has with other countries, and enter into a new NCA with Euratom itself.

As a member of the IAEA, the UK may still be able to benefit from some existing safeguarding arrangements – of the 1,234 inspections carried out by Euratom Safeguards in 2014, about half were done jointly with IAEA. In recent years, the IAEA has widened its safeguarding approach to consider the state as a whole through its State-Level Concept which approaches safeguarding in relation to the state’s nuclear and nuclear-related activities and capabilities as a whole. The UK has the possibility to enter into an SLC with the IAEA, replacing the safeguarding arrangements with Euratom.

According to Tom Greatrex, chief executive of the Nuclear Industry Association UK, none of these challenges is insurmountable:

“With nuclear new build, operations and decommissioning all taking place in this country, it is clearly in the interest of both the UK and European nuclear industries that a strong relationship is maintained [with Euratom], even with the UK outside the EU.”

Opportunities for nuclear leadership

The UK has a long history of nuclear innovation, and while advances in large-scale generation have dwindled, the UK’s leadership in nuclear propulsion, research and waste management all provide opportunities for the future. In its report on leaving Euratom, the Institution of Mechanical Engineers has identified a number of areas including new nuclear build, decommissioning and radioactive waste disposal where the UK could become a global leader.

Technical skills and markets
The UK Government could elect to leave the Almelo Treaty with Germany and the Netherlands which would enable it to take control of its own nuclear enrichment activities. This would support UK-based generation and could open up new markets supplying fuel to generators in other countries.
Member state responsibilities
Leaving Euratom would relieve the UK from the provisions of Article 41 which requires member states to review and comment on investment projects for new-build nuclear across Europe. This is an onerous requirement which diverts resources away from domestic nuclear activities.
Procurement and supply chain
Leaving the EU could provide new opportunities for developing a UK supply chain for nuclear power, and allow the UK to avoid EU procurement rules, opening up opportunities for co-operation with a wider range of contractors. The UK’s new-build nuclear programme will provide significant construction and manufacturing opportunities which can attract new technical expertise and capabilities to the UK. The resulting development of the UK’s nuclear capabilities could lead to global demand for UK skills, while other EU nations are downsizing their nuclear programmes.
Trade deals
The UK will need to enter into new NCAs after leaving Euratom. This provides an opportunity for strengthening nuclear trade links and developing markets for goods and services related to the disposal and management of radioactive waste. NCA negotiations also provide a mechanism for agreeing research collaborations and funding for joint research activities.

The UK has a real opportunity over the next few years to become a clear leader in nuclear and radioactive waste technologies. The IME believes that despite not having a strong track record in geological disposal facilities the UK has the potential to develop niche skills that would be sought after internationally. According to this article in Wired magazine, nuclear power stations have been built in 31 countries, but only six have either started building or completed construction of geological disposal facilities, so there is a clear gap in the market.

The nuclear reprocessing and decommissioning facility at Sellafield employs 13,000 people and is the largest nuclear facility in Europe hosting the world’s largest stockpile of civil plutonium. The facility which is run by the Nuclear Decommissioning Authority, handles almost all of the waste from the UK’s 15 operational nuclear facilities, as well as reprocessing spent fuel from plants overseas, primarily from Europe and Japan. The UK needs to come up with a long-term disposal solution for the vast quantities of waste at Sellafield – in doing so it has the chance to become a world-leader in radioactive waste technologies.

Small Modular Reactors (“SMRs”) is another area where the UK could develop technological leadership, leveraging the skills that have evolved in the nuclear propulsion sector. The current SMR competition shows some commitment to the development of this technology. Outside the restrictions of EU state aid rules, the UK could be free to subsidise SMRs to overcome the initial investment hurdles where investors are reluctant to commit the billions needed to build an SMR production plant without a strong order book, while generators are reluctant to commit to an un-proven and un-built technology.

The Culham Centre for Fusion Energy is one of the leading research centres in the world and is the site of the Joint European Torus and the Mega Ampere Spherical Tokamak. This research informs the design of ITER, many of whose design features are derived from work at Culham. A large number of EU scientists work at the centre, and there is some uncertainty over their ability or desire to remain post Brexit. There is also speculation as to what may happen to the equipment, much of which has been funded by the EU, with some suggestions the site will be broken up and distributed across the EU.

This would seem to be a wasteful suggestion. The world-leading work at Culham could be protected given motivation on both sides, through a suitable NCA between the UK and Euratom – and there are good reasons for it to be in the mutual interests of both sides to continue. Securing the UK’s leadership in fusion technology would provide further opportunities for the UK’s nuclear future.

