20km and 30km impact radius around Cattenom nuclear plant, France
(Source: antiatomnetz-trier.de )
So imagine the following setting. A country needs to decide on the location for a new nuclear power plant. It furthermore knows that, in case of a nuclear incident, a part of its country will be uninhabitable for quite a long time. Hence, in order to minimize national damages, the best non-cooperative strategy is, obviously, to place the nuclear plant somewhere along its borders, at a place where, furthermore, wind direction takes a nuclear cloud away from one’s country, and along a water stream which leads contaminated water outside of the country.
A really perfect example for this strategic, non-cooperative behavior is the French nuclear plant Cattenom, which the French decided to place virtually on the border to both Luxembourg and Germany. This nuclear power plant fits all of the three above named criteria extremely well. Firstly, it is placed as close as possible on the French border; secondly, the wind direction tends to come from the south-west, taking a potential nuclear cloud into Germany and Luxembourg and away from France; thirdly, the nuclear plant takes its water from the river Mosel, which, from Cattenom, flows north, through Germany into the river Rhine, then through Netherlands into the North Sea, and its waters are basically never seen again by the French.
Why focus on Cattenom here? Well, there are clearly more nuclear power plants with similar characteristics, like Fessenheim, or various Swiss or even German power plants, but because Cattenom is so “perfectly” placed for France, it gives rise to some further strategies for the French. (By the way – a power plant with similar characteristics and issues is the Czech plant Temelin, just 70km off the German border.)
Thus, let’s talk more about economic incentives now. Imagine you build a nuclear power plant at the heart of France, in Paris. For obvious reasons the French government did not do this, but simply imagine it would. In that case you would make absolutely sure that this is going to be safest nuclear plant ever built, with constant supervision, surveillance and repairing parts even before they have the chance to break down. The reason for this is that the disaster costs to you as a country would be incredibly high, and you would simply not want to take the chance of an incident that might devastate your country.
The closest nuclear plant to Paris is the Nogent nuclear plant, 120km south-east of Paris. This plant was build at nearly the same time as Cattenom. In its 30 year history, there was one INES 1 incident (in 2005), where someone accidently sprayed water on some electric cables, but otherwise nothing happened. You would obviously expect that this nuclear plant, though sufficiently far away from Paris, may still affect France to a significant degree, and consequently you would undertake everything in your power to make this plant as safe as possible. The low number of incidents obviously supports this view.
On the converse, let’s return now to Cattenom. Unfortunately, no nuclear power plant has such a bad history (apart of those that exploded…). The official ASN list of incidents at Cattenom, only for the years 2000 till 2008, includes 88 incidents, around 13 of which were INES 1, and one was ranked as INES 2. In 2012, the ASN report counts 47 incidents, the annual maximum of any nuclear reactor so far. There were repeated incidents of reactor building evacuations, shutdowns of reactors, and workers were repeatedly exposed to radiation. In addition, power transformers caught fire several times, and 58 cubic liters of hydrochlorid acid ended up in the Mosel river and the surrounding earth in June 2013 (EDF, the operator, only informed the public three weeks after this incident). Despite all these incidents, the French government decided, in September 2013, to extend the shutdown date of Cattenom to 2045.
Disclaimer: This is obviously not sufficient proof that all nuclear power plants that are built in a favourable location are less safe than others. Nevertheless, at least the evidence for Cattenom seems to point in that direction. One would, obviously, have to undertake a proper study to be able to fully support this view. (I am currently in the process of doing just that. Contact me for any questions.)
7th June 2013 – Cattenom burning
(source: www.volksfreund.de)
Neither Luxembourg nor Germany are reaping any economic benefits from Cattenom, but instead are likely to bear a brunt of the costs from a nuclear disaster. There are approx. 11 million people living around Cattenom, mostly in Germany and Luxembourg, and the Cattenom no merci initiative found out that it takes only roughly 15min for a nuclear cloud to pass over to cities in adjacent Germany. 15 minutes – not even enough time to start thinking about evacuations. Plus, with Luxembourg’s main city and its south being within the 30km radius of Cattenom, a nuclear disaster will wipe Luxembourg virtually off the maps. As a result, it is understandable that there is a strong lobby in both countries that tries to press France to shut down the plant.
