European Scrutiny Committee Contents

27 International Thermonuclear Experimental Reactor (ITER)



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COM(10) 226

Commission Communication: ITER status and possible way forward

Legal base—  
Document originated4 May 2010
Deposited in Parliament25 May 2010
DepartmentBusiness, Innovation and Skills
Basis of considerationEM of 7 June 2020 and Minister's letter of 4 August 2010
Previous Committee ReportNone
To be discussed in CouncilSee para 27.8 below
Committee's assessmentPolitically important
Committee's decisionCleared, but further information awaited


27.1 The International Thermonuclear Experimental Reactor (ITER) is a new experimental fusion facility, located in France, and involving Euratom, China, India, Japan, Korea, Russia and the United States, which aims to demonstrate the feasibility of nuclear fusion energy for peaceful purposes, and to establish whether this can become a major sustainable energy source, providing safe and clean energy with no carbon dioxide emissions. The relevant International Agreement came into force in 2007, and has an initial duration of 35 years, covering three phases — construction (10 years), operation (20 years) and de-activation (5 years). During the construction phase, the EU will contribute five-elevenths (about 45%)[112] of the cost (80% of which will be met by Euratom and 20% by France), whilst each of the other six parties will contribute one-eleventh (about 9%). The Euratom contribution is managed through the European Joint Undertaking for ITER — "Fusion for Energy (F4E)", with Euratom, the 27 Member States and Switzerland all being involved in its governance.

27.2 Although the total construction cost of ITER was estimated in 2001 as €5.9 billion, it is now clear that this will be significantly exceeded, but the Council nevertheless recently confirmed its unanimous support for the project, to which the EU is legally committed. This was, however, subject to certain "boundary conditions" laid down by the Commission (notably the inclusion of credible cost assessment and containment policies, a realistic timetable, and sound project management at all levels) being met, and the Council also asked the Commission to explore the options for providing the increased funding needed during the current Financial Perspectives, including the possibility of securing a loan from the European Investment Bank (EIB) and re-prioritising expenditure within the existing EU budget. The Council also agreed that no new financial contribution from Member States towards ITER construction costs will be possible during the current Financial Perspectives.

The current document

27.3 The Commission has now sought in this Communication to meet the Council's request. It notes that, whilst the 2001 cost estimate implied a EU contribution of €2.7 billion, the latest estimate for the period 2007-20 has risen to €6.6 billion (plus a further €650 million for F4E running costs and other activities), with Euratom meeting €5.9 billion of the total €7.2 billion, and France the remaining €1.3 billion. It also points out that this would involve commitment appropriations of €2.1 billion for the two years 2012-13, as against programmed appropriations of €890 million, leaving a gap of €1.4 billion (€550 million in 2012, and €850 million in 2013).

27.4 In seeking to consider how this situation might be addressed, the Commission first stresses the need for sound governance, and in particular for the operation of F4E to be overhauled in order to deliver the necessary boundary conditions. It then examines various ways in which the required additional funding might be found. As regards a loan from the EIB, it notes that, should the Bank require an explicit guarantee from Euratom, this would involve unanimous agreement on the necessary change in the legal act establishing F4E, but that the main problem would be repayment of the loan in the absence of any identifiable income stream. It therefore concludes that such a loan would not be an appropriate solution. Likewise, it suggest that the size of the funding gap is such that to meet it by transferring funds from other headings within the EU budget would have a significantly adverse impact on a range of other policies at the heart of the Europe 2020 agenda, adding that neither this, nor a loan from the EIB, would provide a structural solution.

27.5 The Commission accordingly suggests that there are only two ways in which the EU's commitment to the ITER project can be met:

Complementary funding from Member States

The Commission says that the 27 Member States and Switzerland would need to make additional contributions of €1.4 billion for 2012-13, and to undertake to finance any cost over-runs beyond those foreseen for the whole life of the project.

