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Geoffrey Styles's picture
GSW Strategy Group, LLC

Geoffrey Styles is Managing Director of GSW Strategy Group, LLC, an energy and environmental strategy consulting firm. Since 2002 he has served as a consultant and advisor, helping organizations...

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An Energy Perspective on the Iran Nuclear Framework

iran nuclear technology and treaties

  • With enormous natural gas reserves and renewables potential, Iran has little need for nuclear power, and even less for uranium enrichment.
  • If Iran’s sacrifices in pursuit of its nuclear program cannot be explained by a gap in its energy mix, what will motivate its leaders to abide by the current nuclear deal?

The coverage of the recently agreed international nuclear framework for Iran’s nuclear program has missed an important aspect of the story. Nearly all of the reporting and analysis I have read considered the deal from a security and geopolitical perspective, without examining the merits of civilian nuclear power within Iran’s domestic energy mix. That goes to the heart of Iran’s motivation for future adherence to the terms of the detailed agreement that must shortly follow the broad framework negotiated in Switzerland.

This line of analysis dates back to an article I wrote for Geopolitics of Energy, published by the Canadian Energy Research Institute exactly 10 years ago, in April 2005, and subsequently reprinted in my blog. Other than some outdated figures on energy consumption, reserves and cost, it has held up pretty well, particularly in terms of its main proposition:

“Iran makes an unusual candidate for civilian nuclear power, compared to other countries with nuclear power. Most of these fall into either of two categories: those that lack other energy resources to support their economies, such as France, Japan and South Korea, and resource-rich countries that developed nuclear power as a consequence of their pursuit of nuclear weapons, including the US, former USSR, UK, and arguably China. Blessed as it is with hydrocarbon reserves, Iran does not fall into the former category, and it claims not to fall into the latter. Does it represent a unique case?”

In the years since I wrote that, we’ve seen a growing interest in nuclear energy elsewhere in the Middle East, including a reported memorandum of understanding between Saudi Arabia and Korea for constructing civilian power reactors in the Kingdom. Such projects in energy-rich Gulf States beg the same questions as in Iran, although the “displacement of oil for export” rationale holds up better for Saudi Arabia and the UAE than for Iran under the current circumstances.

As in 2005, the key to understanding the fit of nuclear power within Iran’s energy mix is natural gas. In the most recent country analysis by the US Energy Information Administration (EIA) Iran’s domestic energy consumption has grown by roughly two-thirds since the 2003 data on which I based my 2005 article. The EIA data indicate that around 75% of that growth has been fueled by gas. That’s not surprising, since Iran now claims 18% of the world’s proved reserves of natural gas, having leapfrogged Russia for the top spot a few years ago. At current production rates, Iran has over 200 years of proved gas reserves, compared to about 14 years for the US. (Higher US estimates are based on the less-restrictive category of resources, not reserves.)

Moreover, since 2005 the cost of building nuclear power plants has increased, in some cases significantly, while the cost of natural gas-fired combined cycle turbine power plants has generally declined, thanks to substantial efficiency improvements. For that matter, the cost of alternatives like solar power, which Iran’s geography favors, has declined even more in the interim.

A decade after I first examined this question, it is still hard to find a compelling energy rationale for Iran to pursue civilian nuclear power with the persistence it has demonstrated. Developing more of its abundant natural gas would be more cost-effective, perhaps in combination with solar power, which presents natural synergies with gas relating to solar’s intermittency. These options would not have triggered the kind of economic constraints to which Iran’s choices have led.

Nor does the other rationale to which I alluded above withstand scrutiny in this case, involving the application of domestic nuclear power to free up for export oil and gas that would otherwise be consumed to generate electricity. The implied cost of Iranian gas displaced from power generation would likely be higher than the cost of new gas development, especially when the costs of the full nuclear fuel cycle that is the crux of international concerns are included. If anything, Iran’s pursuit of nuclear energy in the last decade has functioned as a reverse fuel displacement mechanism, resulting in costly reductions in oil exports due to international sanctions.

