31 March 2011

The Cost of Fukushima

How much will the Fukushima nuclear power disaster cost the Tokyo Electric Power Company, the Japanese economy, and the Japanese taxpayer? A rough estimate based on current conditions is something around $50 billion. TEPCO's salable assets are only worth about half of that.


The costs of the problems at TEPCO's Fukushima Number One nuclear power plant fall into several areas:
  • The direct costs of trying to contain disaster and stabilize the damaged reactors. This includes costs to TEPCO as well as costs being borne by public agencies such as the Japan Self Defense Force, fire services, and so on.
  • The costs to TEPCO of lost sales of the electricity formerly generated at the facility.
  • The costs to individuals and businesses caused by the blackouts imposed by TEPCO due to its sudden loss of generating capacity. There will be secondary and tertiary effects--for example if power cuts prevent railways from running, perishable goods may be lost, or raw materials may not be available to keep manufacturing plants operating. The rolling blackouts are distributing this cost widely over much of eastern Japan, beyond the area where economic activity has been disrupted by the earthquake and tsunami. [Update 6 April 2011 1515 GMT: Government-imposed conservation measures may make blackouts unnecessary, minimizing this exposure for TEPCO. See note below.]
  • Compensation to people harmed by radiation at the plant or released from the plant, or by other direct effects such as fires and explosions. So far the only people directly harmed are some of the workers exposed to radiation or injured during the efforts to stabilize the facility. TEPCO will presumably owe compensation to those injured, sickened, or killed.
  • The eventual cost of cleaning up and entombing the damaged reactors, which will take years [update 28 March 2012: decades; Guardian story], and securing the contaminated areas of the site for many decades. Some land around the plants may need to be acquired due to contamination that is impossible to remove or remediate.
  • The economic losses due to radioactive contamination. Many farmers have already been ordered not to harvest crops, and other crops and other agricultural or fisheries products will not be able to be sold because of radioactive contamination or fear of contamination. All of these businesses will have a claim against TEPCO.
  • If this were in the United States there would be thousands of lawsuits, including class action lawsuits, seeking to recover damages due to disruption of peoples lives and businesses. Probably there would be suits seeking compensation for psychological impacts and loss of quality of life. I don't know how this will play out in the Japanese legal system.
To offset these costs TEPCO presumably will receive some insurance payments, but such payments will be much, much less than its total costs.

Costs of containment and control of the damaged reactors Perhaps $500 million so far; estimated about $2 billion to stabilize the reactors
Lost sales of electricity About $7 billion per year
Costs to businesses due to blackouts About $10 billion [update: may be minimized by conservation measures see note below]
Liability for direct radiation injury Several hundred million dollars?
Clean-up and mothballing cost $10 to $15 billion
Liability for economic harm due to radiation release Maybe $10 billion, depending on amount and type of releases of radioactive materials
Other tort liability Maybe another few billion
Total costs and liabilityAbout $50 billion [update: about $40 billion if blackout liability claims are avoided]

[Update 2012-07-20 1800gmt: This article says "600 people may have died as a result of the evacuation" from the exclusion zone around the plant in an effort to protect them from radiation exposure. "Even the upper-bound projection of the lives saved from the evacuation is lower than the number of deaths already caused by the evacuation itself." Those 600 should be counted as deaths caused by the nuclear accident at Fukushima Daiichi. So even if the total on-site deaths from the nuclear accident are zero and the radiation deaths world wide are few-to-none, the accident at the plant did cause hundreds of deaths in Japan.]

This estimate seems realistic when compared to BP's costs associated with the Macondo blowout. BP had to set aside $20 billion just for economic liability and environmental damage, not counting its costs to plug the blowout and the liability for 11 workers killed and others injured.

This Reuters article has some estimates of TEPCO's costs. "the company said on Wednesday that 2 trillion yen ($24 billion) in emergency loans from Japan's major banks would not cover its mounting costs." Bank of America-Merill Lynch is cited as estimating that compensation claims alone could be between $12 and $130 billion, depending on how long the situation at the plant "drags on".

