Canada set to raise nuclear liability cap

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The Pickering Nuclear Power Plant
The Pickering Nuclear Power Plant

In Canada, officials are working to submit legislative plans to increase the amount in damages Canadian operators of nuclear power plants would be responsible for in case of a nuclear accident, as well as increase the number of categories under which compensation could be sought and improve the procedures for delivering compensation.  Federal Natural Resources Minister Joe Oliver has committed publicly to making plans to increase the liability cap for the nuclear industry.  “Tomorrow, we will announce our commitment to increase nuclear civil liability in our efforts to protect the taxpayer and the safety of all Canadians,” Oliver said in a statement.  “Most importantly, it will continue to require that the liability of the operator be absolute and exclusive. This means there is no need to prove fault and no one else can be held liable,” he added.

Currently, the liability cap in Canada is set at C$75 million ($73 million USD); a figure which is generally considered “outdated” at best, but could be raised to C$1 billion ($980 million USD).  Previously, legislators in Canada have submitted legislation in the past attempting to increase the forty-year-old limit to $650 million and giving the minister power to increase the cap in the future, but have been unable to pass such legislation every time.

In 2011, Joel Wood, a senior research economist at the Fraser Institute wrote in his analysis, “Increasing the cap only decreases the subsidy; it does not eliminate it. The government of Canada should proceed with legislation that removes the liability cap entirely rather than legislation that maintains it, or increases it to be harmonious with other jurisdictions.”

The Canadian Environmental Law Association said the C$1 billion cap is too low. Executive Director Theresa McClenaghan told Reuters the new legislation also makes no provision for third party liability, which means suppliers cannot be held accountable.

Environmentalists in Canada have argued that if the nuclear industry was as safe as they claim to be there would be no need for any liability caps and that anything less than unlimited liability equals a subsidy for the nuclear industry, but nuclear proponents have warned that unlimited liability could lead utilities involved in operations of nuclear facilities to walk away from the industry and leave governments on the hook.

Historically, observational evidence has shown that nuclear incidents are generally rather small, let’s call them nuclear accidents, which cost a few million to fix and clean-up, or extremely enormous nuclear disasters easily capable of racking up tens of billions of dollars in costs and economic fallout. The Fukushima Daiichi nuclear disaster in Japan is a recent example of a nuclear disaster which led to tens of billions of dollars in damage claims and has shown that no private organization can suffer costs which continue to pile up for decades.

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