Page 24 - bne IntelliNews monthly magazine April 2025

24 I Companies & Markets bne April 2025
attract foreign investment. It is a simple truth that modern economies require reliable and cost efficient energy.
All EU members are affected by high energy prices but if the EU continues down this path then the repercussions will be felt most acutely in Central and Eastern Europe. The bloc’s central and eastern member states have previously enjoyed high growth rates, largely as a consequence of their post- communist recovery and access to the single market. That era is ending. The Central and Eastern European economies are maturing and soon will experience the fiscal restraints of Western Europe. This will present an immense challenge for them in meeting EU climate goals at a time when geopolitical necessity requires high defence spending.
The unmet potential of the communist years has left an energy mix heavily dependent on fossil fuels. This represents both a national security threat but also an ecological one. Central and eastern member states have a daunting task in reducing their reliance on oil, coal and natural gas. Logic would dictate that a nuclear and renewable mix would provide the smoothest possible landing and could be rolled out quickly. The EU’s taxonomy, however, will likely foil this. Nuclear projects will flounder and struggle with patchy financing and regulatory inertia whilst renewable projects steam ahead. The result? An unsatisfactory rollout that risks bequeathing Central and Eastern Europe with intermittency and high energy costs. That is no recipe for prosperity.
Already we can see the contours of this energy landscape taking shape. Consider Poland, where coal still generates 70% of the nation's electricity. Coal's death grip on the Polish energy market produces both considerable levels of pollution (and all the health risks associated) and an increasing economic strain as the EU’s carbon credits shred profitability. Its days are up and the Polish government knows this, that is why it has invested in the construction of six nuclear reactors by 2043, with the first reactor expected by 2033. The EU should be aiding and celebrating Poland's efforts to decarbonise. Instead, as a conse- quence of the EU’s stringent financing framework, the country has been forced to find alternative funding from partners in the United States, South Korea and Canada.
The Polish approach provides a clear pathway towards freedom from fossil fuels and renewable intermittency and yet its efficacy is now questionable. Ultimately, this will not prevent Poland from using nuclear energy as part of its green strategy but it will make rollout slower and far more expensive than it needs to be.
Similar examples abound. Czechia has long been reliant on nuclear power to stabilise its grid. If there is a significant shift towards renewables without robust nuclear backups then it
is highly unlikely that the already aging grid will cope or that critical emissions targets can be met. Romania too faces the twin threats of supply shocks and volatile prices if it tries to reduce its natural gas reliance without the aid of nuclear. Even in Hungary, where there are ambitious expansion
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plans for the Paks nuclear power plant, it is foreseeable that persistent regulatory and financial constraints could undermine progress.
Central and Eastern Europe should use renewable energy
to wean itself off fossil fuels but it should not allow the EU taxonomy to effectively render nuclear off the table. Margin- alising nuclear projects risks jeopardising nearly thirty years of increasing prosperity. Instead, the member states, particu- larly those of Central and Eastern Europe, should take the lead in lobbying for a more lucid financing framework.
Nuclear is not a silver bullet but it does have enormous potential for stabilising the European economy. New innovations like Small Modular Reactors (SMRs) and High- Assay Low-Enriched Uranium (HALEU) fuel could rapidly reshape Europe’s energy landscape. SMRs ,for instance,
offer lower upfront investment, lower operational costs
and enhanced safety features. They also take less time to construct, averaging out at just five years. This is dramatically shorter than traditional reactors and would buy valuable breathing room for EU member states as they transition their energy market on a large scale. Yet under the current EU sustainable finance framework, SMR’s are designated as
high risk, stifling their rollout and financing options.
Furthermore, whilst HALEU fuel could make SMRs and
even traditional reactors more cost efficient, it too has been hampered by the EU’s overly restrictive taxonomy. Currently, HALEU fuel can cost as much as €20,000 per kilogram and has the disadvantage of Russia being a key global provider. Unlike other economies, however, the EU has neither invested in lowering the cost of production nor in decoupling from Russian HALEU providers. It has also failed to adapt transport regula- tions to facilitate HALEU fuel delivery. The EU has instead made the bizarre choice of artificially diminishing the cost compet- itiveness of these emerging technologies via its suffocating regulations. In effect this is a capitulation. It has driven and will continue to drive investments towards more favourable markets in North America and Asia, essentially relinquishing any major European contribution to the future of nuclear power.
If the EU is to secure its energy future and preserve its economic vitality, decisive action is needed. The Sustainable Finance Framework needs to be readjusted to remove the undue regula- tory burdens on nuclear energy. Only a sensible mixture of renewable energy and nuclear power can provide the European economy with the affordable and clean energy that it needs.
Europe’s energy future is at a crossroads. Brussels should choose wisely.
Owen Walden-Harris is a freelance journalist specialising
in geopolitics, anthropology and European affairs. He has a strong interest in the practical mechanics behind political and institutional decision making having studied EU law, regulation and political theory at the College of Europe.