Who takes the risk of nuclear power?

Following the oil spill in the Gulf of Mexico, BP has promised to clean it all up. In fact, on 16th June 2010, it announced it would set up a $20bn fund for that purpose. Intuitively, this seems right. A private company is taking risks. This can bring fortune if all goes to plan. If not, the company has to pay a heavy price. According to BP’s boss – a one-in-a-million chance. All seems fair. And in this instance, it will probably work because BP is otherwise a cash-generating business.

Does this free-market principle of equally facing the upside and downside of risk-taking activities extend to other areas? It seems not. Obviously not in banking with all the banks that had to be bailed out. There is another interesting example: nuclear power – would any company build a nuclear power station if it faced the risk of having to pay for any major incidents without limitation? Of course, the probability of such an event is very low, its severity however would most certainly wipe out any operator. What happens here is that the risks of nuclear power stations are socialised.

Should operators of nuclear power stations start paying into a fund?