However, as clearly stated by the French mayor Betrand Mertz who is responsible for the area around Cattenom, Cattenom is a French nuclear plant and, consequently, both Germany and Luxembourg have no say as to whether and when it is supposed to be shut down. It is subject to both French law and regulation, as well as French security standards. Since the nuclear operator EDF, or its largest shareholder, the French government, earns around one billion Euros from Cattenom every year, plus it provides several thousand jobs, plus Cattenom delivers around 8% of the French electricity supply, then it is clear that incentives for the French government to close that plant are low. Also, as the accident reports show and discussed above, French incentives for investments to maximize safety are lower than if that plant were to be in the middle of Paris. Hence, France can produce electricity cheaper in Cattenom than anywhere else.
So how should this situation be treated, then?
1. It is certainly an international conflict that arises due to non-cooperative behavior. It would be in both Germany’s and Luxembourg’s best interest to cooperate on the nuclear plant, but would this be in the best interest for France, too? For example, partial cooperation would not do the job. E.g. if Germany/Luxembourg were to take care of safety, since this is their main concern, then France would simply stop investing in safety measures and the costs would fall on Germany/Luxembourg. On the converse, it would not be in France’s best interest to cooperate fully, since France is currently benefiting from reduced safety expenditure but reaping all the profits. In the case of cooperation, Germany/Luxembourg would demand higher investments in safety, of which they would pay a part, but France would have to share the profits of the plant, too. Consequently, it is unlikely that France would give up its sovereignty over the plant. Seems like a dead end here.
2. As far as I know, both Germany and Luxembourg are importing nuclear energy from France, and most likely from Cattenom. I am unsure of the exact amount. If both countries were stopping imports from Cattenom, would this have an effect on profitability in Cattenom? Most likely only a small one, but an adverse on safety. Smaller profits from Cattenom may imply lower investments in safety. It is unlikely that Cattenom would be closed, even if both Germany and Luxembourg are currently importing a significant fraction of the electricity produced in Cattenom, since very little electricity (roughly 5% on the 350km) were to be lost if e.g. more electricity were to be transported from e.g. Cattenom to Paris. As Cattenom is cheaper to run than other plants in the centre of Paris (due to laxer safety measures), this will not avoid Cattenom from continuing to produce electricity.
3. As a result, we are thus dealing with a true international externality from France imposed upon Germany/Luxembourg, and Germany/Luxembourg can really do nothing against this. Furthermore, we have the issue of asymmetric information on the part of EDF, where, as discussed above, not always all relevant information are leaked immediately. Thus, this may give a further rise to moral hazard, where vital information may be suppressed and used to the (financial) advantage of EDF/France.
4. It is clear that this issue can only be resolved at the European Union level. Since this problem is faced by several countries in Europe, there is a need for an international debate. Some debate already started on the insurance of nuclear plants across Europe. But this will not seriously affect the investments in safety, especially because there is a move towards more internationalization of disaster costs, since it is well-known that a disaster may exceed a nuclear operator’s insurance, its capital, and its country’s budget (as e.g. Fukushima has vividly shown). Thus, an internationalization of costs reduces, yet again, incentives to invest in safety.
5. As a result, what is needed is a debate on the safety standards in excess of what is being done in response to e.g. the recent stress tests. For example, the nuclear authority in France, ANS, in response to the 2012 results of the stress tests for Cattenom, declared that “the nuclear power plants have a sufficient level of safety, such that none needs to be shut down immediately. Nevertheless, a prolonged use of the plants requires to increase safety margins for extreme situations.” This is saying something like: We acknowledge that there are issues and we will take care of some, but this does not warrant overhasty actions like shutdown of plants. One would, of course, expect this course of decision. However, it must also be said that this decision cannot be derived from the results of the stress tests, since the stress tests have “… not assessed the current safety level of the European NPPs, but only the potential increased safety level which should have been achieved in the next decade… The EU stress test has no direct effect on the European nuclear power plant fleet. Even the oldest plant which have obvious deficiencies in defence …, apply for life time extension, and [European Nuclear Safety Regulators Group] has no mandate to stop this process.” (source)
6. One solution is obviously the following: Assume the European Union manages to come out with a new regulation that says: If you want to build a nuclear power plant, then build it inside your own country’s centre, as this will maximize your safety efforts. However, it is unlikely that such a solution would ever be accepted by countries that build new plants. Who would ever want to exposure one’s country fellows to such hazards?
Furthermore, this is not going to lead to increased safety expenditure on those plants that are already built. One solution would thus be if the International Atomic Energy Agency provides strict regulations as to what safety standards a nuclear plant should fulfil, and link those standards to the best available technology. This would at least be a partial solution, in the sense that we are less likely to see reduced safety expenditure on nuclear plants that are built on borders with advantageous wind and river flow directions.