[Update 5 April 2011 1530 GMT: According to this Reuters story TEPCO has made token payments to evacuated towns of about $2 million. It is in negotiations with the government on what share of damages the taxpayers will cover. TEPCO "said it must first assess the extent of damage before paying actual compensation. 'We are still in discussion as to what extent we will pay on our own and to what extent we will have assistance from the government,' TEPCO executive vice-president Takashi Fujimotohe told a news conference."]

[Update 12 April 2011 0420 GMT: According to this BBC story JP Morgan has estimated compensation claims from the Fukushima disaster could total $24 billion.]

[Update 29 March 2012: BBC story says "to keep the company afloat" "Tepco now says it needs 2.55tn yen [$31 billion--DW] in compensation - up from its previous estimate of 1.7tn yen. Tepco is seeking the additional 1tn yen in financial support from the state-backed fund 'in order to prepare for necessary compensation payouts, the steady decommissioning of Unit 1 to 4 at Fukushima Daiichi Nuclear Power Plant, securement of sufficient capital for stable power supply, and early bond issuance to be able to raise funds independently'." TEPCO press release here.]

At least TEPCO or its successor should establish a compensation fund, as BP was required to do. I am surprised the discussion has leapt directly to nationalization of TEPCO, rather than holding the company to account.

TEPCO's likely costs and liabilities are so far in excess of its resources (cash, borrowing capacity and salable assets) that there has been talk of the Japanese government "nationalizing" the company, or otherwise taking on some of these costs in order to save it.

One might ask why the company is worth saving. Surely it could sell its intact assets (other power plants and distribution systems) to another electricity company to generate some cash to cover its liabilities. (TEPCO's net income from other assets, not including Fukushima Number 1, is still about $3-4 billion per year. These assets should be worth some $30 billion, if they were sold.)

Other remaining liabilities, and the long-term responsibility for the contaminated site, would be transferred to the Japanese taxpayer. The Tokyo Electric Power Company would cease to operate, like ENRON, Lehman Brothers Holdings and many other companies who found their liabilities vastly exceeding their assets.

The taxpayers will have to cover some costs, perhaps tens of billions of dollars worth. But there is no reason that they should bail out the shareholders of TEPCO.

Nuclear generation of electricity will never be as safe as it can be until the private companies that profit from it have to accept all the liability of problems that develop at their plants. Then they will design conservatively, include accurate provisions for costs and potential liability, and make investment decisions that are beneficial for both the owners and the taxpayers. (Note that this implies that no nuclear power industry that is owned and operated by the government will ever be as safe as it can be.)


Calculations:

Cost of control--Just a wild guess.

Lost sales--The capacity of Fukushima 1 was about 4696 MW, about 11% of TEPCO's total generating capacity. (Reactors 5 and 6 may eventually be able to return to service, but their production will probably be lost for at least a year.) Thus about 11% of TEPCO's annual revenues, which are roughly $65 billion, will be lost during the first year.

Business losses due to power cuts--The lost generating capacity at Fukushima Number 1 is about 3% of Japan's total electricity consumption of 1,075 TWh per year (2008). So the estimate is that some fraction of Japan's $5 trillion GDP is lost, say one tenth of that 3%. Conservation and other adjustments will mean that this loss will be temporary. [Update 6 April 2011 1515 GMT: This Reuters story indicates the Japanese government may impose energy conservation measures to prevent the need for blackouts. This could effectively shield TEPCO from liability claims for harm to business due to such blackouts.]

Injuries to workers--Estimating a few deaths or serious injuries, at $100 million per death. [Update 15 April 2011 1815 GMT: Reuters article says 28 workers at Fukushima have accumulated doses of more than 100 millisieverts. This includes the two who were exposed to 170-180 millisiverts by standing in contaminated water with improper footwear. Japan has raised the limit these workers may be exposed to to 250 millisieverts per year, and we haven't heard of any reaching that level. The 100 millisievert level is the lowest dose thought to be linked to increased cancer risk. See this post for more on doses and consequences.]

