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Japan to pass tsunami reconstruction budget

TOKYO – Japan's parliament was set to pass a 4 trillion yen ($48 billion) tsunami recovery budget Monday, but even that covers only a fraction of the cost of what was the most expensive disaster ever. Mounting frustrations over the government's response and a still unfolding nuclear crisis, meanwhile, are threatening to topple the country's increasingly unpopular prime minister as more budgetary battles lie ahead.

The supplementary budget bill for the fiscal 2011 year that started in April was unanimously approved by parliament's upper house budget committee Monday morning and was to be made into law at the chamber's plenary session later in the day. The more powerful lower house approved the plan Saturday.

The budget will cover the building of new houses for the more than 100,000 people who remain without proper shelter, the massive undertaking of clearing debris and rubble, reconstruction of fishing grounds, and support for disaster-hit businesses and their employers.

"I'm anxious to get the budget plan approved as quickly as possible so that we can reimburse funds for the projects immediately," Finance Minister Yoshihiko Noda said at the budget committee meeting.

Further outlays are expected to follow in the months ahead, he said.

The March 11 magnitude-9.0 earthquake and ensuing tsunami, which wiped out large swaths of Japan's northeastern coastline, are believed to have caused an estimated $300 billion in damage, making it the most expensive disaster ever. More than 26,000 people are dead or missing.

Though the new budget passed relatively smoothly, Prime Minister Naoto Kan's government is coming under growing pressure for its handling of the crisis and can expect greater opposition from rival parties in future budget negotiations.

"We support this budget plan just because of the urgent need to fund reconstruction projects," said Mikishi Daimon, an opposition lawmaker from the Communist Party.

Opposition leaders have called on Kan — who was already unpopular before the disaster — to step down for his handling of the aftermath, particularly his response to the subsequent crisis at the Fukushima Dai-ichi nuclear power plant. Polls show the public is also not satisfied with his efforts.

A poll released Monday by the Asahi, a major newspaper, found 55 percent of respondents have "few expectations" for Kan's Cabinet to handle the disaster response properly. Only 27 percent said they were "hopeful," according to the nationwide telephone survey conducted April 23 and 24 among 1,842 randomly selected households. A poll of that size would normally have a margin of error of plus- or minus-3 percentage points.

The budget does not include any government support for the massive compensation liability of the nuclear plant's operator, Tokyo Electric Power Co.

Chief Cabinet Secretary Yukio Edano made clear Monday that TEPCO bears unlimited liability because the tsunami and quake were "not impossible to foresee" and not an exception under the nuclear accident compensation law.

TEPCO spokesman Takashi Kurita said the operator was preparing to install an air purifier inside the Unit 1 reactor building to reduce radioactivity by 95 percent over the next few days — a step to allow workers into the area for the first time since the crisis began so they can resume their primary goal of restoring cooling systems.

02.05.2011. 11:25

Nuke insurance said too costly Most plants have hardly any coverage

AP

BERLIN — From the U.S. to Japan, it’s illegal to drive a car without sufficient insurance, yet governments have chosen to run the world’s 443 nuclear power plants with hardly any insurance coverage whatsoever.

The Fukushima No. 1 nuclear disaster, which will leave taxpayers with a massive bill, highlights one of the industry’s key weaknesses — that nuclear power is a viable source for cheap energy only if plants go uninsured. The plant’s operator, Tokyo Electric Power Co., had no disaster insurance.

Governments that use nuclear energy are torn between the benefit of low-cost electricity and the risk of a nuclear catastrophe, which could total trillions of dollars and even bankrupt a country. The bottom line is that it’s a gamble: Governments are hoping to dodge a one-time disaster while they accumulate small gains over the long-term.

Yet 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. The cost of a worst-case nuclear accident at a German plant, for example, has been estimated to total as much as €7.6 trillion ($11 trillion), while the mandatory reactor insurance is only €2.5 billion ($3.65 billion).

“The €2.5 billion will be just enough to buy the stamps for the letters of condolence,” said Olav Hohmeyer, an economist at the University of Flensburg who is also a member of the German government’s environmental advisory body. One estimate by a German think tank shows that coverage for every €1 trillion ($1.5 trillion) in estimated damages would theoretically cost annual insurance of €47 billion ($68.5 billion).

A similar situation exists for nuclear plants in the U.S., Japan, China, France and other countries. It is still unclear what the final cost will be for the Fukushima No. 1 plant, crippled by the March 11 quake and tsunami.

