US optimistic on signing of ‘123 nuclear agreement’ with PH

The government of the United States is optimistic on the signing a historic “123 Agreement” on nuclear power with the Philippine government that could help Filipino investors gain access not just to cutting-edge nuclear power technologies—including those of the targeted deployment of small modular reactors (SMRS); but will also enable them to get their hands on financing that can help concretize these projects.

In an interview on the sidelines of the recent United Airlines inaugural flight to San Francisco, California, US Ambassador to the Philippines Marykay L. Carlson said, “we are very optimistic that we would be able to reach an agreement on the 123 signing,” hinting that there is a target to cement this landmark deal at the Asia Pacific Economic Cooperation (APEC) Leaders’ Summit in San Francisco, California this month.

She qualified that the working timeframe on the signing is “sometime before the end of the calendar year and we’re hopeful that it can be done at the APEC, that would be great.”

The United States will be this year’s host of the APEC Economic Leaders Week from Nov. 11-17. This major global event is to be attended both by Philippine President Marcos and US President Joe Biden as well as the other heads of state in the Asia Pacific region.

Section 123 of the US Atomic Energy Act warrants the US government’s entry into “peaceful nuclear cooperation agreement” with any country that will be availing themselves of technology transfer from American nuclear companies. Such collaboration will also cover those on technical assistance, scientific research and safeguard discussions.

The Department of Energy (DOE) previously hinted that the “123 nuclear agreement” will be firmed up in conjunction with other nonproliferation legal frameworks, primarily the Treaty on the Non-proliferation of Nuclear Weapons (NPT), an international agreement which is promoting the safe use of nuclear technologies.

Major Philippine companies, including Manila Electric Company (Meralco) and Aboitiz Power Corporation, have already started navigating the nuclear power investment terrain as they envision this to be a critical component of the country’s future energy mix.

These Filipino firms have been setting their sights on possible US nuclear power tech providers—the likes of Nuscale Power and Ultra Safe Nuclear—on their planned rollout of SMR technologies, but this will only be possible if the 123 deal with the US has already been firmed up by the leaders of both governments.

Once the 123 agreement is signed, the Philippines will be joining the league of other countries that already have this kind of agreement with the US. For Southeast Asia, in particular, Indonesia and Vietnam have so far sealed this kind of agreement with the US.

Deployment of nuclear power technology is a key addition in the power mix that the Marcos administration has been fervently pushing for. This is a key component of the energy future anticipated taking off in the country’s power mix starting year 2034.

Many of the SMR technologies currently being experimented on and under pilot have been suffering delays and cost overruns, but the global nuclear industry is sounding off hopes that licensing and commercial deployment can finally advance within 2030-2031 timeframe.

In the case of the Philippines, it has been re-taking baby steps on the sphere of nuclear power development, but the targeted 123 agreement with the US is a key milestone that the government has been aiming for to help Filipino investors advance on their aspired project rollouts.

As things stand today, the future of nuclear power in the Philippines is still seen to depend largely on the passage of legislative policies on nuclear power. The proposed measure is still going through a maze of deliberations and targeted approval in Congress.

The DOE primarily admitted that the country will need to hurdle “exhaustive predicaments” for it to get back into the nuclear energy pathway—as all the gaps in legal, policy and regulatory frameworks would need to be addressed first—and these processes could take decades to accomplish.

Bluntly, the issues and concerns when it comes to nuclear power developments already turned too long and varied for the Philippines—from public acceptance, humongous upfront capital investment which became a dilemma to many nuclear new builds, recycling and storage/disposal concerns on spent fuel, safety and equipment redundancy installation as well as siting issues, nuclear liability and insurance coverage, upskilling and reskilling of human resources and enabling of domestic expertise on nuclear power operations, and most importantly, the tricky policy and regulatory frameworks.

And in the restructured sphere of the Philippine energy sector that is now largely private sector-driven, nuclear power facilities will also need to find their place in a merchant market set-up or on competitive bilateral contracting versus other fuels for power generation.