Economic losses due to contamination--A rough guess. Loss of crops will be temporary. Fisheries losses may be masked by losses due to the tsunami. If Caesium 137 is released in a form that contaminates local land surfaces, some areas might be closed to agriculture for many years, decreasing land values. The government or TEPCO might have to acquire such contaminated land. [Update 5 April 2011 1530 GMT: According to this Bloomberg article BP's payments for economic loss claims from Macondo blowout may total around $10 billion. Update 6 April 1515 GMT: See this post for comparison of Fukushima and Macondo costs.] [Update 12 April 2011 0420 GMT: BBC story reports JP Morgan estimates compensation claims could be around $24 billion.]

Cleanup--Three Mile Island cost about $1 billion to clean up and mothball. It was a much more limited problem with much less contamination of the facility. I estimate at least double the cost per reactor and four damaged reactors, so about $10-15 billion.

28 March 2011

Fukushima vs. Chernobyl

How does the Fukushima nuclear power station disaster compare with that at Chernobyl in 1986?


Fukushima Chernobyl
Cause Natural disaster, design flaws Human error, design flaws
Amount of radiation released The amounts of radioactive iodine and caesium released have approached those at Chernobyl (reports here, here, and here) (and there has been much more released since then). Small amounts of radioactive plutonium have been found. In addition to volatile iodine and cesium, many other radioactive materials were released, including strontium, plutonium, and ruthenium in particles in smoke and dust (overview in Science article) which caused long-lived contamination of surrounding areas.
Workers and responders killed 2 missing? (estimate as of 26 March 2011 see Reuters article, Telegraph article) (These 2 may have been killed by the tsunami not the nuclear accident see BBC story) 34
Public health impact Few direct public health impacts currently anticipated [update Reuters quotes UN expert on minimal health impacts] "more than 6,000 cases of thyroid cancer" (UNSCEAR) entailing up to 500 premature deaths (Other sources give much higher estimates of premature deaths)
Clean-up Cost Perhaps around $10-15 billion for site cleanup and mothballing (Three Mile Island cost $1 billion to clean up and close--see NYT article) (For estimates of other costs--around $50 $40 billion--see this post. Tens to hundreds of billions of dollars, including maintenance of exclusion zones, relocation costs, ongoing work at the site (a multi-billion dollar project is currently under way to put a more permanent cover over the damaged reactor building)
Exclusion zone None anticipated at this time, except perhaps the Fukushima #1 site itself. Considerable areas around the plant, and in neighboring Ukraine, Belarus and Russia, are zones of restricted access where no people can live

The estimates of health effects and premature deaths due to the radiation released by the Chernobyl disaster vary widely, and may be influenced by ideology and political factors.

The Chernobyl disaster involved a catastrophic and sudden release of a large plume of airborne radioactive material, including smoke and dust, while releases from Fukushima have been gradual, mainly volatile elements, and a substantial fraction have been water-borne and released into the adjacent sea. Also much of the airborne contamination has blown out to sea, rather than over inhabited land. This has minimized population exposure and contamination around the plant.

Also, at Fukushima an area within 20 km of the facility was evacuated promptly, and an additional area between 20 km and 30 km from the plant is currently subject to voluntary evacuation. The disaster at Chernobyl was at first not announced publicly and evacuation was delayed. The city of Pripyat, about 2.5 km from the Chernobyl plant, was not evacuated until 36 hours after the explosion and fire. Thus many more people were exposed to airborne radioactive materials.

Even after the Chernobyl disaster became public many people continued to drink milk from cows which were consuming contaminated feed or forage. The authorities were slow to prevent this route of exposure.

More than 300,000 people were resettled from the contaminated areas around Chernobyl. It is not likely that many will have to be permanently relocated from around Fukushima, but much of the surrounding area will have to be rebuilt due to tsunami and earthquake damage.

