India’s nuclear industry deserves a place in the sun

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New nuclear power has become increasingly uneconomical in the West but electricity from Indian-made reactors is still competitive.

Brahma Chellaney, Nikkei Asian Review, July 3-9, 2017.

22_06_2017_016_023_010The Indian government recently approved the construction of 10 commercial nuclear power reactors of indigenous design, initiating the largest nuclear building program in the world since the 2011 Fukushima disaster in Japan. The global nuclear power industry is still reeling from that calamity: Just three of Japan’s 42 reactors are currently operating, while France — the poster child for nuclear power — plans to cut its reliance on atomic energy significantly.

New nuclear power has become increasingly uneconomical in the West, in part because of rapidly spiraling plant-construction costs, prompting the U.S. and France to push reactor exports aggressively, including to “nuclear newcomers” such as the cash-laden oil and gas sheikhdoms of the Arabian peninsula. Still, the bulk of the new reactors under construction or planned worldwide are located in just four countries — China, Russia, South Korea and India.

The Indian decision to turn to a “fully homegrown initiative” reflects the continuing problems in implementing a 2005 agreement on nuclear power with the U.S. Nine years after the U.S. Congress ratified the landmark deal, commercialization is still not within sight.

India, duped by its own hype over the nuclear deal, had announced plans to import reactors costing tens of billions of dollars from two U.S.-based vendors, Westinghouse Electric and GE Hitachi Nuclear Energy, and France’s state-owned Areva. The Indian plans helped motivate Toshiba to acquire Westinghouse — a takeover that ultimately proved a huge blunder, plunging Toshiba into a grave financial crisis. Westinghouse filed for bankruptcy protection in March.

One missing link in commercializing the U.S.-India deal has been Japan, which signed a separate civil nuclear agreement with New Delhi only in 2016 after other supplier-nations had already concluded such accords. The Japanese parliament’s approval in early June of the agreement with India clears the legal path for Japanese exports. The accord is to take effect in early July.

Japan is a top nuclear equipment supplier, not merely because Toshiba largely owns Westinghouse. Hitachi has a global nuclear power alliance with GE, while Mitsubishi Heavy has one with Areva. Just one Japan-based company, Japan Steel Works, controls 80% of the international market for heavy nuclear forgings.

The Japanese parliamentary approval, although an important development, has come at a time when Westinghouse, GE Hitachi and Areva — which dominate the international reactor export business — are in a dire financial state, with their futures at stake. These are the companies that were to principally benefit from the U.S.-India nuclear deal, although none had secured a supply contract thus far.

Fading promise

Having invested considerable political capital in the vaunted nuclear deal with the U.S., India today confronts an embarrassing situation: The nuclear power promise is fading globally before New Delhi has signed a single reactor contract as part of that deal. To save face, India, with one of the world’s oldest nuclear energy programs, has embarked on a major expansion of domestically designed power reactors.

The monumental nature of the decision to construct 10 reactors with 700 megawatts of capacity each is underscored by the fact that the total size of these units surpasses the current installed nuclear generating capacity in the country. India has 22 nuclear reactors in operation which produce 6,219MWe of electricity. The 10 new reactors will be in addition to seven others already under construction which will have a combined capacity of 5,300MWe.

The 10-reactor decision fits well with India’s commitment under the Paris climate accord to reduce reliance on fossil fuels. India is committed to cutting the carbon intensity of its economy by about a third by 2030, including by generating 40% of its electricity from non-fossil fuels. The single-minded focus on carbon, however, threatens to exacerbate India’s water crisis, given the water-guzzling nature of the energy sector, especially nuclear power.

Moreover, U.S. President Donald Trump’s decision to exit the Paris accord has cast unflattering light on the onerous climate-related obligations India has taken on before it has provided electricity to all its citizens. According to a review of global trends by the Netherlands Environmental Assessment Agency the U.S. produces eight times more carbon dioxide emissions than India, on a per capita basis. Under current plans, India will link the last remaining 4,141 villages without power to its electricity grid in 2018, but 24-hour electricity will not be available nationwide to all communities until 2022.

India’s decision to ramp up its nuclear power capacity may contribute little to meeting the 2022 goal, given that the time frame for domestic nuclear plant construction averages seven years. But it will yield major economic dividends, including boosting domestic industry and creating thousands of jobs. By providing $11 billion worth of likely manufacturing orders to Indian industry, the 10-reactor decision will help to transform the domestic nuclear industry, according to Prime Minister Narendra Modi.

By contrast, had India relied primarily on imports of Western reactors to accelerate new capacity additions, the financial costs would have been substantially higher, without tangible benefits accruing to domestic industry. India is already a top weapons importer. Reliance on Western reactors would have made it the world’s largest importer of nuclear power plants — a double whammy for Indian taxpayers, especially given that the country is the only major Asian economy that is import-dependent rather than export driven.

In this light, the travails of the nuclear deal with the U.S. may be a blessing in disguise for India. But for the serious financial woes of Westinghouse, GE Hitachi and Areva — each of which was to build a cluster of reactors at a separate Indian park — Indian taxpayers would have been potentially saddled with plants like Areva’s reactor project in Finland, which is currently almost a decade behind schedule and billions of euros over budget.

Rightful place

To be sure, a dispute with Western suppliers over nuclear accident liability also put a break on India’s reactor-import plans. After India’s 2010 legislation put off foreign reactor vendors by giving plant operators the right of recourse against equipment suppliers in the event of a nuclear accident resulting from substandard equipment or material, New Delhi established a nuclear insurance pool in 2016 to extend protection to suppliers. By then, however, the global nuclear power scene had fundamentally changed due to the impact of the Fukushima disaster.

mapNuclear power may be on a downward trajectory globally, yet it has earned a rightful place in India’s energy mix. The country’s domestic nuclear power industry, without technological assistance from overseas, has done a good job in beating the mean global plant-construction time frame and in producing electricity at a price that is the envy of Western reactor vendors. As a result, power from domestic reactor models is competitive with cheap coal-fired electricity. By contrast, in the U.S., where five reactor closures have been announced since 2013, utilities are seeking greater state subsidies to keep other nuclear plants operating.

India was compelled to establish nuclear autarky, including an independent fuel cycle, because it was excluded from international civil nuclear trade on the grounds that it developed nuclear-weapons capability in 1974 after the Nuclear Non-Proliferation Treaty had already taken effect in 1970. (The five countries that tested bombs before the NPT was concluded were accorded the status of nuclear-weapons states under the NPT.) The Indo-U.S. nuclear deal sought to remedy this situation somewhat by opening civil nuclear commerce to India while recognizing the reality of its nuclear-weapons capability.

For many in India’s governing elite, the nuclear deal with the U.S. — despite the conditions quietly put into the American ratifying legislation — became the acme of their aspirations for the country. They believed the deal would turn the U.S. into India’s enduring benefactor and catapult the country into the big-power league. Years later, for example, New Delhi is still not in the U.S.-led Nuclear Suppliers Group, with China unyielding in its opposition to India’s entry.

