Phasing out the phased out phase-out: the third change of course for nuclear power in Germany.
Posted January 17, 2012
Welcome to my blog that will explore nuclear power’s fate in Germany!
Following the disasters at the Fukushima Dai-ichi nuclear facility in Japan, the German government reviewed its nuclear policy. As a result, the Bundestag (Congress-like body) passed a law that mandates a total phase-out of nuclear power by 2022. On May 30, 2011, Chancellor Merkel announced this decision and stated that Germany will simultaneously lower carbon emissions by 40 percent. The new law does not allow for the possibility to extend any nuclear power station beyond the end of the new target year.
In 2010, nuclear power generation supplied 22.6 percent of grid-connected electricity. This dependence is comparable to that of the United States, where nuclear power carries about 19-20 percent of the electricity production each year. In Germany, the share fell to about 18 percent in 2011. Immediately after the Fukushima accident, the government removed from the grid all seven reactors built prior to 1980 and Nuclear Power Station Krümmel (1983), which accumulated an unusually high number of irregularities.
Phasing-out nuclear power, a low-carbon energy source, seems to conflict with the premise that nuclear power is an essential part of any strategy to reduce world-wide carbon emissions. Before exploring this question further, one has to examine the history of German nuclear policy that may allow a judgment on the political stability of this decision.
History of German Nuclear Politics
Germany regulates nuclear activity by the Atomgesetz (Nuclear Law), which, in its long form, is the ‘Law on the Peaceful Utilization of Nuclear Power and the Protection Against its Dangers’. Since the Bundestag passed it on January 1, 1960, it has received eleven changes, three of which address a nuclear phase-out.
German nuclear activity, albeit requiring a special kind of regulation, is part of free business enterprise. The utilities in Germany privately own nuclear power plants, sometimes jointly, and have to guarantee for accidents caused by incidents other than natural catastrophes or similarly unpredictable externalities with all their corporate assets. For self-induced accidents, the Atomgesetz requires the purchase of an insurance policy of about 250 million Euro which compares to the US Price-Anderson Act insurance scheme. The German government actively engages in shaping energy policy – more so than in the United States – which is how the German government can impose these measures on business in a free market economy. In the United States, a similar government-mandated nuclear phase-out even one driven by popular desires to eliminate the risk of severe nuclear accidents and transition to a green energy economy, seems almost inconceivable in the present political context; Germany, however, has defined itself as a social market economy that allows for a stronger role by the government in determining economic policy.
The first talks about nuclear policy under Chancellor Kohl in 1993 and 1995
The first talks on fiscal nuclear planning date back to 1993 and 1995. German Chancellor Helmut Kohl met with industry members to discuss a national strategy for nuclear energy. This debate received the name Energiekonsens (consensus on energy questions) but terminated without results. Besides the future of nuclear power, these talks aimed at finding solutions to permanent storage of nuclear waste. Until 2000, no further energy talks ensued. In conjunction with a strong anti-nuclear sentiment in Germany, a coalition of the Social Democratic Party (SPD) and the Green Party (Grüne) has been able to pursue the phase-out of nuclear power starting in 1998.
Three important changes to the Atomgesetz
The government passed the first major overhaul to the Atomgesetz in 2002, based on a 2000 agreement with the major utilities. This amendment mandated regular and federally enforced security checks. Contrary to the original text of the Atomgesetz, the amendment of 2002 did not intend to promote nuclear power but phase it out in an orderly manner, without a target year but allotted electricity production for each plant. Experts generally agreed on 2021 as the resulting phase-out year. The amendment also affected disposal of nuclear waste. It barred German utilities from delivering nuclear waste to reprocessing facilities, for example, to La Hague (France) or to Sellafield (England). To intermediately store nuclear waste, utilities had to build interim storage facilities. As a final point, the amendment increased the insurance protection requirement ten-fold from 250 million to 2.5 billion Euro. As a result of this legislation, two nuclear power plants were shut down between 2002 and 2005.
In 2010, the coalition of the Free Democratic Party (FDP) and the Christian Democratic Union (CDU) reversed the aforementioned amendment to the Atomgesetz. On September 5, 2010, a contract between the ruling coalition and Germany’s four largest utilities included license extensions for German nuclear plants. On December 14, 2010, this agreement became an amendment to the Atomgesetz and was signed into law. This new legislation implied that the seven generating stations built prior to 1980 received allotted electricity production for eight more years while the remaining ten plants were allotted electricity for 14 more years. The Bundestag added these extensions to existing licenses whose prior expiration dates ranged from 2010 (eight year extension) to 2023 (14 year extension). Extensions thus made 2037 the new effective phase-out year.
This decision was controversial because it passed without the agreement of the German Bundesrat (Senate-like body) in which FDP and CDU lost their majorities. In order to be passed, some laws require the agreement of the Bundesrat. Opposition parties threatened to file a suit with the Bundesverfassungsgericht (Supreme Court-like instutition) but never pursued that option. The German constitution regulates which kind of laws need the agreement of the Bundesrat. Controversies usually result in suits before the Verfassungsgericht.
The latest change after the Fukushima accident
Following the accidents at the Fukushima Dai-ichi nuclear facility in Japan in March 2011, the 2010 decision to extend licenses was quickly reconsidered. The most recent Atomkonsens thus refers to universal agreement between the FDP and CDU, parties that initially opposed any nuclear phase-out, and the SPD and the Greens, parties that enacted the initial phase-out in 2002. The latest agreement intends to remove all nuclear plants from the electricity grid by 2022. The coalition signed the agreement on May 30 and passed it as an amendment to the Peaceful Atomic Energy Act on June 30, 2011. While 2022 is the final deadline, the last nuclear plant to shut down may do so prior to this target year. Under the new law, each plant receives an allotted electricity production that, once completely exhausted, mandates the expiration of the operation license. In case the allotted electricity production is not used up before 2022, the law still mandates a shut-down by the end of that year.
Immediate consequences of the new legislation
As a result of the most recent amendment to the Atomgesetz, Swedish utility Vattenfall has announced that it will sue the German government for compensation for shutting down its plants. It is reported that the company is about to lose $957 million that it had invested in the two German nuclear plants after the first second major amendment in 2010 that extended the lifetime of certain plants. Vattenfall plans to file the complaint with the International Centre for Settlement of Investment Disputes. Germany has lost a comparable suit before the ICSID although the object of this dispute was a coal plant that faced tougher environmental regulations.
Germany’s change of course results in broad political consensus
From a political perspective, this consensus among parties as distinct as FDP and Greens builds a strong argument for the political stability of this decision, making it unlikely to be overturned. The dynamic of reversing course multiple times, followed by the Fukushima accident, has finally produced a political consensus to phase out nuclear power that is supported by both business-friendly and left-oriented parties.