The Nuclear Free Local Authorities (NFLA) has submitted today its views on the UK Government’s consultation on the level of liability insurance cap placed on the nuclear industry in the event of a major accident. NFLA conclude that the cap being suggested by the Government is far too low and gives the nuclear industry an unfair advantage. (1)
Amendments to the Paris and Brussels Conventions on nuclear third party liability were agreed by the Contracting Parties (Euratom Treaty members) in 2004 and the UK Government consulted on them in 2011/12. The Government decided to increase the minimum level of financial liability that must be imposed on a nuclear operator in the event of a nuclear incident from €140m to €1.2bn (£119m to £1.02bn). Additional public funds are to be made available if the compensation payable is insufficient. These new arrangements are expected to finally come into force on 1st January 2017.
The UK Government is now consulting on what it calls ‘low risk sites’ and the transports of radioactive waste and what the liability levels for both should be.
In the NFLA’s view, the original cap set on nuclear liabilities in 2011/12 remains far too low and represents a hidden subsidy for nuclear power and the nuclear industry. For example, the March 2011 Fukushima accident has already cost Japanese taxpayers $100bn (€90bn / £76.5bn), despite government claims that the Tokyo Electric Power Company (TEPCO) is footing the bill, according to calculations by the Financial Times. (2) Estimates of the total economic loss range from $250-$500 billion (€225bn – €450bn / £188bn – £382bn). (3)
To put the €1.2bn cap on liabilities into some perspective, it can be compared with the $41 billion (€37bn / £31.5bn) that BP has set aside to cover claims arising from the Gulf of Mexico ‘Deepwater Horizon’ disaster. (4)
NFLA notes research by the German company Versicherungsforen Leipzig GmbH, which specialises in actuarial calculations, has shown that full insurance against nuclear disasters would increase the price of nuclear electricity by a range of values— €0.14 per kWh up to €2.36 per kWh—depending on assumptions made. (5) If taking the minimum value, this would add €140/MWh (£119) to the cost of electricity from new reactors making a total of around €250/MWh (£213) – making it much more expensive than renewable energy alternatives and far higher than the already controversial strike price of £92.50 offered to EdF in respect of Hinkley C.
The three key factors for NFLA in responding to this consultation are:
- Given that the maximum liability imposed on the nuclear industry is to be €1.2bn, yet Japan has experienced an accident likely to result in economic damage to a value of 375 times that figure, NFLA calculates that the liability limit for a so-called “low risk” site (at the €70m level it is being calculated at) should be raised to €26bn / £22bn.
- NFLA has previously called for much greater openness and transparency in nuclear emergency planning and a complete review of REPPIR (Radiation Emergency Planning Public Information Regulations). NFLA notes a lack of clarity about what the maximum credible accident scenario would be. It is therefore unclear how the Office for Nuclear Regulation (ONR) calculates the potential impact of such an accident as a result. This makes it difficult for groups like NFLA to make a reasoned judgement to determine what the risk level for liability on transport incidents should actually be. (6)
- The probabilistic risk assessment (PRA) technique used by the nuclear industry and nuclear safety authorities requires the definition of failure scenarios to which probabilities and damage values are assigned. NFLA has directed the Government and regulators to consider a new study by American academics Spencer Wheatley, Benjamin Sovacool and Didier Sornette. This argues that statistical or empirical analyses of nuclear accidents have “almost universally” found that PRA “dramatically underestimates the risk of accidents”. They also point to research demonstrating that PRAs are “fraught with unrealistic assumptions, severely underestimating the probability of accidents”. (7)
NFLA is also concerned that the level of liability for certain types of radioactive material transports is also too low given the potential large-scale multi-agency emergency planning response that could be required. The continuing transport of materials, some of which include highly radioactive materials by rail and sea from Dounreay to Sellafield, is a key example. An accident or malicious incident involving such transports would be very difficult to deal with and could lead to significant environmental and financial damage.
NFLA Chair Councillor Ernie Galsworthy said:
Though the Government may like to pat itself on the back for increasing the liability level of the nuclear industry for dealing with the financial effects of a nuclear accident, the figures chosen are ridiculously low in comparison with the experience of previous incidents like Chernobyl or Fukushima. If it has cost BP over £31 billion to clean up a major oil disaster, and conservative assumptions that it will cost Japan over £180 billion to clean up Fukushima, then how can a cap of £1.02 billion be adequate? As ever, this is an exercise to give the nuclear industry an unfair advantage over its competitors, particularly renewable energy, which in comparison has much lower risks. Sadly, nuclear accidents are more than likely to happen again so it is about time the nuclear industry accepted the true cost when things go so badly wrong and not the humble taxpayer.”
For more information please contact Sean Morris, NFLA Secretary, on 0161 234 3244.
Notes for editors:
(1) The NFLA consultation response is attached with this media release and will be available on the home page of the NFLA website http://www.nuclearpolicy.info
(2) FT 6th March 2016 See http://electricityinfo.org/news/2016/japan-7-3-16/
(3) Physicians for Social Responsibility http://www.psr.org/environment-and-health/environmental-health-policy-institute/responses/costs-and-consequences-of-fukushima.html
(4) The Guardian, 1st February 2011 https://www.theguardian.com/business/2011/feb/01/bp-loss-gulf-oil-spill-resumes-dividend
(5) Calculating a risk-appropriate insurance premium to cover third-party liability risks that result from operation of nuclear power plants, German Renewable Energy Federation, 1st April 2011 http://www.mng.org.uk/gh/private/20111006_NPP_Insurance_Study_Versicherungsforen.pdf See also http://www.energyfair.org.uk/reports#liabilities
(6) Fukushima update and its impact on UK & European nuclear emergency planning NFLA Policy Briefing June 2015, http://nuclearpolicy.info/docs/briefings/A247_(NB133)_Fukushima_Nuclear_EP_update.pdf
(7) Spencer Wheatley, Benjamin Sovacool and Didier Sornette, „of Disasters and Dragon Kings: A Statistical Analysis of Nuclear Power Incidents & Accidents, Physics and Society, April 2015 http://arxiv.org/abs/1504.02380 – as noted in WISE / NIRS Nuclear Monitor, May 7th 2015