A cost-benefit analysis against this background is helping to lower India’s expectations from the nuclear deal. By expanding construction of its own reactor models, India is laying the base for its emergence as a reactor exporter. Compared with the larger reactors of Westinghouse, GE Hitachi and Areva, India’s midsize reactors are better suited for the developing countries, considering their grid limitations.

India may still buy some Western reactors, but the latest decision clearly signals that its focus will be on building its own reactors. It has taken 12 years for Indian hype over the nuclear deal to give way to sober realism. The inward turn reaffirms India’s embrace of a zero-carbon power source and underscores its faith in the likely advent of commercially attractive reactors based not on uranium — a resource it lacks — but on thorium, which it has in plenty.

Brahma Chellaney is a geostrategist and the author of nine books, including the award-winning “Water, Peace, and War.”

© Nikkei Asian Review, 2017.

 

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The Kudankulam nuclear power plant seen from a beach in the southern Indian state of Tamil Nadu © Reuters

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Nuclear power promise is fading

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Why the U.S.-India nuclear deal has proved to be a dud on the energy front, and how “incredible India” has fallen victim to its own hype over the deal.

Brahma Chellaney, The Hindustan Times, March 28, 2017

downloadIt is often said that China could become the first country in the world to age before it gets rich. India faces no such spectre. However, India has already become the first important economy in the world to take on onerous climate-related obligations before it has provided electricity to all its citizens.

This reality has greatly accentuated India’s energy challenge, which is unique in some respects. Consider the scale of its challenge: Before its population stabilizes, India will add at least as many people as the U.S. currently has. Even if India provided electricity to its projected 1.6 billion population in 2050 at today’s abysmally low per capita energy consumption level, it will have to increase its electricity production by about 40% of the total global output at present.

India’s domestic energy resources are exceptionally modest in comparison to population size and the demands of a fast-growing economy, with energy demand projected to rise 90% just over the next 13 years. And, unlike China, India does not share common borders with any energy-exporting country and thus must rely on imports from beyond its neighbourhood, making it vulnerable to unforeseen supply disruptions.

Still, under the Paris Agreement, India has committed to reduce the carbon intensity of its economy by about a third by 2030, including by generating 40% of its electricity from non-fossil fuels. The single-minded focus on carbon threatens to exacerbate India’s water crisis, given the water-guzzling nature of the energy sector — the largest user of water by far in the West.

What may be “clean” from a carbon angle could be “dirty” from a water-resource perspective. For example, “clean” coal, with carbon capture and sequestration, ranks along with nuclear power at the top of the water intensity chart. Also, some renewables, such as solar thermal power and geothermal energy, are notoriously water-intensive. By contrast, two renewable technologies increasingly being employed in India — solar photovoltaic and wind plants — need little water for their normal operations.

In choosing its energy options, India must strike a prudent balance between carbon intensity and water intensity, or else it will get caught in a vicious circle, with attempts to address the energy crisis worsening the water crisis, and vice versa. The nexus between energy, water and even food demands a holistic, integrated policy approach.

The share of renewables in India’s energy mix is set to considerably increase, given the tax and other incentives on offer. In contrast to the intermittent nature of renewables like solar and wind, hydro and nuclear power can be used both to cover the electrical base load and for peak load operations. Yet hydro and nuclear power face increasingly strong headwinds. Activist NGOs — many foreign funded — have made it difficult for India to build large dams, blighting the promise of hydropower. It is virtually certain that India (which generates more power from wind alone than from nuclear) will slip badly on its 2030 target to produce 12% of electricity from atomic sources.

Nuclear power growth is falling victim to larger factors. The first factor is the increasingly poor economics of nuclear power across the world. Skyrocketing construction costs, made worse by the post-Fukushima safety upgrades, and reliance on massive government subsidies are making nuclear power uncompetitive.

A second factor is the dire financial state of the foreign companies that were planning to build nuclear power plants in India — Toshiba-Westinghouse and Areva. Their very survival is at stake today. France’s state-owned Areva needs a government-led €5 billion bailout to stay afloat. It also set to be split, with its reactor unit being sold to EDF, also state-owned.

For Toshiba, the US nuclear market is proving to be its graveyard. On the brink of disintegration, Toshiba has posted a $6.2 billion nuclear-business loss, mainly from its US subsidiary, Westinghouse. Its 2006 blunder in acquiring Westinghouse has been compounded by its 2015 purchase of nuclear plant builder CB&I Stone & Webster. Now Toshiba is jettisoning its lead role in projects to build nuclear plants in India and Britain, a move that would leave it merely as a nuclear equipment supplier.

Add to the picture a third factor: Grassroots resistance in India to new nuclear power plants — a fact that resulted in considerable delay in commissioning the Kudankulam plant and forced the shifting of Westinghouse’s first planned project from Gujarat to Andhra Pradesh.

India, duped by its own hype over the 2005 nuclear deal with the US, announced plans for a huge expansion of nuclear power at a time when this energy source was already in decline globally. Its plans indeed motivated Toshiba to acquire Westinghouse. Now India faces an embarrassing situation: The nuclear power promise is visibly fading before it has signed a single reactor contract as part of the nuclear deal.

More broadly, India’s energy conundrum has been compounded by unrealistic targets, embrace of carbon-reduction goals at a time when Donald Trump was vowing to take America in the opposite direction, and inability to stem disruptive NGO activism. But for the near bankruptcy of Areva and Toshiba, Indian taxpayers would have been saddled with white-elephant projects similar to Areva’s Finnish reactor at Olkiluoto, whose construction is running almost a decade behind schedule and incurring billions of euros in cost overruns.

Brahma Chellaney is a geostrategist and author.

© The Hindustan Times, 2017.

When will the U.S. accommodate India’s strategic interests?

Brahma Chellaney, India Abroad, June 10, 2016

INDIA-US-DIPLOMACY

Indian Prime Minister Narendra Modi has built a personal rapport with U.S. President Barack Obama, and his fourth visit to the U.S. in less than two years highlights warming Indo-American relations. Few doubt that U.S.-India ties are better and closer than ever before. From being estranged democracies in the second half of the 20th century, the U.S. and India have become closely engaged democracies.

Besides a shared love of democracy, three elements drive the U.S.-India strategic partnership: money, military hardware, and Asian geopolitics. Their partnership promises to be a force for stability and security in the Indo-Pacific relations.

The blossoming of ties with the U.S. has become an important diplomatic asset for India. The new warmth in relations, however, has failed to ease Indian concerns over America’s regional policies, including on Pakistan, Afghanistan and terrorism, or address complaints of Indian information technology and pharmaceutical industries about U.S. practices, especially non-tariff barriers.

For the U.S., displacing Russia as India’s largest arms supplier has been a diplomatic coup. The success paralleled what happened in the early 1970s when Egypt switched sides during the Cold War by transforming itself from a Soviet arms client to a buyer of mainly American arms. But in contrast to the perpetually aid-dependent Egypt, India buys U.S. weapons with its own money.

