Managing the Nuclear Fuel Cycle: Policy Implications of Expanding Global Access to Nuclear Power
Managing the Nuclear Fuel Cycle:
Policy Implications of Expanding Global Access
to Nuclear Power
Updated September 3, 2008
Mary Beth Nikitin, Coordinator
Foreign Affairs, Defense, and Trade Division
Anthony Andrews and Mark Holt
Resources, Science, and Industry Division
Managing the Nuclear Fuel Cycle: Policy Implications of
Expanding Global Access to Nuclear Power
After several decades of decline and disfavor, nuclear power is attracting
renewed interest. New permit applications for 30 reactors have been filed in the
United States, and another 150 are planned or proposed globally, with about a dozen
more already under construction. In the United States, interest appears driven, in
part, by provisions in the 2005 Energy Policy Act authorizing streamlined licensing
that combine construction and operating permits, and tax credits for production from
advanced nuclear power facilities. Moreover, the U.S. Department of Energy
proposes to spend billions of dollars to develop the next generation of nuclear power
Expanding global access to nuclear power, nevertheless, has the potential to lead
to the spread of sensitive nuclear technology. Despite 30 years of effort to limit
access to uranium enrichment, several undeterred states pursued clandestine nuclear
programs; the A.Q. Khan black market network’s sales to Iran and North Korea
representing the most egregious examples. Concern over the spread of enrichment
and reprocessing technologies, combined with a growing consensus that the world
must seek alternatives to dwindling and polluting fossil fuels, may be giving way to
optimism that advanced nuclear technologies may offer proliferation resistance.
Proposals offering countries access to nuclear power and thus the fuel cycle
have ranged from a formal commitment by these countries to forswear enrichment
and reprocessing technology, to a de facto approach in which a state does not operate
fuel cycle facilities but makes no explicit commitment, to no restrictions at all. The
most recent proposal under the U.S. Global Nuclear Energy Partnership (GNEP)
represents a shift in U.S. policy by not requiring participants to forgo domestic fuel
cycle programs. Whether developing states will find existing proposals attractive
enough to forgo what they see as their “inalienable” right to develop nuclear
technology for peaceful purposes remains to be seen.
Congress will have a considerable role in at least four areas of oversight related
to fuel cycle proposals. The first is providing funding and oversight of U.S. domestic
programs related to expanding nuclear energy in the United States. The second area
is policy direction and/or funding for international measures to assure supply. A third
set of policy issues may arise in the context of implementing the international
component of GNEP. A fourth area in which Congress plays a key role is in the
approval of nuclear cooperation agreements. The 110th Congress has introduced
several bills related to nuclear energy in the United States and fuel cycle assurances,
including H.R. 885, S. 1977, S. 1700, S. 1138, S. 970, and S. 328 (Section 336).
This report will be updated as events warrant.
In troduction ......................................................1
Renewed Interest in Nuclear Power Expansion...........................4
Worldwide Nuclear Power Status.................................9
Nuclear Fuel Services Market....................................9
Final Stages of the Fuel Cycle...................................17
Waste Disposal and Energy Security..............................19
Proposals on the Fuel Cycle.........................................20
President Bush’s 2004 Proposal..................................20
El Baradei Proposal...........................................23
IAEA Experts Group/INFCIRC/640..............................23
Six Country Concept..........................................25
Nuclear Threat Initiative Fuel Bank...............................26
World Nuclear Association.....................................29
Global Nuclear Energy Partnership...............................30
Comparison of Proposals...........................................34
Prospects for Implementing Fuel Assurance Mechanisms.................39
Issues for Congress...............................................40
List of Tables
Table 1. Announced U.S. Nuclear Plant License Applications...............8
Table 2. Commercial UF6 Conversion Facilities.........................13
Table 3. Operating Commercial Uranium Enrichment Facilities............15
Table 4. Comparison of Major Proposals on Nuclear Fuel Services and
List of Figures
Figure 1. The Conceptual Nuclear Fuel Cycle...........................10
Figure 2. World Wide Nuclear Power Plants Operating, Under Construction,
Managing the Nuclear Fuel Cycle:
Policy Implications of Expanding Global
Access to Nuclear Power
A renewed interest in nuclear power and expanding its role in meeting world
energy demands has also led to increased concerns for limiting the spread of nuclear
weapons-relevant technology. After languishing for several decades, the United
States appears poised for a new phase of nuclear reactor construction. Two new
uranium enrichment plants are already under construction in anticipation of an
increased demand for nuclear fuel. Spent nuclear fuel disposal has remained the
most critical aspect of the nuclear fuel cycle for the United States, where
longstanding nonproliferation policy discouraged commercial nuclear fuel
reprocessing.2 Other countries provide commercial reprocessing services and, with
several notable exceptions, have kept their commercial and weapons fuel cycles
separate. New proposals to offer commercial nuclear power opportunities to non-fuel
cycle nations would guarantee them a supply of nuclear fuel in exchange for
commitments to forgo enrichment and reprocessing.
The U.S. Department of Energy considers nuclear power as “the only proven
technology that can provide abundant supplies of base-load electricity reliably and
without air pollution or emissions of greenhouse gases.”3 The National Energy
Policy Development Group recommended in 2001 that President Bush “support the
expansion of nuclear energy in the United States as a major component of our
national energy policy.” About the same time, the U.S. Department of Energy (DOE)
created the Generation IV International Forum to collaborate with 10 other states in
investigating “innovative nuclear energy system concepts for meeting future energy
challenges.” The Bush Administration requested millions of dollars from Congress
in 2003 to support several programs related to the development of new nuclear power
plants in the United States, including the Advanced Fuel Cycle Initiative, and
Generation IV. In passing the Energy Policy Act of 2005, Congress created certain
incentives and streamlined license application procedures for new nuclear power
plants. In February 2006, the Secretary of Energy announced the Global Nuclear
Energy Initiative (GNEP) as part of President Bush’s Advanced Energy Initiative.
1 Jill Marie Parillo and Sharon Squassoni were original contributors to this report.
2 CRS Report RS22542, Nuclear Fuel Reprocessing: U.S. Policy Development, by Anthony
3 U.S. Department of Energy, “The Global Nuclear Energy Partnership,” Factsheet 06-
GA50506-01 (also available at [http://www.gnep.energy.gov]).
Meanwhile, concerns over nuclear proliferation have steadily risen as ostensibly
commercial uranium enrichment and reprocessing technologies have been subverted
for military purposes. In 2003 and 2004, it became evident that Pakistani nuclear
scientist A.Q. Khan sold sensitive technology and equipment related to uranium
enrichment — a process that can be used to make fuel for nuclear power and research
reactors, or to make fissile material for nuclear weapons — to states such as Libya,
Iran, and North Korea. Although Pakistan’s leaders maintain they did not acquiesce
in or abet Khan’s activities, Pakistan remains outside the Nuclear Nonproliferation
Treaty (NPT) and the Nuclear Suppliers Group (NSG). Iran has been a direct
recipient of Pakistani enrichment technology.4
The International Atomic Energy Agency (IAEA)’s Board of Governors found
in 2005 that Iran’s breach of its safeguards obligations constituted noncompliance
with its safeguards agreement, and referred the case to the UN Security Council in
February 2006. Despite repeated calls by the UN Security Council for Iran to halt
enrichment and reprocessing-related activities, and imposition of sanctions, Iran
continues to develop enrichment capability at Natanz.5 Iran insists on its inalienable
right to develop the peaceful uses of nuclear energy, pursuant to Article IV of the
NPT. Interpretations of this right have varied over time.6 The IAEA Director
General, Mohamed ElBaradei, has not disputed this inalienable right and by and
large, neither have U.S. government officials. However, the case of Iran raises
perhaps the most critical question in this decade for strengthening the nuclear
nonproliferation regime: how can access to sensitive fuel cycle activities (which
could be used to produce fissile material for weapons) be circumscribed without
further alienating non-nuclear weapon states in the NPT?
Leaders of the international nuclear nonproliferation regime have suggested
ways of reining in the diffusion of such inherently dual-use technology, primarily
through the creation of incentives not to enrich uranium or reprocess plutonium. The
international community is in the process of evaluating those proposals and may
decide upon a mix of approaches.
Most of the proposals are not new, but rather variations of those developed
thirty or more years ago.7 In the 1970s, efforts to limit or manage the spread of
4 CRS Report RS21592, Iran’s Nuclear Program: Recent Developments, by Sharon
5 “Security Council, in Presidential Statement, Underlines Importance of Iran’s Re-
Establishing Full, Sustained Suspension of Uranium Enrichment Activities,” March 29,
2006, at [http://www.un.org/News/Press/docs/2006/sc8679.doc.htm], and UN Security
Council Resolution 1737 (2006) [http://www.un.org/News/Press/docs//2006/sc8928.doc.
6 Most observers point to the obligation in Article IV that such pursuit must be consistent
with a state’s obligations under Articles II and II of the treaty. Article II refers to a state’s
obligation to foreswear nuclear weapons development and Article III refers to a state’s
obligation to undertake safeguards “for the exclusive purpose of verification of the
fulfillment of its obligations” under the treaty.
7 See timeline of fuel cycle proposals, available at [http://www.iaea.org/NewsCenter/
nuclear fuel cycle technologies for nonproliferation reasons foundered for technical
and political reasons, but many states were nevertheless deterred from enrichment
and reprocessing simply by the high technical and financial costs of developing
sensitive nuclear technologies, as well as by a slump in the nuclear market. Several
developments may now make efforts to limit access to the nuclear fuel cycle more
attractive: a growing concern about the spread of enrichment technology (specifically
via A.Q. Khan black market network, as well as Iran’s efforts); a growing consensus
that the world must seek alternatives to polluting fossil fuels; and optimism about
new nuclear technologies that may offer more proliferation-resistant systems. Central
to the debate is developing proposals attractive enough to compel states to forego
what they see as their inalienable right to develop nuclear technology for peaceful
At the same time, there is debate on how to improve the IAEA safeguards
system and its means of detecting diversion of nuclear material to a weapons program
in the face of expanded nuclear power facilities worldwide.
This report is intended to provide Members and congressional staff with the
background needed to understand the current debate over proposed strategies to
redesign the global nuclear fuel cycle. It begins with a look at the motivating factors
underlying the resurgent interest in nuclear power, the nuclear power industry’s
current state of affairs, and the interdependence with the nuclear fuel cycle. A
number of proposals have been offered that are aimed at limiting direct participation
in the global nuclear fuel industry by assuring access to nuclear fuel supplies:
Year Ag ency Proposal
2003IAEAWould establish internationally owned fuel cycle centers.
2004United StatesWould keep uranium enrichment and plutonium reprocessing in
the hands of current technology holders, while providing fuel
guarantees to those who abandon the option.
2005IAEAExplored a variety of options to address front end and back end
problems and their attractiveness to different groups of states, and
surveyed past proposals.
2005Russian FederationWould establish international fuel cycle centers.
2006United StatesU.S. Global Nuclear Energy Partnership originally proposed that
certain recognized fuel cycle countries would ensure reliable
supply to the rest of the world in return for commitments to
renounce enrichment and reprocessing; also proposed solutions for
recycling of spent fuel and storage issues.
2006U.S., U.K., Russia,Six Country Concept would establish reliable access to nuclear
Year Ag ency Proposal
2006Nuclear ThreatPromised $50 million for a international nuclear fuel bank under
InitiativeIAEA supervision provided another $100 million donated within
two years and IAEA organizes implementation.
2007United StatesRevised GNEP would promote an international nuclear fuel supply
framework (without explicit renunciation of fuel technology) to
reduce proliferation risk and a closed fuel cycle featuring recycling
techniques that do not separate plutonium.
Renewed Interest in Nuclear Power Expansion8
Commercializing nuclear power has proved far more challenging than first
envisioned. World nuclear capacity had reached about 200 gigawatts during the
mile Island and Chernobyl, the rate of adding new capacity fell more than 75%
during the following decade.9 Today, nuclear power provides about 368 gigawatts
— 15% of the world’s electricity generation. Though a significant amount, it is far
less than that projected 50 years ago. High construction and operating costs, safety
problems and accidents, and controversy over nuclear waste disposal slowed the
worldwide growth of nuclear power.
With uranium once considered a scarce resource, reprocessing was promised as
a means of extending the energy remaining in spent nuclear fuel and fast breeder
reactor technology promised to produce more fuel than a reactor consumed. In the
1980s, as the economics of nuclear power became questionable with declining fossil
fuel prices and increased uranium supplies, national programs to develop fast breeder
reactors came nearly to a standstill. Moreover, the plutonium fuel produced by
breeder reactors drew strong opposition over its potential use in nuclear weapons.