Leaving Euratom certainly presents a number of challenges for the UK, and many in the industry feel that the country’s best interests would be best served by replicating the Euratom provisions as closely as possible through and association agreement. However, that would potentially undermine the UK’s ability to exploit the opportunities for the UK to develop its nuclear industry on a global scale.

As other European nuclear powers, particularly Germany, but also to a certain extent France, exit or de-prioritise their nuclear industries, the UK’s ongoing commitment both to nuclear energy and nuclear defence provides the potential for leadership in a number of nuclear technologies.

With courage and imagination, leaving Euratom could help take the UK’s industry to a new level, but there are significant execution risks. Agreeing Nuclear Co-operation Agreements with the EU and key international partners should be given a high priority so the risks can be avoided and the potential benefits realised.

Euratom legal framework: analysis by Professor Steve Peers, Professor of EU and Human Rights Law at the University of Essex

The Euratom treaty is a separate treaty from the treaty which initially created what was the European Economic Community (EEC) – now known as the European Union (EU). Equally, Euratom is a separate international organisation from the EU. But there have always been close links between the two. The founding treaties were negotiated together, and they have always had the same membership. They shared some institutions from the outset in 1958, and all institutions from 1967, when the ‘Merger Treaty’ brought together the separate Councils and Commissions which the three Communities (the EEC, Euratom and the European Coal and Steel Community) had until then.

Since that point, the provisions on the institutions in the Euratom Treaty have been updated every time the corresponding rules in the EEC Treaty were amended. Those institutional rules are now split between the Treaty on the Functioning of the European Union (TFEU) – as the EEC Treaty is now called – and the Treaty on European Union (TEU). The link between the latter two treaties, which are the legal basis for the EU, and the Euratom Treaty, is now set out in Article 106a of the Euratom Treaty, which was inserted by the Treaty of Lisbon:

1. Article 7, Articles 13 to 19, Article 48(2) to (5), and Articles 49 and 50 of the Treaty on European Union, and Article 15, Articles 223 to 236, Articles 237 to 244, Article 245, Articles 246 to 270, Article 272, 273 and 274, Articles 277 to 281, Articles 285 to 304, Articles 310 to 320, Articles 322 to 325 and Articles 336, 342 and 344 of the Treaty on the Functioning of the European Union, and the Protocol on Transitional Provisions, shall apply to this Treaty.

As you can see, Article 50 of the TEU applies to the Euratom Treaty. That could be interpreted one of two ways. First of all, it could mean that a Member State is free to leave the EU but not Euratom (or the other way around), if it chooses. Article 50 is the exit route for leaving either body separately, or both of them together, as that Member State desires. Alternatively, it could mean that if a Member State wants to leave the EU, it must also leave Euratom.

Which view is correct? In my view, the answer is clear if Article 106a is read as a whole. For it does not only refer to Article 50 TEU, but also to ten other Articles in the TEU, and 85 Articles in the TFEU. A large number of these Articles refer to the EU institutions. For instance, Article 13 TEU describes the institutional framework as a whole; Article 14 sets out the basic rules on the European Parliament; Article 15 the European Council; Article 16 the Council; Article 17 the Commission; Article 18 the Foreign Policy High Representative; and Article 19 the EU Court. Equally, the TFEU Articles which apply to the Euratom Treaty make up most of Part Six of the TFEU (Articles 223-334 of that Treaty), which is the ‘Institutional and Financial Provisions’. They go into more detail about issues like determining the number of Members of the European Parliament and the jurisdiction of the EU courts.

In practical terms, this would mean that if the UK left the EU but not Euratom, it would still have Members of the European Parliament, a Commissioner, a role on the Council, judges on the EU courts, and so on. From a legal perspective, it’s hard to believe this odd scenario was intended by the drafters of the Treaties; from a political perspective, this prospect would surely dismay those who voted to Leave.

This could be addressed if the Euratom Treaty were amended to suit the UK’s intention (if it wished) to stay in Euratom but not the EU, but without such institutional complications. But it’s hard to imagine the remaining Member States being willing to do that. So the best interpretation of the current law is that a Member State must also leave Euratom if it wants to leave the EU. And even if that legal interpretation is wrong, the UK government would want to leave the two bodies at the same time, to avoid continued participation in those EU institutions that give Leave voters such graphic nightmares.