In addition to the technical differences between these two disasters which affect the type and degree of radioactive material released and other impacts, there are very significant differences due to the contrasting political and information climates. In 1986 in the Soviet Union little information was conveyed to local populations, or anyone else. The Fukushima disaster is playing out in the glare of international media coverage, and in an age when information is circulating freely via the internet.

Because of this much greater information flow and reasonably effective government intervention, many of the pathways of harmful radiation doses have been blocked. In particular around Fukushima food, water and other potentially contaminated sources of exposure are being monitored, and efforts are being made to prevent exposure by warning consumers against various hazards.

It is not possible to compare the broader economic impacts of these two nuclear energy disasters. Chernobyl had its greatest effects in a primarily rural area, while substantial economic activity (farming, fisheries) may be affected by Fukushima. Also, it is impossible to disentangle many of the economic effects of the Fukushima disaster from the much more severe and widespread effects of the earthquake and tsunami. Contamination of fisheries may be irrelevant, for example, since the fishing industry in the area has been destroyed by the tsunami.

[Update  31 March 2011 1700 GMT]
A recent Reuters article says compensation claims against Tokyo Electric Power Company could be $12 to $36 billion (or even as high as $133 billion according to an analysis by Bank of America Merrill Lynch). This would put the total cost of the Fukushima disaster in the same range as that of Chernobyl, even accounting for the change in the value of the dollar over the intervening 20 years.

[Update 6 April 2011 1800 GMT]
Reuters quotes members of the United Nations Scientific Committee on the Effects of Atomic Radiation, saying that the public health effects of releases of radioactive material from Fukushima are expected to be very minor, based on current information.

Part of the reason that the cost of the Fukushima disaster is high even though its environmental, health and mortality effects are much more limited than Chernobyl is that Fukushima affects a relatively more wealthy and productive economy. The disruption of the Japanese economy due to the disaster at Fukushima creates costs and liabilities much greater than Chernobyl's impacts on the Soviet, Ukranian, Russian and Belorussian economies.

Updated 30 March 2011 0540 GMT
Updated 1 April 2011 0011 GMT with link to "Cost of Fukushima" post. 
Updated 3 April 2011 1530 GMT regarding 2 bodies recovered
Updated 6 April 2011 1800 GMT with link to Reuters story on health effects.

Sources and further reading: 
Wikipedia article

23 March 2011

How Much Radiation Is Bad For You?


Putting Fukushima In Perspective


This excellent chart puts in perspective the various amounts of radiation we might be exposed to. I know you can't read the reduced version shown here, so click on the image or go to the xkcd site to see the full-sized image. That site also has links to supporting information.

chart of radiation exposures

Yes, too much ionizing radiation can be very dangerous. But "too much" is a lot. We all tolerate minor amounts every day of our lives.

Smoking Sieverts


The chart doesn't include the very significant additional radiation that tobacco smokers expose themselves to. (Info at this EPA site. The U.S. Army Corps of Engineers has a pdf here with some exposure examples.) This University of Iowa site says someone who smokes a pack and a half of cigarets a day exposes himself or herself to a dose of 1300 mrem/year, equivalent to a chest x-ray for each cigaret. That's one of the green boxes in the chart above per smoke. Second-hand smoke is similarly radioactive.

Nobody who smokes should complain about radiation. They expose themselves to more than anyone living around Fukushima is likely to receive. No tsunami required.

The Sievert Measures a Radiation Dose's Effect on Us


The sievert is the SI unit used to compare the effect of doses of ionizing radiation on the body. Different kinds of radiation have different effects, and different parts of the body are affected differently. The sievert takes this into account so we can compare, for example, the effect of the extra radiation received during an airplane flight with the extra radiation received by visiting Chernobyl. [Wikipedia article here.] Sieverts (Sv), and microsieverts (╬╝Sv), millisieverts (mSv) and so on are used in the chart above.

