People are always in such a rush. US Presidents are always in such a rush to pardon whoever they can get their hands on during the last day of their office. We call this PardonGate nowadays, and I guess they do it to either potentially benefit from those people in the future or simply for some last-minute drop of altruism towards their own kind.
Then there are people in general who are always in such a rush, and they tend to be shoppers on discount days like Black Friday in the US. There is dramatic video evidence showing what consequences a discount day like Black Friday has on people’s rational thought and behavior:
And then there are leaving European Commissioners such as Joaquin Almunia, who, on the deeply contested point of the planned nuclear power station Hinkley Point C in UK, propose in their last days of office to
“propose to the college of commissioners to take a positive decision and in principle the decision should be taken during this mandate of the commission in October”.
A decision like that is not only incredible because of the extent of the subsidies that the UK government guarantees a foreign company, EDF from France, for the next 35 year. The UK government has agreed to pay EDF £92.50 per MWh for the electricity output from Hinkley Point C – roughly twice the current wholesale price of power, for the next 35 years(!) in addition to a public support to finance the project of (at minimum) £17.6bn.
No, even more incredible is this decision because it is yet another decision which is taken by a leaving politician on his last days in office. Now let us face the issue at hand. Why such a rush?
It is well-known that the new, upcoming commissioner is not as supportive as Joaquin Almunia towards nuclear energy. Thus, a politician, in his last days of office, will take a decision that will potentially affect all British citizens for the next 35 years, unless there is obviously an accident, in which case the whole world will be affected for a long time. And, furthermore, the new commissioner who will come on stage in a couple of weeks is likely to block Hinkley Point C.
So, why such a rush?
Why should anyone be allowed to rush and push through a decision of this severity, knowing that it is not going to be supported anymore only a couple of weeks after it has been taken? How can someone feel this is the right decision to take then? And, given the astonishing subsidies that the UK government is going to pay out for Hinkley Point C, how flexible and bendible must the European competition law be in order to get such an uncompetitive decision pushed through? Do we really need a European competition law if such subsidies are allowed by it? And has the European Commission for Competition actually made a full study of the effect of this subsidy on the Green Growth transition of the European Union and on alternative sources of energy like wind and solar? Also, why do we see diminishing subsidies for wind and solar energy while we at the same time allow never-seen subsidies for nuclear energy? I would love to see answers to these questions at some point, don’t you?
The European Commission has opened an in-depth inquiry to examine whether UK State Aid for the construction and operation of two new nuclear power plants at Hinkley Point C in Somerset are in line with EU legislation.
We conclude that the proposed UK government State Aid for new nuclear is incompatible with EC Legislation, does not represent a genuine ‘Service of General Economic Interest’ under Art 107(1) TFEU, will distort the European energy market, is neither transparent nor proportionate, will not make a timely contribution to UK security of supply or decarbonisation, and will not contribute to affordability, price stability and least-cost for the UK energy consumer.
An in-depth analysis of why a very large set of key UK and pan-EU energy policy and civil society stakeholders come to this conclusion is provided in THIS PDF DOCUMENT which I advice any interested reader or policy maker to go through. Thanks to Paul for this very important contribution!
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).
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
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.
I am extremely thankful to Oliver Tickell for valuable discussions and editing.
UPDATE 7-02-2014: In response to the comment by Franz Meister from the Environmental Agency in Austria I post a graphic that I did some while ago which shows the high correlation between nuclear accident insurance levels and GDP as well as GDP per capita. Obviously Franz Meister is correct in his comment as there are exceptions, see below, but in general poorer countries have lower insurance levels.
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.)
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.
In the year 1967, Robert Oppenheimer, the father of the atomic bomb and subsequently one of its most vicious opponents and toughest nuclear power regulators, died of thyroid cancer. That same year also saw one of the most far-sighted, ingenious lectures on the topic of nuclear power in front of the National Society for Clean Air in London. The speaker, none other than Ernst Friedrich Schumacher, subsequently published a slightly re-written version of that lecture in his “book of heart and hope and downright common sense about the future”, entitled small is beautiful. In 1995, The Times Literary Supplement ranked this book among the 100 most influential books since World War II.
So what were the main insights by E.F. Schumacher already in the year 1967? He wrote that “[o]f all the changes introduced by man into the household of nature, large-scale nuclear fission is undoubtedly the most dangerous and profound… The point is that very serious hazards have already been created by the `peaceful use of atomic energy’, affecting not merely the people alive today but all future generations, although so far nuclear energy is being used only on a statistically insignificant scale. The real development is yet to come, on a scale which few people are capable of imagining… A serious accident, whether during transport or production, can cause a major catastrophe; and the radiation levels throughout the world will rise relentlessly from generation to generation. Unless all living geneticists are in error, there will be an equally relentless, though no doubt somewhat delayed, increase in the number of harmful mutations… Yet all these weighty opinions play no part in the debate on whether we should go immediately for a large `second nuclear programme’ or stick a bit longer to the conventional fuels which, whatever may be said for or against them, do not involve us in entirely novel and admittedly incalculable risks.”
