Bearing the brunt of foreign nuclear risk

  • 2011•04•18     Maastricht

    Friday, 11 March, I was attending a conference in Brussels on Europe’s future energy policy, when Japan was hit by an earthquake. During the coffee break we were transfixed by the images coming out the country. At first it seemed that Japanese society was well prepared, despite the unprecedented scale of the earthquake.

    The number of deaths directly caused by the earthquake was limited, and even pictures of the tragic tsunami suggested that most Japanese people had managed to escape because of their well-designed homes and tsunami alerts. Even coverage of the nuclear plants, where activity had stopped automatically, indicated that this technologically advanced country could cope even with this natural catastrophe.

    But that picture slowly dissolved. Day by day the toll of dead or missing persons has risen, now standing at more than 28,000. It was as if the lessons from the past (in 1896 and 1933 tsunamis of more than 30 metres swept over the same Japanese coast) had been wiped from the memory of Japanese engineers and developers.

    Then, one by one, the reactors at the Fukushima nuclear power plant began to experience problems. Suddenly it seemed that this country, which the whole world trusted even with nuclear power was no longer able to stave off a nuclear meltdown. Finally this week came news of a “success”, as a leak of radioactive water from one of the nuclear reactors was plugged. One can only hope that Japan has turned the corner on this particular tragedy.

    I agree with those commentators who thought it unethical to engage in a debate about the safety of nuclear power plants in their own neighbourhoods while Japan was still searching for thousands of victims of the tsunami. But now that the search for victims has stopped, and the radioactive leak in Fukushima 2 seems to be under control, I thought it appropriate to examine this question from a local perspective.

    Here in South Limburg, the nearest nuclear power plant is based at Tihange in Belgium, about 40 km upstream from the Netherlands on the right bank of the river Meuse. Like in Fukushima, the three light-water nuclear reactors are also water-cooled (but pressurized) water reactors, with the river Meuse providing a continuous source of cooling water. These so-called “second-generation” nuclear reactors at Tihange have been in use since 1975, 1982 and 1985, respectively — each with a lifetime of 40 years.

    The total energy production in Tihange is about 3,000 megawatts (MWe), representing a quarter of Belgium’s energy consumption. The nuclear plant at Doel, in Flanders, generates around the same output, meaning that over 50 per cent of Belgium’s energy needs are covered by nuclear power, spread equally between Flanders and Wallonia.

    [quote quote=”Over 50 per cent of Belgium’s energy needs are covered by nuclear power.” type=”text”]

    Last year the Belgian Government, just like the Japanese Government (regarding Fukushima), decided to delay its plans to decommission Tihange 1 in 2015, and continue its exploitation till 2025. Nuclear energy under these conditions represents for any government “green gold”: expanding the lifespan of nuclear energy production helps in achieving CO2 targets without any need for further investment. Furthermore, producing nuclear energy from fully “paid off” nuclear plants is an extraordinary source for milking extra government revenue in terms of profits tax, an extra nuclear tax, etc. The problem is that neither the government nor the energy operator has any incentive to spend such windfall profits on additional security measures.

    If there is a major nuclear accident at Tihange, its current operator/owner Electrabel (part of the French GDF Suez) is just liable for a maximum of some 300 million euros. As the Fukushima case illustrates, such an insurance amount will only cover a very small fraction of the potential costs; the estimates of the Fukushima liability are running to 16bn euros. A full insurance against a nuclear accident would, of course, push insurance premiums so high that nuclear energy production would actually no longer be profitable. But as an economist, I find the limited liability in case of a nuclear accident rather strange: the operator of nuclear energy is being protected by its local government for the risks linked to its own (risky) choice of energy production. The huge implicit subsidies governments are prepared to give nuclear energy operators is actually reminiscent of the other sector where the government was saddled with similar “too big to fail’”risks: the banking sector.

    As an international economist, I’m even more puzzled by the limited liability of Electrabel in case of a nuclear accident in Tihange or Doel. In the event of such an accident, it will be the debt-stricken Belgian Government that will have to pay for most of the damage, including the cross-border damage. And such damage in case of a nuclear accident is more than likely. Radioactive coolant would indeed drain into the Maas and Schelde, flowing across the border into The Netherlands.

    In short, we here in the southern Netherlands may well end up bearing the brunt — or as our Flemish neighbours so lyrically put it: bear the “baked pears”. In this case, “nuked” baked pears, that is.

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    UNU-MERIT Director’s Column by Luc Soete was originally published in Dutch in the Dagblad de Limburger newspaper on 9 April 9, 2011

    Also see  UNU-MERIT Director’s Column for this and other recent columns by Luc Soete.