If these two countries want nuclear energy, they have a strange way of showing it
In Germany, Chancellor Angela Merkel is not backing down from her pursuit of a 50% tax on the profits the nation’s 17 nuclear reactors which supply a quarter of the nation’s electricity. On the other side of the globe, Indian Prime Minister Mammohan Singh is battling opposition leaders in parliament who want to put “unlimited” liability on both the suppliers of nuclear reactors. The country plans to build 20 GWe of new reactors in the next 10-15 years. (update below)
Germany roiled over nuclear taxes
The Wall Street Journal reports Aug 26 Merkel sees the reactors as cash cows. Merkel wants to raise [E]3.2 billion/year from the reactor tax on fuel rods. With an austerity budget creating angst among her supporters, revenue from the reactors looks sweet.
She is quoted as telling reporters, “We are eying the levy to achieve our goal to consolidate the budget.”
In an “energy tour” last week she told the four major utilities that run the reactors to stand down from their very public protests about the tax. They told her the tax on profits would cause the utilities to shut down the very reactors Merkel says she wants to save from the clutches of green groups.
The green groups are part of the opposition to Merkel’s center/right coalition that won re-election last September. The German Greens want all the reactors shut down by 2022. Instead, they propose to build wind farms and solar energy arrays.
German industry is hard over opposed to this plan because they want reliable, base load power from the reactors to power their factories. Germany’s economy leads with exports from manufacturing which makes electricity supply a crucial success factor for the nation.
The controversy over the tax has led to “chaotic” communications between Merkel and the business community. Bloomberg wire service reports Aug 26 the controversy is causing some equity analysts to recommend to investors that they sell their shares in the under-performing German utilities.
Compounding the problem is that some of the junior members of Merkel’s coalition want to split the tax revenues between bolstering the budget and subsidizing new solar and wind projects. According to the Bloomberg report, Klaus Breil, a spokesman for the Free Democratic Party, wants the revenue to be used for alternative energy projects including R&D.
His statements raise the question of whether Merkel will pursue just a fuel rod tax, a windfall profits tax, or both. Two years ago Merkel floated the idea of using the tax to fund alternative energy projects, but with the global economic downturn, she now wants the money to balance the budget.
India wrapped too tight over liability
This is the third try for reasonable liability legislation for Prime Minister Singh who has been set back on his heels twice before by opposition leaders. They claim the liability limits in the bill are too low and that Singh is compromising national interests to serve those of U.S. firms that want to build reactors for India.
The Hindustan Times reports Aug 25 that India’s lower house of parliament passed a bill after the government modified several legal clauses in the measure that create almost “unlimited” liability in case of an accident. This can’t be good news for any U.S. firm that wants to sell reactors, or components to India.
U.S. firms aren’t the only one worried about the way the liability bill will turn out. Indian heavy industry firms, which would supply components for the reactors, are wound up like tops over a provision that would put no timetable on when a supplier’s liability ends and an operator’s begins.
The Financial Times reports Aug 25 that a coalition of the country’s major business groups told PM Singh the legislation in its current form would be a “deterrent” to the new nuclear build.
“No manufacturer, Indian or foreign, would be able to serve the nuclear power industry,” said Sudhinder Thakur, executive director of Nuclear Power Corp of India.
According to the World Nuclear Association, India will have the second largest nuclear build on the planet over the next 40 years after China. India expects to have 20 GWe nuclear capacity on line by 2020 and 63 GWE by 2032. It aims to supply 25% of electricity from nuclear power by 2050.
And India’s business groups aren’t alone in their opposition. The Russians, who have a major deal to build 4.8 GWe of new nuclear reactors at Kudankulam told the Business Standard newspaper Aug 24 flat out they will not accept the liability clauses in the legislation. The Russians also said they would pull out of the deal if India pressed them on the extended liability terms.
American diplomats, speaking on background to the newspaper, conveyed the message that the current proposal would be a “disaster” for American firms. U.S. President Obama is planning to visit India in November. Singh wants an acceptable bill in place before then. Whether he gets it depends on whether that snake can climb a rope.
Update 0200 GMT August 27, 2010
Wire services report the Indian parliament has reached an agreement on a nuclear liability bill. It triples the compensation cap in the event of a nuclear accident to 15 billion rupees (€254 million) from an earlier version of the legislation. It will open up the country’s $150 billion atomic energy market to overseas suppliers.
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