Michele Kearney's Nuclear Wire: European Commission Consultation on Insurance and compensation of damages caused by accidents of nuclear power plants (nuclear liability)

Monday, August 5, 2013

European Commission Consultation on Insurance and compensation of damages caused by accidents of nuclear power plants (nuclear liability)

Nuclear energy

Public consultation

Insurance and compensation of damages caused by accidents of nuclear power plants (nuclear liability)

Online questionnaire

Consultation period

From 30/07/2013 to 22/10/2013

Policy field(s)

Nuclear Energy

Target group(s)

Public authorities, Member States authorities, utilities, financing institutions, industries, private organisations, industry associations, research organisations, universities, citizens, consumer organisations, trade unions, NGOs, environmental organisations, consultancies.

Objective of the consultation

The European Commission (Directorate General for Energy) is currently assessing to what extent the situation of potential victims of a nuclear accident in Europe could be improved, within the limits of EU competence. The present consultation therefore seeks the views of all relevant stakeholders on the need for common rules at EU level on insurance and compensation for nuclear accidents in the EU.
Introduction
With approximately 132 nuclear reactors in the EU territory, currently generating close to 30% of all electricity in the EU and 2/3 of its low-carbon electricity, it is essential that society and the economy, not only strive to avoid the occurrence of a nuclear accident in a MS, but also deal with the question of sufficiency of damage coverage (“who pays how much to whom for which damages?”) in case of a nuclear accident.
Although the risk of a nuclear accident is very low, the consequences of such accidents, should they occur, are severe. It is therefore of the outmost importance to enhance the safety of those installations and of nuclear power plants (NPPs) in particular. In that regard, the European Union has already adopted a set of legally binding rules aiming at maintaining and promoting a high level of safety in the European nuclear sector (Council Directive 2009/71/Euratom of 25 June 2009 establishing a Community framework for the nuclear safety of nuclear installations [OJ n° L 172, of 2.7.2009, p. 18]).
It should be understood that all efforts made towards increased nuclear safety will not succeed to eliminate all the risks, complete nuclear safety being thus theoretical. Indeed, unforeseeable events such as human failures can be at the origin of a serious accident, as in Chernobyl (Soviet Union, 1986), but also natural catastrophes may lead to a nuclear accident, such as the one of Fukushima (Japan, 2011). Hence, it is also necessary to have clear and workable rules on liability, insurances or other financial guarantees in order to ensure that in the event of an accident, adequate compensation for loss of life, harm suffered on health, loss or damage of property and environmental damage are available.
Although severe nuclear accidents have been scarce hitherto in the EU, and therefore statistical figures are not necessarily very representative, the costs derived from the damages to persons, goods and environment have been estimated as high as €187 billion for Fukushima or €450 billion, for Chernobyl. These figures give rise to the questions of how to deal with compensation for such damages, to what extent the nuclear operator should be held liable for all the damages caused by an accident and whether sufficient monetary resources have been foreseen to pay all this compensation.
Since the 1950's there have been two principle approaches worldwide towards the regulation of nuclear operators' liability. The first scheme, mainly shaped by international Conventions [the Paris Convention (PC) and the Vienna Convention (VC)], consists on limiting to a particular level, the amount for which NPP operators might be held liable ("capped liability"), while at the same time making them solely responsible for any accident, i.e. they assume the liability of transporters of radioactive ores and materials or NPP suppliers (the so called "channelling" principle). The second scheme builds upon the concept of the unlimited liability of NPP operators, such that they remain fully liable with all their business assets.
It should be pointed out, however, that irrespective of the scheme applied, a financial security is usually required from operators in order to at least cover a part of the damages caused by nuclear accidents. As to the heads of damages (loss of life, personal injury, loss or damage to property, economic loss and reinstatement of impaired environment), the coverage is not uniformly regulated by the Conventions or in the MS. For example some MS have laid down rules in order to prioritise particular types of damages, while others operate a pro-rata scheme.
At the EU level, the nuclear liability regimes remain governed by national laws, which in 23 out of 28 MS reflect the provisions of either the PC or the VC. Thus, these 23 MS set the principle of liability of the sole nuclear operator and establish a minimum level of coverage. Amongst them, some apply channelling alongside the unlimited liability. There are five MS not bound by any Convention, thus applying common tort law rules to nuclear liability, meaning in particular that in addition to operators, transporters and suppliers can be held unlimitedly liable.

Operators' liability according to national laws in EU MS (in Euro)

	Convention to which MS is party	Operator's liability	Limit of the financial security
Austria	PC (not ratified)	Unlimited	446.6 million
Belgium	PC	1.2 billion	1.2 billion
Bulgaria	VC	49.1 million	49.1 million
Croatia	VC	43.9 million	43.9 million
Cyprus	-	Unlimited	-
Czech Republic	VC	232 million	232 million
Denmark	PC	Unlimited	700 million
Estonia	VC	Unlimited	-
Finland	PC	Unlimited	700 million
France	PC	91.5 million (700 million)	91.5 million (700 million)
Germany	PC	Unlimited	2.5 billion
Greece	PC	16.3 million	-
Hungary	VC	109 million	109 million
Ireland	-	Unlimited	-
Italy	PC	5.4 million	5.4 million
Latvia	VC	114.2 million	Shall be determined by the Government
Lithuania	VC	1963 USD 5 million (= € 154 million)	1963 USD 5 million (= € 154 million)
Luxemburg	PC (not ratified)	Unlimited	-
Malta	-	Unlimited	-
Netherlands	PC	1.2 billion	1.2 billion
Poland	VC	345 million	345 million
Portugal	PC	16.3 million	-
Romania	VC	345 million	345 million
Slovakia	VC	75 million	75 million
Slovenia	PC	700 million	-
Spain	PC	1.2 billion	1.2 billion
Sweden	PC	Unlimited	1.2 billion
United Kingdom	PC	156.7 million	156.7 million

The table above shows that the liability amount and the amount for compulsory financial securities are not always identical. In fact, these are two different concepts which only coincide where MS have introduced the lowest liability amount provided for in the Convention to which they are party to. This explains also the fact that MS party to one of the Conventions, but having freely introduced unlimited liability, do nevertheless require minimum financial security coverage.
From the table above, it can furthermore be acknowledged that the amounts provided do not reflect the potential costs of a severe nuclear accident in a NPP. In that regard, it is sufficient to compare the amounts in the figure with the already mentioned estimations of damages caused by the nuclear accidents in Fukushima or Chernobyl.
This gap between the potential costs and the effective amounts for which nuclear operators are liable and are therefore covered by insurance creates several problems. Thus, not only victims won't probably be treated equally, since not all of them will receive compensation for the same heads of damage; but also competition conditions of the operators in different MS could be distorted, since the amounts for which they might be held liable significantly varies from MS to MS. Furthermore, inasmuch as MS will very likely have to assume at least a big part of the non-covered costs, the gap also creates a problem of governance and could have an impact on public budgets.

How to submit your contribution

Information on online questionnaires
You are invited to reply to this public consultation by answering the online questionnaire.
Please, submit your response to this public consultation by22/10/2013 at the latest.
Received contributions will be published on the Internet. It is important to read the specific privacy statement pdf - 77 KB

[77 KB] attached to this consultation for information on how your personal data and contribution will be dealt with.

Contact details

Responsible service :
European Commission
DG Energy - ENER.D.1.
Nuclear safety architecture and multilateral & international cooperation
Rue Robert Stumper, 10
L-2557 Luxembourg
E-mail : ENER-LUX-NUCLEAR-LIABILITY@ec.europa.eu