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Philippines and US set landmark nuclear energy deal

MANILA (ANN/PHILIPPINE DAILY INQUIRER) – The Philippines and the US are set to finalise the 123 agreement on nuclear energy cooperation on Friday, an agreement that is said to hold great importance in reducing energy costs in the Philippines, where electricity rates rank among the highest in Asia.

This accord represents a significant component of the deals to be formalised during President Ferdinand Marcos Jr’s visit to the Asia-Pacific Economic Cooperation (APEC) Leaders’ Summit.

During his address to the Filipino community at the South San Francisco Conference Centre on Wednesday afternoon, President Marcos announced his participation in the signing of agreements with various American businesses spanning digital infrastructure and connectivity, renewable energy, electronics manufacturing, health, and tourism, among other sectors.

“Energy security, especially clean energy, is also a priority of this administration, and as such, we will have business meetings by the Philippine delegation in this regard,” said President Marcos.

Previously, President Marcos acknowledged that concerns about energy supply and costs had deterred many businessmen from investing in the Philippines.

Legal basis

The 123 agreement is a pact entered into by the US with other countries on nuclear energy cooperation to provide the legal basis for allowing American companies to export nuclear fuel, reactors, equipment, and other specialised nuclear material.

This is called for under Section 123 of the US Atomic Energy Act, which “generally requires the conclusion of a peaceful nuclear cooperation agreement for significant transfers of nuclear material or equipment from the US.”

US Ambassador to the Philippines MaryKay Carlson. PHOTO: ANN/PHILIPPINE DAILY INQUIRER

Speaking to reporters in October this year, US Ambassador to the Philippines MaryKay Carlson said there were a number of American nuclear technology firms “who would be very interested in investing” in the Philippines but were hesitant due to the absence of the 123 agreement.

According to Carlson, a 123 agreement would “allow for greater civil nuclear cooperation, including the export of nuclear technology.”

The United States has 23 civil nuclear agreements with other countries, including Russia, China, Canada, South Korea, the United Kingdom, Japan, Taiwan, Turkey, Ukraine, the United Arab Emirates, and Vietnam.

Policy shift

Negotiations between the US and the Philippines on a nuclear energy cooperation agreement were started by US Vice President Kamala Harris during her visit to Manila in November last year.

The Marcos administration has been leaning toward nuclear energy in hopes of solving the country’s electricity problem.

President Marcos said in his first State of the Nation Address last year that it might be time for the Philippines to reexamine state policy on nuclear energy.

During the Asia-Pacific Economic Cooperation (APEC) Summit in Bangkok, Thailand, in 2022, Marcos also implied that he was willing to partner with France regarding nuclear energy, citing its long experience in the said field.

The Department of Energy has emphasised the importance of the agreement as Filipino companies would have access to nuclear technologies provided by American companies, particularly the small modular reactors (SMRs) of NuScale, UltraSafe and other firms.

Under the Philippine Energy Plan, the government is looking to include 1,200 megawatts of nuclear energy in the power mix by 2032, rising to 2,400 MW by 2040 and to 4,800 MW by 2050.

Local companies, among them the Manila Electric Co. and Aboitiz Power Corp, have already expressed interest in SMR installations.

The International Atomic Energy Agency (IAEA) describes SMRs as advanced nuclear reactors that have a power capacity of up to 300 MW each, or about a third of the generating capacity of traditional nuclear power plants.

Low-carbon electricity

Touted to produce a large amount of low-carbon electricity, the IAEA said SMRs are a fraction of the size of a conventional nuclear power reactor, making it possible for systems and components to be factory-assembled and transported as a unit to a location for installation.

It added that prefabricated units of SMRs can also be manufactured and then shipped and installed on-site, making them more affordable to build than large power reactors, which are often custom-designed for a particular location.

SMRs offer savings in cost and construction time and can be deployed incrementally to match increasing energy demand, it noted.