COMMENT: Hitachi should expect no state backing from Japan for reactor project in Lithuania

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Exporting reactors – exporting dangerous technologies

The question of whether Japan’s government was willing to provide financial backing to nuclear reactor export projects – in particular, the support it supposedly intended to offer to Hitachi’s participation in building an ABWR reactor in Lithuania – was one among several on the agenda of a series of meetings that Japanese NGOs held in Tokyo with officials from the JBIC and Japan’s Ministry of Finance in mid-December. 

Japanese non-governmental organizations were concerned about the very possibility that Tokyo might consider extending state support to nuclear reactor projects launched in other countries at a time when the heavily nuclear-dependent Japan was making its difficult steps toward a nuclear phase-out – a tentative change of course prompted by the Fukushima tragedy of March 2011.  

Bellona’s expert Andrei Ozharovsky participated in the Tokyo meetings on an invitation from the Japanese NGOs.

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On behalf of Lithuanian environmentalists, Ozharovsky informed the Japanese officials overseeing energy projects that 62.68% of Lithuanians who had taken part in the October 14 advisory referendum had voted against the construction of a new nuclear power plant in Visaginas, a town where the old Ignalina Nuclear Power Plant is currently under decommissioning.

Lithuania shut down Ignalina’s two Soviet-built RBMK-1500 reactors in 2004 and 2009 to comply with the European Union’s requirements for the country’s ascension to the union. Building a replacement plant in Visaginas, an idea that was discussed in talks with a number of reactor manufacturers and led to initial agreements with Hitachi as a strategic investor for an advanced boiling water reactor there, has faced strong public resistance, eventually resulting in last year’s referendum.

After the vote last October – held alongside parliamentary elections – when the majority of Lithuania’s citizens expressed their decision against a new Visaginas plant, the new prime minister, Algirdas Butkevicius, stated that his government intended to honor the people’s wishes and have the project ruled null and void.

But, because of a protracted process of forming a new coalition government, as of the end of last year, a governmental decision that would set in stone the referendum’s result had not yet been made. This technical delay allowed the proponents of exporting a Fukushima-type reactor to Lithuania to present the situation as if the Visaginas project was still alive and well. Reports appeared in the media that the Japanese government intended to support Hitachi’s ABWR project in Visaginas via an export credit provided by the Japan Bank for International Cooperation. In mid-December, however, Japanese officials confirmed during meetings in Tokyo that this information was wrong.

Japan’s finance ministry denies Lithuanian reactor support rumors

Confirmation of the absence of any negotiations or agreements with Hitachi on the Japanese government’s providing a credit line or any other financial backing to the Visaginas project came from Shigeo Shimizu, Director of the Development Institutions Division of the International Bureau of the Japanese Ministry of Finance.

“Export is important to us, but first, all the issues have to be solved, all procedures completed,” said Shimizu.

By Japanese law, a company seeking state financial support for an export project is to file an application with the Japan Bank for International Cooperation, which, provided that the project meets the relevant financing criteria, further refers the application to the Ministry of Finance, where the final decision on the project is taken. Neither of the steps were made in the case of the Visaginas project.

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“The Ministry of Finance of Japan has not received an application for support for Hitachi’s project in Lithuania from the Japan Bank for International Cooperation, which is why the Ministry of Finance of Japan has not made and is not making an evaluation of the possibility of state support for this project. As far as we know, Hitachi does not have a contract to build the NPP in Lithuania, thus, there is no issue to discuss,” said Masaki Kawano, Deputy Director of the Development Policy Division of the International Bureau of the Ministry of Finance.

“Export of nuclear reactors is the worst type of export of contamination, waste, and dangers. The Ministry of Japan must clearly state that no support will be extended to nuclear export,” said Eri Watanabe, coordinator of the Nuclear and Energy Program of Friends of the Earth Japan, during the meeting.

The meeting between Japanese NGOs and representatives of the finance ministry was held in Tokyo on December 17, 2012. About an hour was taken with the discussion of the issue of nuclear technologies export. 

