Ethical Performance
inside intelligence for responsible business


Nuclear power ‘will survive’

June 2011

Japan’s nuclear power crisis will not derail the industry’s expansion worldwide, but will have lasting implications for power generation everywhere, a leading research and index-provider has said.

However, the US-based MSCI, which has long conducted extensive risk analyses of nuclear power, has said the earthquake disaster, which caused the meltdown of nuclear reactors, was likely to give a boost to competing low carbon-generating sources.

An MSCI paper, Implications of the Japanese nuclear disaster: an ESG research perspective, says that, although the nuclear role in a low-carbon economy will prevent its collapse, many governments still appear to be reconsidering what were extensive plans to expand nuclear power.

The US and Europe, with more than 250 operating reactors, plan extensive reviews of their nuclear plants and disaster preparedness, and China – which had intended to triple the number of its reactors – has suspended approval for new plants.

MSCI says global expansion plans were a result of governments and the industry ‘understating nuclear risks’.

Experts predict that scrutiny will, naturally, be greater in countries with fault lines and high earthquake risks – most nuclear plants are in ‘seismically stable areas’, but some are planned on or near fault lines.

MSCI expects increased regulation and greater financial pressure on nuclear companies. It has already downgraded its ‘controversies rating’ of the Tokyo Electric Power company after its management of the Fukushima crisis.

Nevertheless, the Fukushima disaster will not, MSCI concludes, ‘prevent the industry from growing in the long term, albeit at a more tempered pace and with greater regulatory scrutiny’.

It says: ‘Nuclear power’s greatest long-term challenge may yet be its ability to generate competitively priced electricity. Many reactors under construction are facing billions of dollars of cost overruns.

‘More government subsidies will be needed to attract investment capital to sustain global nuclear expansion. The public will need to be convinced that government and industry assessments about its cost and safety are credible and objective.’ ‘‘apan’s nuclear disaster compounds the challenges facing this already controversial and high-risk industry.’

MSCI | Asia | Sustainability

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