Now, where does the unbelievable twist to world’s fate come in? Remember that E.F. Schumacher gave the lecture when nuclear energy produced only roughly one percent of total electricity. Today, nuclear energy not only accounts for around 10% of world’s energy production, with a share of more than 50% in some countries, like France or Slovakia. However, it also more and more gets viewed as a necessary aid for reducing our man-made climate change problem. So, while in 1967 E.F. Schumacher believed that “[r]adioactive pollution is an evil of an incomparably greater `dimension’ than anything mankind has known before”, we now know that our consumption lifestyles and consequently energy demands have created an evil that is even greater than the “evil of an incomparably greater `dimension’ than anything mankind has known before”. Even more incomprehensible, we now seem to prefer the lesser “evil of an incomparably greater dimension”, and want to make increasing use of it in the future. This is a sentiment that is widely shared across the world. At the end of 2011, the European Parliament has put this most bluntly in its Energy Roadmap 2050: “Nuclear energy will be needed to provide a significant contribution in the energy transformation process… It remains a key source of low carbon electricity generation. As a large scale low-carbon option, nuclear energy will remain in the EU power generation mix.” This, indeed, is something that one should call an unbelievable twist to world’s fate.
So what are our main lessons that we should take away from this venture in the not-so-distant past? Firstly, it seems we way too easily forget about what we should have learnt from past disasters, like Chernobyl or Fukushima. The direct costs of Fukushima run into several hundred billions, while the most serious indirect costs may only arise in the more distant future. For example, recently every single bluefin tuna caught in California was radioactively polluted. How effects like these are accumulating in the food chain is impossible to predict. Similarly, the rate of thyroid cancer in Europeans, Ukrainians and White Russians increased, depending on the region, between threefold to tenfold, believed to be directly linked to the nuclear disaster in Chernobyl around 30 years ago. If this disaster trend is to continue, with a serious incident every 25 years, we will soon be living in a world where radioactive contamination may be the rule rather than the exception. Nevertheless, directly in the aftermath of Fukushima, a large number of nuclear power plants have been shut down, while they are now, step by step, being re-connected to the electricity grid. Economic, short-term considerations, nuclear lobbies, and the unwillingness to opt for a small yet beautiful option may very well turn out to be the downfall of mankind.
Secondly, with each passing generation, we seem to get hold of more and more evidence that our way of using nature, of living off nature, to our own benefit, involves risks that are extremely difficult to calculate and to predict. All our large-scale solutions have turned out to be problematic in some way, from environmental pollutants like coal, oil or nuclear for our energy needs, to taking the joy out of work by big mechanical aids like assembly lines. And this is not surprising, for our planet needed millions of years to evolve into a well-balanced ecosystem, in which species were able to live in a neat symbiosis. It is the impatience of mankind on which disastrous new scientific `solutions’ that support our insatiable lifestyle thrive. One may only wonder what further concerns may arise with the advent of the wicked wonders brought about nanotechnology or genetic engineering, which meddle with genetic codes that have suited the planet’s needs just perfectly for thousands of years.
Thirdly, we seem to be able to get used to living with risks and trying to trade-off these self-created dangers to an extent that, time and again, requires us to question where exactly we would like to take this planet. If yesterday we bedevilled one source of energy for being mankind’s most dangerous energy solution yet, and today we decide to increasingly rely on this source of energy to reduce another problem that we created ourselves, then this is an unmistakably dangerous journey that we are taking. Yes, it is true that we get used to risks, that our future generations will learn to accept radioactivity or climate tippings as part of their lives, but we have to continuously ask ourselves whether this is what we really want for them.
Let me conclude with E.F. Schumacher’s own words. “Man cannot live without science and technology any more than he can live against nature… What matters… is the direction of research, that the direction should be towards non-violence rather than violence; towards an harmonious co-operation with nature rather than a warfare against nature; towards the noiseless, low-energy, elegant, and economical solutions normally applied in nature rather than the noisy, high-energy, brutal, wasteful, and clumsy solutions of our present-day sciences.” These words, although spoken roughly half a century ago, remain today as true as ever.
FG replied to my thoughts on nuclear power and climate change HERE. So thanks for giving some more thoughts and discussions to this interesting topic.
In a nutshell, FG suggests that we should think about relying on nuclear power for future energy supply, since a nuclear disaster is less costly than future climate change. Judging by the author’s reply, I think I might not have been very clear in my previous post. So here is another shot at it:
What I am saying is that we have a pretty unclear picture of what we should expect from climate change, but at the same time I have not yet seen a good Cost-Benefit Analysis that tells me how costly a nuclear disaster actually is! And I also agree with FG and think that we should be cautious, very cautious indeed, and that it is likely that the costs from climate change may turn out to be very high indeed. We have a large uncertainty surrounding any estimate, and I also prefer a more precautionary approach to our future. But, if one wants to say that nuclear power should be increased since a nuclear accident will be less costly than climate change, then I ask for the numbers in order to prove that.
However, and here I think we should be on the same line, I argue that it is a mistake to believe that the trade-off should be phrased in a way of: Either climate change, or potential nuclear disasters. It is simply a mistake to define the trade-off along only these lines, since there are other options out there, like relying on alternative sources of energy and social change. Though per unit costs for e.g. alternative energy sources (solar, wind, geothermal) are somewhat larger than those for nuclear energy, they will not have this negative impact on future generations like a potential nuclear disaster or nuclear waste has.
In other words, if a guy on the streets asks you whether you want to be punched or stabbed, then one shouldn’t forget that one has a third alternative, namely inviting him for a beer to talk things over. If one forgets that there are other alternatives, then the discussion will obviously only center around the choice between two bad alternatives while neglecting the third less nasty one…