‘Rumors coming from Hitachi people’

“We can finance an export contract, but as we know, neither the contract nor the concession [agreement] have been signed. No talks have been initiated with our bank, and the project evaluation process has not started,” said Yutaka Inaba, Deputy Director General at the JBIC and Director of the bank’s Division 1 Nuclear and Renewable Energy Finance Department. “So far, these are all rumors coming from Hitachi people. We are aware of the decision made during the referendum in Lithuania. We respect Lithuania’s decision. But we are waiting for information on the final decision from the Government of Lithuania.”

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JBIC officials responsible for making decisions on extending credit lines to export projects met with Japanese NGOs on December 18. They confirmed that they were receiving information from Hitachi via unofficial channels and that Hitachi was treating the results of the Lithuanian referendum as non-binding.

Hitachi keeps up pressure

“After Lithuania’s citizens at the referendum did not support the idea of building a new NPP, the Japanese embassy in Lithuania is making great efforts to arrange a meeting between representatives of the strategic investor into the new NPP project in Lithuania – the Japanese company Hitachi – and Lithuania’s new government,” read a December 18, 2012 story from the Baltic news site DELFI.lt (in Russian).

“I can confirm that the Japanese embassy is in fact applying efforts to having such a meeting take place,” the DELFI report quoted Irena Siauliene, leader of the ruling Social Democratic party’s faction in the Lithuanian parliament, the Seimas, as saying.

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On December 18, the Seimas adopted a resolution entitled “On Implementation of the Results of the Advisory Referendum on the Construction of a New Nuclear Power Plant in the Republic of Lithuania. In this document, the Lithuanian parliament proposes “that the Government of the Republic of Lithuania, having regard to the results of the advisory referendum and seeking to ensure the country’s energy security and reliability of electricity supply, […] also having regard to the use of renewable energy sources, develops and submits to the Seimas of the Republic of Lithuania a cost-optimal and consumer-friendly strategy for provision of electricity.” It also “calls on the Government of the Republic of Lithuania to draft relevant legislative acts or amendments thereto and submit them to the Seimas of the Republic of Lithuania by 15 May 2013.”

Neither the government, nor the Seimas should be reasonably expected to make decisions that will run counter to the results of the referendum. But nuclear proponents, too, seem to have found support within the ranks of the newly elected government. Lithuania’s new Minister of Energy Jaroslav Neverovic insisted the project needed another look – as if one more evaluation could change the results of the people’s vote.

“[…] I can say again that the project should be given an assessment in all the aspects – nuclear, engineering, nuclear safety. After consultations with all the partners, a responsible decision [should be] made,” another DELFI.lt story of December 18, 2012 (in Russian) quoted Neverovic as saying.

The Hitachi corporation seems to think the best face-saving strategy is precisely the opposite of a graceful exit – continuing to lobby a project that found little support among the Lithuanian citizens. In Japan, nuclear lobbyists are trying to spin the result of the referendum as not that important – while in Lithuania, efforts are made to create an impression that Hitachi has support of the government of Japan.  

But even if Hitachi’s Visaginas NPP project does get filed for consideration for financial support from the Japanese government, it  hardly has any chance of getting it.

The decision-making criteria

Making a decision on whether to extend state financial backing to an export project in Japan includes not just an analysis of economic and financial risks, but also an assessment of social and environmental consequences that the proposed activity will have in the destination country. 

In April 2012, the JBIC posted an updated version of its “Japan Bank for International Cooperation Guidelines for Confirmation of Environmental and Social Considerations.” Making decisions based on specific and established criteria allows for an objective assessment of the consequences of the applicant’s proposed activity, preventing potential problems with bias.   

Reactor export projects in Japan will thus be unable to qualify for financial backing from the state as failing to meet environmental and social criteria.

A stark example of the opposite – providing unquestioning support to a reckless export project – is the Russian government’s support of the construction by Russia’s State Atomic Energy Corporation Rosatom of a nuclear power plant in Belarus.  One wonders who and based on which criteria made the decision to back Rosatom’s NPP project in Belarus with a $10 billion state export credit – money spent out of the Russian state budget.

Nuclear projects’ sore points: waste, accidents, transboundary impacts

Nuclear power is on the JBIC guidelines’ list of “sensitive sectors, characteristics, and areas” – such sectors or characteristics that are “liable to cause adverse environmental impact,” and projects that fall into this category are classified as Category A projects – their impact, the guidelines say, “may affect an area broader than the sites or facilities subject to physical construction.”