Adjustment to the Financial Perspectives ceilings

The Commission suggests that, provided a solution to the funding of the whole life of the project is found, a net increase in the overall ceiling of the 2007-13 financial perspective could be envisaged for 2012-13. However, it notes that the Council has so far insisted that the seven-year global ceilings of the financial framework in terms of commitments and payments should not be changed, and that future Multiannual Financial Framework ceilings would need to be set at a level which enabled the EU to meet its commitments to the ITER project.

In calling for the necessary funds to be made available in order to secure the future of a project which it describes as "emblematic of the EU's capacity to take a leading role at global level in science and technology", the Commission stresses the need for this to be agreed as soon as possible, in order to enable a decision to be transmitted to its international partners who it says are expecting a decision at the next meeting of the ITER Council in mid-June.

The Government's view

27.6 In his Explanatory Memorandum of 7 June 2010, the Minister of State for Universities and Science at the Department for Business, Innovation and Skills (Mr David Willetts) says that the UK has long supported ITER as the next step to practical fusion energy supply, and recognises that more money will inevitably be needed in order to meet the increased costs of the European contribution because collapse of the project would be likely to cost many billions of Euros in compensation. He adds that, whilst it is important for there to be a proper assessment of the funding options, the Government opposes a revision of the 2007-13 financial framework and increasing the present EU budget to fund ITER cost increases. In particular, it does not believe that, in a period of fiscal restraint, there is scope for additional money at the Member State level or for increased contributions to the EU budget, and it has consistently argued that the redeployment of funds from projects and programmes of lesser importance should be explored in much more depth, with firm options, including the possibility of a loan from the EIB, being put to the Council on which a solution can be found.

27.7 The Minister says that other Member States have shared the UK's reservations, and that the Spanish Presidency submitted draft conclusions to ensure that the burden of additional funding was not placed on Member States, but from within the EU budget heading dedicated to the Seventh Research Framework Programme, transport policy, nuclear decommissioning, the trans-European transport and energy networks, the competitiveness and innovation programme, lifelong learning and Galileo, with the main reprioritisation likely in practice to fall on the first of these. He adds that the Commission has argued that the draft conclusions did not provide a clear enough financial commitment to ITER, and that no agreement was reached at the Competitiveness Council on 26 May. However, a task force with representatives from the Commission and Member States had been established to try and find a solution, and the Presidency would be advising on the timetable for its meetings.

27.8 We have since received from the Minister a letter of 4 August 2010, indicating that the Council had agreed on 12 July that the additional resources of up to €1.4 billion needed for 2012-13 would come from the existing EU budget, and that the overall EU contribution for the period 2007-20 should be reduced from €7.2 billion to €6.6 billion, with a plan to this effect to be presented to the Competitiveness Council on 26 November. He says that this would now form the basis of the EU's position at the meeting of ITER Council to be held on 27-28 July, and that, in the meantime, the Commission had proposed that €460 million of the €1.4 billion required in 2012-13 should come from the Seventh Research Framework Programme, €400 million from other unused funds, and the balance from a further transfer to be specified later on.


27.9 The ITER project is clearly of some considerable technical, economic and political significance, and, whilst we recognise the legal commitments which the EU has entered into, and the compensation costs it would incur if the project were to collapse, it is disturbing that such a major cost over-run should have occurred. In view of this, and the scale of the sums involved, we think it right to draw these developments to the attention of the House.

27.10 We also note the continuing discussion over both the level of the EU's contribution to ITER, and the extent to which this should be found from within the existing budgetary ceilings. Since this last point has now been resolved as regards 2012 and 2013 in a way satisfactory to the UK, we are clearing the current document, but we would be glad if the Minister would keep us informed of any developments over the attempt being made to reduce the remaining EU liability for the period 2007-2020 and the way in which this will be funded after 2013.

112   During the subsequent operation and deactivation phases, this figure will fall to 34%. Back

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