Nuclear energy — dangerous concessions on liability

The Union Budget included an announcement regarding the government's intention to amend the Atomic Energy Act and the Civil Liability for Nuclear Damage Act. This announcement has sparked concerns in India, as it aims to ease restrictions on nuclear suppliers' liability in the event of an accident, especially in the context of U.S.-India nuclear cooperation.

Implications for Nuclear Liability

• Dilution of Liability Law: The amendments to the Civil Liability for Nuclear Damage Act may dilute the provisions on supplier liability, especially the right of recourse, which allows India’s Nuclear Power Corporation (NPCIL) to hold suppliers accountable for accidents caused by defective equipment or services. This change may appease foreign nuclear suppliers, especially U.S. companies, but it reduces the accountability of suppliers for nuclear accidents.
• Comparison with Global Standards: Unlike many countries that indemnify suppliers completely, India’s law attempted to limit supplier liability, focusing more on the operator. However, the Fukushima disaster and the Bhopal gas disaster indicate that supplier liability is crucial for ensuring nuclear safety and accountability.
• Indemnity’s Impact on Safety: The proposed indemnification of nuclear suppliers removes their financial liability in the case of accidents, thus diminishing their incentive to ensure the safety of reactors. The Fukushima incident, where General Electric did not face any compensation responsibility despite the defect in reactor design, illustrates the dangers of such indemnification.

Economic Considerations

• High Cost of U.S. Reactors: The U.S. is pushing India to purchase AP1000 reactors, but these reactors have proven to be extremely expensive, with delays and cost overruns. The South Carolina reactors, for example, were abandoned after spending over USD 9 billion, and the reactors in Georgia were completed at USD 8 billion, more than double the initial cost estimate.
• Economic Comparison with Alternative Sources: The cost of electricity generated by AP1000 reactors would be several times higher than that generated from renewable sources like solar and wind power.
• Impact of Small Modular Reactors: Smaller reactors, such as those offered by NuScale Power, face economic challenges as well due to a lack of economies of scale. Despite their safety claims, these smaller reactors may not be competitive in terms of cost-effectiveness, further complicating India's nuclear energy options.

Safety Concerns and Corporate Accountability

• Supplier Accountability and Safety Standards: One of the main arguments against indemnifying suppliers is that it removes the economic incentive for nuclear reactor suppliers to ensure high safety standards post-sale. The case of Three Mile Island, where Babcock & Wilcox failed to address a known safety hazard, highlights the potential for safety failures due to lack of accountability. By easing liability, India could inadvertently lower safety standards, jeopardizing public safety.
• Indemnity and Corporate Influence: The strong lobbying by S. nuclear companies for indemnification is a result of their desire to avoid financial risks in India. Despite historical evidence of safety failures by suppliers, including General Electric's role in Fukushima, the push for total indemnity underscores the influence of powerful corporations on nuclear policy, potentially at the expense of safety and public interest.

Practice Question

Q. The proposed amendments to the Civil Liability for Nuclear Damage Act and the Atomic Energy Act in India reflect a shift towards accommodating the demands of foreign nuclear suppliers. Critically analyze the potential implications of these amendments on India’s nuclear safety, economic viability, and public accountability.