Tepco’s shares have been battered, and analysts say Japan — which already has the highest debt level among the world’s industrialized nations — might eventually have to nationalize the company and take on its massive liabilities. “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 Switzerland, the obligatory insurance for nuclear plants is being raised from 1 billion to 1.8 billion Swiss francs ($2 billion), but a government agency estimates that a Chernobyl-style disaster might cost more than 4 trillion francs — about eight times the country’s annual economic output.

A major nuclear accident is statistically extremely unlikely when human errors, natural disasters or terrorist attacks are excluded, but the world has already suffered three in just about 30 years — Three Mile Island, Chernobyl and Fukushima. Many countries back nuclear energy as a cleaner alternative to fossil fuels, even though right now there still is no solution for the permanent disposal of radioactive waste.

Governments could opt for a middle road, taking out more insurance to protect taxpayers from massive bills, but that would make nuclear energy cost more. Ultimately, the decision to keep insurance on nuclear plants to a minimum is a way of supporting the industry. "Capping the insurance was a clear decision to provide a nonnegligible subsidy to the technology," said Klaus Toepfer, a former German environment minister and longtime head of the U.N. Environment Program (UNEP), said.

The nuclear insurance in Germany costs utilities €12 million ($17 million) a year or €0.008 cents ($0.015 cents) per kilowatt hour of electricity, a tiny part of the final energy cost to customers of about €.22. Increasing the liability coverage to, say, €100 billion ($146 billion) would lead to a premium of about €3.20 ($4.67) per kwh, according to Bettina Meyer of the Berlin think tank Green Budget Germany.

China, which is under international pressure to lower its use of coal and cut its carbon emissions, is betting on nuclear power to feed its rising energy demand. Yet it has an industry insurance pool covering damages only up to 300 million yuan ($46 million) and another 800 million yuan from the government to compensate victims, too little to cover damages in any meaningful way.

The situation is not much better among veteran users of nuclear energy. In the U.S., where no new reactors have been planned and completed since the 1979 Three Mile Island accident, the necessary insurance for nuclear operators is capped at just $375 million per plant by law, with further claims funded by the utilities up to a maximum of $12.6 billion.

France, a country dotted with 58 reactors, only requires insurance of €91 million ($133 million) from plant operators, with the government guaranteeing liabilities up to €228 million ($333 million). The figures were similar for Britain, Russia and the Czech Republic.

Damage estimates for a worst-case nuclear disaster differ widely because it is difficult to forecast the spillover effects of a meltdown - death and illness, compensation for lost work and the economic impact of massive evacuations for years.

The cost of a nuclear meltdown at the Indian Point reactors, located 37 km north of New York City has been estimated at up to $416 billion in a study. But that does not take into full account the impact on one of the world's great cities.

"A worst-case scenario could lead to the closure of New York City for years, as happened at Chernobyl . . . leading to almost unthinkable costs," University of Pennsylvania's Howard Kunreuther and Columbia University's Geoffrey Heal said in their 2009 study.

23.04.2011. 10:26

Sendai port back in business; temp housing construction moving ahead

SENDAI — Commercial shipments at the Sendai port in Miyagi Prefecture resumed Saturday for the first time since the area was hit by the March 11 earthquake and tsunami, as a fresh sign that commodity distribution is being restored.

Around 300 Toyota Motor Corp vehicles, manufactured at its group firm factory in Iwate Prefecture, were loaded onto a large cargo carrier at the port and shipped to Nagoya.

‘‘We have completed the distribution system, and we expect corporations to use the port more,’’ Takashi Hashiura, a senior official in charge of port facilities at the Miyagi prefectural government, said. The prefectural government also said the construction of a combined 1,311 temporary housing units will be completed in 13 disaster-hit municipalities, including Sendai and Ishinomaki, by April 28.

Gov Yoshihiro Murai said, ‘‘We are working to secure building sites for temporary housing in order to start construction of 10,000 units by mid-May. We will definitely provide necessary units.’‘

In Morioka, Iwate Prefecture, meanwhile, Land, Infrastructure, Transport and Tourism Minister Akihiro Ohata said the government is willing to use building materials produced in the quake-hit Tohoku region to construct temporary housing.

‘‘We will seek the help of local constructors (in building temporary housing) so we can generate more employment,’’ he said after meeting with Iwate Gov Takuya Tasso.

As of 10 a.m. Saturday, around 28,000 people were confirmed dead or remained listed as missing—13,645 deaths and 14,384 missing—in the wake of the disaster, according to the National Police Agency.

16.04.2011. 23:01