Today, Washington is seeking to further open the Indian market for its businesses. And to suit U.S. corporate interests, it is pressing New Delhi to introduce regulatory and other legal changes, strengthen intellectual-property rights provisions, and initiate broader economic reforms.

Not content with the growth in arms sales — which have risen in one decade from $100 million to billions of dollars yearly — America is aiming to capture a bigger share of the Indian defense market. This objective has prompted its Congress recently to propose that India be treated on par with NATO members for defense sales. The U.S. is also seeking to revive its domestic nuclear power industry by selling commercial reactors to India.

India’s size, location and capabilities position it as a counterweight to China and to the forces of Islamist extremism to its west. Yet, as Obama nears the end of his second term, his India policy bears no distinct strategic imprint. Indeed, critics argue that he has no real Indian policy and that his administration has betrayed a transactional attitude toward engagement with India.

Although Obama’s 2015 New Delhi visit set a firm basis for moving the bilateral relationship forward, it was striking that, on his trip’s last public engagement, he lectured the world’s largest democracy on human rights. This was a subject on which he stayed mum at his next stop — tyrannical Saudi Arabia, which probably has the world’s most odious political system.

The complexity of the U.S.-India partnership is underlined by the fact that the U.S. has little experience in forging close strategic collaboration with a country that is not its treaty-based ally. All of America’s close military partners are its treaty-linked allies. India is a strategic partner, not an ally, of America.

The structural difficulties in India-US relations are not easy to overcome. From the Indian perspective, America’s reluctance to accommodate Indian interests on major regional issues, coupled with the fundamental challenge of managing an asymmetrical relationship, constantly test the resilience of the partnership.

For example, close counter-terrorism and intelligence cooperation between the U.S. and India remains hobbled by America’s continued mollycoddling of the Pakistani military and its rogue Inter-Services Intelligence agency. There are doubts whether the U.S. would fully share actionable intelligence on terrorist threats emanating from Pakistani soil against India because that would prompt India to pursue one of two options that Washington wouldn’t like — either India counteracted the identified threat on its own or urged the U.S. to do it.

Meanwhile, strategic weapon transfers, loans and political support allow China to use Pakistan as a relatively inexpensive counterweight to India. Yet, oddly, America also extends unstinted financial and political support to a Pakistan that has mastered the art of pretending to be a U.S. ally while hosting those that kill U.S. soldiers in Afghanistan, including the Taliban and the Haqqani network. Under Obama, the U.S. has made a financially struggling Pakistan one of the largest recipients of its aid.

Take India’s other adversary, China, which also poses a geopolitical challenge for America. Both the U.S. and India are keen to work together to control the potentially disruptive effects of the rise of an increasingly assertive China.

The U.S., however, seeks to use the China factor to draw India further into the American-led camp while remaining neutral on China-India disputes, including shying away from holding joint military exercises in Arunachal Pradesh. Washington has not criticized China’s $46-billion infrastructure-building plan to use Pakistan as its land corridor to the Arabian Sea and the Indian Ocean. It also ignores China’s egregious human-rights violations.

The U.S. seeks to counter China only where it directly challenges American power, as in the Pacific. In southern Asia, by contrast, U.S. policy regards China as a virtual partner, including on Pakistan and Afghanistan.

In Afghanistan, Washington treats terror-exporting Pakistan as part of the solution when, to Kabul and New Delhi, it is at the core of the problem.

On the other hand, the U.S. views Iran as part of the problem in the Af-Pak belt when the imperative is to co-opt Iran as part of the solution to help build stability in the volatile, terrorist-infested region.

Despite the U.S. recently assassinating Afghan Taliban chief Mullah Akhtar Mansour through a drone strike in Pakistan’s Balochistan province, Washington does not consider the Pakistan-backed Taliban as a terrorist organization. It is willing, as part of a peace deal, to accommodate the Afghan Taliban in a power-sharing arrangement in Afghanistan. It assassinated Mansour because he defiantly and doggedly refused, despite U.S. and Pakistani pressures, to enter into peace negotiations.

The assassination, ironically, exposes both Pakistan and America. The fact that the Taliban chief was killed inside Pakistan has contradicted years of denials by Pakistani officials that they were harboring Taliban leaders. Pakistan found its sovereignty violated again, after the raid that killed Osama bin Laden in 2011, by the power that still showers it with billions of dollars in aid.

As for the U.S., it has yet to offer an explanation as to why it took almost 15 years to carry out its first drone strike in Pakistan’s Balochistan province, even though the Afghan Taliban leadership set up its command-and-control structure there after being driven from power in Kabul by the 2001 U.S. military intervention in Afghanistan.

Against this background, no realistic assessment can focus merely on areas where the U.S.-India relationship has thrived — such as U.S. arms sales to India and booming bilateral trade — while ignoring U.S. policies that compound India’s regional security challenges.

In fact, India’s one-sided defense relationship with the U.S., locking it as a leading American arms client, suggests that New Delhi has drawn no appropriate lessons from its protracted reliance on Russian weapon supplies earlier.  Significantly, while U.S. arms to India fall mainly in the category of defensive weapons — which simply cannot tilt the regional military balance in India’s favor — Russia has over the years armed India with offensive weapon systems, including strategic bombers, an aircraft carrier, and a nuclear-powered submarine.

The paradox is that while India has emerged as the largest buyer of American arms, Pakistan is one of the biggest recipients of American alms. This suggests that U.S. profits from arms exports to India help to lubricate America’s aid-to-Pakistan machine. Such U.S. aid also bolsters China’s strategy to box in India while encouraging Pakistan to diabolically sponsor cross-border terrorism.

It is the task of Indian diplomacy to build a robust bilateral relationship while ensuring that it advances, not weakens, the country’s security interests in the region and beyond.

Indian diplomacy has failed to employ leverage from arms-import deals, greater market access to U.S. businesses, and broader geopolitical cooperation to persuade the U.S. to refine policies in southern Asia so that they do not adversely affect Indian security and to dismantle non-tariff barriers against Indian IT and pharmaceutical firms.

Indeed, New Delhi has not even tried to utilize the services of the large and increasingly influential Indian American community. The mistake Indian diplomacy has made is to put the emphasis on bilateral summit meetings and lofty pronouncements to showcase progress. The American side has been happy to pander to this Indian weakness.

In fact, one reason the U.S. is hosting Modi in the twilight of the Obama presidency is to help smooth ruffled feathers. After all, Obama earlier this year unveiled $860 million in new aid to Pakistan under the Overseas Contingency Operations fund, dubbed the “slush fund” because it is not subject to the same oversight as the regular Pentagon and state department budgets. Additionally, he decided to reward Pakistan with eight more subsidized F-16s, a subsidy burden the U.S. Congress hasn’t taken kindly.

