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9 February, 2016

Japanese Cabinet Approves Bill for Spent Fuel Reprocessing Contribution System, Allowing Creation of New Juridical Entity

At a meeting of the Cabinet on February 5, the Japanese government approved a bill concerning spent fuel reprocessing. The bill focuses on replacing the current deposit system with a so-called “contribution system,” allowing spent nuclear fuel from nuclear power plants to be reprocessed with greater certainty. The government intends to enact the legislation during the current Diet session.

A special working group under the Advisory Committee for Natural Resources and Energy had been discussing the matter since the summer of 2015 in anticipation of major changes in the business environment surrounding nuclear power resulting from increased competition, resulting from full deregulation of Japan’s power retail market starting in two months. The other concern was not slow up the reprocessing business on account of the difficulty to secure stable funding.

The bill enables stable funding for the business and the creation of a spent fuel reprocessing corporation through the following: (1) a contribution system, (2) a duly authorized judicial entity, and (3) a proper governance system at the core. Once established, the corporation becomes the duly-authorized juridical entity that can only be dissolved by legislative act.

The bill is thus another step toward the establishment of a system of steady nuclear fuel reprocessing in Japan, including the formulation of an implementation plan with all related parties involved. It will be responsible for determining and making contributions.

Under the new system, nuclear operators, based on the principle of generator’s responsibility, will be required to contribute to the reprocessing business proportionate to the amount of spent fuel they generate. The new juridical entity will engage in the reprocessing business for which contributions have been paid.

However, Japan Nuclear Fuel Limited (JNFL), with its accumulated technology and human resources, will continue with the work-site operations, being commissioned by the juridical entity.

From now on, a working committee including third parties will be established within the juridical entity as a decision-making body, the president of which will be appointed by the minister of the Ministry of Economy, Trade and Industry (METI). Its trustees (up to four persons) will require also approval by the METI minister.

The government will thus be involved in operations to a certain extent, strengthening the governance of the business in general.

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