In the past few years, however, the original promises of nuclear power have
attracted renewed interest around the world. What has changed?
Sharply higher prices for oil and natural gas are a fundamental factor in national
energy policymaking. Average world oil prices have risen from below $10 per barrel
at the beginning of 1999 to above $80 per barrel in the Fall of 2007.10 U.S. natural
gas prices have followed a similar track, and a near-doubling of international
8 This section was prepared by Mark Holt, Specialist in Energy Policy, and Anthony
Andrews, Specialist in Energy Policy, in the Resources, Science, and Industry Division,
Congressional Research Service.
9 International Energy Agency, World Energy Outlook 2006, p. 349.
10 Energy Information Administration, at [http://tonto.eia.doe.gov/dnav/pet/hist/wtotworldw.
shipments of liquefied natural gas since 199811 indicates that natural gas prices have
also risen around the world. As a result, national governments are searching for
alternative energy sources, often including nuclear power. However, only 20% of the
world’s electricity generation is fueled by natural gas and 7% by oil (the majority of
the world’s electricity is generated from coal),12 so nuclear power’s ability to directly
substitute for oil and gas is limited, at least in the near term.
For nuclear power to have a significant impact on oil demand, long-term
changes in energy-use patterns would have to take place, particularly in the
transportation sector. One possibility is that nuclear power plants could be used to
produce hydrogen, which could provide energy for fuel-cell vehicles. The U.S.
Department of Energy is developing processes that could produce “industrial scale”
quantities of hydrogen in a high-temperature reactor by 201913 and is concurrently
supporting development of fuel cell vehicles. Another possibility is the
commercialization of all-electric or plug-in hybrid vehicles that could be recharged
with nuclear-generated electricity. But even if such technologies were to be
successfully developed, it would take many years for the new vehicles and, in the
case of hydrogen, fuel delivery infrastructure to have a significant energy impact.
Government policies aside, higher oil and gas prices are heightening interest in
nuclear power by improving current projections of nuclear power’s economic
viability. In the United States, natural gas has been the overwhelming fuel of choice
for new electrical generation capacity since the early 1990s, but recent high prices
have caused planned coal-fired capacity in 2009 to reach nearly twice the level of
planned gas-fired capacity.14 Increased demand has led to rising U.S. prices for coal,
which already generates nearly half of U.S. electricity (and 40% of world
electricity15). Because fuel costs constitute a relatively small percentage of nuclear
power costs, higher natural gas and coal prices could make new nuclear power plants
economically competitive, despite sharply rising uranium prices.16
Growing worldwide concern about greenhouse gas emissions, particularly
carbon dioxide from fossil fuels, has renewed attention to nuclear power’s lack of
direct CO2 emissions. Although few national governments or international
organizations have explicitly adopted policies in support of nuclear power to reduce
greenhouse gas (GHG) emissions, many GHG policies and proposals may indirectly
encourage nuclear power expansion. Legislative proposals such as tradeable permits
and carbon taxes could increase the cost of electricity from new fossil-fuel-fired
power plants above that of nuclear power plants.
11 EIA [http://www.eia.doe.gov/emeu/international/gastrade.html].
12 World Energy Outlook, op. cit., pp. 139, 141.
13 DOE, FY 2008 Congressional Budget, vol. 3, p. 577.
14 EIA [http://www.eia.doe.gov/cneaf/electricity/epa/epat2p4.html].
15 World Energy Outlook, op. cit., p. 140.
16 CRS Report RL33442, Nuclear Power: Outlook for New U.S. Reactors, by Larry Parker
and Mark Holt.
Some support for nuclear power as a way to reduce GHG emissions has
emerged in academic and think-tank circles. As stated by the Massachusetts Institute
of Technology in its major study The Future of Nuclear Power: “Our position is that
the prospect of global climate change from greenhouse gas emissions and the adverse
consequences that flow from these emissions is the principal justification for
government support of the nuclear energy option.”17 But environmental groups
generally contend that the nuclear accident, waste, and weapons proliferation risks
posed by nuclear power outweigh any GHG benefits. The large construction
expenditures required by commercial reactors, they contend, would yield greater
GHG reductions if used for energy efficiency and renewable generation. Finally, they
note that nuclear power, while not directly emitting greenhouse gases, produces
indirect emissions through the nuclear fuel cycle and during plant construction.
Another key factor behind the renewed interest in nuclear power is the improved
performance of existing reactors. U.S. commercial reactors generated electricity at
an average of 89.8% of their total capacity in 2006, after averaging around 75% in
the mid-1990s and around 65% in the mid-1980s. Worldwide performance has seen
similar improvement.18 The improved operation of nuclear power plants has helped
drive down the cost of nuclear-generated electricity. Average U.S. reactor operations
and maintenance costs (including fuel but excluding capital costs) dropped steadily
from a high of about 3.5 cents/kilowatt-hour (kwh) in 1987 to below 2 cents/kwh in
2001 (in 2001 dollars).19 By 2005, the U.S. average operating cost was 1.7
Nuclear interest has been further increased in the United States by incentives in
the Energy Policy Act of 2005 (P.L. 109-58). The law provides a nuclear energy
production tax credit for up to 6,000 megawatts of new nuclear capacity,
compensation for regulatory delays for the first six new reactors, and federal loan
guarantees for nuclear power and other advanced energy technologies. Under certain
baseline assumptions, the tax credit could determine whether new U.S. nuclear plants
would be economically viable.21
U.S. electric utilities and other companies during the past two years have
announced plans to submit license applications to the Nuclear Regulatory
Commission (NRC) for more than 30 new commercial reactors (Table 1). NRC has
issued “early site permits” — which resolve site-related issues for possible future
reactor construction — at locations in Illinois and Mississippi and is nearing
completion of a third permit in Virginia. The Tennessee Valley Authority board of
directors voted August 2, 2007, to restart construction of its long-delayed Watts Bar
17 Interdisciplinary MIT Study, The Future of Nuclear Power, Massachusetts Institute of
Technology, 2003, p. 79.
18 “World Nuclear Generation Sets Record in 2006,” Nucleonics Week, February 15, 2007,
p. 1; Nuclear Engineering International, November 2005, p. 37.
19 Uranium Information Centre, The Economics of Nuclear Power, Briefing Paper 8, January
20 Nucleonics Week, “U.S. Utility Operating Costs, 2005,” September 14, 2006, p. 7.
21 CRS Report RL33442, op. cit.
2 reactor, which had been ordered in 1970. But despite that flurry of activity, no new
reactor orders have been placed. No reactors have been ordered in the United States
since 1978, and all orders after 1973 were subsequently cancelled.
New reactors are on order elsewhere in the world, and several non-nuclear
countries have announced that they are considering the nuclear option. As Figure
1 shows, the vast majority of reactors currently under construction are in Asia, with
only a handful in the rest of the world.
Despite the recent positive developments for nuclear power, much uncertainty
still remains about its prospects. Construction costs for new nuclear power plants —
which were probably the dominant factor in halting the first round of nuclear
expansion — continue to loom as a potential insurmountable obstacle to renewed
nuclear power growth. Average U.S. nuclear plant construction costs more than
doubled from 1971 to 1978, according to the Office of Technology Assessment, and
nearly doubled again by the mid-1980s, not including interest accrued during
construction.22 Including interest, many U.S. nuclear plants proved to be grossly
uneconomic, often with capital costs totaling more than $3,000 per kilowatt of
capacity in 2000 dollars,23 and relying on the utility regulatory system to recover their
Major reactor vendors, such as General Electric and Westinghouse, contend that
new designs and construction methods will cut costs considerably. Nuclear
supporters also point to a new U.S. nuclear licensing system that is intended to avoid
some of the regulatory problems that delayed completion of some reactors in the past.
No U.S. commercial reactor has been completed during the past decade, however,
and the new licensing system has yet to be tested. The French reactor vendor Areva
estimated that the first of its newly designed power plants in France would cost
$2,600 per kilowatt, which would be high in the likely range of economic viability.
Reported construction costs of reactors completed around the world since the 1990s
range so widely and vary so much in circumstance that they provide little insight into
probable future costs.24
Many other important factors in the future of nuclear power are similarly
uncertain. Prices of competing fuels, particularly natural gas, have risen recently but
have been volatile in the recent past. If fossil fuel prices become depressed for a
sustained period, as in the late 1980s through the 1990s, support for nuclear power
as an alternative energy source could again be undermined. Major accidents, such
as Three Mile Island and Chernobyl, would almost certainly diminish public support
for nuclear power. Disposal of high-level nuclear waste, which reprocessing or
recycling is intended to address, will continue to generate controversy as
22 Office of Technology Assessment, Nuclear Power in an Age of Uncertainty, OTA-E-216,
February 1984, p. 59.
23 Jan Willem Storm van Leeuwen and Philip Smith, Nuclear Energy, the Energy Balance,
July 31, 2005, Chapter 3, p. 2.
24 Numerous published sources, available from the author.
governments attempt to develop permanent underground repositories — none of
which are yet operating.
Table 1. Announced U.S. Nuclear Plant License Applications
Applica nt Applica t io n
Alternate EnergyBruneau (ID)2008Areva EPR1
AmerenCallaway (MO)2008Areva EPR1
Amarillo PowerVicinity of Amarillo2008EPR2
ConstellationCalvert Cliffs (MD)Submitted JulyAreva EPR1
Energy (Unistar)2007 (Part 1)
Nine Mile Point (NY)1st half 2008Areva EPR1
Not specified4Q 2008Areva EPR1
DominionNorth Anna (VA)Nov. 2007GE ESBWR1
DTE EnergyFermi (MI)4Q 2008Not specified1
Duke EnergyCherokee (SC)2007-2008Westinghouse2
EntergyRiver Bend (LA)May 2008GE ESBWR1
ExelonMatagorda or VictoriaNov. 2008Westinghouse2
Counties (TX)AP1000 or GE
FPLNot specified2009Not specified1
NRG EnergySouth Texas ProjectSubmitted Sept.GE ABWR2
NuStartGrand Gulf (MS)2007GE ESBWR1
Bellefonte (AL)Submitted Westinghouse2
Oct. 30, 2007AP1000
PPLSusquehanna (PA)Not specifiedAreva EPR1
Progress EnergyHarris (NC)2008Westinghouse2
Levy County (FL)2008Westinghouse2
SouthernVogtle (GA)Mar. 2008Westinghouse2
TXUComanche Peak (TX)4Q 2008Mitsubishi US-2
AP W R
Sources: NRC, Nucleonics Week, Nuclear News, Nuclear Energy Institute, company news releases.
Worldwide Nuclear Power Status
Operating commercial nuclear reactors around the world totaled 443 in 2005,
with total installed electric generating capacity of 368 gigawatts. More than 80% of
that capacity is in member nations of the Organization for Economic Cooperation and
Development (OECD), while slightly more than 10% is in Russia and other former
nations of the Soviet bloc. The remainder, about 5%, is in developing countries such
as China and India. Nuclear power supplied 22.4% of electricity generated in OECD
countries in 2005, 17.0% in the former Soviet countries, and 2.1% in developing
Unlike the United States, where active construction of new reactors ended in
1996, the rest of the world has continued building nuclear plants, although at a
modest pace. Since 1996, about 40 commercial reactors have started up, an average
of about four per year. About 30 reactors were permanently closed during that
period, although many of them were smaller than the newly started reactors.26
As shown in the following figures, current reactor construction is dominated by
Asia. Of the 27 reactors currently under construction around the world, 18 are in
Asia, while only five are in Europe, three in the Americas, and one in the Middle East
(Iran). Planned or proposed nuclear power plants show a similar trend. Of the 203
potential reactors identified in the following figures, more than half (112) are in Asia,
while 44 are in Europe, 40 in the Americas, and seven in the Middle East.
The renewed worldwide interest in nuclear power has led to a possible
expansion of the technology to currently non-nuclear nations. Six of the countries
that are currently building or formally considering reactor projects — Egypt,
Indonesia, Iran, Israel, Malaysia, and Vietnam — have never operated nuclear power
plants. Several other non-nuclear countries have also raised the possibility of
building nuclear power plants, including Belarus, Libya, Jordan, Nigeria, Qatar,
Saudi Arabia, Syria, Thailand, and Turkey.27 (See Figure 2, below.)
