Withdrawing from nuclear energy

In autumn 2010, the German government puts its energy policy on course for entry into the age of renewable energies. Nuclear energy was assigned a bridging role until renewable energies can assume their role reliably and economically and the necessary energy infrastructure is available.

After the reactor accident at the Fukushima nuclear power plant in March 2011, German politic conducted a reassessment of the remaining risks of nuclear power. The Reactor Safety Commission (RSK) initiated a comprehensive analysis of the safety of German nuclear power plants. The federal government also appointed an independent ethics committee to comment on all questions regarding future energy supplies. The results of the work by these organizations were the guidelines for the following energy policy decisions.

Withdrawing from nuclear energy

Financial responsibility for nuclear waste liabilities

The responsibility for nuclear waste disposal was divided on the basis of the legal situation that had been in effect for decades: on the one hand, the government was responsible for the selection of the locations, as well as the construction and operation of the repositories. On the other hand, the companies operating the nuclear power plants were responsible for the decommissioning and dismantling of the nuclear power plants and the construction and operation of the interim storage facilities. The companies were entirely responsible for all areas of financing. The intention is for this funding to be ensured through the creation of provisions. 

A legal opinion dated 10 December 2014 prepared for the Federal Ministry for Economic Affairs and Energy (BMWi)  came to the conclusion that if the operating companies or the group parent companies were to become insolvent, this would mean that the government would be obliged to assume liability from tax revenue. In the view of the experts, the system of provisions does not provide adequate protection. The experts therefore proposed the introduction of statutory group liability, intragroup security and a public law fund.

The German government subsequently had an economic analysis performed by an auditing company (→ LINK “Stress test” report by Warth & Klein). The main findings of this report dated 9 October 2015 were as follows: the total nuclear waste disposal costs as of 31 December 2014 were EUR 47.5 billion. The cost estimates were based firstly on estimates made by or on behalf of the companies (decommissioning, dismantling and interim storage) and on the other hand information provided by the federal government and its authorities (final storage). These estimated costs were used to calculate the company's provisions, i.e. in order to account for the required cash values, inflated by the companies by an average of 1.6% per year and escalated to the expected maturities, with an additional nuclear-specific cost increase of 1.97% per year on average. The result of this calculation was discounted at an average rate of 4.58% per year to the respective balance sheet year. 

Financial responsibility for nuclear waste liabilities

Temporary storage site for nuclear waste Lubmin, Credits: Thomas Truschel/photothek.net

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Commission reviewing the financing of the nuclear phase-out (KFK)

These legal and economic findings formed the basis of the discussions and work of the independent commission set up by the German cabinet on 14 October 2015 to review the financing of the nuclear phase-out (Kommission zur Überprüfung der Finanzierung des Kernenergieausstiegs, KFK) . The 19-member commission, which was made up of experts and politicians and was supported by a state secretary committee chaired by the head of the German Federal Chancellery at that time, Peter Altmaier, was led by the co-chair Ole von Beust (CDU), Matthias Platzeck (SPD) and Jürgen Trittin (Greens). The aim of the commission of experts was to draw up recommendations to ensure financing for decommissioning, dismantling and disposal, which ensures that companies are also economically able to fulfil their nuclear obligations in the long term. 

On 27 April 2016, the KFK submitted its recommendations in a final report to the State Secretary's Committee on Nuclear Energy.

With regard to the provisions of the companies for all areas of nuclear waste disposal in the amount of EUR 38.3 billion, a division of responsibility for financing into approximately two halves was proposed: nuclear power plant operators would remain responsible for decommissioning and "immediate dismantling" of the nuclear power plants and "final packaging appropriate for disposal" of the nuclear waste and responsibility for interim and final storage would be transferred to the Federal Republic of Germany and the sum of approx. EUR 17 billion provided for this plus a risk premium of approx. 35% would be transferred to the federal government. 

In addition, the KFK recommended that a public law foundation should be set up. This “could be set up in a slimmed down manner“ and would “provide better protection than a special fund, mainly against greed and outside interference“. 

Commission reviewing the financing of the nuclear phase-out (KFK)

Jürgen Trittin (Grüne), Ole von Beust (CDU) and Matthias Platzeck (SPD). Source: private

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The formation of KENFO

The division of tasks and responsibilities proposed by the KFK was implemented during 2016 in a “The German act on the reorganization of responsibility in nuclear waste management”, made up of ten articles. The essential elements of the legal regulation on the financing of the nuclear phase-out were also placed on an additional contractual pillar between the Federal Republic of Germany and the energy supply companies. Responsibility for action and financing regarding the disposal of nuclear waste was brought together in one place for the first time. In return, the companies undertook to withdraw all lawsuits relating to waste disposal. 

The German Nuclear Waste Management Fund was established on 16 June 2017 as a foundation under public law at the time of the entry into force of the " The German act on the reorganization of responsibility in nuclear waste management" after the granting of the European Commission's approval under state aid law. On 19 June 2017, the Foundation's board of trustees appointed a board of managing directors for the foundation with three members and adopted its statutes.

On 3 July 2017, payments for the obligations of the 25 nuclear power plants in Germany totalling EUR 24.1 billion were transferred by the energy supply companies to the foundation's accounts, which had been set up with the Bundesbank. The fund was therefore set up within a few days, its legal and actual capacity to act was established and it became fully capitalized.

Financing of nuclear waste management

KENFO is intended to fund the costs of the safe disposal of radioactive waste from the commercial use of nuclear energy to generate electricity in Germany and invests the funds transferred to it. KENFO must immediately reimburse the disposal costs charged by the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU). 

To date, KENFO has already paid nuclear waste disposal costs of over EUR 800 million to the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety.