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New nuclear power in Asia

This guide was last updated in October 2011 Asia will be the location for the greatest number of newly built nuclear reactors in the world in the coming decades. It has many of the regulatory structures in place that it will need but this guide examines some of the areas which will need refining if the projects are to be successful and safe.

There are currently 41 reactors under construction across Asia according to the World Nuclear Association (WNA). A further 98 reactors are on order or planned while 221 projects are proposed, it said.

What it takes to be nuclear ready

A nuclear power plant is as challenging a construction project as it is possible to imagine and those contemplating one must deal with a broad ranger of regulatory and practical considerations.

A good starting point is the International Atomic Energy Association's guide, Milestones in the Development of a National Infrastructure for Nuclear Power (103-page / 1MB PDF). This sets out good practice for countries to follow if they are seeking to develop nuclear power generation.

Are there nuclear laws in place?

Nuclear energy requires proper regulation, covering areas such as regulatory approval for nuclear operators; decommissioning obligations, and obligations of the operator with regards the management of the nuclear fuel cycle.

Laws will also have to deal with the consequences of nuclear damage, including: the meaning of nuclear damage; the parties responsible for such damage, and the obligations arising from trans-boundary nuclear damage.

Many countries have signed up to the Vienna Convention, or Convention on Nuclear Safety (CNS), and other Conventions. Asian countries, though, generally have not and so these international agreements have no application there.

This is not as big a problem as it might at first seem – the WNA said that 230 of the world's 440 operational reactors operate outside of the Conventions, including those in the US, India, China and Japan. It is clearly possible for nuclear to be effectively regulated through national laws, rather than the Conventions.  

That approach does create some problems, though. Operators and vendors will need to take greater care than with Convention signatory countries in relation to liability for third party damage and the consequences of trans-boundary nuclear damage.

Third party damage

The Convention principle of channelization articulates a position that industry participants understand. It is the principle that all liability for third party damage is channelled back to the operator of the nuclear installation.

Not all national laws in Asia, though, fully subscribe to channelization and vendors and operators must make sure they properly consider the risk consequences.

For example the nuclear industry has noted with caution India's proposed Civil Liability for Nuclear Damage Act which appears to dilute the strict liability of the operator by providing the right of recourse to vendors in certain circumstances.

China's Guo Han 64 (the 2007 Reply) similarly provides for some right of recourse, for instance where the contract with the vendor allows such recourse, or where a natural person has deliberately caused the damage.

Trans boundary damage

The Convention principle of unity of jurisdiction is also understood by industry participants, but  national laws have no cross-border applications. National laws therefore cannot properly, by themselves, regulate trans-boundary damage.

In the absence of the application of the Conventions, trans-boundary issues can be addressed through bilateral treaties between adjoining states or by providing in the national laws for the concept of reciprocity. This means that one country will afford the same legal provisions as those in an adjoining state provided that that state does the same.

This is how China seeks to deal with the issue of trans-boundary damage.  However, there is no definition as to how this concept of reciprocity would work but presumably it involves looking at whether the country where there is damage has a reciprocal provision to that in China.

Operators and vendors in Asia would therefore need to look at the laws and regulations of adjoining states to identify the extent to which liability arising in an adjoining state could give rise to liability to the operator or vendor. Given that many nations in Asia are not large, the risk of airborne damage crossing national boundaries is a real risk.

Is there an independent regulator?

There must be independent regulation of the nuclear power industry, and that means that and independent regulator must have the power to independently discharge such regulatory functions as licensing of operators; carrying out inspections and assessments, and enforcing applicable nuclear regulations.

Independence is required for various reasons, but paramount is probably the need for confidence in the industry from the general public as well as operators and vendors.

Independence is of course less about form and more about substance. The fact that there is administrative oversight over a regulator, with reporting through to a government agency, does not necessarily mean it cannot be independent. Conversely a regulator that sits outside of government itself does not in itself ensure independence.

Within an Asian context the issue of whether or note regulator independence is possible is something that is under discussion in a number of countries in the region.

If we are to see more nuclear power generation across Asia, we have to see the implementation of a regulator that:

  • is respected by industry stakeholders and trusted for its ability to exercise its functions properly, which calls for strong and capable leadership.
  • is properly staffed with the necessary manpower with the requisite technical skills so that it can effectively carry out its obligations to inspect and assess nuclear power projects
  • is adequately funded
  • is independent.

Due diligence on the regulatory regime is therefore of paramount importance for new operators and vendors, especially in a jurisdiction where the first reactors are being built. Operators should not assume that just because they are familiar with their home regulatory regime they will be able to manage regulatory issues in a new jurisdiction.

Operators should consider:

  • independence – will there be a level playing field with an independent regulator? This involves looking at the way the regulator is set up and more importantly understanding how it would in fact exercise its regulatory function
  • capability – is the regulator sufficiently staffed with capable people with the requisite technical skills to properly and effectively discharge its functions
  • resources – does it have the resources to carry out its functions
  • language – when operating in a different language, consideration has to be given to whether there are risks of misunderstandings arising from different interpretations of regulatory requirements.
  • the regulator’s rights – what are the regulator’s rights to influence or interfere construction, and who takes risks for any delays that may arise? 

Can the procurement and construction process be managed?  

Building nuclear plants in countries that have none or that are never likely to have many presents particular problems. There will not be a local supply chain nor will there be enough people with the training and experience necessary for the building of new nuclear power stations.

This will raise issues for the management of projects. For instance, in some countries with a limited reactor build out programme, it is unlikely that there will be much localisation of the supply chain. This would involve the importation of all that is required for the construction, including the necessary trained expertise required for the construction. This in itself raises risks where project management at site may be complicated by language differences between imported and domestic staff.

A key challenge that may be faced by operators and vendors into new Asian markets is safety. The power industry in general, but the nuclear power industry in particular, requires a strong safety culture. Yet, there is concern that in some parts of Asia there may not yet be the level of safety culture that may be required for the safe construction and operation of new build nuclear power plants.

For further information please contact:

John Yeap (john.yeap@pinsentmasons.com), or Carl Watson (carl.watson@pinsentmasons.com)

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