Further resources:
http://de.atomkraftwerkeplag.wikia.com/wiki/Atomausstiegselbermachen_Wiki
http://schockweiler.blogspot.com/
http://www.cattenom-non-merci.de/
Ökostrom in Luxembourg:
http://www.enovos.lu/de/privatkunde/strom/verkaufstarife/naturstroum
Ökostrom im Saarland:
ingmar schumacher 
Atomic energy, as you stated it, is a matter of collective interest. I completely agree with that. And I don’t really believe that EU —as it exists— can do anything: it is a political issue and I don’t think economists can help.
I think that economists’ point of view is either too restrictive, or biased in its framework.
It is too restrictive because, when considering the case of Cattenom, economists consider the situation as a potential externality (then an insurance will solve the question), or as a relation between a client (mainly Enovos) and a provider (EDF), and the problem is again an insurance one.
This perspective is too restrictive because it can not consider the problem from a preventive point of view (a nuclear disaster will always be too costly and considering that a tradeoff between safety and maintenance exists does not make any sense: nuclear disaster do not happen because someone considered that kind of tradeoff and chose the solution of the disaster).
Moreover, the hypothesis of Cattenom being principally chosen because of the lower consequences (for France) in case of a nuclear disaster is not satisfactory: it may have been chosen because Luxemburg and Germany were interested in cheap energy without being the builders of the plant (it is an hypothesis…), or because the coal and steel industry were dying in that region…
The problem can also be considered as an agency relation between Luxemburg as the principal (mainly, but if you like, we can include Germany) and France as the agent. In that case, I think the framework is biased because it is about a country controlling another country.
I do not think that paying for the maintenance of Cattenom would really be a problem for Luxemburg (they paid for the TGV line from Paris to Metz). The problem is to recognize that Cattenom is still operating because Luxemburg needs it and that Luxemburg is in fact the owner (and then responsible) of Cattenom.
In that case, the problem is for French to recognize that they do not own Cattenom…
It seems to me that the solution will not be found through putting nuclear plants in the French President’s bedroom (or in the Grand Duc’s one, which despite being bigger is still in a much smaller country) or in the middle of a big enough country: the answer will be found only through political considerations, and the EU, in its actual form does not seem to be the place to discuss this kind of issue.
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Thank you for your thoughtful comment. I have already thought about quite a few of your points, so just allow me to give some further thoughts on these.
You suggest that insurance will solve the externality problem. While I agree that insurance may reduce the problem, I doubt this would be sufficient for a serious accident. For example, nuclear insurance per plant is 700 million in France. This is paid by EDF. The rest will have to be covered by the French government. Just imagine the kind of serious disaster as Fukushima in Cattenom – with a trail of radioactive water flowing down the Mosel into the Rhine and then the North Sea, with a nuclear cloud that most likely covers a significant part of Luxembourg and then travels over Trier and follows a north-east direction through Germany. The costs for a disaster of this kind, in a superb-highly populated, extremely wealthy region, will run into many, many billions. In addition, nearly all of Luxembourg may be virtually uninhabitable. A French government alone will be unable to cover for the damages. Insurance, therefore, is unlikely to be able to cover the costs.
Remember that the whole argument I used able relies on the observation that a nuclear power plant, in a favorable location (as e.g. Cattenom for France), will be less safe than a nuclear plant in an unfavorable location (e.g. a plant in Paris). This is because losses for that country are different, especially in a non-cooperative setting. In fact, there is no definite empirical proof for this (yet, I am working on this though), so the evidence raised above may simply be a coincidence. However, it would be a very unlikely coincidence, given the strategic possibilities.
The fact that Luxembourg and Germany demand a large amount of electricity and, therefore, Cattenom needed to be placed so close to the border is not correct. Losses from electricity transportation are rather low, as I point out in the post above. A dying coal or steel industry may be another argument. However, there are poorer régions in France that could have benefitted more from a NPP than the Metz region, like the regions around Guéret, Arras, or Soissons. Obviously, however, it is impossible to dismiss political reasons. Though the strategic placement in case of losses, as it is done now, seems to me as rather likely.
I do not believe that France exports most energy from Cattenom. But I don’t know. For example, 4/5th of Luxembourg’s energy used is supplied from Germany. Indeed, according to data from http://www.statistiques.public.lu/, Luxembourg did not import any electricity from France since 2001. And since Germany is a net exporter of energy these days, I doubt it will import from France to a significant degree. As a result, electricity production from Cattenom should mostly be for the French home market.
To sum up, I do not see any other possibility but discussion/regulation/control and supervision from the EU level, or the IAEA, or any other international body.
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