Moreover, ever since the 2005 nuclear deal, Washington has been promising to help facilitate India’s admission to the Nuclear Suppliers Group, the Missile Technology Control Regime, and other U.S.-led export-control regimes — a promise reiterated when Obama last visited India. However, the U.S. has invested little political capital thus far to promote India’s inclusion in these cartels. An emboldened China has now emerged as the principal opponent to India’s membership, especially in the NSG.

And thanks to MTCR-related criteria in U.S. export-control regulations, Indo-U.S. space cooperation remains very limited.

In this light, the nice gesture of setting up Modi’s address to the U.S. Congress can be seen as an American attempt to pander to India’s collective ego. India must capitalize on the symbolism of the warming ties with the U.S. to expand the areas of bilateral understanding and cooperation while nudging America to be more accommodative of its vital strategic interests.

The promise of a strong, mutually beneficial partnership cannot be realized without concrete action.

Brahma Chellaney — Professor of Strategic Studies at the New Delhi think-tank Center for Policy Research in New Delhi and a Richard von Weizsäcker Fellow of the Robert Bosch Academy in Berlin — is one of India’s leading strategic thinkers.

© India Abroad, 2016. 

The forgotten nuclear deal

BY BRAHMA CHELLANEYThe Japan Times

a-chechen-woman-holding-h-0015The current international attention on the nuclear deal with Iran obscures another much-trumpeted nuclear accord signed a decade ago — between the United States and India. On the 10th anniversary of the U.S.-India nuclear deal, six words sum it up: Built on hype, deflated by reality. Indeed, it has become the forgotten nuclear deal.

When it was unveiled by U.S. President George W. Bush and Indian Prime Minister Manmohan Singh in Washington on July 18, 2005, the deal was touted as a major transformative initiative — one that would serve as a “basis for expanding bilateral activities and commerce in space, civil nuclear energy and dual-use technology.” Bush, while leaving office, declared: “We opened a new historic and strategic partnership with India.”

The deal indeed symbolized warming ties between the once-estranged democracies. The deal also became a legacy-building issue for Bush and Singh, just as U.S. President Barack Obama sought the Iran nuclear accord as the biggest diplomatic achievement of his presidency.

At its core, the Indo-U.S. deal-making centered on finding a compromise between an India determined to safeguard its nuclear military program and an America that insisted on imposing stringent nonproliferation conditions. As part of the deal to bring India into the international nuclear mainstream, New Delhi opened the sizable Indian civilian nuclear program to permanent international inspections, signed an additional protocol with the Vienna-based International Atomic Energy Agency, dismantled its Cirus plutonium-production reactor, and harmonized its export policies with the guidelines of U.S.-led technology-control regimes.

But a decade later, the deal’s much-advertised energy, technological and strategic benefits for India still seem elusive. Indeed, the deal has yet to be commercialized. The premise on which it was founded — that India could build energy “security” by importing high-priced, foreign fuel-dependent reactors — was, in any case, a pipe dream. For the U.S., however, the deal was more geostrategic in nature, designed to make India a major U.S. arms client and coopt it as a quasi-ally.

The deal did help place the U.S.-India relationship on a much-higher pedestal. But bilateral ties had begun to significantly improve much before the deal. And the strategic rationale that has brought the two countries closer remains independent of the deal. For the U.S., displacing Russia as India’s largest arms supplier has been a diplomatic coup.

Given the heavy political investment in it, the deal eventually will be operationalized, however belatedly. It will, however, take a minimum of 10 years thereafter for the first nuclear power reactor under the deal to come on line in India.

After all, the international plant-construction time frame, with licensing approval, now averages at least a decade, with the vast majority of reactors currently under construction in the world plagued by serious delays and cost overruns. For example, the Areva-designed plant in Finland, on Olkiluoto Island, is running at least nine years behind schedule, with its cost projected to rise from €3.2 billion to €8.5 billion. The Russian-origin plant at Kudankulam, at the southern tip of India, took 13 years to be completed, with the second of its two reactors yet to be commissioned. In this light, the U.S.-India deal is expected to deliver its first commissioned reactor a generation after being signed.

If India’s reactor imports were governed by “technical and commercial viability” — in Prime Minister Narendra Modi’s words — not a single contract would be feasible. The stalled Indian negotiations with the French firm, Areva, over the price of power suggest that the deal’s commercialization would be dictated neither by technical nor commercial viability but by the extent to which India is willing to fork out subsidies to support high-priced imported reactors.

Indeed, it is a moot question whether the deal will ever yield substantive energy benefits, given the exorbitant price of foreign-origin reactors, the concomitant need to heavily subsidize electricity generated by such plants, and the grassroots safety concerns over the Fukushima-type multi-plant nuclear parks that India has earmarked for Westinghouse, GE-Hitachi and Areva, each of which is to sell prototype Light Water Reactor (LWR) models presently not in operation anywhere in the world. The accident-stricken Fukushima reactors were also the first of their kind.

Adding to India’s risks from proposed import of prototype models is its plan to induct a multiplicity of different LWR technologies from the U.S., France and Russia. Given the several different reactor technologies already in operation or under development in India, such imports will likely exacerbate the country’s maintenance and safety challenges.

The nuclear power dream has faded globally. The crash of oil and gas prices, coupled with skyrocketing reactor-construction costs, has made nuclear power’s economics more unfavorable than ever. Few new reactors are under construction in the West, with the troubled nuclear power industry desperate for exports.

Even as the global role of nuclear power appears set to become marginal, India stands out today as the sole country in the world wedded to major reactor-import plans.

Washington has long pandered to the Indian weakness for the deal’s consummation, with its decade-long negotiations characterized by shifting goalposts.

Gone is the pretense of Washington extending India “full” nuclear cooperation or granting it “the same benefits and advantages as other leading countries with advanced nuclear technology, such as the U.S.,” as the 2005 deal stated. Gone also is the original accord that India would “assume the same responsibilities and practices” as America.

Instead of meeting its commitment to adjust domestic laws and guidelines of U.S.-led multilateral regimes to “enable full civil nuclear energy cooperation and trade with India,” the U.S. actually worked with its Congress and with the Nuclear Suppliers Group (NSG) to bar exports to India of what New Delhi really needs — civilian enrichment and reprocessing equipment and technology, even though such transfers would be under international safeguards.

As a senator, Obama helped insert an important provision in the India-specific Hyde Act of 2006. The so-called Obama Amendment stipulates that the supply of nuclear fuel to India be “commensurate with reasonable operating requirements.” This amendment negated Singh’s pledge to India’s Parliament — that India intended, with U.S. support, to develop “a strategic reserve of nuclear fuel to guard against any disruption of supply for the lifetime of India’s reactors.”

Consider another issue: Years after the U.S. pledged to bring India into the four American-led technology-control cartels — the NSG, Missile Technology Control Regime, Australia Group, and Wassenaar Arrangement — India is still pleading for its admission. It is now filing a formal application for admission to each regime, in the hope that the U.S. would be more forthcoming in its support than it has been so far.

