Nuclear Power: Risk-Free Privatised Profits

Posted on 23/04/2011 by

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Much comment has been made that if the nuclear power industry were forced to accept the liability (risk) of building nuclear reactors, no nukes would ever be built.

This is very true: the only way that nuclear reactors are build are: 1) the host government has to eminent domain property in order to build the reactors; and 2) said government must underwrite the insurance for said reactors, as no other institution would touch the potential liability of a Fukushima- or Chernobyl-level disaster.

For good reason: the cost of cleaning up after Chernobyl continues to this day — consider how a new sarcophagus needs to be installed over the old one — and the cleanup at Fukushima has yet to begin in any meaningful way. In short, a nuclear disaster is billions upon billions of dollars, more or less constantly, for the rest of time. Anything other than a national government would not be able to finance (even on paper) that sort of payout. In the case of Chernobyl, the government which built the plant… went away… saddling the locals with the (unaffordable) bill which they are begging the international community to help pay.

All this is why the phrase “if the government didn’t take on the risk, nuclear reactors wouldn’t be built”, is true. No insurance company would be so foolish as to look at the glowing history of nuclear power’s and then write an insurance policy. There aren’t enough premiums in the universe to make Lloyd’s want to touch a nuke with a 12 kilometre lead pipe.

The obvious factor which government-backed insurance of nuclear reactors, when the free-ish market doesn’t want to get anywhere near said reactors, is that there is some serious market distortion being created. Something which the free-ish market would prevent being built, gets built. Again, if governments did not underwrite the insurance policies, nukes would not be built.

At this point, however, let’s turn that phrase on its head: nuclear plants are built, because the government insures them. In other words, the government takes on the risk of the plant’s existence, instead of either a private insurance company, or the actual owners of the plant. This has far-reaching implications, not just for the people who have to live with the nuclear plant — in reality, all of us — but also for the corporation which owns the plant proper.

Simply put, nuclear power represents risk-free private profit at public cost.

The operating corporations of ‘private’ nuclear power plants have the power of their host governments behind them, ready, willing, and able to pick up the tab on any clean-up which might be necessary. So, with the down-side risk assumed by the government and its ability to tax its citizens, the nuclear power corporation is free to aspire to what is essentially the Philosopher’s Stone of rentiers: stable, guaranteed, risk-free income.

It is this quality, this Philosopher’s Stone-nature of nuclear power, which ensures reactors are built despite market revulsion and popular opprobrium. The ability of nuclear power to on one hand be risk-free, and on the other be a steady and knowable income stream, is too seductive for high-level rent-seekers to resist.

This highlights the dreadful problem of allowing the profit of a few get so worshiped that it can be at the cost of a great many — indeed, all will pay some price for nuclear disasters, at the very least in the form of increased radioactive fallout. Any government which puts itself up as the insurer of nuclear power has to effectively pretend that nuclear power is as dependably safe as its powers of taxation. As memory serves, there have been far more nuclear disasters than tax revolts in recent times.

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Posted in: Analysis