“Wastes” is one of the items among the JBIC’s environmental criteria for nuclear power projects, as detailed in Environmental Checklist: 12. Nuclear power. The proposed project must ensure proper treatment and disposal of wastes generated by the power plant operations in accordance with the country’s standards.

But because none of the existing nuclear power plant projects can offer an adequate plan to manage a future NPP’s radioactive waste and spent nuclear fuel – the nuclear power industry is yet to come up with an effective solution for safe disposal of nuclear waste – then, such projects cannot pass the environmental screening process and state financing of such projects will not be approved.

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Another item on the checklist, Accident Prevention Measures, contains these two questions: “Are adequate accident prevention plans and mitigation measures developed to cover both the soft and hard aspects of the project, such as establishment of safety rules, installation of prevention facilities, and equipment, and safety education for workers?” and “Are adequate measures for emergency response to accidental events considered?”

Actions taken in the wake of the Fukushima catastrophe in March 2011 both by the Japanese authorities and the plant operator company, TEPCO, demonstrated that even Japan was not sufficiently prepared to handle accidents of such scope and did not have adequate plans or measures in place to respond to such emergencies.

Another item on the JBIC’s environmental checklist for nuclear power projects has to do with potential transboundary impacts: “If necessary, the impacts to transboundary or global issues should be confirmed (e.g., the project includes factors that may cause problems […]).” Because the new Lithuanian NPP was proposed for construction in Ignalina’s hometown of Visaginas – on Lake Drisviaty (Druksiai, in Lithuanian), which is shared by Lithuania and Belarus, and just 2.5 kilometers from the Lithuanian-Belarusian border – a reasonable consideration of potential transboundary impacts of accidents and incidents at the future plant should be grounds enough for the Japanese bank and the government to deny a request for state credit funding.

Dim expectations for state support for Visaginas NPP

As the new NPP project that Hitachi is pushing for in Lithuania fails to meet at least three criteria established by the Japan Bank for International Cooperation, it cannot receive any financing support from the Japanese state. Should Hitachi still apply for a state export credit, it can expect its request to be denied already at the project evaluation stage at the JBIC. As an application failing to comply with the bank’s social and environmental criteria, the project is unlikely to even make it beyond the screening process to the Ministry of Finance for a final financing decision. 

And even should the atomic lobby and Hitachi attempt to present the Visaginas project as one where all issues are settled – something that is not the case – there are in Japan open democratic procedures that allow non-governmental organizations and experts unaffiliated with the nuclear energy industry to make sure that information about the real risks and hazards of a proposed project reaches those who are responsible for making decisions about that project.

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Environmental organizations both in Lithuania and Japan will continue joint actions against Hitachi’s project in Visaginas. A year before the meetings in Tokyo, on December 23, 2011, Lithuanian and Japanese NGOs published a joint letter of concern addressed to the Japanese and Lithuanian governments, the JBIC, and Hitachi, where they protested a preliminary agreement signed between Lithuania and Hitachi, noted that the choice of contractor and other decisions regarding the project were made absent of open public discussion, expressed their opposition to any governmental backing of the Visaginas project and demanded to stop the implementation of the project. The letter also called on the Government of Japan to refrain from providing support for the project, including its financing through the Japan Bank for International Cooperation.    

Then, the late February 2012 working visit to Tokyo by Lithuania’s former prime minister and Visaginas NPP proponent Andrius Kubilius – it included a series of meetings that can be seen as a step toward solidifying cooperation in the project – was accompanied by an anti-nuclear protest organized by Japanese activists (in Russian).

A new joint letter by Lithuanian and Japanese NGOs has been addressed to the Hitachi corporation and the governments of the two countries and demanded that Hitachi acknowledge the result of the referendum and publicly withdraw from the Visaginas project. On December 18, 2012, a picket was held in front of Hitachi’s headquarters in Tokyo in support of these demands, with banners that read “Hitachi, stop nuclear export to Lithuania!” and “Hitachi, respect Lithuania!”.

This comment was originally published in Russian on December 29, 2012; statements by Japanese officials quoted here were back-translated into English from their Russian translations as they appeared in the original December story.

Andrey Ozharovsky

idc.moscow@gmail.com

Maria Kaminskaya