Even in the event that India is admitted to the regimes, the technology controls it still faces will not go away. These regimes are designed to harmonize export policies, not to promote technology trade among member-states.

The key fact is that U.S. nonproliferation policy has yet to treat India on a par with another nuclear-armed country outside the Nuclear Non-Proliferation Treaty (NPT) fold, Israel.

Against this background, India’s diplomatic overinvestment in the deal has already made it harder for it to address more fundamental issues in its warming relations with the U.S., including an increasingly one-sided defense relationship and munificent U.S. aid implicitly subsidizing the Pakistani military’s export of terrorism.

Could the deal with Iran follow the trajectory of the deal with India — a great strategic move, followed by protracted negotiations on follow-up steps, moving goalposts, and the gradual diminution of the original accord? It is possible, but in one fundamental aspect, the two situations are different: Even without a nuclear accord, the U.S. and India would still have become close partners.

Brahma Chellaney is a geostrategist, author and longtime Japan Times contributor.

© The Japan Times, 2015.

India’s diplomatic overinvestment in the civil nuclear deal with America: Why it makes little sense

BY BRAHMA CHELLANEY
The Japan Times

p6-Chellaney-a-20150212-870x655During U.S. President Barack Obama’s recent India visit, a stalled, decade-old civil nuclear deal took center-stage, with the two sides announcing a breakthrough on the contentious issues blocking its implementation — a development that promised to potentially open the path for a Japan-India nuclear deal. It now appears that the breakthrough was more hype than reality and that there is little prospect of the U.S.-India deal’s early commercialization.

With Indian Prime Minister Narendra Modi by his side, Obama announced that “we achieved a breakthrough understanding on two issues that were holding up our ability to advance our civil nuclear cooperation.” The two issues identified were nuclear accident liability and the administrative arrangements to govern the bilateral nuclear cooperation agreement — the successor to an accord the United States unilaterally terminated after India detonated a nuclear device in 1974.

U.S. officials said India agreed to address American concerns over its liability legislation by setting up a $245 million nuclear insurance pool and issuing a “memorandum of law” — essentially an executive action. The Indian foreign ministry, for its part, said “the deal is done,” with the two sides having “reached an understanding on civil nuclear liability and finalized the text of the administrative arrangements.”

But it has now become apparent that the U.S. and India are still locked in negotiations to tie up loose ends and that the much-trumpeted breakthrough was little more than an effort to project a substantive advance during a presidential visit rich in pageantry and symbolism. Obama was the chief guest at India’s Jan. 26 Republic Day parade, a year after Prime Minister Shinzo Abe had that honor.

While claiming a breakthrough, neither side released any details, including on how another sticking point had been resolved: a U.S. demand that New Delhi accept nuclear-material tracking and accounting arrangements that go beyond the safeguards system that the International Atomic Energy Agency (IAEA) has approved and applied to nuclear-armed India’s civilian nuclear program. The U.S. demand entails establishing, on top of the IAEA inspections system, a bilateral safeguards system — an elaborate and expensive arrangement in which India would separately track and account for nuclear materials “by flag” (that is, by each national origin).

The same stumbling block over parallel safeguards in perpetuity has held up India’s conclusion of nuclear deals with Japan and Australia but not with Canada, which dropped that demand. Shortly after Modi took office last May, the Indian foreign ministry conveyed to Tokyo that concluding a nuclear deal must take centerstage during a Modi visit to Japan. Even though Modi postponed his Japan visit by several weeks for unrelated reasons, negotiations failed to yield a deal.

Australia has no nuclear power program, despite holding the world’s largest uranium reserves, and can only offer to export yellowcake, which India is already sourcing amply from other suppliers. Japan’s importance, by contrast, is underscored by two facts: It is the world’s leading supplier of heavy nuclear forgings, with just one Japanese company — Japan Steel Works — controlling 80 percent of the global market for large forged components for light-water reactors (LWRs); and the U.S.-based Westinghouse is owned by Japan’s Toshiba, while another reactor vendor, GE-Hitachi, also headquartered in the U.S., is jointly owned by America’s GE and Hitachi of Japan.

India, pointing out that IAEA safeguards guarantee that all its imported materials are accounted for and devoted to peaceful purposes, has resisted the demand for establishing additional safeguards with America (and Japan) bilaterally, saying this would amount to assuming onerous obligations not envisaged even in the original U.S.-India nuclear deal of 2005.

While the “flagging” arrangements sought by the U.S. and Japan are strictly a government-to-government issue, nuclear liability has become a bone of contention between the Indian government and the firms seeking to export commercial reactors to it — the two U.S.-Japanese private companies, France’s state-controlled Areva and Russia’s Rosatom. The U.S. government, however, has also weighed in against the Indian liability law, calling it an obstacle to the deal’s commercialization.

To be sure, India and the U.S. have made considerable progress in recent months on resolving the sticking points, although a final deal has yet to be clinched. Progress has come mainly due to Indian concessions. But as U.S. Assistant Secretary for State Nisha Biswal admitted last week, the two sides are still “trading paper” and working to stitch up the deal.

The Modi government has yielded ground, even at the risk of facing criticism at home. For example, it has agreed to reinterpret domestic law so as to effectively transfer reactor vendors’ nuclear accident liability risks to Indian taxpayers. Indian law allows suppliers to be held liable in case of an accident. The government is also reinterpreting another provision of the law to bar victims of a nuclear accident in India from suing for damages in the U.S.

These actions are likely to prove controversial, given India’s bitter experience over the 1984 gas leak from an American-owned Bhopal city plant that killed about as many people as the Fukushima disaster. Indeed, Japan’s dual liability laws, which indemnify suppliers and make plant operators exclusively liable, should serve as a sobering lesson for India: GE built or designed all the three Fukushima reactors that suffered core meltdowns in 2011, yet the U.S. firm went scot-free, despite a fundamental design deficiency in the reactors.

To deflect supplier liability, New Delhi — besides creating a nuclear insurance pool to cover suppliers — is issuing a “memorandum of law” incorporating its legal reinterpretations and authoritative clarifications as well as the understandings it has reached with America. But this raises a basic legal question: How can a “memorandum of law,” with no legislative imprimatur and backed merely by the Indian attorney general’s opinion, reinterpret a statute in a way to effectively gut it? Given that such reinterpretation could be challenged in Indian courts, U.S. officials are advising Westinghouse and GE-Hitachi to make their own risk assessment to decide whether to enter the Indian nuclear market.

On the issue of parallel safeguards, New Delhi has agreed to go more than half-way to meet America’s demand, which springs from its Henry J. Hyde Act, enacted in 2006 to govern the nuclear deal unveiled the year before. The Hyde Act calls for a “detailed system of reporting and accounting” of exports to and retransfers within India, including an annual independent audit about the form, amounts and location of exported items.