Nuclear Fuel Services Market
The possible upsurge in worldwide nuclear power plant construction has
focused new attention on nuclear fuel production. Chronic worldwide overcapacity
in all phases of the nuclear fuel cycle appears to be ending, evidenced by sharply
higher prices for uranium and enrichment services. The tightening supplies have
sparked plans for new fuel cycle facilities around the world and also renewed
concerns about controls over the spread of nuclear fuel technology.
25 International Energy Agency, World Energy Outlook 2006, p. 347.
26 World Nuclear Association Reactor Database, at [http://www.world-nuclear.org/reference/
27 Nucleonics Week, April 19, 2007; BBC Monitoring, April 12, 2007; Dow Jones, April 14,
June 12, 2007; New York Times, April 16, 2007.
The nuclear fuel cycle begins with mining uranium ore, and upgrading it to
yellowcake. Naturally occurring uranium lacks sufficient fissionable 235U to make
fuel for commercial light-water reactors, through an enrichment process the
concentration of 235U is increased several times above its natural level of 0.7%. A
nuclear power plant operator or utility purchases yellowcake and contracts for its
conversion to uranium hexafluoride, then enrichment and finally fabrication into fuel
elements (Figure 1). Commercial enrichment services are available in the United
States, Europe, Russia, and Japan. Fuel fabrication services are even more widely
available. While waiting for conversion, the yellowcake remains a fungible
commodity that can be consigned by the reactor operator to any conversion plant and
the product sent to any enrichment plant (within trade restrictions between
countries).28 The sale of yellowcake had been informal, until recently when it moved
to a more formal commodity transaction basis. The various stages of the nuclear fuel
cycle are described below.
Figure 1. The Conceptual Nuclear Fuel Cycle
Yellowcake. Conventionally mined uranium ore (open-pit and underground)
is milled, then acid leached to extract uranium oxide. The extract is then filtered,
dried, and packaged as uranium yellowcake for shipment to a conversion plant. In-
situ leaching avoids the mechanical mining steps by directly injecting solvents into
28 IAEA, Country Nuclear Fuel Cycle Profiles, 2nd ed., 2005.
the ore body through wells drilled from the surface. The dissolved uranium is
pumped to the surface, where the uranium oxide is similarly processed into
yellowcake for shipment.
U.S. uranium reserves are located in Arizona, Colorado, Nebraska, New
Mexico, Texas, Utah, Washington, and Wyoming. According to the Energy
Information Administration (EIA), five underground mines and five in-situ mines
were operating in the United States in 2006. EIA reports 67 million pounds of U3O8
were purchased for U.S. nuclear power reactors in 2006, of which 16% was U.S.
origin.29 The balance was made up in part by imports and downblended highly
enriched uranium (HEU), as discussed further below.
A typical 1,000 MW light water reactor fuel load may require converting and
enriching nearly 800,000 lbs. of uranium “yellowcake” (U3O8). Approximately 102
million lbs. of yellowcake was produced worldwide in 2004. Worldwide uranium
demand in 2004 (the latest statistics available) was an estimated 173 million pounds
U3O8.30 The International Atomic Energy Agency (IAEA) projects that the demand
for uranium will begin to exceed supply after 2010, and by as much as 10,000 metric
tons by 2020.31 IAEA believes that the shortfall could be made up by downblending
more HEU released from weapons stockpiles.
Unlike gold or oil commodities, uranium yellowcake had not been offered
through a formal market exchange until quite recently. Uranium price indicators had
been developed by a small number of private business organizations, such as the
World Nuclear Fuel Market (WNFM) and the Ux Consulting Company (UxC), that
independently monitor uranium market activities, including offers, bids, and
transactions. The price indicators are owned by and proprietary to the business that
has developed them.
NAC International (now a USEC Inc. subsidiary) established the World Nuclear
Fuel Market (WNFM) to provide uranium price information in 1974. The WNFM
membership comprises 79 companies representing 18 countries.32 The WNFM
provides the uranium price information system (UPIS) for both Western and Russian
yellowcake contract prices.33 A quarterly UPIS report presents aggregated
29 U.S. DOE Energy Information Administration, Uranium Marketing Annual Report, May
30 U.S. DOE, Report on the Effect of the Low-Enriched Uranium Delivered Under the HEU
Agreement Between the United States and the Government of the Russian Federation has
on the Domestic Uranium Mining, Conversion, and Enrichment Industries and the
Operation of the Gaseous Diffusion Plant, December 31, 2004.
31 Note: Metric tons is the unit of measurement for uranium fuel. One metric ton is
approximately 2,200 pounds. International Atomic Energy Agency, Management of high
enriched uranium for peaceful purposes: Status and trends (IAEA-TECDOC-1452), June
32 World Nuclear Fuel Market website, at [http://www.wnfm.com/public/default.htm].
33 Information on the Uranium Price Information System is available through NAC
information based on actual uranium contract price data provided by the 19 UPIS
subscri b ers.34
The UxC pricing index has been utilized by major nuclear fuel market
participants, the federal government, and private business. The UxC yellowcake
price was one of only two weekly uranium price indicators that were accepted by the
uranium industry, as witnessed by their inclusion in most “market price” sales
contracts; that is, sales contracts with pricing provisions that call for the future
uranium delivery price to be equal to the market price at or around the time of
In April 2007, the New York Mercantile Exchange (NYMEX) announced that
it had partnered with the UxC to provide financially settled on- and off-exchange
traded uranium futures contracts.35 A NYMEX uranium futures contract’s final
settlement price is based on the UxC pricing index for yellowcake. Uranium futures
contracts are available for trading on Chicago Mercantile Exchange Globex, and for
clearing on NYMEX ClearPort.36 The size of each contract is 250 lbs, and prices are
quoted in U.S. currency. The final settlement price is the spot month-end price
published by UxC.
Uranium is typically mined outside the countries that use it. More than half the
world’s production in 2005 came from Canada and Australia, while more than half
the world’s commercial reactors are in the United States, France, and Japan.37 But
security of uranium supply, while always an underlying policy concern, has rarely
been a real problem, because production vastly outstripped demand during the first
three decades of the commercial nuclear power era — until about the mid-1980s.38
As a result, a huge overhang of military and civilian stockpiles of uranium helped
maintain a worldwide buyers’ market.
Since the mid-1980s, however, world nuclear fuel requirements continued to
rise while uranium exploration and production fell. By 2000, as U.S. spot-market
prices hit bottom (at about $7 per pound), the western world’s nuclear fuel
requirements were twice the level of production. At that point, commercial
stockpiles had been drawn down enough to begin putting pressure on U.S. spot
prices, which rose slightly through 2003 and then dramatically (above $75 per pound)
International at (678) 328-1211 or e-mail at firstname.lastname@example.org.
34 Nine U.S. companies, 10 non-U.S. companies, 12 utilities, four producers, two traders,
and one supplier.
35 New York Mercantile Exchange, at [http://www.nymex.com/UX_pre_agree.aspx].
36 CME Globex is a global electronic trading platform for trading futures products. NYMEX
ClearPort Clearing provides traders an interface where transactions are posted, margin
requirements are calculated, and the transactions are processed by the clearinghouse.
37 Nuclear Energy Agency, Forty Years of Uranium Resources, Production and Demand in
Perspective, 2006, pp. 10-11.
38 World Nuclear Association, Uranium Markets, March 2007, at
[ h t t p : / / www.wor l d-nucl ear .or g/ i n f o / i n f 22.ht ml ]
by 2007. The spot price represents about 20% of the market but provides an
indicator of future contracts, which usually run 3-7 years.39
Despite low worldwide exploration expenditures since the mid-1980s caused
by oversupply and low prices, estimated uranium resources have trended upward over
the long term. As a result, according to the OECD Nuclear Energy Agency (NEA),
known conventional resources have averaged 45 years of supply during the past 20
years, despite steadily increasing annual world uranium requirements, currently about
70,000 metric tons. “Taken together the lessons of the past provide confidence that
uranium resources will remain adequate to meet projected demands even were
requirements to significantly increase,” according to NEA.40
Conversion. In the conversion process, the yellowcake is purified, chemically
reacted with hydrofluoric acid to form uranium hexafluoride (UF6) gas, and then
transferred into cylinders where it cools and condenses to a solid. Uranium
hexafluoride contains two isotopes of uranium — heavier 238U and lighter fissionable235
U, which makes up ~0.7% of uranium by weight. The annual U.S. demand for
yellow cake conversion is approximately 22,000 metric tons uranium (MTU). After
conversion, the uranium hexaflouride is ready for enrichment.
Five commercial conversion companies operate worldwide — in the United
States, Canada, France, the United Kingdom, and Russia (Table 2). ConverDyn in
Metropolis, IL, the only conversion plant operating in the United States, produces
Table 2. Commercial UF6 Conversion Facilities
(metric tons uranium/year)
Count ry Company F acility Capacity
China CNCC Lanzhou 1,500
Russian Minatom Angarsk 20,000
Federation Tomsk 10,000
U.K.BNFLSpringfields Line 46,000
U.S. Converdyn M etropolis 14,000
Source: IAEA Country Nuclear Fuel Cycle Profiles, 2nd ed.
Enrichment. For use as fuel in light water reactors, 235U must be enriched
above its natural ore concentration. By heating yellowcake (UF6) to turn it into a gas,
40 Nuclear Energy Agency, op. cit., p. 13.
the enrichment process can take advantage of the slight difference in atomic mass
between 235U and 238U. The typical enrichment process requires about 10 lbs of
uranium U3O8 to produce 1 lb of low enriched uranium hexafluoride (UF6) product.
About 90% of the world’s reactors (all except heavy water reactors) require
enriched uranium fuel. More than 90% of those uranium enrichment requirements
are supplied by facilities in the United States (including diluted weapons material),
Russia, France, Great Britain, Germany, and the Netherlands. The remainder comes
from Japan, China, and Brazil. Thirty-one countries currently operate commercial
nuclear power plants. Most countries, therefore, rely on enrichment services outside
their borders. An enrichment plant to serve a country with only a few reactors would
appear economically nonviable, given that a single large enrichment plant can supply
up to 25% of the world market (currently estimated at 45 million separative work
units, or SWUs).41
Commercial uranium enrichment employs either gaseous diffusion or high speed
centrifuge. In gaseous diffusion, a thin semiporous barrier holds back more of the
heavier 238U than the lighter 235U. A series of cascading diffusers successively
enriches the 235U concentration. Centrifuge enrichment spins the uranium
hexafluoride gas at ultra-high speeds to separate the lighter 235U. A series of
cascading centrifuges successively enriches the gas in 235U. Final enrichment will
vary depending on the requirements of a specific reactor, normally up to about 4%.
Gaseous diffusion technology was first developed in the United States and later
adopted by France and Britain. It is more energy-intensive than the newer centrifuge
enrichment process. However, the legacy gaseous diffusion plants currently
operating in the United States and France have higher capacities than the newer
centrifuge enrichment plants.
Uranium enrichment services are sold in kilograms (kg) or metric tons (1,000
kg) separative work units (SWU), which is a measure of the amount of work needed
(in the thermodynamic sense) to enhance the 235U concentration. The number of
SWUs required to produce fuel depends on several factors: the quantity of fuel
required, level of enrichment required, the initial enrichment of the feed (0.711% in
the case of natural uranium), and the “tails assay,” which is the 235U concentration
remaining in the depleted processing stream. For example, to produce 1 kg of
uranium enriched to 3% 235U, at a tails assay of 0.2 235U, 4.3 kg-SWU are used to
process 5.5 kg of natural uranium.42 The price of yellowcake is an important factor
in enrichment demand. Under high price conditions, it may be economically
preferable to expend more SWUs enriching a lesser quantity of yellowcake, thus
leaving a lower tails assay. In 2005, the approximately 53 million lbs of yellowcake
contracted for enrichment required 11 million SWUs. Higher uranium prices also
leads to recycling stockpiles of higher assay tails back through enrichment.
41 Ruthane Neely and Jeff Combs, “Diffusion Fades Away,” Nuclear Engineering
International, September 2006, p. 24.
42 Thomas L. Neff, The International Uranium Market, Ballinger Publishing Co., 1984.
Nuclear plant operators can buy uranium yellowcake and have it converted and
enriched, or buy low-enriched uranium (LEU). Commercial enrichment services are
offered by a number of international sources (Table 3) making a up a worldwide
annual capacity of 47,855 metric tons SWU. In 2006, U.S. nuclear plant operators
contracted five companies worldwide to enrich 57 million pounds of yellowcake. Of
the approximately 13 million SWU required, only 12% of the needed enrichment43
could be provided in the U.S.
