* Scandinavians closest to putting waste underground
* Time needed to permission storage, start disposal
* Public need to be brought on board
By Vera Eckert
FRANKFURT, June 19 (Reuters) - More than half a century after the world's first commercial nuclear plant went into operation in the United States, the industry may finally be nearing a way to store radioactive waste underground permanently.
The world has 270,000 tonnes of used fuel stockpiled, much of it under water in ponds at nuclear power stations, adding to the urgency of finding a permanent storage solution for material that can remain toxic for hundreds of thousands of years.
Finland and Sweden hope to be the first countries in the world to be able to put the most dangerous high-level waste (HLW) into underground storage in the next decade, using a new technology to encase fuel rods and protect them from erosion.
At a conference in Vienna this week, the 164-nation International Atomic Energy Agency (IAEA) heard updates from the Finish and Swedish authorities on their model solution.
Finland stopped exporting spent fuel for reprocessing to the then Soviet Union in 1996, and does not accept imports.
For years, Finland has been building a deep underground spent fuel repository, some 450 metres (492 yards) below the surface in the granite bedrock, at Onkalo, on its west coast.
It uses a technology known as KBS-3, developed by Sweden's SKB, which involves the rods being encased in copper containers, then packed into absorbent bentonite clay which swells when wet, sealing off the package from corrosive elements.
The operator, Posiva, which is owned by utilities TVO and Fortum, hopes it can become operational from around 2022.
Authorities knew that public acceptance was crucial and sought local approval for the 3 billion euro ($3.38 billion) repository, which can hold 9,000 tonnes of HLW from the nearby Olikluoto and Loviisa reactors.
And in February Finland's nuclear regulator STUK issued a safety assessment, which backed the project.
"The population has a high trust in regulators and policymakers," STUK inspector Jussi Heinonen told Reuters by phone ahead of the IAEA conference.
Other countries keen to persuade their populations of the merits of nuclear power, such as Britain with its new Hinkley Point C plant project, are likely to take encouragement if the Scandinavians are successful.
Across the Baltic Sea, Sweden is working on a similar project at Oskarshamn. The legal permissioning process lags that of Finland, with a recommendation to the government possible in 2017 and then a 10-year construction period.
"A realistic time for operating a facility is at the end of the 2020s," said Christopher Eckerberg, managing director of SKB, which is owned by Vattenfall, German E.ON and Fortum.
"The critical part is public acceptance."
MKG, a Swedish non-governmental organisation working on nuclear waste, has serious questions. The most controversial issue is if water molecules, and not only oxygen, react directly with the copper surface, said its director Johan Swahn.
"If this is the case, it will be difficult to prove a safety case for 100,000 years," he said.
HLW - the most toxic type of nuclear waste, which accounts for 10 percent of total volumes - is not safe to handle at all for 40 to 50 years until it cools, which has allowed the question of what to do with it to be put off, until now.
The IAEA is fully aware that waste held in surface level storage poses great risks, leaving it more exposed to floods, terrorism, earthquakes, climate change or human error.
"Waste won't go away after reactors are turned off," said Stefan Mayer, team leader of the IAEA's waste technology section. "If we can provide socially and politically accepted approaches, we can implement solutions."
Countries such as Germany which have opted to abandon nuclear power still have waste to handle.
Some 200 reactors, nearly half those currently operating worldwide, will be phased out between now and 2040, requiring deconstruction and disposing of spent fuel.
The decision-making process in Germany has been hampered after plans in the 1970s to turn an interim storage in salt formations in Lower Saxony's Gorleben into a final repository were scuppered by mass protests.
The OECD's Nuclear Energy Agency says it is impossible to gauge the future costs of storage sites, because each country's geography is different and there are no previous projects to serve as examples.
The European Union is trying to speed up thinking on the issue by demanding that member countries submit by August individual plans on how to deal with waste.
France hopes for success with its Cigeo project at Bure in a sparsely populated part of the country's east, which has thick layers of argilite clay rock.
A final investment decision could be due around 2020 and an industrial pilot phase could then be ready to start in 2025.
Switzerland has identified two areas, Zurich Northeast and Jurassic East, to be investigated as possible sites.
($1 = 0.8873 euros) (additional reporting by Michel Rose in Paris and Jussi Rosendahl in Helsinki, editing by David Evans)
Our Standards: The Thomson Reuters Trust Principles.