In its study of the EU nuclear industry, Deloitte, a global network of consulting and audit service providers, makes a forecast of the industry’s contribution to the European economy until 2050. Given the multiplier effect, the contribution of nuclear to the GDP will grow, in the best-case scenario, from current EUR 507.4 billion to EUR 575.9 billion in 30 years.
Given the growing interdependency of global social and economic processes, accurate evaluation of the role of activities carried out by separate companies and entire industries is becoming increasingly important for the achievement of 17 UN Sustainable Development Goals.
The adoption of the goals marked a transition from formulating a concept of the balanced economic, environmental and social development to solving particular tasks and setting up indicators to measure the progress towards these goals.
In this respect, a new study conducted by Deloitte for Foratom, a trade association for the nuclear energy industry in Europe, deserves much attention. The study makes an attempt to assess a cumulative economic impact the nuclear industry has on the GDP, employment, tax payments and other key macroeconomic indicators of the EU countries.
Forecast for Europe
Deloitte’s study relies on FTI-CL Energy 2018, a report prepared by FTI Consulting experts who identified three scenarios of Europe’s nuclear sector development until 2050. In the “Low Scenario”, the aggregate nuclear power capacity in Europe will decrease to 36 GW, with the share of nuclear in the energy mix dropping to 5%. The “Medium Scenario” sees the aggregate capacity of around 103 GW, with a 16% share of the energy mix. In the “High Scenario”, the nuclear capacity will grow to 150 GW and have a share of 24%. As a comparison, the total installed capacity of European nuclear power plants in 2019 is 118 GW (25% of the current energy mix).
Deloitte factored in direct effects of the civil nuclear industry on the European Union’s GDP and new, including highly qualified, jobs. Deloitte’s experts also calculated the average income of households with family members employed in the nuclear industry, government revenue from taxes, and trade balance. The study is the most remarkable for the multiplier effect it estimates. It explains how much money will be generated and how many jobs will be created in the economy thanks to the revenue and new jobs created by the nuclear industry. Following the logic of the analysts, new jobs in the nuclear industry create jobs in other industries along the chain of supply; expenses of nuclear industry employees increase consumer spending, which drives the economy. As a result, the multiplier effect is also observed in taxes as the government receives taxes from both nuclear companies and their suppliers and service providers. Taxes paid by employees in the nuclear and other industries are also taken into account.
Deloitte experts make a conclusion that the nuclear industry performance in the “High Scenario” will make a sizable contribution to the EU economy. Despite a relative reduction of the nuclear industry’s contribution to the EU GDP (from 3–3.5% in 2019 to 1.5–2% of the energy mix in 2050), it will grow in natural terms from EUR 507.4 billion to EUR 575.9 billion.
The most important point of the study is, perhaps, the idea that the “High Scenario” is beneficial for both the nuclear industry and the entire economy of the European Union. “The incremental economic benefits arising from the deployment of a High Scenario with an installed capacity of 150 GW in comparison to the Low Scenario would be widespread. For instance, through the deployment of the High Scenario, the nuclear industry would account for a yearly incremental impact of EUR 294.1 billion in the EU GDP. In other words, the overall incremental impact of the High Scenario on EU GDP would rise to EUR 8.8 trillion throughout the timespan of 2020–2050,” the study says.
Besides, as experts point out, the European economy has to solve two major problems related to the power industry. First, carbon dioxide emissions have to be cut by 95% from the 1990 level till 2050. Second, Europe has to increase power generation from the current 3.1 TWh to 4.1 TWh. “As a well-established large-scale zero-carbon technology in power generation, nuclear energy has the potential to play a decisive role in realizing the EU’s ambitious low-carbon targets for 2050,” the survey states.
Leading international vendors have been speaking out about the beneficial effects of the nuclear industry for the entire economy for a long time now. According to the Rosatom Group’s estimates, every single job in the nuclear construction segment creates an average of 10–12 jobs in related industries (metallurgy, mechanical engineering and others). As of end of 2018, Rosatom Group employed over 255,000 people. Last year its total labor costs increased by 11.2% year-on-year and reached almost USD 5.17 billion.
Rosatom’s influence on suppliers can be estimated by procurement costs. In 2018, the Group spent USD 10.9 billion and signed 17,330 supply contracts, with the average contract price of around USD 629,000. Taxes paid by Rosatom in 2018 amounted to USD 3 billion (up by USD 633.2 million year-on-year).
When analyzing this data, it should be taken into account that “direct jobs” mentioned in the study by Deloitte include only jobs related to construction, maintenance and decommissioning of nuclear stations. However, Rosatom’s market position is absolutely unique since its integrated offer covers the entire production chain, including design, construction and operation of nuclear power plants; mechanical engineering, fuel fabrication from uranium exploration and mining to spent fuel disposal, plant decommissioning, and nuclear waste management. Besides, the company develops nuclear medicine, manufactures irradiation facilities designed to treat produce and food and increase their shelf life, conducts research and is engaged in other areas contributing to the achievement of the UN Sustainable Development Goals.
It should be noted that, apart form Russia, Rosatom operates in other countries and creates a positive impact on local economies. “Thanks to the established supply and production chains, each dollar invested in a nuclear construction project generates an average of 4.3 dollars for the GDP of the project’s country, up to 4–5 dollars for the Russian economy, and an average of 1.4 dollars in taxes for the country. The supplier country receives large taxes as well,” says the Results for Sustainable Development, a report prepared in 2017.
Both Russian and European nuclear industries, however different, are similar in their irreplaceable contribution to the reduction of greenhouse gas emissions.
All Russian-designed nuclear power plants operating in the world prevent 556 million tons of carbon dioxide emissions. “Carbon dioxide emissions are one of the major challenges faced by the global community. The nuclear industry saves 2.2 billion tons of CO2 annually,” Rosatom’s Director General Alexey Likhachev said at ATOMEXPO Forum in April. According to him, this is how much carbon dioxide would have been produced by power plants all over the world if they had used coal or gas instead of nuclear fuel.