India will establish a data-sharing and material-accounting mechanism with America. Its “flagging” of materials by nationality will also involve tracking items sourced from third countries but used in U.S.-origin reactors. Yet U.S. House Foreign Affairs Committee Chairman Edward R. Royce has criticized this arrangement as not adequate.

With complex legal, pricing and other issues still pending, the deal’s commercialization is anything but imminent. In fact, the two sides are yet to sign the administrative arrangements, which they announced had been “finalized.”

It is an open question whether the deal will ever yield substantive energy benefits for India, given the exorbitant price of foreign-origin reactors, the concomitant need for India to heavily subsidize the electricity from such plants, and grassroots safety concerns over the Fukushima-type multi-plant nuclear parks earmarked by India for Westinghouse, GE-Hitachi and Areva, each of which is to sell prototype LWR models presently not in operation anywhere in the world. The accident-stricken Fukushima reactors were also the first of their kind.

Adding to India’s risks is its plan to induct a multiplicity of different LWR technologies from the U.S., France and Russia. This will also exacerbate its maintenance challenges.

Consider another issue: Years after the U.S. pledged to bring India into four American-led technology-control cartels — the Nuclear Suppliers Group, Missile Technology Control Regime, Australia Group, and Wassenaar Arrangement — India is still pleading for its admission, with Obama merely reiterating America’s support for India’s “phased entry” into these groups. India now intends to file a formal application for admission to each cartel, in the hope that the U.S. would be more forthcoming in its support than it has been so far.

The Obama visit was a testament to how hyping the nuclear deal obscures more important issues. For example, despite the vaunted U.S.-India Defense Technology and Trade Initiative (DTTI), the U.S. side refused to accept any of the six joint high technology projects proposed by India, insisting that New Delhi first sign “foundational agreements” on military logistics and communication interoperability that America has designed for its allies in a patron-client framework. India, which seeks a level-playing field, is America’s strategic partner, not its ally. The four joint projects announced during the visit are for relatively modest defense products.

photo from TNuclear power faces an uncertain future, with few new reactors under construction in the West. Yet India has continued to place the nuclear deal at the hub of its relationship with America. Washington has obligingly pandered to this Indian weakness, entering into protracted implementation-related negotiations. The original deal had already spawned multiple subsidiary deals before Obama announced a “breakthrough” on two more auxiliary deals. Each deal has been hailed by New Delhi as a diplomatic success, regardless of the concessions it had to make or the new obligations thrust upon it.

It is past time for India to reduce the salience of the nuclear deal in its relations with America and prioritize other issues concerning its core interests. Why a deal to import reactors to generate an increasingly uneconomical source of energy is critical to Indian interests has never been elaborated by the deal pushers in India other than through beguiling slogans, such as “End of nuclear apartheid against India” and “A place for India at the international high table.” Such imports will create thousands of jobs for American workers but will be out of sync with Modi’s “Make in India” initiative to expand domestic manufacturing base.

India’s diplomatic overinvestment in the nuclear deal has only made it harder for it to address more fundamental issues in its ties with the U.S., including an increasingly one-sided defense relationship. Rarely before has America acquired a major arms client of the size of India so rapidly. It will take concerted efforts, without being weighed down by the nuclear deal millstone, to forge a true, enduring U.S.-India partnership.

Brahma Chellaney, a longtime contributor to The Japan Times, is a geostrategist and the author of the award-winning “Water: Asia’s New Battleground.”

© The Japan Times, 2015.

Don’t believe the hype on U.S.-India civil nuclear deal

Brahma Chellaney, Nikkie Asian Review

43675476.siA “breakthrough understanding” on the stalled civil nuclear deal between India and the U.S. took center-stage in a recent summit between U.S. President Barack Obama and Indian Prime Minister Narendra Modi in New Delhi. It stands out as the only substantive advance in a presidential visit heavy on pageantry and symbolism. But the publicity surrounding the supposed breakthrough was overblown, and the celebrations can only be described as premature.

The deal was portrayed internationally as opening the path for U.S. companies to bag multibillion-dollar reactor contracts, and for Japan and Australia to sign similar deals with India, which plans to ramp up its capacity to generate nuclear power by importing two dozen commercial reactors within the next decade. Currently, nuclear power represents barely 2% of India’s total installed power capacity.

Since it was unveiled in 2005, the U.S.-India nuclear deal — with its many twists and turns — has hogged the limelight at virtually every bilateral summit between leaders of the two countries. In its arduous journey toward implementation, the deal has spawned multiple subsidiary agreements, each of which has been hailed as an important breakthrough.

The latest understanding centers on two issues — nuclear accident liability, and administrative arrangements to govern the bilateral nuclear cooperation agreement required under Section 123 of the U.S. Atomic Energy Act. Obama announced that “we achieved a breakthrough understanding on [the] two issues that were holding up our ability to advance our civil nuclear cooperation.” However, there is still little prospect of early commercialization of the deal.

The newest “breakthrough” is short on specifics and raises troubling questions. It contrives a model that shifts the liability risks for nuclear accidents to Indian taxpayers, thus undermining India’s domestic law, the 2011 Civil Liability for Nuclear Damage Act, which holds suppliers, designers and builders liable in case of an accident. The breakthrough compromise has been designed to circumvent the central principle enshrined in that law — the right to bring civil legal action for damages against suppliers in the event of a nuclear accident caused by defective equipment, components or designs.

Remembering Fukushima

Consider Japan’s 2011 Fukushima disaster. General Electric of the U.S. built or designed the three Fukushima reactors that suffered core meltdowns, yet GE escaped penalties or legal action after the disaster, despite a fundamental design deficiency in the reactors, because Japan’s law indemnifies suppliers, making plant operators exclusively and fully liable. It was to avert such a situation that India’s law armed the Nuclear Power Corporation of India, the state-run plant operator, with the right of recourse to suppliers. India’s sensitivity on this point reflects its bitter experience over a 1984 gas leak from a chemical plant in Bhopal that killed as many as 3,000 people shortly after the accident. The plant was owned by Union Carbide of the U.S.

Supplier liability is a well-established legal concept, applied in many business sectors around the world to deter suppliers from taking undue risks. But the 2011 Act makes India an outlier in terms of current international standards on civil nuclear liability. The global nuclear power industry is controlled by a powerful group of a few state-controlled or state-supported companies that push an opposite norm — that plant operators assume absolute liability so that suppliers face no downside risks.

Too many conventions

Globally, the liability issue has been muddied by a multiplicity of international conventions, protocols, and supplementary conventions introduced since 1960. A majority of the 34 states with civil nuclear power generation capacity have signed one or both of two main conventions, or revised versions of the two. Some of the states that did not sign these conventions, including heavyweights such as the U.S., Canada and Japan, have signed the 1997 Convention on Supplementary Compensation for Nuclear Damage, seen by some as a step toward a unified global liability treaty.

