Sans Insurance, a Nuclear Meltdown Can Become a Financial Meltdown

Way to stay unruffled, Japan Broadcasting Corporation (NHK). The headline at NHK’s website yesterday reads “TEPCO to review cooling operation.” Sounds sober enough — until you find out why it plans to conduct that review.

Tokyo Electric Power Company will have to review its plan for stabilizing the Fukushima Daiichi nuclear facility after a large amount of radioactive water was found in the basement of one of its reactor buildings.

The utility says it discovered an estimated 3,000 tons of contaminated water in the basement of the damaged Number 1 reactor building.

It “discovered”? How does that go overlooked? Never mind: how the water wound up in the basement is light years more frightening.

TEPCO says fuel rods in the Number 1 reactor melted down and created a hole in the bottom of the pressure vessel. It says the containment vessel also appears to be damaged and highly radioactive water has leaked into the basement of the building.

As if that’s not bad enough, Agence France Presse reported:

Ruling-party lawmaker Goshi Hosono, special aide to Prime Minister Naoto Kan, said. . . . reactor three has not cooled down as hoped earlier, saying it was more of a worry to him than reactor one.

Perhaps as a consequence (from the same article)

Japan on Sunday started the first evacuations of homes outside a government exclusion zone. . . . Some 4,000 residents of Iidate-mura village as well as 1,100 people in Kawamata-cho town . . . began the phased relocations. . . . Although Iidate-mura and Kawamata-cho are 30 kilometres (20 miles) away from the plant, they have consistently received high amounts of radioactive materials due to wind patterns.

All at huge cost to the state, of course. But, surprisingly, of all the institutions to come out of this without taking a financial bath, you’d think the last is insurance. But, for those who may be unaware of it, when it comes to insuring nuclear-power plants, insurance companies keep their exposure to a minimum. Juergen Batz reports for the Associated Press.

Japan’s Fukushima disaster, which will leave taxpayers there with a massive bill, brings to the fore one of the [nuclear-energy] industry’s key weaknesses — that nuclear power is a viable source for cheap energy only if it goes uninsured. The cost of a worst-case nuclear accident at a plant in Germany, for example, has been estimated to total as much as $11 trillion, while the mandatory reactor insurance is only 3.7 billion. . . . “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 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.

In fact

Tepco had no disaster insurance.

Despite Fukushima, many, including those to whom it’s vastly less catastrophic for the environment than coal, remain unmoved in their advocacy for nuclear energy. But, the environmental effects of Fukushima aside, purely in financial terms, the world can scarcely afford more than one of these accidents every, say, ten years.