Global Market Brief: Nuclear Aftershocks from Japan's Earthquake

[jpak]

http://www.stratfor.com/products/premium/read_article.php?id=292574

The implications of the disruption of the world's largest nuclear power plant by an earthquake in Japan on July 16 spread far beyond the archipelago. The safety questions surrounding the Tokyo Electric Power Co. (TEPCO)'s Kashiwazaki-Kariwa plant will affect the growing public policy debates in Western countries such as Germany, the United Kingdom and the United States, which increasingly are considering using more nuclear energy technology. The nuclear energy enthusiasm spurred in these countries during the last six months by a variety of reasons, including energy security and greenhouse gas emission concerns, has hit a snag. Although the Japan incident is unlikely to derail these discussions, it could create significant obstacles to nuclear power expansion plans in these countries. Beyond the West, however, the issue is unlikely to affect nuclear expansion in countries such as China, whose special political and economic situations likely will trump any fears about the technology.

The fire, release of radioactive water and 50 other reported malfunctions at the TEPCO plant after a 6.8-magnitude earthquake hit Japan's Niigata Prefecture are the latest in a string of safety issues within Japan's nuclear industry during the past decade. These issues include the deaths of seven workers at various plants because of alleged lax safety standards and a complete shutdown of all 17 nuclear reactors operated by TEPCO in 2002 after the company admitted to falsifying safety data. Japanese Prime Minister Shinzo Abe has taken a hard stance against TEPCO during this latest incident, saying the utility's officials did not warn people about possible health and safety issues -- including the leak of 315 gallons of radioactive water -- early enough. Abe went so far as to call on TEPCO officials to "repent" their actions.

As investigations into the incident unfold, questions are being raised not only among the Japanese public over the utility's actions, but also in other key countries on the safety risks associated with nuclear power plants. China, the United States and Europe have been warming to nuclear energy in the past six months for reasons specific to their own circumstances. Each region, therefore, has had different reactions to the Japan incident.

Chinese state media have downplayed the safety issues of the Japanese plant and has instead generally focused on the earthquake. For the Chinese, nuclear technology is a necessity for the country's stability and economic growth. China needs all the help it can get in providing reliable electricity to as much of its country as possible. Its current dependence on outdated coal-fired power plant technologies is not meeting demand requirements and is contributing to health and environmental concerns in the country, which is serving to kick up social unrest -- something the Chinese government cannot afford. The need for reliable power coupled with the need to improve air and water quality essentially ensures that China will increasingly turn toward nuclear power. China has worked several major deals with U.S. companies, including Westinghouse, in recent months, and its June national greenhouse gas plan states that nuclear energy will become an important part of its energy mix. Public perception among the Chinese about nuclear reactors is almost inconsequential (and nearly nonexistent, since the public's pollution concerns about coal power far outweigh any radiological concerns about nuclear power).

<more>