Liability for a nuclear disaster

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Standard Page - 2012-02-22
The nuclear industry has managed to build a system in which they the polluters harvest large profits, while the moment things go wrong; they throw the responsibility for dealing with losses and the costs of damages to the citizens affected by a nuclear disaster.

Fukushima, man in protective mask

Image © Noriko Hayashi / Greenpeace


Fukushima anniversary feature


Around the world, the operators of nuclear plants are largely protected from paying the full costs of disasters caused by their plants. The people affected by those disasters suffer the consequences of living with radiation and also end up paying the costs of their own misery and suffering.

In almost every country with nuclear reactors, the government protects the operators of nuclear plants from paying the full costs of a disaster by putting a cap on the operator’s liability. Economic analysts have frequently said that putting significant limits on the liability of nuclear operators can be seen as a subsidy to the nuclear industry.

At present, there is no comprehensive unified international legal approach to the liability for a nuclear accident or to compensating victims. Countries don't adhere to the same conventions on accidents or they adapt the conventions differently in domestic legislation.

Until the Chernobyl disaster in 1986, the UN-organized Vienna convention and the OECD-organized Paris convention, both originally negotiated in the 1960s, created an international regime on nuclear liability. After Chernobyl showed the inadequacy of the caps on liability, there were efforts to strengthen the international framework for nuclear liability. Despite various amendments and supplementary protocols, both conventions cap the liability at roughly between £700 million to about £1,500 million. Importantly, they also narrow the liability solely to the operator, so that the supply chains and investors in nuclear companies are fully exempt from any responsibility towards third parties (i.e. those suffering damage from an accident).

The new caps under the conventions are still significantly below the costs of an accident like Chernobyl or Fukushima, which can add up to hundreds of billions of dollars.

As a result, there is a highly confusing and complicated patchwork of national approaches to nuclear liability. In 2000, fewer than half of the reactors in the world were covered by an international agreement (1), a potentially significant problem for victims in a country that is affected by a nuclear disaster in another country. The victims may not be able to even claim compensation in the other country.

Only three countries ─ Germany, Finland and Japan ─ do not cap liability. But here the Fukushima disaster provides another clear example of the failures in liability systems. In theory, Japan does not cap the liability of nuclear operators. Tokyo Electric Power Company (TEPCO), the owner of the Fukushima nuclear disaster site, was required by law to carry $1.6 billion (US dollars) in insurance for the six reactors on the site. This is a tiny fraction of the total cost of this disaster. The Japan Centre for Economic Research (2) has estimated the full cost of compensation and decommissioning of the reactors at between $520 and $650 billion. The Japanese government has already agreed to provide TEPCO with a bailout of $11.6 billion and the company has asked for another $9 billion. Once again, the public that suffers from the effects of a nuclear disaster will pay the costs through its taxes.

Notes:

  1. B. McRae, Overview of the Convention on Supplementary Compensation, in Reform of Civil Nuclear Liability, OECD, p. 175.
  2. Japan Center for Economic Research. (JCER). 2011. Abstract The 38th Middle-Term Forecast, 2 December 2011, p.3. http://www.jcer.or.jp/eng/pdf/m38_abstract.pdf

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