This network of overlapping international arrangements makes liability a complex issue. Some important nuclear power states have not signed any international agreements, including China, South Korea, Taiwan, Pakistan and Iran. India has signed but not ratified the CSC. But the conventions have some key points in common, including assigning exclusive liability to plant operators, mandatory insurance coverage of the operators’ liability, and exclusive jurisdiction of the courts in the country where the accident occurs. India’s domestic law follows this template, but also gives the operator the right to recover damages from suppliers.

     The paradox is that U.S. domestic law allows suppliers, designers and builders of nuclear plants to be held legally liable in the event of accidents, although the 1957 Price-Anderson Act restricts economic liability to operators. Yet the U.S. has sought to shield its exporting firms from claims made by foreign customers by insisting that India and other importing countries accept operators’ strict liability and limit all claims to the jurisdiction of their own courts.

Under the compromise worked out by Obama and Modi, U.S. concerns about India’s legal approach are to be addressed through a legal contrivance called a “memorandum of law” — essentially an executive order — and a $245 million “India Nuclear Insurance Pool,” which is to be set up jointly by India’s state-run insurance companies and its federal government. A number of countries have nuclear insurance pools, but most do not have a legal framework that makes suppliers potentially liable for accidents, as India’s 2011 Act does. For this reason, the memorandum calls for an insurance pool that would address both operator and supplier liability, preventing damages claims against foreign supplier companies.

This arrangement, although claimed by New Delhi to be “squarely within our [Indian] law,” constitutes “a risk-transfer mechanism,” as the Indian foreign ministry has admitted. Under the arrangement, the Indian government is effectively scrapping the right of recourse to foreign suppliers provided by Indian domestic law and transferring the liability risk to Indian taxpayers, offset partly by the modest insurance pool. U.S. officials say the two governments are in agreement over India’s memorandum plan, which they view as a creative solution. But how can a “memorandum of law,” with no legislative imprimatur, reinterpret a statute in a way that effectively guts it?

First, the contrivance being fashioned as part of the understanding between the two leaders threatens to open a legal can of worms. U.S. officials are advising American companies to do their own risk assessments, even though Obama’s deputy national security adviser, Ben Rhodes, affirmed in New Delhi that “in our judgment, the Indians have moved sufficiently on these issues to give us an assurance that the issues are resolved and that there is a path open to implementation and investment here.” No details have been announced by either government on the resolution of another sticking point: a U.S. demand that India accept nuclear-materials tracking and accounting arrangements that go beyond the safeguards system approved by the International Atomic Energy Agency. The same obstacle has held up conclusion of a Japan-India nuclear deal. It is now up to U.S. companies to decide whether to do nuclear business in India.

Second, at a time of skyrocketing reactor construction costs, the crash of oil and gas prices has made nuclear power’s economics more unfavorable. Nuclear power is already the world’s most subsidy-fattened energy industry. Since the 1980s, average international costs for nuclear power have jumped from $1,000 per installed kilowatt to nearly $8,000. Few new reactors are under construction in the West, and the International Energy Agency has warned that “uncertainties continue to cloud the future for nuclear.”

Modi has emphasized that reactor imports will be governed by “technical and commercial viability.” The deal’s commercialization, however, will be dictated not by the market but by the extent to which the Indian government is willing to fork out subsidies to support high-priced electricity generated from imported reactors.

India is in negotiations with four foreign supplier companies — Areva of France, Russia’s Atomstroyexport, Westinghouse, owned by Toshiba of Japan, and GE-Hitachi, jointly owned by GE and Hitachi of Japan. The latter two are both based in the U.S. Under the plans, the companies will each be confined to a single site, on which they will build multiple reactors that will be operated by the state-owned nuclear power company, thus freeing the foreign vendors from the problem of producing electricity at marketable rates. Currently, negotiations are stuck over the price of power. India has offered Areva, with which negotiations are most advanced, a price of 11 U.S. cents per kilowatt hour — more than twice the average price of electricity from indigenously built reactors. The state-controlled French company is holding out for a much higher price.

Not in our backyards

20150104_india_nuclear.jpg_middle_320

The U.S.-built Tarapur atomic power station, located near Mumbai, is India’s oldest nuclear power plant.

Finally, grassroots opposition is growing to new nuclear power plants in India, especially against the Fukushima-type multi-reactor parks earmarked for foreign vendors. Building six to eight giant reactors in a single complex raises additional safety issues, as highlighted by the triple Fukushima meltdown. Local communities want nuclear power plants to be located in someone else’s backyard.

Worse still, India plans to import — as Japan did at Fukushima — prototype reactors that are not in operation anywhere in the world, including GE-Hitachi’s Economic Simplified Boiling Water Reactor, which only recently received U.S. regulatory approval, Westinghouse’s AP1000, criticized in the U.S. for supposed design failings, and Areva’s Evolutionary Pressurized Reactor, which is under construction in France and Finland but has suffered major cost overruns and delays. Prototypes usually face major teething troubles and carry greater long-term risks.

     If a serious accident were to occur, India would be saddled with staggering long-term costs. Japan’s Fukushima disaster bill has been conservatively estimated by an Osaka City University study at $105 billion, or 429 times higher than the Indian insurance pool’s capital. Japan is now establishing a state-backed compensation institution to be funded with government bonds totaling 5 trillion yen ($42 billion) and by utilities. This fund surpasses the $13.6 billion cover currently provided by the U.S. Price-Anderson Act, with another $10 billion pledged by the U.S. Department of Energy.

The Price-Anderson Act, which provides subsidies to the U.S. nuclear power industry by underwriting insurance costs, has been mocked by independent U.S. groups as “Half-Price Anderson.” India’s contrivance can be labeled “Free-Ride Anderson.” Yet it is unlikely to resolve all the tricky issues bedeviling the nuclear deal’s commercialization.

BrahmaChellaney-icon_small_150Brahma Chellaney is a professor of strategic studies at the independent Center for Policy Research in New Delhi and author of “Water: Asia’s New Battleground,” winner of the 2012 Bernard Schwartz Award.

(c) Nikkie Asian Review, 2015.

False Promise of Nuclear Power

Brahma Chellaney, The Hindu, November 19, 2014

wind-nuclearNew developments highlight the growing travails of the global nuclear-power industry. France — the “poster child” of atomic power — plans to cut its nuclear-generating capacity by a third by 2025 and focus instead on renewable sources, like its neighbours, Germany and Spain. As nuclear power becomes increasingly uneconomical at home because of skyrocketing costs, the U.S. and France are aggressively pushing exports, not just to India and China, but also to “nuclear newcomers,” such as the cash-laden oil sheikhdoms. Still, the bulk of the reactors under construction or planned worldwide are located in just four countries — China, Russia, South Korea and India.

Six decades after Lewis Strauss, chairman of the U.S. Atomic Energy Commission, claimed that nuclear energy would become “too cheap to meter,” nuclear power confronts an increasingly uncertain future, largely because of unfavourable economics. The International Energy Agency’s World Energy Outlook 2014, released last week, states: “Uncertainties continue to cloud the future for nuclear — government policy, public confidence, financing in liberalized markets, competitiveness versus other sources of generation, and the looming retirement of a large fleet of older plants.”

