Nuclear energy, its further development, and obviously its safety are the topics these days. Not only due to Fukushima, but also due to the shutdowns as a result of Germany’s Energiewende, and furthermore due to UK’s recent plan to build of one of the largest and most expensive nuclear power plants in the world (using a contract that puts all the risk on the tax payer and none on the operator, see discussions by Paul Dorfman HERE, by Peter Kirby HERE, and more generally HERE).
Interestingly, for the UK nuclear plans at Hinkley Point, it is international pressure that is currently putting up concerns and barriers. For example, the UN feels that there is a ““profound suspicion” that the UK failed to properly consult neighbouring countries, including Norway and Spain, over the possible environmental impact that Hinkley Point C could have on them.” Consequently, nuclear policies should not only be viewed as a national issue, but most definitely as an international one due to the potential spillovers to neighbouring countries, or even the whole world.
While we should be worried about the plans to increase nuclear energy in some countries, we should also not forget that some countries are still running really ancient plants with minimal safety standards that apparently fail any currently accepted international technology standard.
Obviously, if we build new plants, invest billions in order to make these somewhat safe at least according to the currently available technology, but at the same time neglect those old ticking nuclear time bombs, then we may nevertheless see an increasing number of accidents in the future.
The lack of investments in older plants has recently been forcefully discussed by Vladimir Kuznetsov (Professor at the Arkhangelsk Arctic State University and previously an engineer in Reactor 3 in Chernobyl until the accident) in front of the Commission for Environmental protection and nuclear safety in the German Bundestag.
Professor Kuznetsov said that there are many more nuclear power plants in Russia of the same type as the one of Chernobyl, and these nuclear power plants have no uniform safety standards and are aging virtually without safety investments. Since the Russian government does not provide finances to shut down these plants or decomission them, they are still being used for energy production.
If a country does not possess the finances to adequately improve the safety standards of its nuclear industry which may lead to possibly widespread international disasters, then common sense would dictate that this country should not run nuclear power plants in the first place. This is like saying: Look, if you have no driving license then you must not drive. I think everyone nowadays accepts this principle. This should especially hold for nuclear energy, which may lead to an accident of a much more massive scale.
The question is: What to do?
Two possibilities come to mind:
1) Further development of insurance to allow compensation in case of a disaster
2) Increased international cooperation to improve safety standards
While an increased development of insurance is certainly important, it is only an ex post measure. Furthermore, while in general insurance may also raise the incentives to increase investments in safety, this is not going to be the case in countries that are financially constrained and are anyway unable to invest in safety.
As a consequence, the only reasonable means by which it may be possible to effectively reduce the probability of a disaster in this case is international cooperation. One issue here is obviously moral hazard: If a poor country knows that it does not have the finances to improve its aging nuclear sector but it can count on foreign finances, then why should this country undertake safety improvements at all? Knowing that the international community will come to its help, it may even reduce investments in nuclear safety and instead spend the money on other problems.
Thus, a simple international principle should be: If your disaster is also our concern (due to international spillovers), then so is your safety!
An approach along these lines is followed by the International Atomic Energy Agency. In its Convention on Nuclear Safety, the main treaty that covers international cooperation when it comes to issues of nuclear safety, they however wrote
The Convention is an incentive instrument. It is not designed to ensure fulfillment of obligations by Parties through control and sanction but is based on their common interest to achieve higher levels of safety which will be developed and promoted through regular meetings of the Parties.
Furthermore, one of the articles is that the signatories are
“Reaffirming that responsibility for nuclear safety rests with the State having jurisdiction over a nuclear installation;”
Again, it should be emphasized that if a potential disaster transcendents international borders, then the responsability lies with the state the operator of the nuclear plant is in, yes, but the costs are also born by the neighbouring states!
So while it is certainly important to improve the international insurance framework, much more priority should be placed on international cooperation, with a clearer notion of how international spillovers need to be handled and evaluated in and for Cost-Benefit Analyses of new projects (like Hinkley Point in UK) and older plants. This should be done in a way such that next time when Professor Kuznetsov visits the Bundestag he can give a less worrisome speech.