16 March 2011

Fukushima, Nuclear Power, and Coal


The simple message from the Fukushima nuclear plant disaster is that unlikely events can and do happen. So when representatives of the nuclear power industry and their regulators re-assure us that modern plants are designed to withstand all "likely" circumstances we should ask them, "Well, what about unlikely circumstances?"

In this article U.S. Nuclear Regulatory Commission Chairman Gregory Jaczko is quoted as saying, "We have a strong safety program in place to deal with seismic events that are likely to happen at any nuclear facility in this country." I'm sure Japanese regulators said the same before recent events.

We should also consider that earthquakes are not needed for crises to occur at nuclear power stations. Neither Three Mile Island nor Chernobyl involved an earthquake. Also, any earthquake strong enough to cause a nuclear emergency will probably have a death toll thousands of times larger from other effects such as building collapses or tsunami. The deaths associated with any problems at nuclear power plants will be very minor in comparison.

But just because nuclear power generation entails risks, does this mean that we should continue to burn coal?

It has been known for 40 years that reactors like those at Fukushima might release radioactive material if they suffered a loss-of-coolant accident. Yet such reactors have been approved and built. (See this Guardian article.) Society has been willing to roll those dice.

Regulators approved those reactors, hoping their faults would never be tested. A score of similar reactors are operating in the U.S. today. Probably they will never be subjected to an unfortunate sequence of events that will cause them to fail catastrophically. But when the industry and their regulators assure us that "nothing can go wrong" they are obviously exaggerating. Things can go wrong, and at Fukushima they have.

The Fukushima disaster illustrates once again how massively complex systems can be destroyed by an unanticipated combination of failures. (See "When Systems Fail It's No Accident" in sister blog Science In Action. Also consider the combination of failures that led to the BP Macondo blowout disaster, described in this post.) Failures of this kind are unavoidable, though fortunately they are rare. (See this Wikipedia list of civilian nuclear accidents--not all of which are disasters.) (Here is an interesting list of structural failures and collapses. Engineering failures are not that uncommon. Dozens of people die from such failures every year on average.)

We don't know yet how much radioactive material will be released from the Fukushima reactors, nor how much disease, death and economic harm may result. Probably the total economic and personal loss due to the reactor failures will be relatively minor--a few billion dollars to Tokyo Electric Power Company, and some tens or hundreds of premature deaths. (There have apparently already been some deaths among workers at the facility, mainly from the effects of the hydrogen explosions, if I interpret the cryptic information coming from TEPCO correctly. Japan has had previous deaths among nuclear industry workers. See Wikipedia article on the Tokaimura accident.)

The cost of coal

This should be balanced against the thousands of deaths annually caused by particulate emissions from coal-burning power plants. Particulates are poison, and cause morbidity and mortality among exposed populations. If you count plants in China the annual toll is probably in the tens of thousands at least. (Here are discussions of health effects of particulates from WRI, EDF and Wikipedia.)

We should also count the deaths among coal miners as a cost of coal-fired electric power. The annual number of coal mine deaths is probably far above the number of deaths that will eventually be attributed to the Fukushima disaster. Twenty-nine coal miners were killed at the Upper Big Branch disaster in the U.S. in 2010. Hundreds of coal miners die in China annually. Mining is dangerous business, probably more dangerous than working at a nuclear power plant. (Of course uranium mining is part of the nuclear fuel cycle, but it may be less dangerous than coal mining.)

(Interestingly the Willow Island construction disaster, the collapse of a cooling tower being built at a coal-fired power plant, killed 51 construction workers. This toll is far greater than that of all nuclear power accidents in U.S. history. Admittedly the coal-fired power industry is much larger than the nuclear power industry.)

The Fukushima disaster is serious, and will do no good to the prospects of the nuclear power industry. If we are going to have nuclear power generation we should figure on the costs of such events. But the risks associated with nuclear power generation, always well known and now sadly demonstrated, need to be balanced against the also-well-known risks associated with other power generation technologies. It is hard to find something worse than coal.