Table 3. Operating Commercial Uranium Enrichment Facilities
(metric tons SWU/year)
Paducah Gaseous DiffusionUnited StatesGaseous Diffusion11,300
Eurodif (Georges Besse)FranceGaseous Diffusion10,800
Ekaterinburg (Sverdlovsk-44)Russian FederationCentrifuge7,000
Siberian Chemical CombineCentrifuge
Urenco CapenhurstUnited KingdomCentrifuge4,000
Shaanxi Uranium Enrichment
Plant China Centrifuge 500
Kahuta Pakistan Centrifuge 5
Source: International Atomic Energy Agency, Nuclear Fuel Cycle Information System.
The U.S. DOE had operated gaseous diffusion enrichment plants in Oak Ridge,
TN, Paducah, KY, and Portsmouth, OH, to produce high-enriched uranium used in
the nuclear weapons program. The plants later produced low-enriched uranium for
commercial nuclear power around the world, although production at the Oak Ridge
K-25 enrichment site ceased in 1985. The Energy Policy Act of 1992 established the
United States Enrichment Corporation (USEC) as a government-owned corporation
to take over DOE’s uranium enrichment services business. The corporation was
privatized as USEC Inc. in 1998. In 2001, USEC ceased uranium enrichment
operations in Portsmouth and consolidated operations in Paducah. The Paducah
gaseous diffusion plant is the only operating enrichment facility in the United States.
In 2004, USEC announced plans to build the American Centrifuge Plant on the site
of the Portsmouth, Ohio gaseous diffusion plant. The new gas centrifuge enrichment
plant will expand to 11,500 centrifuges with a capacity of 3.8 million SWU.44 USEC
currently supplies approximately 51% of the U.S. demand for enrichment services,
mostly with blended-down Russian HEU, as discussed below.
Urenco, a joint Dutch, German, and British enrichment consortium, was set up
in the 1970s following the signing of the Treaty of Almelo. Urenco operates
enrichment plants in Germany, the Netherlands, and the United Kingdom to supply
customers in Europe, North America, and East Asia. Its U.S. affiliate, Louisiana
Energy Services, has begun constructing the gas centrifuge National Enrichment
Facility (NEF) in New Mexico.45 The NEF is expected to produce 3 million SWUs
annually when it reaches full operational capacity in 2013 — meeting approximately
25% of the current U.S. demand.46 In 2006, Urenco estimated that it provided around
Areva operates the Eurodif gaseous diffusion production plant (located on the
Tricastin nuclear site in France) to enrich uranium for some 100 nuclear reactors in
France and throughout the world.47 Areva nc Inc. provides toll conversion services
and uranium yellowcake through its subsidiary Comurhex.
Under the 1993 U.S.-Russian Federation Megatons to Megawatts program,
highly enriched uranium from dismantled Russian nuclear warheads is converted into
low-enriched uranium fuel for use in commercial U.S. nuclear power plants.48 The
HEU Agreement, as it is known, provides for the purchase over 20 years of 500
metric tons highly enriched uranium downblended to commercial grade low-enriched
uranium (delivered as UF6). The agreement provides about 46% of the current U.S.
demand for enrichment.
The world uranium enrichment industry is currently undergoing a technological
transformation from gaseous diffusion to centrifuges, primarily because centrifuges
need only a fraction of the energy required by gaseous diffusion. In 1996, 57% of the
world’s commercial enrichment came from gaseous diffusion plants, a level that
dropped to 35% in 2006. As noted above, the United States’ only currently operating
enrichment facility, in Paducah, KY, is to be replaced by 2011 with a centrifuge plant
in Portsmouth, OH. The world’s only other operating gaseous diffusion plant, at
44 USEC to Site American Centrifuge Plant in Piketon, Ohio — Technology Expected to Be
World’s Most Efficient for Enriching Nuclear Fuel, at [http://www.usec.com/
v2001_02/Content/News/NewsTemplate.asp?page=/v2001_02/Content/News/NewsFil e s
45 URENCO [http://www.urenco.com/fullArticle.aspx?m=1371].
46 URENCO [http://www.urenco.com/fullArticle.aspx?m=1371].
47 AREVA [http://www.areva-nc.com/servlet/ContentServer?pagename=cogema_en%2F
Areva’s Tricastin site in France, is to be replaced by a centrifuge plant by around
Fuel Fabrication. Like enrichment, fuel fabrication is a specialized service
rather than a commodity transaction. The now low-enriched uranium (UF6)
undergoes one final process, converting to uranium dioxide (UO2), before the final
stage of fuel fabrication. It is then sintered into pellets and loaded into zirconium
alloy tubes (fuel rods) about 12-15 feet long and half an inch in diameter. The fuel
rods are bundled into fuel assemblies, which vary from less than 100 to as many as
Fuel fabrication services are offered by 16 suppliers operating in 18 countries
at around 34 facilities. In 2002, IAEA estimated a that worldwide fabrication
capacity of 19,000 tons (fuel assemblies and elements) exceeded the demand by50
53%. The oversupply had existed for many years, and, as a consequence, facilities
were shut down and ownership was consolidated.
Essentially all U.S. fabrication demand is met by three companies providing
fabrication service at four facilities: Framatome ANP Inc. in Lynchburg, VA, and
Richland, WA; Global Nuclear Fuel in Wilmington, NC; and Westinghouse Electric
in Columbia, SC. About 30 other nuclear fuel fabrication facilities are in operation
elsewhere in the world.51
Final Stages of the Fuel Cycle
The final stages of the nuclear fuel cycle take place after nuclear fuel assemblies
have been loaded into a reactor. In the reactor, the uranium 235 (235U) splits, or
fissions, releasing energy, neutrons, and fission products (highly radioactive
fragments of 235U nuclei). The neutrons may cause other 235U nuclei to fission,238
creating a nuclear chain reaction. Some neutrons are also absorbed by U nuclei to
create plutonium 239 (239Pu), which itself may then fission.
After several years in the reactor, fuel assemblies will build up too many235
neutron-absorbing fission products and become too depleted in fissile U to
efficiently sustain a nuclear chain reaction. At that point, the assemblies are
considered spent nuclear fuel and removed from the reactor. Spent fuel typically
contains about 1% 235U, 1% plutonium, 4% fission products, and the remainder 238U.
The last stage of the fuel cycle, after spent fuel is removed from a reactor, has
proved highly contentious. One option is to directly dispose of spent fuel in a deep
geologic repository to isolate it for the hundreds of thousands of years that it may
remain hazardous. The other option is to reprocess the spent fuel to separate the
uranium and plutonium for use in new fuel. Supporters of reprocessing, or recycling,
contend that it could greatly reduce the volume and longevity of nuclear waste while
50 IAEA, Country Nuclear Fuel Cycle Profiles, 2nd ed.
51 Nuclear Engineering International, 2007 World Nuclear Industry Handbook, p. 207.
vastly expanding the amount of energy extracted from the world’s uranium resources.
Opponents contend that commercial use of separated plutonium — a key material in
nuclear weapons as well as reactor fuel — poses a nuclear weapons proliferation
Commercial-scale spent fuel reprocessing is currently conducted in France,
Britain, and Russia. The 239Pu they produce is blended with uranium to make mixed-
oxide (MOX) fuel, in which the 239Pu largely substitutes for 235U. Two French
reprocessing plants at La Hague can each reprocess up to 800 metric tons of spent
fuel per year, while Britain’s THORP facility at Sellafield has a capacity of 900
metric tons per year. Russia has a 400-ton plant at Ozersk, and Japan is building an
Britain and France also have older plants to reprocess gas-cooled reactor fuel, and
India has a 275-ton plant.52 About 200 metric tons of MOX fuel is used annually,
about 2% of new nuclear fuel,53 equivalent to about 2,000 metric tons of mined
However, the benefits of reprocessing spent fuel from today’s nuclear power
plants are modest. Existing commercial light water reactors use ordinary water to
slow down, or “moderate,” the neutrons released by the fission process. The
relatively slow (thermal) neutrons are highly efficient in causing fission in certain
isotopes of heavy elements, such as 235U and 239Pu.55 Therefore, fewer of those
isotopes are needed in nuclear fuel to sustain a nuclear chain reaction. The downside
is that thermal neutrons cannot efficiently induce fission in more than a few specific
isotopes. In today’s commercial reactors, therefore, the buildup of non-fissile
plutonium and other isotopes sharply limits the number of reprocessing cycles before
the recycled fuel can no longer sustain a nuclear chain reaction and must be stored
or disposed of.
In contrast, “fast” neutrons, which have not been moderated, are less effective
in inducing fission than thermal neutrons but can induce fission in all actinides,
including all plutonium isotopes. Therefore, nuclear fuel for a fast reactor must have
a higher proportion of fissionable isotopes than a thermal reactor to sustain a chain
reaction, but a larger number of different isotopes can constitute that fissionable
A fast reactor’s ability to fission all actinides (actinium and heavier elements),
makes it theoretically possible to repeatedly separate those materials from spent fuel
and feed them back into the reactor until they are entirely fissioned. Fast reactors are
also ideal for “breeding” the maximum amount of 239Pu from 238U, eventually
52 World Nuclear Association, Processing of Used Nuclear Fuel for Recycle, March 2007,
53 World Nuclear Association, Mixed Oxide Fuel (MOX), November 2006, at
[ h t t p : / / www.wor l d-nucl ear .or g/ i n f o / i n f 29.ht ml ] .
54 World Nuclear Association, Uranium Markets, March 2007.
55 Isotopes are atoms of the same chemical element but with different numbers of neutrons
in their nuclei.
converting virtually all of natural uranium to useable nuclear fuel.56 Current
reprocessing programs are generally viewed by their proponents as interim steps
toward a commercial nuclear fuel cycle based on fast reactors.
Waste Disposal and Energy Security
Reprocessing of spent fuel from fast breeder reactors has long been the ultimate
goal of nuclear power supporters. As noted above, fast reactors (operated either as
breeders or non-breeders) can eliminate plutonium from nuclear waste and greatly
extend uranium supplies. But opponents contend that such potential benefits are not
worth the costs and nonproliferation risks.
Removing uranium from spent nuclear fuel through reprocessing would
eliminate most of the volume of radioactive material requiring disposal in a deep
geologic repository. In addition, the removal of plutonium and conversion to shorter-
lived fission products would eliminate most of the long-term (post-1,000 years)
radioactivity in nuclear waste. But the waste resulting from reprocessing would have
nearly the same short-term radioactivity and heat as the original spent fuel, because
the reprocessing waste consists primarily of fission products, which generate most
of the radioactivity and heat in spent fuel. Because heat is the main limiting factor
on repository capacity, conventional reprocessing would not provide major disposal
benefits in the near term.
DOE is addressing that problem with a proposal to further separate the primary
heat-generating fission products — cesium 137 and strontium 90 — from high level
waste for separate storage and decay over several hundred years. That proposal
would greatly increase repository capacity, although it would require an alternative
secure storage system for the cesium and strontium that has yet to be designed.
Energy security has been a primary driving force behind the development of
nuclear energy, particularly in countries such as France and Japan that have few
natural energy resources. Recent cutoffs in oil and gas have underscored the
instability of oil and gas supply, which could be mitigated by nuclear energy. For
example, in 2006, a natural gas price dispute between Russia and Ukraine resulted
in a temporary cutoff of natural gas to Western and Central Europe; in 2007, price
disputes between Russia and Azerbaijan and Belarus caused a temporary cutoff in oil
to Russia from Azerbaijan and in oil from Russia to Germany, Poland, and Slovakia.
Moreover, temporary production shutdowns in the Gulf of Mexico and the
Trans-Alaskan pipeline, instability in Nigeria, and nationalization of oil and gas
fields in Bolivia in 2006, have all raised concerns about oil and gas supplies and
56 The core of a breeder reactor is configured so that more fissile 239Pu is produced from 238U
than the amount of fissile material initially loaded into the core that is consumed (235U or
239Pu). In a breeder, therefore, enough fissile material could be recovered through
reprocessing to refuel the reactor and to provide fuel for additional breeders. The core of239
a fast reactor can also be configured to produce less Pu than fissile material consumed,239238
if the primary goal is to eliminate Pu from spent fuel. In that case, much less U239
ultimately would be converted to Pu and therefore less total energy produced from a given
amount of natural uranium.
worldwide price volatility. Relative to gas and oil, the ability to stockpile uranium
is widely seen as offering greater assurances of weathering potential cutoffs.
