From the U.S. to Japan, it’s illegal to drive a car without sufficient insurance, yet governments around the world choose to run over 440 nuclear power plants with hardly any coverage whatsoever.
Japan’s Fukushima disaster, which will leave taxpayers there with a massive bill, brings to the fore one of the industry’s key weaknesses — that nuclear power is a viable source for cheap energy only if it goes uninsured.
Governments that use nuclear energy are torn between the benefit of low-cost electricity and the risk of a nuclear catastrophe, which could total trillions of dollars and even bankrupt a country.
The bottom line is that it’s a gamble: Governments are hoping to dodge a one-off disaster while they accumulate small gains over the long-term.
The cost of a worst-case nuclear accident at a plant in Germany, for example, has been estimated to total as much as €7.6 trillion ($11 trillion), while the mandatory reactor insurance is only €2.5 billion.
“The €2.5 billion will be just enough to buy the stamps for the letters of condolence,” said Olav Hohmeyer, an economist at the University of Flensburg who is also a member of the German government’s environmental advisory body.
The situation in the U.S., Japan, China, France and other countries is similar.
“Around the globe, nuclear risks — be it damages to power plants or the liability risks resulting from radiation accidents — are covered by the state. The private insurance industry is barely liable,” said Torsten Jeworrek, a board member at Munich Re, one of the world’s biggest reinsurance companies.
In Switzerland, the obligatory insurance is being raised from 1 to 1.8 billion Swiss francs ($2 billion), but a government agency estimates that a Chernobyl-style disaster might cost more than 4 trillion francs — or about eight times the country’s annual economic output.
A major nuclear accident is statistically extremely unlikely when human errors, natural disasters or terror attacks are excluded, but the world has already suffered three in just about thirty years — Three Mile Island, Chernobyl and now Fukushima.
In financial terms, nuclear incidents can be so devastating that the cost of full insurance would be so high as to make nuclear energy more expensive than fossil fuels. . . .
As Japan’s disaster at the Fukushima Dai-ichi plant unfolds in the wake of the March 11 earthquake and tsunami, it is still unclear what the final cost might be.
Operator Tepco’s shares have been battered, and analysts say Japan — which already has the highest debt level among the world’s industrialized nations — might eventually have to nationalize the company, and take on its massive liabilities.
Tepco had no disaster insurance.
The majority of Germans and the political parties have concluded that the potential damage outweighs the benefits, and the country now stands alone among industrialized nations in its determination to overcome nuclear power.
Phasing out nuclear energy — which like in the U.S. produces a quarter of the country’s electricity — was meant to happen slowly over the next 25 years. But in the wake of Fukushima the government seems determined to speed things up, possibly pulling the plug on the last reactors within a decade, gradually replacing them with renewable energies.
“No society has to bear the potentially enormous risk of a nuclear disaster,” Hohmeyer said.