Will The EU Sanction Russia’s Nuclear Industry?

In February 2022, the EU imposed sanctions on Russia in response to the Russian invasion of Ukraine. The sanctions at this point included restrictive measures (individual sanctions), economic sanctions, and visa measures. The sanctions aimed to disrupt the country's economy to prevent Russia from continuing its conflict with Ukraine. Throughout the year, the EU and other parts of the world increased the number and types of sanctions on Russia as they decreased their reliance on Russian energy. 

In December 2022, the EU banned the import of Russian crude oil and in February 2023 the region banned imports of Russian diesel, jet fuel, and other oil products. These sanctions came later than many others due to the heavy reliance of many EU countries on Russian energy. For example, before the war, Germany imported around half of its gas from Russia and more than a third of its oil. But in January, Germany stated that it was no longer reliant on Russian energy. 

But one area that the EU has avoided sanctioning, to date, is Russian nuclear power. This is largely because of the significant role Russia's state-owned nuclear energy monopoly, Rosatom, plays in global nuclear power. Paul Dorfman, chair of Nuclear Consulting Group, explained that the problem is a "Russian doll's worth of interlocking dependencies." Firstly, Rosatom is a major exporter of nuclear fuel, providing the U.S. with 14 percent of its uranium in 2021. Meanwhile, utilities across Europe purchased around a fifth of their uranium from Rosatom, and they have been unable to diversify their uranium sources since cutting other energy ties with Russia. Rosatom also provided 28 percent of the U.S.'s enrichment services in 2021." Related: Senators Call For Seizure Of Iran Oil Cargos

Further, Rosatom is not just limited to Russia, holding ownership of several nuclear plants around the world. By the end of 2021, one in five nuclear plants worldwide was either in Russia or was Russian-built. Rosatom has repeatedly stepped in to help finance nuclear plants in countries that want to expand their nuclear power sectors but don't have the money to do so. Many of these plants fall under a build-own-operate model, relying on Rosatom for their operation. 

Certain EU states have, therefore, opposed sanctions on Russian nuclear power as they continue to rely on Rosatom for their energy security. For example. Hungary sources around 40 percent of its electricity from nuclear power and has a long-term financing deal with Rosatom to build two new nuclear reactors. In February this year, the European Commission (EC) scrapped plans for sanctions on Russia's nuclear energy industry, citing opposition from some member states. The EU had considered imposing sanctions on individual employees of Rosatom and other companies on the list but has not acted on this idea so far. 

Despite uncertainty over how to impose sanctions on Russian nuclear energy without harming the interests of several European countries, such as Hungary and Bulgaria, the nuclear sanction plan is on the table once again. Germany, Poland, and the Baltic EU member states are pushing for new sanctions on Russian nuclear energy as a means of imposing greater harm on Russia's economy, as the war on Ukraine continues. Robert Habeck, the German economy and climate minister stated, "Across the EU, we must keep making ourselves independent from Russia." Habeck added, "The nuclear sector is still outstanding. It is not justifiable that this area is still given preferential treatment. Nuclear technology is an extremely sensitive area, and Russia can no longer be seen as reliable partner within it."

A Royal United Services report stated that "Between March and December 2022, Russia exported just over $1 billion-worth of materials and technology of relevance to the nuclear energy sector." And "This trade included exports to members of NATO and the EU. In fact, not only has the value of Russian nuclear-related exports not shrunk since February 2022, the data reviewed by the author suggests that it may be expanding, with a handful of loyal customers still eager to do business with Russia's nuclear sector."

Ukraine has repeatedly condemned the EU for not introducing sanctions on Russia's nuclear might alongside other restrictions on Russian energy. So far, the EU has imposed 10 packages of sanctions on Russia, with preparations for the 11th one now taking place. However, despite pressure from Ukraine and several EU member states to include nuclear power in the new sanctions, the EC must consider what this will mean for countries like Hungary and Bulgaria, which continue to rely on Russian nuclear power for their energy. Not to mention the fact that nuclear power is a major clean energy source, and a halt of Russian nuclear energy could encourage some countries to return to fossil fuels. The EU must now weigh up the positive and negative implications of sanctioning Russian nuclear power to determine the right move. 

By Felicity Bradstock for Oilprice.com

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