Worldwide uranium resources are generally considered to be sufficient for at
least several decades. Uranium supply is highly diversified, with uranium mining
spread across the globe, while uranium conversion, enrichment, and fuel fabrication
are more concentrated in a handful of countries. But because most reactors around
the world rely at least partly on foreign sources of uranium and nuclear fuel services,
nuclear reactors nearly everywhere face some level of supply vulnerability. To
mitigate such concern, countries such as China, India and Japan are seeking to secure
long-term uranium contracts to support nuclear expansion goals. Efforts are
underway to establish an international nuclear fuel bank attempt to inject greater
certainty in fuel supplies, as discussed in the next section.
Ultimately, only the development of breeder reactors and reprocessing could
provide true nuclear energy independence. This remains the long-term goal of
resource-poor France and Japan, and Russia as well, although their research and
development programs have faced numerous obstacles and schedule slowdowns.
Proposals on the Fuel Cycle57
Proposals on limiting access to the full nuclear fuel cycle have ranged from a
formal commitment to forswear enrichment and reprocessing technology, to a de
facto approach in which a state does not operate fuel cycle facilities but makes no
explicit commitment to give them up, to no restrictions at all. All of these proposals
aim to persuade countries not to develop their own fuel production capabilities by
providing economically attractive alternatives that allay concerns about politically-
motivated interruption to fuel supply. Most proposals focus on this front-end
problem, dealing with fuel supply and production issues. The U.S. Global Nuclear
Energy Partnership (GNEP) envisions giving incentives on the back-end of the fuel
cycle as well by offering management of spent fuel and toxic byproducts.
President Bush’s 2004 Proposal
In a speech at the National Defense University on February 11, 2004, President
Bush said the world needed to “close a loophole” in the NPT that allows states to
legally acquire the technology to produce nuclear material which could be used for
a clandestine weapons program. To remedy this, he proposed that the forty members
of the Nuclear Suppliers Group (NSG) should “refuse to sell enrichment and
reprocessing equipment and technologies to any state that does not already posses
57 This section was prepared by Mary Beth Nikitin (Analyst in WMD Nonproliferation),
Sharon Squassoni (Specialist in National Defense), and Jill Parillo (Research Associate) in
the Foreign Affairs, Defense, and Trade Division, and Anthony Andrews (Specialist in
Energy Policy) in the Resources, Science, and Industry Division.
full-scale, functioning enrichment and reprocessing plants.”58 President Bush also
called on the world’s leading nuclear fuel services exporters to “ensure that states
have reliable access at reasonable cost to fuel for civilian reactors, so long as those
states renounce enrichment and reprocessing.”
In wake of the A.Q. Khan network revelations (also highlighted in the February
2004 speech), the international community had a renewed interest in addressing this
quandary. Since 2004, the Group of Eight (G-8) Nations have announced a year-long
suspension of any such transfers at their annual summit meetings, and international
study groups have been formed to try and find agreement on a more permanent
solution to the problem.59
President Bush’s 2004 proposal is the only one that calls for countries to
explicitly “renounce” pursuit of enrichment or reprocessing technologies in exchange
for reliable access to nuclear fuel. It was meant to disarm advocates of indigenous
fuel cycle development of the argument that only indigenous supply is secure. There
has been little agreement on President Bush’s proposals. Many non-nuclear weapon
states see this as an attempt to limit their inalienable right to the use of peaceful
nuclear energy under Article IV of the NPT and are not willing to consider limits on
peaceful nuclear technologies until more progress on nuclear disarmament has been
Key questions about implementation of this proposal remain unanswered. For
example, who is included in the group of supplier states and how is “full-scale,
functioning plants” defined? Would Iran’s enrichment program qualify today, even
if it did not back in 2004? And what about non-NPT states with the full fuel cycle
as part of their weapons programs? Also, how would related technologies be treated?
For example, would restrictions also apply to post-irradiation experiments on spent
nuclear fuel, which yield significant data about reactor operations, but can also
contribute to knowledge about reprocessing for weapons purposes? Since 2004,
delay in defining these terms appears to have provided an incentive for some states,
such as Canada, South Africa, Argentina, and Australia, to expedite their pursuit of
a full operational enrichment capability so as not to be excluded when and if such a
division between fuel cycle haves and have-nots is made.
Following President Bush’s 2004 speech, NSG members discussed how they
might implement such restrictions. Since the 1970s, NSG members have adhered to
an informal restriction on transferring enrichment, reprocessing, and heavy water
technology to states outside the NSG. France proposed a criteria-based approach that
would lay out a set of criteria that recipient states would first need to meet, including
!Member of the NPT in full compliance.
58 “President Announces New Measures to Counter the Threat of WMD,” February 11,
59 See Paragraph 13 of the Heiligendamm Statement on Non-Proliferation, G8 Summit 2007,
!Comprehensive safeguards agreement and Additional Protocol in
!No breach of safeguards obligations, no IAEA Board of Governors
decisions taken to address lack of confidence over peaceful
!Adherence to NSG Guidelines.
!Bilateral agreement with the supplier that includes assurances on
non-explosive uses, effective safeguards in perpetuity, and
!Commitment to apply international standards of physical protection.
!Commitment to IAEA safety standards.
The NSG also discussed including more subjective criteria in a decision to
supply a state with fuel cycle technology such as general conditions of stability and
security, potential negative impact on the stability and security of the recipient state,
and whether there is a credible and coherent rationale for pursuing enrichment and
reprocessing capability for civil nuclear power purposes.
No consensus has yet been reached on how to define these criteria and a number
of questions remain. For example, it is clear from these requirements that states
outside the NPT — such as India, Pakistan, and Israel — would be prohibited from
reprocessing and enrichment cooperation with NSG members (which may account
for U.S. rejection of the approach). To add further complications, the nuclear
cooperation agreement (so-called 123 Agreement) between the US and India signed
in July 2007 provides consent in principle for India to reprocess U.S. spent fuel and
agreement in principle to transfer enrichment and reprocessing-related technology to
India, pursuant to an amendment to the agreement. These two details suggest that
India is a reprocessing technology holder, despite not having its reprocessing
facilities under comprehensive IAEA safeguards, and call into question criteria for
distinguishing between states that should receive assistance and those that should not,
particularly since India is neither a party to the NPT nor an NSG member.
The United States had objected to the criteria-based approach, favoring a
moratorium, until spring 2008. The United States reportedly would be in favor of
establishing criteria if it included a requirement that uranium enrichment be exported
only through a “black box” arrangement. Canada objects to this, and negotiations are
In summary, President Bush’s proposal as put forth in 2004 faces significant
challenges in implementation, given the prevailing views against restrictions, and the
lack of a consensus within the NSG on how to proceed.
60 Daniel Horner, Mark Hibbs, “G8 adopts interim measure on sensitive nuclear exports,”
Nucleonics Week, July 17, 2008.
El Baradei Proposal
In anticipation of resistance to a new arrangement where some states possess
this processing technology and some are not allowed to, IAEA Direct General
Mohamed ElBaradei proposed a 3-pronged approach to limiting the processing of
weapon-usable material (separated plutonium and high-enriched uranium) in civilian
nuclear fuel cycles.61 First, he would place all enrichment and reprocessing facilities
under multinational control. Second, he would develop new nuclear technologies
that would not produce weapons-usable fissile material — in other words, “the holy
grail” of a proliferation-resistant fuel cycle. In his October 2003 article in the
Economist where he laid out these ideas, ElBaradei maintained, “This is not a
futuristic dream; much of the technology for proliferation-resistant nuclear-energy
systems has already been developed or is actively being researched.” Third,
ElBaradei proposed considering “multinational approaches to the management and
disposal of spent fuel and radioactive waste.” ElBaradei did not place any
nonproliferation requirements on participation, but instead suggested that the system
“should be inclusive; nuclear-weapon states, non-nuclear-weapon states, and those
outside the current non-proliferation regime should all have a seat at the table.”
Further, he noted that a future system should achieve full parity among all states
under a new security structure that does not depend on nuclear weapons or nuclear
IAEA Experts Group/INFCIRC/640
In February 2005, an Expert Group commissioned by IAEA Director General62
ElBaradei presented a report, “Multilateral Approaches to the Nuclear Fuel Cycle.”
The Expert Group studied several possible approaches to securing the operation of
proliferation-sensitive nuclear fuel cycle activities (uranium enrichment, reprocessing
and spent fuel disposal, and storage of spent fuel) and analyzed the incentives and
disincentives for states to participate. The report reviewed relevant past and present
experience. The Group’s suggested approaches included the following:
!Reinforce existing market mechanisms by providing additional
supply guarantees by suppliers and/or the IAEA (fuel bank).
!Convert existing facilities to multinational facilities.
!Create co-managed, jointly owned facilities.
The Group concluded that “in reality, countries will enter into multilateral
arrangements according to the economic and political incentives and disincentives
61 “Towards a Safer World,” at [http://f40.iaea.org/worldatom/Press/Statements/2003/
ebT E20031016.shtml ].
62 “Multilateral Approaches to the Nuclear Fuel Cycle: Expert Group Report submitted to
the Director General of the International Atomic Energy Agency,” February 22, 2005,
(INFCIRC/640). Available at [http://www.iaea.org/Publications/ocuments/Infcircs/2005/
offered by these arrangements.”63 The report noted that no legal framework existed
for requiring states to join supply assurance arrangements.
In September 2006, the IAEA sponsored a conference entitled “New Framework
for the Utilization of Nuclear Energy in the 21st Century: Assurances of Supply and
Non-Proliferation,” which addressed proposals to provide fuel assurances. The
IAEA presented a report on fuel assurance options at the June 2007 Board of
Governors meeting analyzing the various proposals put forth to date.64 A potential
framework for nuclear supply assurances could have three stages: (1) existing market
arrangements; (2) back-up commitments by suppliers in case of a politically
motivated interruption of supply if nonproliferation criteria are met; (3) a physical
LEU material reserve.65 The report emphasizes that participation in these
arrangements should be voluntary, that progress on this question will be incremental
and that many options should be explored to give consumer states sufficient choices
to meet their needs. The report is still under discussion by IAEA Board members.
In January 2006, Russian President Vladimir Putin proposed four kinds of
cooperation: creation of international uranium-enrichment centers (IUECs),
international centers for reprocessing and storing spent nuclear fuel, international
centers for training and certifying nuclear power plant staff, and an international
research effort on proliferation-resistant nuclear energy technology. The international
fuel cycle centers would be under joint ownership and co-management. They would
be commercial joint ventures (that is, no state financing), with advisory boards
consisting of government, industry, and IAEA professionals. The IAEA would not
have a vote on these boards, but would play an advisory role, while also certifying
the fuel provision commitments. As part of an open joint-stock company, IUEC
participants would receive dividends from IUEC profits.
Recipient countries under Putin’s proposal would receive fuel cycle services, but
access to sensitive technology would stay in the hands of the supplier state. Russia
has offered a similar arrangement to Iran — to jointly enrich uranium on Russian
territory. Iran has not yet accepted this offer, but it is still part of ongoing negotiations
with Iran over its nuclear program. Russia has also made the return of spent fuel from
Bushehr a condition of supply, so that no plutonium can be extracted from the spent
63 Ibid., p. 98.
64 International Atomic Energy Agency, Possible New Framework for the Utilization of
Nuclear Energy: Options for Assurance of Supply of Nuclear Fuel, June 2007.
65 Tariq Rauf, “Realizing Nuclear Fuel Assurances: Third Time’s the Charm,” Presentation
to the Carnegie International Nonproliferation Conference, June 24, 2007, at
66 “The Last Word: Sergei Kirienko,” Newsweek, February 20, 2006 issue, at
[ h t t p : / / www.ms nbc.msn.com/ i d / 11299203/ si t e / n ewsweek/ ] .
As a first step, Russia has created a model International Uranium Enrichment
Center (IUEC) at Angarsk (approximately 3,000 miles east of Moscow). The
Angarsk IUEC began operation on September 5, 2007. Kazakhstan was the first
partner, and Armenia joined the consortium-based center in February 2008.67
Ukraine, Armenia, Mongolia, the Republic of Korea and Japan have also expressed
interest in participating in the Angarsk arrangement. France is reportedly also
considering establishing a similar IUEC on its territory.68 Press reports have also
indicated that Turkey is interested in hosting an IUEC.69
To join the Angarsk IUEC, countries must agree that the material be used for
“nuclear energy production” and must receive all of their enrichment supply from the
IUEC.70 The IUEC is “chiefly oriented to States not developing uranium enrichment
capabilities on their territory.”71 The type of safeguards for the envisioned
international fuel cycle center has yet to be determined by the IAEA, but are under
discussion.72 Ideally, Russia would like the nuclear fuel being provided to
non-nuclear weapon states to be fully safeguarded by the IAEA. Russia has
reportedly requested that safeguards apply to the perimeter of the Angarsk facility as
well as to the material stockpile (not within the facility). Russia, as a nuclear weapon
state under the NPT, has a voluntary safeguards agreement which allows, but does
not require, inspections.
