Future

Closing Nuclear Plants Will Be A Massive Global Mess

Germany's Grafenrheinfeld nuclear power plant
Germany's Grafenrheinfeld nuclear power plant
Markus Balser

BERLIN — The problem weighs nearly 300,000 tons. Tubes, generators, a concrete containment shell. And there is a gigantic volume of steel and scrap material alone at the former atomic power station in Obrigheim in the state of Baden-Württemberg. The most dangerous work on the highly radioactive materials is done by robot.

Nine years after Germany's oldest atomic power plant closed, high-security work is still in full swing. The closure marked the start of the biggest demolition program in Germany's industrial history. Obrigheim is just the beginning. Seventeen more facilities are scheduled to follow. But Obrigheim serves to illustrate what is going to become a massive problem for the whole world over the next few years.

A new study by the International Energy Agency (IEA) suggests that the dismantling of old nuclear power stations around the globe risks becoming a huge cost risk. "Nearly 200 reactors are going to be shut down by 2040," the IEA writes in its new World Energy Outlook.

There are currently 434 nuclear facilities in operation worldwide. The Paris-based IEA estimates the cost of dismantling them at "over $100 billion." But because of limited experience with decontamination, costs can't be estimated with a high degree of accuracy, the IEA says. The wave of dismantlement, which concerns primarily Europe, the United States, Russia and Japan, could in fact cost substantially more.

In the next two and a half decades the biggest die-out of power stations in the history of atomic energy will complete itself. "Many nuclear power plants are reaching the end of their approved life cycle, and others are being closed down for political reasons," says Fatih Birol, IEA chief economist, who adds that "we've never experienced such a concentration before."

Obrigheim's nuclear plant — Photo: Felix Koenig/GFDL

Which is why the IEA is anticipating serious problems. "Only very few countries are going to be able to cope with this," Birol warns, because dismantlement is highly demanding technically and can take between 15 and 20 years depending on the facility. Governments and suppliers should already be putting the means aside to be able to meet future costs, the study says.

The urgent warning about the cost of the nuclear sector's radioactive heritage should spark debate in Germany about how to deal with companies running nuclear power plants, like Eon, RWE, Vattenfall and EnBW. Energy companies would be glad to have the taxpayer bear part of the cost for the difficult dismantlement process and burial of waste.

Funding cleanup

A suggestion that became public last spring was for energy companies to place their reserves of 30 billion euros in a foundation that would assume responsibility for the dismantling of all atomic power plants, including the risks of tearing them down and burying waste. But environmental associations have refused the model out of fear that the companies' reserves would not fully cover costs.

The annual World Energy Outlook is the IEA's most important publication. In it, experts outline various scenarios about energy supply under various conditions. Despite all the risks of nuclear power stations, the organization is expecting a 60% rise in electricity production from nuclear plants. The current 392 gigawatts should grow to 620 gigawatts by 2040.

The study predicts that atomic power will continue to play a big role in the future mainly in China, Russia, Korea and India. Because the need for electricity will increase sharply, the share of atomic power in the worldwide energy mix will rise one percentage point, to 12%.

That means aggravating a problem that until now has remained unsolved. Not a single country has yet to find a permanent burial site for atomic waste, IEA expert Birol complains. The volume of burned-out fuel elements will double to 700,000 tons, the study predicts. The energy agency urges the world to devote thought to this urgently, or else "it will become one big headache."

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Society

Debt Trap: Why South Korean Economics Explains Squid Game

Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.

In the Netflix series, losers of the game face death

Yip Wing Sum

-Analysis-

SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.

The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.


It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.

Seoul housing prices top London and New York

In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.

According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.

Average home loans are equivalent to 270% of annual income.

One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.

According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.

Playing the stock market

At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.

A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."

In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.

42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s

Simon Shin/SOPA Images/ZUMA

Game of survival

In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.

But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.

This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.

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