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EU acts to save ITER budget as fusion project's price rises.

Thursday, 01 July 2010 00:00

THE EUROPEAN Commission proposed today (July 20) a major additional cash injection of Euro 860 million plus in European Union (EU) funds to develop the nuclear fusion demonstration reactor ITER. The proposal is Brussels' response to a potential serious budget shortfall to meet its commitments to fund the construction of the ITER reactor, needing to find an additional Euro EUR1.4 billion from 2012 to 2013. Detailed financial reports from the Commission have shown that contingency budgets are woefully insufficient to deal with the growing cost of building the reactor in Cadarache, southern France.

Today's response--if accepted by the European Parliament and EU Council of Ministers--will help ease this problem. Its first step will be an initial transfer of unused funds of EUR400 million from other EU budgets to ITER. The Commission said it would also request an additional transfer of money later this year when negotiating next year's EU budget, starting with detailed talks with MEPs and ministers in November. Looking ahead, it is proposing a redeployment of EUR100 million in 2012 and EUR360 million in 2013 from the EU's main research spending budget, the Seventh Framework Programme (FP7).

EU budget Commissioner Janusz Lewandowski and research Commissioner Maire Geoghegan-Quinn said: "ITER can provide a safe, clean and inexhaustible source of energy for the future. This is an immense prize--especially when you consider that the EU had a trade deficit in energy of nearly 400 billion euros in 2008. The EU needs to show the vision and the resolve beyond the immediate financing difficulties and meet its international commitment to this project."

The revision has been necessary because of substantial overall cost increases for ITER, which have more than doubled the costs for Europe from the initially expected ? 2.7 billion. One Brussels study on ITER costings points out the 2001 cost estimated for ITER's construction was EUR5.9 billion, of which the EU's EURATOM budgets were supposed to fund EUR2.7 billion (EUR 1.7 billion in kind with components and systems and EUR945 million in cash).

Today, the Commission admitted there were "substantial overall cost increases for ITER, which have more than doubled the costs for Europe." However, the Commission points out that current cost estimates from the European Joint Undertaking for ITER--'Fusion For Energy' (F4E), coordinating the European role in the project, says these cost estimates have inflated. Its current assessment for European contributions alone to the project under the 2007-2020 construction schedule is EUR6.6 billion for building works and EUR650 for running costs and other activities. "These estimates would require a EURATOM contribution of EUR5.9 billion," said the Commission. Examining budgets commitments for 2012 and 2013 there is a shortfall. Programmed ITER spending in the EU's 2007-13 medium term spending plan includes just EUR346 million for 2012 and EUR344 million for 2013. This means, said the Commission: "EURATOM is facing an estimated gap on commitment appropriations of about EUR1.4 billion for the years 2012-2013 (EUR550 million in 2012 and EUR850 million in 2013)."

A new Brussels report on general spending pressures for the EU shows this could be a tough circle to square. A review of the EU's 'inter-institutional agreement on budgetary discipline and sound financial management' confirms "estimated additional commitment appropriations for ITER to be provided by the EU budget under the present [2007-13 budget plans] might be well above one billion euro."

This might demand a rewriting of this medium-term spending programme as regards key budget heading 1A, which covers immediate spending demands for boosting European economic competitiveness and job creation. ITER is a key priority here and the report said this budget heading "is regularly under pressure due to the evolving context of global challenges", notably because of programmes whose "additional financial needs still have to be determined (for example on ITER)". It continued: "The potential amounts at stake decisively exceed amounts anticipated to remain unspent/uncommited under the current ceiling of heading 1A and there is no budgetary room for new initiatives." And ITER is far from being the only financial suiter. Other competing priorities include the Galileo global positioning satellite programme, the European Institute of Innovation and Technology (EIT), energy sustainability programmes and the decommissioning of Bulgaria's Kozloduy nuclear power plant, among others. With these financial pressures taken into account, only EUR50.1 million in 2011, EUR34.6 million for 2012 and EUR47.8 million for 2013 is left in this particular kitty for additional unexpected spending, which might be expected from ITER. Negotiations would be required to transfer more money to ITER, and unless there is an unexpected underspend in the EU budgets elsewhere--for instance on agriculture--some tough political choices could be required to find ITER the money it needs.
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Author:Nuthall, Keith
Publication:International News
Date:Jul 1, 2010
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