Six Country Concept
In May 2006, six governments — France, Germany, the Netherlands, Russia,
the United Kingdom, and the United States — proposed a “Concept for a Multilateral
Mechanism for Reliable Access to Nuclear Fuel”73 (referred to here as the Six
Country Concept). This proposal reportedly developed from a U.S. initiative
following President Bush’s 2004 proposal. It would not require states to forgo
enrichment and reprocessing, but participation would be limited to those states that
did not currently have enrichment and reprocessing capabilities.
67 “Russia, Armenia sign uranium production, enrichment deals,” RIA Novosti, February 6,
68 “France: International partnership part of new enrichment business,” Nuclear Fuel,
September 24, 2007.
69 “Nuke Plans Light Up,” Turkish Daily News, January 15, 2008.
70 “Russia’s Angarsk international enrichment center open for business,” Nuclear Fuel,
September 24, 2007.
71 “Communication received from the Resident Representative of the Russian Federation to
the IAEA on the Establishment, Structure and Operation of the International Uranium
Enrichment Centre,” INFCIRC/708, June 8, 2007.
72 “IAEA eyes monitoring Russian uranium enrichment facilities,” Kyodo World Service,
October 10, 2007.
73 “Concept for a Multilateral Mechanism for Reliable Access to Nuclear Fuel,” Proposal
as sent to the IAEA from France, Germany, the Netherlands, Russia, Ireland, and the United
States, May 31, 2006, IAEA GOV/INF/2006/10. Available at [http://www-pub.iaea.org/
MT CD/Meetings /PDFplus/2006/cn147_ConceptRA_NF.pdf].
The Six Country Concept calls for a multi-tiered backup mechanism to ensure
the supply of low enriched uranium (LEU) for nuclear fuel. The proposal would
work as follows: (1) A commercial supply relationship is interrupted for reasons
other than nonproliferation; (2) The recipient or supplier state can approach the IAEA
to request backup supply; (3) The IAEA would rule out commercial or technical
reasons for interruption (to avoid a market disruption) and assess whether the
recipient meets the following qualifications: it must have a comprehensive safeguards
agreement and Additional Protocol in force; it must adhere to international nuclear
safety and physical protection standards; and it is not pursuing sensitive fuel cycle
activities (which are not defined); (4) The IAEA would facilitate new arrangements
with alternative suppliers.
Two mechanisms were proposed to create multiple tiers of assurances: including
a standard backup provision in commercial contracts, and establishing reserves of
LEU (not necessarily held by the IAEA, but possibly with rights regarding the use of
the reserves). The Six Country Concept specifically mentioned the 17 tons of U.S.
HEU declared in September 2006 to be excess to defense needs, which would be
converted to LEU and held in reserve to support fuel supply assurances.74 According
to U.S. Ambassador Gregory Schulte, any such reserve in the United States would
be kept under national control.75 Stringent U.S. requirements on U.S.-origin material,
pursuant to the 1954 Atomic Energy Act (as amended), may limit the attractiveness
of that material for some states. Such requirements include safeguards in perpetuity,
prior consent for enrichment and reprocessing, and the right of return should a non-
nuclear weapon state detonate a nuclear explosive device.76
The Six Country Concept addressed several future options, all of which are
longer term in nature. They include providing reliable access to existing reprocessing
capabilities for spent fuel management; multilateral cooperation in fresh fuel
fabrication and spent fuel management; international enrichment centers; and new
fuel cycle technology development that could incorporate fuel supply assurances.
Nuclear Threat Initiative Fuel Bank
In September 2006, former Senator Sam Nunn, Co-Chairman of the Nuclear
Threat Initiative (NTI),77 announced NTI’s pledge of $50 million as seed money to
create a low-enriched uranium stockpile owned and managed by the IAEA. NTI
believes that the establishment of such an LEU reserve would assure an international
74 Assistant Secretary of Energy Dennis Spurgeon, Remarks at an IAEA Special Event on
“Assurances of Nuclear Supply and Nonproliferation,” September 19, 2006. Available at
[http://energy.gov/ news /4173.htm] .
75 “News Analysis: The Growing Nuclear Fuel-Cycle Debate,” Arms Control Today,
November 2006. Available at [http://www.armscontrol.org/act/2006_11/NAFuel.asp].
76 See CRS Report RL33016, U.S. Nuclear Cooperation With India: Issues for Congress,
by Sharon Squassoni, for additional detail on the requirements contained in Section 123 of
the Atomic Energy Act.
77 Nuclear Threat Initiative is a private organization founded in 2001 by Mr. Ted Turner and
former Senator Sam Nunn. It is now classified as a 501(c)3 public charity.
supply of nuclear fuel on a non-discriminatory, non-political basis to recipient states.
As Senator Nunn said in his speech announcing the pledge, “We envision that this
stockpile will be available as a last-resort fuel reserve for nations that have made the
sovereign choice to develop their nuclear energy based on foreign sources of fuel
supply services- and therefore have no indigenous enrichment facilities.”78
Provision of the NTI money is contingent on the IAEA taking the necessary
preparatory actions to establish the reserve and on contribution of an additional $100
million or an equivalent value of LEU, by one or more IAEA Member States.79 No
other conditions have been set by NTI — policy questions are meant to be solved by
the IAEA and member states. Key issues still to be determined include the reserve’s
content, location, criteria for determining access to the stocks including safety and
export control standards, the fuel’s pricing, and how the fuel in reserve would be
fabricated into the appropriate fuel type for the customer’s reactor.80
Several bills before Congress support the establishment of an international fuel
bank. On April 18, 2007, Senator Lugar introduced S. 1138 in the Senate, the Nuclear
Safeguards and Supply Act of 2007. This bill would make it U.S. policy to
“discourage the development of additional enrichment and reprocessing capabilities
in additional countries, encourage the creation of bilateral and multilateral assurances
of nuclear fuel supply, and ensure that all supply mechanisms operate in strict
accordance with the IAEA safeguards system.” It would also authorize the President
to negotiate mechanisms to assure fuel supply to countries who forego national
nuclear fuel cycle capabilities.81 While this bill supports the fuel bank initiative as
a mechanism for supply assurance, it does not provide authorization for funding. The
Senate Committee on Foreign Relations approved S. 1138 on June 27, 2007.
On June 18, 2007, the House passed H.R. 885, the International Nuclear Fuel
for Peace and Nonproliferation Act of 2007, which would authorize $50 million in
FY2008 for establishing an IAEA fuel bank.82 The bill, however, would place certain
requirements on implementation: the fuel bank itself would have to be established
on the territory of a non-nuclear weapon state under the oversight of the IAEA; any
state receiving fuel from the bank must be in full compliance with its IAEA
safeguards agreement and have an Additional Protocol in force; if the recipient state
78 New Framework for the Utilization of Nuclear Energy in the 21st Century: Assurances of
Supply and Nonproliferation, IAEA Special Event, Speech by Sam Nunn, September 19,
79 Nuclear Threat Initiative Commits $50 million to Create IAEA Nuclear Fuel Bank,
International Atomic Energy Agency Press Release, September 19, 2006. Available at
80 For more detailed treatment of these questions see, New Framework for the Utilization
of Nuclear Energy in the 21st Century: Assurances of Supply and Nonproliferation, IAEA
Special Event, Speech by Laura Holgate, September 19, 2006, at [http://www.nti.org].
81 See S.Rept. 110-151, Nuclear Safeguards and Supply Act of 2007.
82 Introduced February 7, 2007, by Representative Lantos; reported by House Committee on
Foreign Affairs June 18, 2007 (H.Rept. 110-196); passed House under suspension of the
rules by voice vote.
had previously been in noncompliance, the Board of Governors must determine that
the state has taken all necessary actions to satisfy concerns of the IAEA Director
General; the recipient agrees to use the fuel in accordance with its safeguards
agreement; and the recipient does not operate uranium enrichment or spent fuel
reprocessing facilities of any scale. An identical bill, S. 1700 was introduced in the
Senate on June 26, 2007 and referred to the Senate Foreign Relations Committee.
In addition, S. 970, the Iran Counterproliferation Act, contains the text of H.R. 885
in a subtitle, was introduced on March 22, 2007 and referred to the Senate Committee
The House (H.R. 1585) and Senate versions (S. 1547) of the National Defense
Authorization Act for Fiscal Year 2008 both authorized $50 million to be
appropriated to the Department of Energy for the “International Atomic Energy
Agency Nuclear Fuel Bank.” The conference report supports the establishment of a
fuel bank and notes that “additional work will be required in order to provide
appropriate guidance to the executive branch regarding criteria for access by foreign
countries to any fuel bank established at the IAEA with materials or funds provided
by the United States.”83
Both the House (HR.2641) and Senate (S. 1751) Energy and Water
Appropriations Acts recommended that funds be made available for an international
nuclear fuel bank under the IAEA, and make available $100 million and $50 million
respectively. The Consolidated Appropriations Act for FY2008, which became P.L.
110-161 on December 26, 2007, provided that $50 million should be available until
expended for “the contribution of the United States to create a low-enriched uranium
stockpile for an International Nuclear Fuel Bank supply of nuclear fuel for peaceful
means under the International Atomic Energy Agency.” On August 4, 2008, the U.S.
Secretary of Energy issued an official letter to the IAEA donating “nearly 50 million”
to the international nuclear fuel bank.84 This reflects a congressionally mandated
rescission that was applied proportionally across the Department of Energy’s
In addition, Norway pledged $5 million to the fuel bank on February 27,86 and
the United Arab Emirates announced a contribution of $10 million on August 1,
83 H.Rept. 110-477 to accompany H.R. 1585.
84 “U.S. Donates $50 million for the IAEA International Nuclear Fuel Bank,” NNSA Press
Release, August 4, 2008. [http://nnsa.energy.gov/news/2090.htm]
85 Division C, Title III, Section 312 of the FY2008 Consolidated Appropriations Act
rescinded 1.6 percent of discretionary budget authority for Congressionally directed
projects, this includes the fuel bank. [http://www.whitehouse.gov/omb/legislative/
86 “Norway Contributes $5 Million to IAEA Nuclear Fuel Reserve,” Norwegian Ministry of
Foreign Affairs Press Release No. 027/08, February 27, 2008. [http://www.regjeringen.no/
en/dep/ud/Press-Contacts/News/2008/fuel reserve.html ?id=50210]
2008.87 Thus, $35 million needs to be raised by the extended deadline of September
World Nuclear Association
In May 2006, the private-sector World Nuclear Association (WNA) Working
Group on Security of the International Nuclear Fuel Cycle outlined proposals for
assuring front-end and back-end nuclear fuel supplies.88 Like the Six Country
Concept, the WNA proposal envisions a system of supply assurances that starts first
with normal market procedures attempting to reestablish nuclear fuel supply after
interruptions. Also similar to the Six-Party Proposal, a pre-established network of
suppliers could be triggered through the IAEA if supply were interrupted for political
reasons. If that network then failed, stocks held by national governments could be
The first tier of assurances, therefore, is through commercial suppliers. The
second level of supply commitment would use a “standard backup supply clause” in
enrichment contracts, supported by governments and the IAEA. “To ensure that no
single enricher is unfairly burdened with the responsibility of providing backup
supply, the other (remaining) enrichers would then supply the contracted enrichment
in equal shares under terms agreed between the IAEA and the enrichers,” according
to the proposal.
For fuel fabrication, a backup supply system would be more complicated,
according to the WNA report. “Because fuel design is specific to each reactor
design, an effective mechanism would require stockpiling of different fuel
types/designs. The cost of such a mechanism could thus be substantial,” according
to the report. However, WNA noted that unlike uranium enrichment technology,
uranium fuel fabrication is not of proliferation concern.
