Five years after Fukushima
One has to ask whether the concept of unlimited liability has any real meaning when the operators capacity to pay is so limited. It also
raises questions for other parts
of the world
Makoto Takahashi
As four reactors at the Fukushima Daiichi Nuclear Power plant suffered catastrophic cooling failures and exploded in March 2011, the world watched in disbelief. For Japan, this was not just the greatest nuclear disaster since Chernobyl. It was the most severe crisis since World War II.
Five years on, the nation continues to struggle with the effects. A 10 km radius of the plant remains a dead-zone: desolate and uninhabited. As many as 100,000 people still remain displaced, unable to return to their homes. Workers at the Tokyo Electric Power Company (TEPCO) still don claustrophobic masks and rubber suits to venture into the Fukushima facility. Their job is to decommission the plant safely, a task that plant manager Akira Ono recently said was about 10% complete.
The task is beset with setbacks and spiralling costs. In December 2011 the government estimated that managing Fukushima would cost US$50 billion. By 2014 this had nearly doubled to include US$19 billion to decommission the Fukushima plant; US$22 billion to decontaminate the surrounding area; US$9 billion to build temporary storage facilities for nuclear waste; and US$43 billion to compensate the victims. Today even this looks hopelessly optimistic.
Fukushima is now the biggest civil liability case in history. More than two million people have sued TEPCO and US$50 billion has already been paid out. This is already equivalent to 400 Exxon Valdez oil spill settlements, and experts predict the total cost of compensation could rise to US$120 billion.
One notable subplot has been compensation for cases of suicide. A courts landmark decision that TEPCO pay $470,000 to the heirs of a 58-year-old farmers wife named Hamako Watanabe could prove much more costly. The Watanabe family were evacuated from the village of Yamakiya in April 2011, losing their farm and leaving them with a US$140,000 mortgage on their now uninhabitable home. Watanabe became severely depressed and during an authorised one-night visit to their home in June the same year, she burned herself to death.
While nuclear carries very real technical and regulatory risk construction cost represents a key challenge. New builds will only go ahead after government guarantees public subsidies, including long-term power purchase agreements. This is because the private sector cant afford to build new nuclear plants themselves. The reality is that nuclear new builds are high-value, high-risk projects with a marked tendency for significant delay and delay claims, cost growth and investor risk.
For example, in Finland, their nuclear corporation TVO is pressing a 2.7 billion compensation claim for delays to the Olkiluoto EPR nuclear power plant. Perhaps amusingly, the French nuclear corporation Areva is in turn demanding 3.5 billion from TVO. The projects turn-key price was 3 billion in 2005 and the current estimated price stands at 8.5 billion, with a construction time of 13 years and rising. And just recently, TVO has dashed Areva hopes of building any more EPRs in Finland.
So the general post-Fukushima situation in the EU implies there will be limited construction in the coming decade. Although new builds are still planned in Finland, France and the UK Italy and Switzerland have cancelled plans for new reactors, Belgium has confirmed a nuclear phase-out, and eight EU countries have signed a declaration that nuclear power is incompatible with the concept of sustainable development.
At the heart of the nuclear question are differing views on value for money, foresight and responsibility. Huge long-term investments are needed and its clear there are critical social, environmental and economic decisions to be made.
Germany, Europes dominant electricity user, has made its choice. Its decision to phase out nuclear power by 2022 and to instead invest in renewables, efficiency measures, grid infrastructure and energy storage, will prove significant for both European and international energy policy.
Other bereaved families have also come forward. Two similar cases are now underway, with a recent Japanese government report stating that a total of 56 suicides could be tied to the disaster. And this looks conservative: the NHK broadcasting service has put the number at 130. What is certain is that the number is rising. A further 19 evacuees took their lives in 2015 and there is no reason to believe 2016 will be any different.
Anti-nuclear demonstration in Nagatacho, 2015. Credit: TK Kurikawa
Officially the buck for everything stops with TEPCO. Under Japanese nuclear-liability law, the nuclear operator is always responsible for the full cost of an accident, even if it cannot be proven to be negligent.
In practice, the Japanese taxpayer is bearing the burden. TEPCOs liability may be unlimited, but its assets are not. Despite the countrys earthquake history, TEPCOs insurance policy incredibly did not cover earthquakes or tsunamis. And in accordance with regulations introduced in 2009, TEPCO was insured for up to only US$1.1 billion anyway: about a fiftieth of the damages paid out so far.
The government has been forced to prevent TEPCOs bankruptcy over and above all of its other Fukushima-related outgoings. It has bought a majority share and has continued to finance compensation payments through a series of indemnity agreements and loans in the form of government compensation bonds.
One has to ask whether the concept of unlimited liability has any real meaning when the operators capacity to pay is so limited. It also raises questions for other parts of the world. In the UK, for example, nuclear liability is capped at a mere $220m, less than two hundredth of what TEPCO has already paid in compensation claims. Japan is evidently not be the only country that should be taking lessons from Fukushima.
The writer is a pre-doctoral researcher, University of Cambridge.
