Japan's Nuclear Nationalism

Japan has pushed nuclear energy hard-at the expense of safety

Nuclear advocates are dismayed that radiation fears over Japan's Fukushima plant might kill an industry that has a better safety track record than virtually any other. But the public in Japan and elsewhere has every right to question the safety of nuclear power that everywhere receives massive government support. The Japanese government, in particular, has aggressively pushed nuclear in its quest for energy independence, perverting with political considerations the market's natural ability to take safety issues into account.

It's true that radiation engenders irrational fear among people. Trace amounts of radioactivity from Japan have produced a run for iodine pills in California. Never mind that Golden State residents likely have more to fear from being knocked out by falling solar panels than radiation sickness. And judged purely by deaths per terawatt hours, nuclear is 10 times safer than solar and thousand times safer than coal or oil.

But that doesn't mean there is nothing to worry about with nuclear. Its potential for catastrophe is orders of magnitude greater than any other technology. Hence, only when investors are willing to foot the entire bill for its construction and liability can we believe that nuclear is truly safe.

That, however, is not the case anywhere—least of all in Japan.

Nuclear meets about a third of Japan's energy needs (compared to 20 percent in America) not because it is more competitive than the alternatives; it is not. Nuclear's exorbitant upfront capital costs and long—and uncertain—lead times make it every bit as unattractive to investors in Japan as elsewhere, especially compared to other fuels.

But nuclear appeals to Japan's mercantilist rulers who, since the mid-60s, have regarded the country's lack of indigenous energy resources as a major strategic vulnerability that must be corrected at all cost. They have committed themselves to increasing Japan's energy independence ratio from 35 percent currently to 70 percent by 2030. "We can no longer rely on the market to secure energy," declared Koji Omi, chair of the Liberal Democratic Party's Energy Security Committee a few years ago. "We should put much more emphasis on energy as our nation's strategy."

Such thinking has prompted Japanese lawmaker to push nuclear more aggressively than street vendors hawking broken Mao watches in Tiananmen Square. From 1990 to 2000, nuclear's share of Japan's energy mix has gone from 9 percent to 32 percent.

To get there, Japan has poured lavish subsidies into nuclear, starting with research. Around 65 percent of Japan's energy research budget goes toward nuclear—the highest of any country—with the industry spending $250 million, well below 10 percent of what the government spends. Even France, that gets 80 percent of its energy from nuclear, spends three-and-half times less than Japan.

Beyond research, the government offers the nuclear energy industry loans that are a full percentage point below commercial levels. And for four decades Japan has taxed the utility bills of electricity consumers, distributing the proceeds to communities willing to house nuclear plants. In essence, nuclear's competitors are being forced to act against their interest and bribe local communities to accept a risk against the communities' interest.

But the mother-of-all subsides is the liability cap that nuclear enjoys. In the event of an accident, the industry is on the hook for only $1.2 billion in damages, with the government covering everything beyond that. Japan's cap is generous even by American standards which require the industry to cover $12.6 billion before Uncle Sam kicks in. (Nuclear proponents in the U.S. argue that this liability cap is necessary given our insane tort awards. However, the fact that even countries without such awards have to offer a liability cap suggests that nuclear technology is not yet considered safe enough to be viable.)

The liability cap effectively privatizes the profits of nuclear and socializes the risk. It uses taxpayer money to diminish the industry's concern with safety—which government regulations can't restore. In 2008 Tokyo actually started offering bigger subsidies to communities that agreed to fewer inspections. The problem of regulatory capture is particularly endemic in Japan given that regulators seek industry jobs upon retirement, and hence often cosy up to companies they are supposed to oversee.

Nuclear's advocates argue that, if anything, Fukushima testifies to just how safe nuclear is given that the reactor reportedly shut down as designed in the face of a 9 Richter earthquake even though it was built for only 7 Richter. Had a freak tsunami not knocked out the backup generator needed to cool down fuel rods, none of this would have happened. Requiring an industry to plan for every random eventuality is a recipe for paralysis.

Perhaps. But had the industry been underwritten by private companies that risk getting wiped out by lax procedures instead of a government that risks nothing, might they not have refused to insure a reactor in an earthquake-prone zone or demanded better seismological studies than those available or ensured that backup generators were built to withstand a tsunami?

Only when the nuclear industry fully internalizes safety costs will we know that it is actually safe. Until then, we can only regard Fukushima as an avoidable tragedy. If it offers any lesson about nuclear, it is a cautionary one.

Shikha Dalmia is a senior analyst at the Reason Foundation and a columnist at The Daily. This article originally appeared at The Daily. Allison McCarty of Pepperdine University provided valuable research assistance for this column.