The WNA report also noted the need for back-end nuclear fuel cycle supply
assurances, to prevent a future scenario in which reprocessing technologies spread
as nuclear power programs expand. The report recommends that a clear option to
reprocess spent fuel at affordable prices is offered to states that do not have
indigenous reprocessing programs. Such assurances would be part of a longer-term
Japan presented a “complementary proposal” to the Six Country Concept at the
IAEA in September 2006. Japan’s concerns with the Six Country Concept centered
on the implication that it would deny the right for states to use nuclear technology for
commercial purposes and because it assured the supply only of LEU, rather than all
87 “UAE Commits $10 Million to Nuclear Fuel Reserve Proposal,” IAEA Press Release,
August 7, 2008 [http://www.iaea.org/NewsCenter/News/2008/uaecontribution.html]; “UAE
Commitment Gives NTI/IAEA Fuel Bank Critical Momentum,” NTI Press Release, August
88 WNA’s report is available at [http://www.world-nuclear.org/reference/pdf/security.pdf].
front-end nuclear fuel cycle services. Japan proposed instead to create an “IAEA
Standby Arrangements System” that would act as an early warning system to prevent
a break in supply to recipients. With a list of supply capacities from each state
updated annually and a virtual bank of front-end fuel cycle services (from natural
uranium to fuel fabrication), the IAEA would facilitate supply to recipient states
before supply was completely stopped. States determined by the IAEA Board of
Governors to be in good non-proliferation standing by the IAEA could participate.
Germany proposed in May 2007 that a new enrichment facility be built and
placed under IAEA ownership in a extraterritorial area.89 An independent
management board or consortium would finance and run the plant on a commercial
basis, but the IAEA would decide whether to supply enriched fuel according to
nonproliferation criteria. Germany argues that this approach is advantageous since
it does not prohibit uranium enrichment, but does provide a commercially viable,
politically neutral option for fuel supply and could create competition on the world
market by creating a new fuel service provider. With an economically viable option
on neutral ground, it will be harder for states to justify starting their own enrichment
program for commercial reasons.
The United Kingdom has proposed that enrichment bonds be created that would
give advance assurance of export approvals for nuclear fuel to recipient states. The
bonds would be an agreement between supplier state or states, the recipient state and
the IAEA in which the supplier government would guarantee that, subject to the
IAEA’s determination that the recipient was in good nonproliferation standing,
national enrichment providers will be given the necessary export approvals to supply
the recipient states. It is a transparent legal mechanism designed to give further
credible assurance of supply with a ‘prior consent to export’ arrangement. The IAEA
would make the final decision on whether conditions had been met to allow the
export of LEU.90
Global Nuclear Energy Partnership
In February 2006, U.S. Secretary of Energy Bodman announced the Global
Nuclear Energy Partnership (GNEP), drawing together two of the Bush
Administration’s policy goals: promotion of nuclear energy and nonproliferation.
Recycling nuclear fuel to produce more energy and reduce waste, and encouraging
global prosperity are a few of DOE’s stated aims for the program. GNEP builds on
DOE’s Advanced Fuel Cycle Initiative (AFCI), a program that began in 2003 to
develop and demonstrate spent fuel reprocessing/recycling technology.
The domestic component of GNEP focuses on the future of nuclear energy in
the United States: what kind of future reactors will be licensed, and how spent
nuclear power reactor fuel will be handled. Existing commercial light water reactors
are expected to continue as the predominant technology for at least the next two
89 “Safe Enrichment for All,” Handelsblatt newspaper, May 2, 2007, in English at
90 INFCIRC/707, June 4, 2007.
decades. Spent fuel from existing reactors would be stored or retrievably emplaced
at the planned Yucca Mountain, NV, repository, awaiting future reprocessing and
Reprocessing facilities would use new technologies developed by AFCI to avoid
separation of pure plutonium that could be used for weapons. However, there is
some controversy over how proliferation-resistant such processes might be. High
level waste from reprocessing (mostly fission products) would go to the Yucca
Mountain repository, and the recycled plutonium and uranium would be fabricated
into fuel for an Advanced Burner Reactor, a fast reactor to be developed by DOE’s
Generation IV Nuclear Energy Systems Initiative. In the longer term, plutonium and
other transuranics in spent fuel would be fabricated into new fuel for future fast
reactors. Eventually, that fuel would be continually recycled until all the transuranics
are consumed, leaving the fission products to be disposed of in a geologic repository.
The international component of GNEP envisions a consortium of nations with
advanced nuclear technology that would provide fuel services and reactors to
countries that “refrain” from fuel cycle activities, such as enrichment and
reprocessing. It is essentially a fuel leasing approach, wherein the supplier takes
responsibility for the final disposition of the spent fuel. This could mean taking back
the spent fuel, but might also mean, according to DOE, that the supplier “would
retain the responsibility to ensure that the material is secured, safeguarded and
disposed of in a manner that meets shared nonproliferation policies.”91 While this
describes the responsibility of the supplier, the vagueness of the language suggests
that any number of solutions, including on-site storage, could be the outcome.
GNEP envisions a system whereby supplier states take back spent fuel, but
many nations lack the political will to do so. Skeptics have raised the question of
whether the technology used in GNEP will be a net gain for nonproliferation efforts,
since the United States does not reprocess or re-use plutonium now. In their view,
the “proliferation-resistance” of technologies under consideration must be assessed
against the status quo in the United States, which is disposal of sealed, intact fuel
rods in a geologic repository.
Much of the AFCI’s research is focusing on a separations technology called
UREX+, in which uranium and other elements are chemically removed from
dissolved spent fuel, leaving a mixture of plutonium and other highly radioactive
elements. Proponents believe UREX+ is proliferation-resistant, because further
purification would be required to make the plutonium useable for weapons and
because its high radioactivity would make it difficult to divert or work with. In
contrast, conventional reprocessing using the PUREX process can produce weapons-
However, critics see the potential nonproliferation benefits of UREX+ over
PUREX as minimal. Richard Garwin suggested in testimony to Congress in 2006
that Urex+ fuel fails the proliferation-resistance test. Since it contains 90%
plutonium, it could be far more attractive to divert than current spent fuel, which
91 DOE Global Nuclear Energy Partnership home page, at [http://www.gnep.energy.gov].
contains 1% plutonium. In other words, a terrorist would only have to reprocess 11
kg of Urex+ fuel to obtain roughly 10 kg of plutonium, in contrast to reprocessing
1,000 kg of highly radioactive spent fuel to get the same amount from light water
Another nonproliferation-related concern about GNEP is how its
implementation will affect global stockpiles of separated plutonium. Frank Von
Hippel points to costly failed plutonium recycling programs in the U.K., Russia and
Japan where separated plutonium stocks have accumulated to 250 tons, enough for
30,000 nuclear warheads. In Von Hippel’s view, GNEP would exchange the safer
on-site spent fuel storage at reactors for central storage of separated transuranics and
high-level waste, cost ten times more, and increase the global plutonium stockpile.93
A separate set of questions focuses on how effective GNEP will be in achieving
its goals. As the only proposal currently that offers incentives for the back-end of the
fuel cycle, it may hold more promise of attracting states to participate in the fuel
supply assurances part of the framework. However, back-end fuel cycle assurances
will require significant changes in policies and laws, as well as efforts to
commercialize technologies. Further, it is far from clear that all suppliers will be
able to offer the full range of fuel cycle assurances, raising the question of the relative
competitiveness of suppliers. These critics do not argue that the overall vision of
GNEP is misplaced, but instead are skeptical that its vision can be achieved,
particularly in the timeframe proposed.
GNEP itself marks a departure from a U.S. policy of not encouraging the use of
plutonium in civil nuclear fuel cycles. Supporters suggest that the U.S. policy
developed in the late 1970s did not envision a recycling process that would not
separate pure plutonium, and therefore question the underlying assumptions of that
longstanding policy. Critics of GNEP have suggested that even though many nations
did not agree with the United States in the 1970s on the dangers of having stockpiles
of separated plutonium, the message that the United States conveyed was that
reprocessing was unnecessary to reap the benefits of nuclear power and that GNEP
conveys the opposite message now. Moreover, some critics point to the
accumulation since the 1970s of separated plutonium as a particular threat, given the
potential for terrorist interest in acquiring nuclear material.
An October 2007 study published by the National Academies of Science
recommended that research and development activities for new reprocessing plants
continue but be scaled back, with more time and peer review before commercial
plants are built. It strongly criticized DOE’s timeline for the program, saying that
“achieving GNEP’s goals are too early in development to justify DOE’s accelerated
92 Richard Garwin, “R&D Priorities for GNEP,” Testimony to House Science Committee,
April 6, 2006.
93 Frank von Hippel, “GNEP and the U.S. Spent Fuel Problem,” Briefing for Congressional
Staff, March 10, 2006, at [http://www.princeton.edu/~globsec/publications/pdf/House
Briefing10March06rev2.pdf]; Frank von Hippel, “Managing Spent Fuel in the United States:
The Illogic of Reprocessing,” International Panel on Fissile Materials, January 2007, at
[ ht t p: / / www.f i ssi l e ma t e r i al s.or g/ i pf m/ s i t e _down/ i pf mr e sear chr e por t 03.pdf ] .
schedule for construction of commercial facilities that would use these
The GNEP proposal has attracted some international interest, at least among
potential supplier states. Officials from China, France, Japan, Russia, and the United
States met in Washington, DC, on May 21, 2007, to discuss GNEP and its goals.
According to a joint statement issued after the meeting, “The participants believe in
order to implement the GNEP without prejudice to other corresponding initiatives,
a number of near- and long-term technical challenges must be met. They include
development of advanced, more proliferation resistant fuel cycle approaches and
reactor technologies that will preserve existing international market regulations.”
In a formal presentation of GNEP principles, made September 16, 2007 in
Vienna, Austria, participation was opened to all nations on a voluntary basis that
agree to internationally accepted standards for a safe, peaceful, and secure nuclear
fuel cycle.95 Sixteen countries joined the United States in signing the Statement of
Principles for GNEP in September 2007, and Italy, Canada, and the Republic of
Korea have joined the partnership since then.96 The principles call for safe expansion
of nuclear energy, enhanced nuclear safeguards, international supply frameworks, and
development of fast reactors, “more proliferation resistant” nuclear power reactors
and spent fuel recycling technologies in facilities that do not separate pure plutonium.
They did not call upon states to renounce or refrain from indigenous development of
enrichment or reprocessing technologies but emphasized the goal of creating “a
viable alternative to acquisition of sensitive fuel cycle technologies.” It further
emphasized that participants would not be giving up any rights to benefit from
peaceful nuclear energy.
It may be difficult for the United States and others to define which states are
suppliers and which are recipients. Informally, U.S. policy currently recognizes 10
states as having enrichment capability — the five nuclear weapon states (U.S., U.K.,
France, China, Russia) plus Japan, Argentina, Brazil, the Netherlands, and Germany.
While Argentina has a plant (Pilcaniyeu) under safeguards, this plant has never
operated commercially and it is doubtful that it will be cost-effective, since it uses
outdated gaseous diffusion technology. Brazil’s centrifuge enrichment plant at
Resende is still in the early stages of commissioning and won’t produce at a
commercial scale for several years. States such as Australia, Canada, South Africa,
and Ukraine have stated they would be interested in developing enrichment capability
for export. On the reprocessing side, South Korea has expressed interest in becoming
a GNEP supplier state through development of a pyroprocessing technique that does
94 “DOE’s Spent Nuclear Fuel Reprocessing R&D Program Should Be Scaled Back; Boosted
Efforts to Get New Nuclear Power Plants Online Needed,” National Academies News
Release, October 27, 2007, [http://www8.nationalacademies.org/onpinews/newsitem.
95 “Remarks as Prepared for Delivery by U.S. Secretary of Energy Samuel W. Bodman,” 2nd
Global Nuclear Energy Partnership Ministerial Opening Session Vienna, Austria, September
not separate plutonium from uranium. In the past, the United States for proliferation
reasons has rejected requests from South Korea to reprocess U.S.-origin spent fuel.
Congress has itself raised concerns about GNEP. In the Consolidated
Appropriations Act FY2008 (P.L. 110-161), Congress provided $181 million out of
$395 million requested by the administration. Of this amount, $151 million is for
research, development, and design activities, with no funds for constructing facilities
for technology demonstration or commercialization.97 The additional $30 million is
for upgrades to existing facilities. The administration had proposed that technology
demonstration facilities be built and begin operating in the period FY2008-FY2020.
In its press release, the House Energy and Water Appropriations Committee said
that the budget cuts were made because “it is unnecessary to rush into a plan that
continues to raise concerns among scientists and has only weak support from industry
given that there are reasonable options available for short term storage of nuclear
waste and that this project will cost tens of billions of dollars and last for decades.”98
The Senate Report on Energy and Water Appropriations similarly cautioned that
the policy of reinitiating the recycling of spent nuclear fuel in the United States
is a significant issue and one that has international implications.... The
Committee believes the administration must come forward with greater
scientific, technical, and policy information that examines more alternatives in
the fuel cycle and recycling process. The administration is directed to limit the
FY2008 work scope to research and development and technology demonstrations
at existing facilities. No funds may be used beyond conceptual design of new99
facilities or the sodium cooled fast burner reactor.
