Most nukes not insured for costs of disaster

The Associated Press has just published an analysis of the insurance costs and coverage for reactors around the world. The results as reported in the Kansas City Star today:

Nuclear dilemma: Adequate insurance too expensive

By JUERGEN BAETZ

Associated Press

From the U.S. to Japan, it’s illegal to drive a car without sufficient insurance, yet governments have chosen to run the world’s 443 nuclear power plants with hardly any insurance coverage whatsoever.

Japan’s Fukushima Dai-ichi nuclear disaster, which will leave taxpayers there with a massive bill, highlights one of the industry’s key weaknesses – that nuclear power is a viable source for cheap energy only if plants go uninsured. The plant’s operator, Tepco, had no disaster insurance.

Baetz looks at the situation in a number of countries, including Germany:

The cost of a worst-case nuclear accident at a German plant, for example, has been estimated to total as much as euro7.6 trillion ($11 trillion), while the mandatory reactor insurance is only euro2.5 billion ($3.65 billion).

“The euro2.5 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.

One estimate by a German think tank shows that coverage for every euro1 trillion ($1.5 trillion) in estimated damages would theoretically cost annual insurance of euro47 billion ($68.5 billion).

In Switzerland, the situation is even worse:

In Switzerland, the obligatory insurance for nuclear plants 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 – about eight times the country’s annual economic output.

The results of under-insurance is an artificially low price for nuclear power:

The nuclear insurance in Germany costs utilities euro12 million ($17 million) a year or euro0.008 cents ($0.015 cents) per kilowatt hour of electricity, a tiny part of the final energy cost to customers of about euro.22 (32 cents).
 
Increasing the liability coverage to, say, euro100 billion ($146 billion) would lead to a premium of about euro3.20 ($4.67) per kilowatt hour, according to Bettina Meyer of the Berlin think tank Green Budget Germany.

And in the United States, the Price-Anderson Act limits nuclear liability:
 
In the U.S., where no new reactors have been planned and completed since the 1979 Three Mile Island accident, the necessary insurance for nuclear operators is capped at just $375 million per plant by law, with further claims funded by the utilities up to a maximum of $12.6 billion.
 
That’s a tiny fraction of what a major accident might cost:
 
The cost of a nuclear meltdown at the Indian Point reactors, located 24 miles (37 kilometers) north of New York City has been estimated at up to $416 billion in a study. But that does not take into full account the impact on one of the world’s great cities.
 
“A worst-case scenario could lead to the closure of New York City for years, as happened at Chernobyl … leading to almost unthinkable costs,” University of Pennsylvania’s Howard Kunreuther and Columbia University’s Geoffrey Heal said in their 2009 study.
 

Olav Hohmeyer, an economist at the University of Flensburg who is also a member of the German government’s environmental advisory body, summarized the situation:
 
“If you take all external costs into account, the conclusion is inevitable: Nuclear power is not economically viable….”

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About Robert Singleton

By day, I work for a call center. In my spare time, I try to save my hometown (and planet) from a nearly constant onslaught of greedheads, lunatics and land developers. I live in a fictional town called Austin, Texas, where I go to way too many meetings.
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