As for the benefits of nuclear energy in cutting greenhouse gas emissions, Iran did not include nuclear power in the list of mitigation measures it presented at the UN climate summit in Durban in 2011, nor did it commit to specific emissions reductions at the Cancun Climate Conference in 2012.

On balance, Iran’s objective need for civilian nuclear power scarcely justifies the sacrifices it has endured, or the lengths to which it has gone to secure its nuclear program. Over the last 10 years, buying time through engagement and negotiations led to an opportunity for the “P5 +1” countries to impose the tough sanctions that brought Iran to the point of the current deal, once rising US shale oil production effectively defused Iran’s “oil weapon.” However, if the current agreement merely buys more time, it risks squandering the best chance to bell this cat. We cannot count on having more slack in energy markets 10 years hence than we do today.

Viewed from an energy perspective, the primary purpose of Iran’s nuclear program seems unlikely to be an expanded energy supply, rather than a weapons capability. In that context, the concerns about this deal recently expressed by two former US Secretaries of State who negotiated Cold War arms control agreements with the Soviet Union should be sobering. They deserve serious consideration by both the White House and a Congress that seeks its own opportunity to weigh in.

Photo Credit: Iran Nuclear Deal Analysis/shutterstock

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Thank Geoffrey for the Post!
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Rick Engebretson's picture
Rick Engebretson on Apr 13, 2015

Thanks, Geoff. Your “based on energy needs, alone” conclusion that nuclear power in Iran makes limited sense is interesting. Then we might ask, “what is the possible need for large scale enrichment?”

I was not able to read much of the Wall Street Journal opinion piece by Kissinger and Shultz you linked (paywall). However, the “national debate” they mention is important.

Geoffrey Styles's picture
Geoffrey Styles on Apr 13, 2015

Thanks, Rick, and sorry about the WSJ link. I suspect if you Googled on the title you’d find the full text somewhere. It’s a shame that op-eds of significant national intersest such as this one are hidden behind paywalls.

After some of the traffic this piece generated on Twitter this morning, I should also clarify for anyone not familiar with my body of work that I am generally supportive of nuclear power. The bone of contnention in this case is enrichment, which is even harder to justify in economic and energy terms and provides a direct path to proliferation.

Rick Engebretson's picture
Rick Engebretson on Apr 14, 2015

No need to be sorry, Geoff. The title of your post, “An Energy Perspective on the Iran Nuclear Framework,” is what you provided in generous detail.

Such is the nature of our modern era; those of the “free lunch” crowd invariably blame the cook for something. For example, I always thought your photo should have you wearing a green tie. Twitter me indignant.

Bob Meinetz's picture
Bob Meinetz on Apr 14, 2015

Geoffrey, in today’s news: Iran Expects Delivery of Russian Missiles by End of Year:

http://www.nytimes.com/aponline/2015/04/14/world/europe/ap-eu-russia-ira...

As a proponent of nuclear energy I couldn’t agree with you more on the seriousness of permitting a fundamentalist Islamic state to have access to nuclear materials. All of our anti-proliferation measures are for naught if we hand belligerent states the keys to the car by permitting them to enrich uranium within their own borders.

Two books, Richard Rhodes’s Dark Sun: the Making of the Hydrogen Bomb and Eric Schlosser’s Command and Control: Nuclear Weapons, the Damascus Incident, and the Illusion of Safety should be required reading for anyone advocating a “soft touch” in dealing with Iran and nuclear weapons development. The destruction wrought by bombs dropped at Hiroshima/Nagasaki is insignificant compared to the horrific capabilities of modern weapons a fraction of their size.

Mark Heslep's picture
Mark Heslep on Apr 14, 2015

“The Making …” is also a fascinating read.   In one of his two volumes, Rhodes captures Oppenheimer’s naive plan for addressing nuclear profiliferation in the world to come: 1) Disarm, eliminate nuclear weapons among the weapons states.  Then, 2) declare war on any state building a weapon, as such efforts could reliably detected.

 

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