The House Appropriations Committee recommended cutting AFCI to $90.0
million in FY2009, eliminating all funding for GNEP. The remaining funds would
be used for research on advanced fuel cycle technology, but none could be used for
design or construction of new facilities. The committee urged DOE to continue
coordinating its fuel cycle research with other countries that already have spent fuel
recycling capability, but not with “countries aspiring to have nuclear capabilities.”
The Senate Appropriations Committee recommended $229.7 million for AFCI for
FY2009, focusing on advanced fuel separation and fuel fabrication, without
specifically mentioning GNEP (S.Rept. 110-417, House report not filed).
Comparison of Proposals
Table 4 provides a comparison of the major proposals currently in circulation
to restrict sensitive nuclear fuel technology development. The table is based on one
97 See CRS Report RL34009, Energy and Water Development: FY2008 Appropriations, by
Carl E. Behrens et al.
98 “Summary: 2008 Energy and Water Appropriations Full Committee Markup,”
99 Nuclear Energy section, S.Rept. 110-127, Energy and Water Appropriations Bill, 2008.
created by Chaim Braun presented at the September 2006 IAEA conference on
nuclear fuel supply assurances.100
100 The IAEA proposal is “Multilateral Approaches to the Nuclear Fuel Cycle: Expert Group
Report Submitted to the Director General of the International Atomic Energy Agency,”
INFCIRC/640, International Atomic Energy Agency, February 22, 2006, p. 18. Available
The Six-Country Concept is “Concept for a Multilateral Mechanism for Reliable Access to
Nuclear Fuel,” Proposal as sent to the IAEA from France, Germany, the Netherlands,
Russia, Ireland, and the United States, May 31, 2006. Available at
[ h t t p : / / www-pub.i aea.or g/ MT CD/ M eet i n gs / PDFpl us/ 2006/ cn147_Concept RA_NF.pdf ] .
Table 4. Comparison of Major Proposals on Nuclear Fuel Services and Supply Assurances
IAEA/INFCIRC/640Putin InitiativeGNEPSix Country ConceptAssociation
alsIdentify multilateralEstablish internationalEnable expansion ofCreate interim measures forEnhance supply
approaches across the fuelcommercially operatednuclear power in thefront-end assurances. security.
cycle; improve non-nuclear fuel service centersUnited States and around
proliferation assurancesin Russia, to includethe world, promote nuclear
without disrupting marketenrichment, education andnonproliferation goals, and
mechanisms.training, and spent fuelhelp resolve nuclear waste
management. disposal issues. Provide
states with front-end and
back-end services, to
provide an alternative to
iki/CRS-RL34234the creation of national
rgetFront-end and back-endSupply of nuclear fuel andFront- and back-endSupply of nuclear fuel.Primarily fuel supply.
://wikiservices including uraniumpossibly other fuel cycleservices. It could create
httpenrichment, fuel reprocessing,services.new class of “reactor-
and disposal and storage ofonly” states.
Reinforce commercialCommercial, long-termUse existing enrichmentLevel I: MarketLevel I: Market meets
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of enriched uranium
IAEA/INFCIRC/640Putin InitiativeGNEPSix Country ConceptAssociation
EA RoleIAEA participates inIAEA would ensure supplyIAEA would applyIAEA as broker. IAEAIAEA would approve
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guarantor of service suppliesstocks and placing themimplementation, safety,IAEA could manage
with use of a fuel bank.under its control (IAEAphysical protection andenriched uranium
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an international consortiumto do so).sensitive fuel cycle activities.
for reprocessing services.
ibilityRecipient countries wouldEqual access, butNo requirements nowIAEA-approved states thatIAEA-approved states
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designated center.but not necessarilycontracts; identified need tocontracts. No new
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tentialNo mechanism specified forIncentives not specified, asLack of political will toIncentives may beIncentives may be
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nonproliferation record.nonproliferation regime. Concerns about gains fordetermine price on
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incorporated into contracts.
FCIRC/640, p. 103.
Questions Abound on Proposals by Bush, Putin on Fuel Centers,” Nuclear Fuel, March 13, 2006, vol. 31, no. 3.
Prospects for Implementing Fuel
Proposals to provide an international and institutional framework for peaceful
nuclear activities have abounded since the 1940s, but few have been implemented.
The U.S.-sponsored Baruch Plan introduced at the United Nations in 1946
recommended establishing an international agency with managerial control or
ownership of all atomic energy activities. The International Atomic Energy Agency,
established in 1957, emerged as a paler version of what was suggested in the Baruch
Plan, but still retains authorities in its statute to store fissile material.
Concern about proliferation led to a flurry of proposals in the 1970s and 1980s
as the United States and others convened groups to study the issues.101 One idea
studied in the mid-1970s was regional nuclear fuel cycle centers, focused on
reprocessing technologies. Several factors contributed to its lack of success, despite
support by the U.S. Congress: low uranium prices (making plutonium recovery
relatively unattractive), a slump in the nuclear industry in the late 1970s and early
1980s, and U.S. opposition to reprocessing from the late 1970s. Member states of
the IAEA also convened the International Fuel Cycle Evaluation project, which
involved 60 countries and international organizations. INFCE working group reports
suggested establishing a multi-tiered assurance of supply mechanism similar to the
one proposed by the Six Country Concept in 2006. States also studied international
plutonium storage in the late 1970s and early 1980s, but could not agree on how to
define excess material or the requirements for releasing materials.
As in the past, the success of current proposals may depend on whether nuclear
energy is truly revived not just in the United States, but globally. That revival will
likely depend on significant support for nuclear energy in the form of policy, price
supports, and incentives. Factors that may help improve the position of nuclear
energy against alternative sources of electricity include higher prices for other
sources (natural gas and coal through a carbon tax), improved reactor designs to
reduce capital costs, regulatory improvements, and waste disposal solutions.
The willingness of fuel recipient states to participate in international enrichment
centers rather than develop indigenous enrichment capabilities, and confidence in
fuel supply assurance mechanisms such as an international fuel bank, will largely
determine the success of the overall policy goal — to prevent further spread of
enrichment and reprocessing technologies. So far, proposals addressing this
challenge have originated in the supplier states, with many recipient states continuing
to voice concern that their right to peaceful nuclear energy technology under the NPT
is in jeopardy. Increasingly, however, participation is being presented as a market-
based decision by a country not to, at least for the present, develop their own fuel
101 For an analysis of these past proposals, see Lawrence Scheinman, “Equal Opportunity:
Historical Challenges and Future Prospects of the Nuclear Fuel Cycle,” Arms Control
Today, May 2007.
Another factor that will shape the success of these proposals is the possible
addition of other incentives. Simply making nuclear energy cost-effective may not
induce countries to forgo indigenous enrichment and reprocessing. Such decisions
may require other incentives, perhaps even outside the nuclear realm, to make them
palatable. The experience of Iran may be instructive here. Russia’s offer to provide
assured enrichment services on Russian soil has gone nowhere; instead, other,
broader trade incentives may be necessary. While the case of Iran may illustrate the
extreme end of the spectrum, in terms of a country determined to develop a capability
for a weapons program, non-nuclear weapon states will clearly take notice of how a
solution develops for Iran.
Issues for Congress
Congress would have a considerable role in at least four areas of oversight
related to fuel cycle proposals. The first is providing funding and oversight of U.S.
domestic programs related to expanding nuclear energy in the United States. Key
among these programs are GNEP, the Advanced Fuel Cycle Initiative, other nuclear
research and development programs, and federal incentives for building new102
The second area is policy direction and/or funding for international measures to
assure supply. What guarantees should the United States insist on in exchange for
helping provide fuel assurances? H.R. 885 contains nonproliferation requirements
for states participating in an IAEA fuel bank, yet the NTI fuel bank and other
proposals do not. Although the Six Country Concept contains an option for a fuel
bank, it would not require participants to forswear enrichment and reprocessing.
A third set of policy issues may arise in the context of implementing the
international component of GNEP. As referenced above, in the original policy
documents, GNEP participant states would “agree to refrain from fuel cycle
initiatives.” However, in its most recent ministerial meeting, this language was no
longer used and participation was opened to all. This is most likely meant to increase
participation in the initiative by emphasizing that GNEP is not asking state to give
up rights to peaceful nuclear technology.
Some observers believe that further restrictions on non-nuclear weapon states
party to the NPT are untenable in the absence of substantial disarmament
commitments by nuclear weapon states. In particular, a January 4, 2007, Wall Street
Journal op-ed by George Schultz, Bill Perry, Henry Kissinger, and Sam Nunn,
entitled “A World Free of Nuclear Weapons,” noted that non-nuclear weapon states
have grown increasingly skeptical of the sincerity of nuclear weapon states in this
regard. Some observers have asserted that non-nuclear weapon states will not
tolerate limits on NPT Article IV rights (right to pursue peaceful uses of nuclear
energy) without progress under Article VI of the NPT (disarmament). Amending the
NPT is seen by most observers as unattainable.
102 See CRS Report RL33558, Nuclear Energy Policy, by Mark Holt.
The IAEA experts group report, INFCIRC/640, did point to the political
usefulness of achieving a ban on producing fissile material for nuclear weapons
(known as fissile material production cutoff treaty, or FMCT) to provide more
balance between the obligations of nuclear and non-nuclear weapon states. Although
the United States tabled a draft FMCT in May 2006 at the Conference on
Disarmament in Geneva, negotiations await resolution of agenda issues that have
plagued that body for over a decade. Further, some see the U.S. position that such
a treaty is inherently unverifiable as a particular stumbling block.103 Ultimately, any
such treaty would require Senate advice and consent to ratification.
A fourth area in which Congress plays a key role would be in the approval of
nuclear cooperation agreements. Two such agreements have been negotiated but not
yet approved by Congress: one with India and one with Russia. The extent to which
India is granted certain privileges (e.g., prior consent for reprocessing U.S.-origin
material) may influence how Congress votes on the so-called Section 123 agreement
(after the relevant portion of the U.S. Atomic Energy Act) with India. Such an
agreement is required by the Atomic Energy Act before any significant nuclear
equipment or material can be exported. The State Department released the details of
the proposed agreement July 27, 2007, contending that it meets all statutory
requirements.104 Controversy in the Indian Parliament over the agreement has put it
on hold as of mid-October 2007.
Presidents Bush and Putin announced that they had initialed the negotiated
agreement in July 3, 2007.105 Prior to 2006 when President Bush and Putin
announced their intention to negotiate a 123 agreement, Russia’s nuclear commerce
with Iran presented the chief obstacle to such cooperation. Several factors may have
contributed to U.S. officials de-linking peaceful nuclear cooperation with Russia
from Russian behavior on Iran: a tougher line by Moscow since 2003 with respect to
Iran and negotiation of spent fuel take back for the Russian-built Bushehr reactor as
a condition of fuel supply; President Bush’s embrace of nuclear power as an
alternative to reliance on hydrocarbons and “dirty” energy sources; President Bush’s
proposals to multilateralize the nuclear fuel cycle and develop proliferation-resistant
technologies through GNEP; and Russia’s proposals to act as an international fuel
center by storing and reprocessing spent fuel and enriching uranium for fresh fuel.
Russia’s nuclear expertise and infrastructure make it an important potential partner
in expanding nuclear energy and developing future generations of proliferation-
resistant reactors. A completed nuclear cooperation agreement with Russia could
also pave the way for Russian reprocessing of U.S.-origin spent fuel from third
countries (although Russia has not yet decided to do this).Congress has expressed its
103 See CRS Report RS22474, Banning Fissile Material Production for Nuclear Weapons:
Prospects for a Treaty (FMCT), by Sharon Squassoni, Andrew Demkee, and Jill Marie
104 Daniel Horner, “India Agreement Complies With U.S. Law, State Department Official
Says,” Nucleonics Week, August 2, 2007, p. 1.
105 Text of Declaration on Nuclear Energy and Nonproliferation Joint Actions, July 3, 2007,
at [http://moscow.usembassy.gov/bilateral/joint_statement.php?record_id=64]. Once the
agreement is submitted to Congress, the Congress will have 60 days to consider. If no
objections are made, then the agreement becomes law.
continued concern over Russia’s nuclear and missile trade with Iran, and the Iran
Counter-Proliferation Act of 2007 (HR1400) which has been passed by the House,
and S. 970 would prohibit any agreement with a country aiding Iran with its nuclear,
advanced conventional or missile programs.