Heavily subsidy reliant

Nuclear power has the energy sector’s highest capital and water intensity and longest plant-construction time frame, making it hardly attractive for private investors. Plant-construction time frame, with licensing approval, still averages almost a decade, as underscored by the new reactors commissioned in the past decade.

The key fact about nuclear power is that it is the world’s most-subsidy-fattened energy industry, even as it generates the most dangerous wastes whose safe disposal saddles future generations. Commercial reactors have been in operation for more than half-a-century, yet the industry still cannot stand on its own feet without major state support. Instead of the cost of nuclear power declining with the technology’s maturation — as is the case with other sources of energy — the costs have escalated multiple times.

In this light, nuclear power has inexorably been on a downward trajectory. The nuclear share of the world’s total electricity production reached its peak of 17 per cent in the late 1980s. Since then, it has been falling, and is currently estimated at about 13 per cent, even as new uranium discoveries have swelled global reserves. With proven reserves having grown by 12.5 per cent since just 2008, there is enough uranium to meet current demand for more than 100 years.

Yet, the worldwide aggregate installed capacity of just three renewables — wind power, solar power and biomass — has surpassed installed nuclear-generating capacity. In India and China, wind power output alone exceeds nuclear-generated electricity.

Fukushima’s impact

Before the 2011 Fukushima disaster, the global nuclear power industry — a powerful cartel of less than a dozen major state-owned or state-guided firms — had been trumpeting a global “nuclear renaissance.” This spiel was largely anchored in hope. However, the triple meltdown at Fukushima has not only reopened old safety concerns but also set in motion the renaissance of nuclear power in reverse. The dual imperative for costly upgrades post-Fukushima and for making the industry competitive, including by cutting back on the munificent government subsidies, underscores nuclear power’s dimming future.

It is against this background that India’s itch to import high-priced reactors must be examined. To be sure, India should ramp up electricity production from all energy sources. There is definitely a place for safe nuclear power in India’s energy mix. Indeed, the country’s domestic nuclear-power industry has done a fairly good job both in delivering electricity at a price that is the envy of Western firms and, as the newest indigenous reactors show, in beating the mean global plant-construction time frame.

No competitive bidding

India should actually be encouraging its industry to export its tested and reliable midsize reactor model, which is better suited for the developing countries, considering their grid limitations. Instead, Prime Minister Manmohan Singh’s government, after making India the world’s largest importer of conventional arms since 2006, set out to make the country the world’s single largest importer of nuclear power reactors — a double whammy for Indian taxpayers, already heavily burdened by the fact that India is the only major economy in Asia that is import-dependent rather than export driven.

To compound matters, the Singh government opted for major reactor imports without a competitive bidding process. It reserved a nuclear park each for four foreign firms (Areva of France, Westinghouse and GE of the U.S., and Atomstroyexport of Russia) to build multiple reactors at a single site. It then set out to acquire land from farmers and other residents, employing coercion in some cases.

Having undercut its leverage by dedicating a park to each foreign vendor, it entered into price negotiations. Because the imported reactors are to be operated by the Indian state, the foreign vendors have been freed from producing electricity at marketable rates. In other words, Indian taxpayers are to subsidise the high-priced electricity generated.

Westinghouse, GE and Areva also wish to shift the primary liability for any accident to the Indian taxpayer so that they have no downside risk but only profits to reap. If a Fukushima-type catastrophe were to strike India, it would seriously damage the Indian economy. A recent Osaka City University study has put Japan’s Fukushima-disaster bill at a whopping $105 billion.

To Dr. Singh’s discomfiture, three factors put a break on his reactor-import plans — the exorbitant price of French- and U.S.-origin reactors, the accident-liability issue, and grassroots opposition to the planned multi-reactor complexes. After Fukushima, the grassroots attitude in India is that nuclear power is okay as long as the plant is located in someone else’s backyard, not one’s own. This attitude took a peculiar form at Kudankulam, in Tamil Nadu, where a protest movement suddenly flared just when the Russian-origin, twin-unit nuclear power plant was virtually complete.

India’s new nuclear plants, like in most other countries, are located in coastal regions so that these water-guzzling facilities can largely draw on seawater for their operations and not bring freshwater resources under strain. But coastal areas are often not only heavily populated but also constitute prime real estate. The risks that seaside reactors face from global-warming-induced natural disasters became evident more than six years before Fukushima, when the 2004 Indian Ocean tsunami inundated parts of the Madras Atomic Power Station. But the reactor core could be kept in a safe shutdown mode because the electrical systems had been installed on higher ground than the plant level.

One-sided

Dr. Singh invested so such political capital in the Indo-U.S. civil nuclear agreement that much of his first term was spent in negotiating and consummating the deal. He never explained why he overruled the nuclear establishment and shut down the CIRUS research reactor — the source of much of India’s cumulative historic production of weapons-grade plutonium since the 1960s. In fact, CIRUS had been refurbished at a cost of millions of dollars and reopened for barely two years when Dr. Singh succumbed to U.S. pressure and agreed to close it down.

Nevertheless, the nuclear accord has turned out to be a dud deal for India on energy but a roaring success for the U.S. in opening the door to major weapon sales — a development that has quietly made America the largest arms supplier to India. For the U.S., the deal from the beginning was more geostrategic in nature (designed to co-opt India as a quasi-ally) than centred on just energy.

Even if no differences had arisen over the accident-liability issue, the deal would still not have delivered a single operational nuclear power plant for a more than a decade for two reasons — the inflated price of Western-origin commercial reactors and grassroots opposition. Areva, Westinghouse and GE signed Memorandums of Understanding with the state-run Nuclear Power Corporation of India Limited (NPCIL) in 2009, but construction has yet to begin at any site.

India has offered Areva, with which negotiations are at an advanced stage, a power price of Rs.6.50 per kilowatt hour — twice the average electricity price from indigenous reactors. But the state-owned French firm is still holding out for a higher price. If Kudankulam is a clue, work at the massive nuclear complexes at Jaitapur in Maharashtra (earmarked for Areva), Mithi Virdi in Gujarat (Westinghouse), and Kovvada in Andhra Pradesh (GE) is likely to run into grassroots resistance. Indeed, if India wishes to boost nuclear-generating capacity without paying through its nose, the better choice — given its new access to the world uranium market — would be an accelerated indigenous programme.

Globally, nuclear power is set to face increasing challenges due to its inability to compete with other energy sources in pricing. Another factor is how to manage the rising volumes of spent nuclear fuel in the absence of permanent disposal facilities. More fundamentally, without a breakthrough in fusion energy or greater commercial advances in the area that the U.S. has strived to block — breeder (and thorium) reactors — nuclear power is in no position to lead the world out of the fossil-fuel age.

(Brahma Chellaney is a geostrategist and author.)

© The Hindu, 2014.