US embassy cable - 05FRANKFURT4506

UNCLAS SECTION 01 OF 02 FRANKFURT 004506 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG, ECON, SENV, PGOV, GM 
SUBJECT: Nuclear Energy Phase-Out Continues Amid Uncertainty 
 
 
1.  SUMMARY:   The phase-out of nuclear power in Germany took a 
major step in mid-May with the decommissioning of the country's 
oldest nuclear power plant at Obrigheim in the state of Baden- 
Wuerttemberg.  While Green party leaders and environmental groups 
celebrated the move with a "phase-out festival," new Baden- 
Wuerttemberg Minister-President Guenther Oettinger (CDU/Christian 
Democrats) and leading energy producer EnBW (Energie Baden- 
Wuerttemberg) warned the phase-out would have negative effects on 
global warming, energy security, and export competitiveness. 
Market watchers foresee an extended lease on life for Baden- 
Wuerttemberg's remaining reactors should conservatives prevail in 
national elections this September.  END SUMMARY. 
 
BACKGROUND ON NUCLEAR PHASE-OUT 
------------------------------- 
 
2.  In June 2000, the Social Democratic-Greens national 
government and representatives of Germany's leading power 
suppliers concluded an agreement to decommission the country's 19 
nuclear power plants over two decades.  In the accord, producers 
agreed to decommission plants following an average of 32 years of 
operation (measured in terms of total electricity output).  The 
phase-out agreement forbids the establishment of new plants and 
mandates on-site storage of nuclear waste pending establishment 
of a permanent storage facility.  In return, the government 
promised reactor operations would not be disrupted, as happened 
with massive demonstrations against spent fuel shipments in the 
80s and 90s, during their remaining life cycle. 
 
3.  Germany relies on nuclear power for about one-third of its 
electricity needs (putting it just over the EU average).  The 
state of Baden-Wuerttemberg is much more dependent on nuclear 
power (almost 60% of total consumption), as home to Germany's 
oldest power plant (at Obrigheim) and several of its newest 
plants including Neckarwestheim II (which would be the last plant 
decommissioned under the agreement, in about 2021).  Other EnBW 
reactors -- Neckarwestheim I and Philippsburg I -- are slated to 
be shut down by 2012 under current plans. 
 
RECENT DEVELOPMENTS 
------------------- 
 
4.  On May 11, Energie Baden-Wuerttemberg (EnBW) decommissioned 
its 340-megawatt Obrigheim reactor after 37 years of operation 
(EnBW says decommissioning will cost it EUR 500 million / USD 625 
million in lost revenue).  Obrigheim is the second reactor shut 
down in the phase-out after the Stade reactor near Hamburg was 
closed in November 2003.  On April 25 (perhaps not 
coincidentally, the day before the 19th anniversary of the 
Chernobyl disaster), Federal Environment Minister Juergen 
Trittin, Economics State Secretary Rezzo Schlauch, and Bundestag 
Deputy Fritz Kuhn (all Greens politicians) joined environmental 
groups at a "phase-out festival" in neighboring Mosbach.  Calling 
the plant's decommissioning the "victory of the century," Trittin 
predicted that Germany's technological lead in alternative energy 
and incentives created by emissions trading would lead to new 
employment and sufficient production capacity to cover Germany's 
needs.  "The future belongs to ... energy conservation, energy 
efficiency and renewable energies," Trittin said. 
 
5.  At recent public discussions attended by a Consulate 
representative, EnBW CEO Dr. Utz Claassen characterized the 
Greens' "phase-out festival" as an insult to the hundreds of 
Obrigheim residents left unemployed by the shutdown (250 will 
lose their jobs at the plant itself).  Claassen affirmed that the 
industry would comply with the phase-out agreement, warning, 
however, that Germany's resultant dependence on gas and coal 
would exacerbate global warming.  Citing the developing world's 
growing need for electricity, Claassen argued that only nuclear 
power can avert devastating effects on the earth's climate 
through increased use of fossil fuels. 
 
6.  Sharing a public forum with Claassen, Minister-President 
Oettinger said he respected the official process that led to the 
decommissioning of Obrigheim but vowed to push for extension of 
operations at the state's other nuclear power plants.  Oettinger 
termed nuclear power a "transitional" energy source but cautioned 
that the timeframe for phasing out Baden-Wuerttemberg's remaining 
reactors was too short, arguing that the current phase-out plan 
would damage Germany's energy security and competitiveness, 
making energy more expensive and less reliable. 
 
7.  The German public generally supports phasing out nuclear 
energy.  According to Forsa (a well-respected polling 
organization), 77% of Germans approve of the phase-out agreement, 
14% support extending the life of current reactors, and only 18% 
oppose the phase-out altogether.  Over eighty percent of Germans 
polled consider nuclear power a security threat (44% see it as a 
major threat).  Many are not well informed:  in a Eurobarometer 
poll, for instance, most German respondents called nuclear energy 
a significant contributor to global warming. 
 
COMMENT: LOOKING AHEAD 
---------------------- 
 
8.  Utilities argue nuclear power is the most cost-efficient 
energy source in Germany although there is debate whether it is 
so inexpensive if tax breaks, waste disposal and decommissioning 
costs are included.  As a leading center for manufacturing -- 
Baden-Wuerttemberg is home to Daimler-Chrysler, Bosch (the 
world's largest automotive supplier), and other export-oriented 
companies -- the state's large industrial enterprises want to 
hold the line on energy costs (a factor in economic 
competitiveness and future investment decisions) and will support 
nuclear energy if it can keep costs down. 
9.  Chancellor Schroeder's call for early elections has rekindled 
discussion about whether a conservative government will prolong 
the nuclear phase-out.  CDU (Christian Democratic Union) 
chancellor candidate Angela Merkel told a utilities association 
June 7 she would support extending reactor licenses.  Even some 
Greens privately say extending nuclear plant lives may be the 
only way to meet Kyoto commitments, but as noted in para 7, 
public support for the phase-out appears strong.  While many 
industry representatives remain mum on the issue, leading energy 
stock prices rose after Merkel's announcement on speculation of 
extended lifespans for existing reactors.  Given the tension 
between political considerations and economic/climate-change 
concerns, current policy towards nuclear energy may be anything 
but final.  END COMMENT. 
 
10.  This message was coordinated with Embassy Berlin. 
 
BODDE