Summary report for Future of Nuclear seminar – Nuclear Liability Developments in India, May 27

On May 27th attendees of the Future of Nuclear seminar series had the privilege to hear Els Reynaers discuss recent nuclear liability developments in India. Specifically, the discussion focused on the practical implications for Canadian parties interested in establishing commercial exports of civil nuclear energy technology and uranium.

A review of India’s current energy mix, as well as the country’s ambitious projected energy scenarios provided context for the discussion. By 2050, India wishes to meet 25% of its electricity needs through nuclear energy, a significant increase from the roughly 2% the industry currently represents. Thanks to key international developments, specifically a 2008 exception from Nuclear Supply Group (NSG) guidelines that previously restricted the transfer of technology, it seemed India was on-route to meeting their targets with the help of foreign participation.

Nevertheless, for this union to be successful, foreign nuclear vendors, regulators, and suppliers had to navigate India’s Civil Liability for Nuclear Damage Act (CLND). It is precisely here where the challenges lie. Chief among them were issues regarding the value and time frame of supplier liability, as well as what constitutes a supplier and the right to legal recourse in the event of a nuclear incident.

In response, the recent India-US agreement represents a commitment to address the stipulations of the CLND and so encourage foreign partnerships. The recently launched India Nuclear Insurance Pool (INIP) serves this purpose by providing funds to cover both operator and supplier liability risks and thus generate investor confidence.

Towards the end of the discussion, insightful questions were brought forth that spoke of support as well as the need to delve into the details of both the CLND and INIP. For partnerships to thrive, it is key that the aforementioned challenges be addressed. While we await the finalization of the India-US agreement and INIP policies, the lines of communication between interested parties will be kept open.

Written by Alejandra Tobar, B.Sc. Candidate, University of Toronto

 

Special Report: Nuclear Law and Liability Developments in India (Part 2 of 3)

Introduction

Last week, in Part 1 of this Special Report, we explored the history of India’s nuclear law liability regime and the passing of the 2010 Civil Liability for Nuclear Damage Act. We ended by highlighting how the 2010 Liability Act effectively drove a wedge between international suppliers and India’s nuclear industry by exposing suppliers to increased liability in the event of accidents.

Today, in Part 2, we will discuss and analyze the recent India-US agreement on nuclear trade and liability. In addition, we will canvas news reports and opinion pieces to get a sense of the reaction’s of industry experts and observers.

Part 2: The India-US Agreement

In January of this year, U.S. President Barack Obama visited India to meet with Prime Minister Narendra Modi. One of the key goals of the president’s trip was to formalize an agreement on nuclear development and liability issues.

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(Image Source: Reuters via the BBC)

As a report by Dan Roberts in The Guardian notes, the threat of tough Indian compensation laws – specifically the 2010 Liability Act – had “frustrated US hopes of an export boom in the energy sector.” As of May 2015, the details of the deal are still being finalized. However, certain baseline elements are set. As this Reuters report lays out, the deal sets a framework for the US nuclear industry to enter commercial talks with India’s nuclear operators by resolving two concerns, inspections and liability.

On the issue of liability specifically, the agreement upholds the strict liability regime and the supplier liability provisions of the 2010 Liability Act. However, to address supplier concerns, India will establish an insurance pool to cover liability up to a hard cap. The insurance pool, which would be backed by the state of India, would cover operator liability of up to 15 billion rupees (around $250 million US). Any recourse sought by the operator against a supplier could not be exceed this figure. In addition, insurance premiums for suppliers would be a fraction of the amount paid by the operator of the plants.

The Reuters report also highlights that in the event of a large scale incident, the Indian government would cover additional costs up to $420 Million (US) and, for additional funds, the report says that India would need to join the IAEA Convention on Supplementary Compensation for Nuclear Damage (CSC).

Following the India-US agreement, India has made it clear that the 2010 Liability Act will not be amended. A report from the India Express highlights the government’s position that

the foreign suppliers of the reactors cannot be sued for the damages by victims of a nuclear accident but can be held liable by the operator who has the right of recourse that could be operationalised through the contract between the operator and the supplier.

As a result, the agreement should not be viewed as a reform of India’s liability laws, but as an agreement to work within those laws by establishing an insurance pool for the operators and suppliers. In retrospect, it is clear that it was very important that India maintain its liability regime, as public and political opinion favoured increased liability for foreign suppliers following the Bhopal disaster in 1984. The agreement thus establishes a mechanism that keeps this regime in place while allowing for increased international nuclear trade.

Reactions to the Agreement and Concluding Thoughts

Reactions to the agreement have been mixed in the ensuing days and months. Partly, this is due to the fact that many of the details of the insurance pool have yet to be finalized. In an interview with Germany’s Deutsche Welle (DW), Mycle Schneider, an independent international consultant on energy and nuclear policy, shared concerns about the deal;

apparently, no specific document was signed. The Indian government reportedly announced its plan to set up a 122 million USD insurance fund to cover operators and suppliers from liabilities in case of an accident. Senior US nuclear industry officials stated they need to understand the “fine print” of the insurance. Equipment suppliers are keeping the champagne on ice, as one Indian business journal commented.

Mr. Scheinder, when asked if he expects the Indian market to become more appealing for US companies, says that “there is no real market for foreign companies in India, unless they bring their own funding. Under free market condition, it is not possible anymore to build a nuclear power plant anywhere in the world.”

A recent article on Monday by Ran Chakrabarti, an Indian lawyer, echoes similar skepticism.

It remains to be seen whether the Act and the Rules set out a balanced framework, encouraging suppliers to dip their toes into the Indian nuclear energy market, yet protecting the legitimate interests and concerns of the public in the event of a nuclear accident.

Given the complexity of nuclear development and the liability regime in India, it’s clear that this agreement will not be a panacea for all of the industry’s problems. As we’ve seen in these criticisms, and throughout India’s history, the role of foreign companies and governments in trade and development has been at times troublesome and, at other times, even disastrous.

However, India is growing at incredible rates and, as we explored in Part 1, lacks access to domestic energy resources such as coal and oil (which have driven China’s much faster economic growth). As a result, nuclear energy can help provide for a better base capacity for the country as it continues to also develop renewables such as wind and solar. In Part 3, to be published in the coming weeks, we will explore the future of nuclear in India and also focus on the ongoing finalization of the US-India agreement.

US Deparement of Energy agrees to fund NuScale SMR to commercialization

The US Department of Energy (DOE) announced this week that it will invest $217 million over five years in the development and commercialization of the NuScale Small Modular Reactor (SMR).  The DOE expects their investment to be matched by private sector investment in the project.  NuScale intends to use the funds to test their reactor and to complete the process of certification through the Nuclear Regulatory Commission with hopes of having the first NuScale reactor online by 2023.

NuScale’s 45MW pressurized water reactor is a unique design making use of an unconventional fuel assembly which is passively cooled and more inherently safe than existing reactors.  In the event of an overheating, the reactor is designed to cool without any human input, without any additional water, and without electricity.  The NuScale SMR will be mass produced in a factory and shipped by truck, rail, or barge in sets of up to twelve for power stations between 45MW and 540MW.

Here, the Chief Commercial Officer of NuScale Power explains some of the benefits of a small modular reactor generally and the NuScale reactor specifically.

If NuScale is able to keep to its schedule for commercialization, it could play a major role in achieving US President Barack Obama’s recently stated goal of reducing the emissions of all US power plants 30% by 2013.

Source: http://www.world-nuclear-news.org/NN-Federal-funding-agreed-for-NuScale-2905144.html