German government does nuclear waste deal with energy companies

Nuclear power plant operators in Germany have agreed to pay more than 23 billion euros into a public fund to dispose of radioactive waste. But critics say German taxpayers will have to cover likely shortfalls.

The German government cabinet has announced a landmark deal with energy giants Vattenfall, Eon, RWE and EnBW that will see them pay 23.6 billion euros ($26 billion) into a public fund to dispose of nuclear waste.

“We are making it clear who is responsible for nuclear disposal,” said Economics Minister Sigmar Gabriel in a statement. “We’re ensuring the long-term financing for shutting down, dismantling and cleaning up [nuclear power plants] without society alone having to bear the costs and without making the economic situation of operators untenable.”

Germany decided to phrase out nuclear energy after the Fukushima catastrophe in 2011, but has yet to begin decommissioning and dismantling the majority of the country’s 23 active nuclear plants. The operators have already agreed to set aside an additional 24 billion euros for that purpose. The additional money in Wednesday’s deal is for the long-term clean-up of an estimated 21,000 cubic meters of highly radioactive and 190,000 cubic meters of weak-to-moderately radioactive waste.

“We assume that we can guarantee the money in the fund will be sufficient,” said an economics ministry spokeswoman in Berlin when asked if that sum would be enough.

Experts and the political opposition disagree. They say that the deal will leave German taxpayers footing a potentially sizeable proportion of the bill, especially for the disposal of nuclear waste in the long term.

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The ‘taxpayer will pay’

Atommüll Fässer in Morsleben Archiv 2009 (picture-alliance/dpa)No one is sure how much it will cost to dispose of all of Germany’s nuclear waste

The German Institute for Economic Research in Berlin (DIW) estimates that the nuclear phase-out, which, including clean-up operations, will take at least several decades, could reach 170 billion euros. The parliamentary committee that negotiated the deal with the energy providers used a lesser estimate, and low interest rates could mean that the amount of money in the clean-up fund is ultimately far less than actually needed.

“It’s an open question what form the fund will take and how the financing will be secured,” DIW Energy Division Director Claudia Kemfert told DW. “The actual costs will be a lot more than the estimates. So the deal only covered a fraction of the actual costs, and society will have to pick up the rest.”

The Green Party spokeswoman for nuclear policies, Sylvia Kotting-Uhl, sees the situation somewhat less ominously. She said she thought the money set aside for decommissioning the plants would be adequate but predicting that the fund for waste disposal will fall short.

“We don’t know precisely what it will cost in the end,” Kotting-Uhl said in an interview with DW. “If we draw comparisons with figures from other countries, our estimates seem quite high. On the other hand, major projects always come in over budget. I expect that it will cost more than what we have in the fund, including interest. In the end, the taxpayer will pay.”

And if it’s scarcely possible to predict how the financial markets will affect the total value of the fund in future, it’s even more difficult to predict what sort of costs Germany may face as the country implements its unprecedented nuclear phase-out.

Japan Fukushima Daiichi , damaged reactors (Getty Images/C. Furlong)The Fukushima disaster prompted Germany’s nuclear phase-out

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The real ‘tsunami of costs’

The medium- and long-term storage of radioactive waste is an extremely complex undertaking, and neither the industry nor the German government knows precisely what challenges it will entail.

Kotting-Uhl cites as examples uncertainties connected with the transition from provisional to permanent storage of nuclear waste. Will radioactive material need to be put in new containers, she asks. And will the transition proceed on schedule or be subject to costly delays?

“We can’t fully anticipate what transitional storage will cost,” Kotting-Uhl says. “And what the energy providers have put aside assumes that the intermediary facilities will be emptied in 40 years’ time. There will definitely be additional costs in that area.”

Nonetheless, if enacted, the deal would free energy providers of responsibility for any further, unanticipated costs.

“The true tsunami of costs from nuclear power hasn’t arrived yet,” says Kemfert. “The providers earned abundant profits over the years so they shouldn’t be generally absolved of responsibility. And yet they’re able buy themselves a free pass with this solution.”

The dilemma with the providers

Logo Eon Symbolbild Verfall (picture-alliance/dpa/M. Gerten)Critics say energy providers are trying to wash their hands of responsibility

Some of the perceived shortcomings of the overall solution relate back to the economic difficulties faced by energy providers in Germany at the moment. RWE’s stock, for example, has lost more than 50 percent of its value in the past five years.

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“Because the companies face serious financial struggles, the fear is that they won’t be able to bear the costs for the dismantling of nuclear plants by themselves,” Kemfert says.

But Kotting-Uhl thinks that it’s precisely the difficulties of providers that forced the government’s hand and convinced the cabinet to accept a deal that she grades as no more than “satisfactory to adequate.”

“The politicians in charge waited too long to set up a public fund,” Kotting-Uhl said. “For too long they entrusted the matter of forming reserves to cover costs to the hands of the companies, which are now in a difficult financial situation. If we didn’t do something to secure such cover, the taxpayer would presumably have been left entirely holding the bag. Action was urgently needed. It was no longer possible to get top marks for any deal.”

The main companies concerned welcomed Wednesday’s deal but said they wanted a separate contract with the government indemnifying them from further liability. Kotting-Uhl said said that, conversely, the government should demand that firms like Vattenfall and Eon end lawsuits against the phase-out that currently cost the German state millions annually.

The economics ministry spokeswoman confirmed on Wednesday that an end to the lawsuit was not part of the solution passed by the cabinet. She said contracts would be negotiated with energy providers, but refused to give any detail as to what they might contain.