Japanese authorities used water cannons, helicopters and other unconventional means in an increasingly desperate effort to gain control of the partial meltdown at the Fukushima Daiichi Nuclear Power Station. The U.S. government said on Thursday that it will begin airlifting U.S. citizens from the area, reflecting rising fear that emergency efforts by civil, military and industrial leaders in Japan aren’t working.
The accident, and the inability of emergency workers to stabilize the site, has aroused growing fears about the safety of atomic energy. Within hours of the accident, sparked by the March 11 earthquake and tsunami, governments around the world announced that they were delaying construction of new reactors. As a result, the industry likely never will be the same.
“It’s huge. This is a big as Three Mile Island in terms of the development and future of the nuclear power industry,” says Shawn Reynolds, lead energy analyst with Van Eck Global. The New York-based money manager, with about $20 billion in assets, focuses on energy and natural resources.
Three Mile Island, the partial meltdown at a nuclear reactor in Pennsylvania in 1979, forever altered the course of the nuclear power industry in the United States, according to Reynolds. “Until then, nuclear energy was on track to become the main source of power in the U.S., just as it eventually did in France,” Reynolds said. That has yet to come to pass in the U.S., where fossil fuels remain the main source of power. On a global basis, nuclear power accounts for 6 percent of energy about 13-14 percent of electricity.
Fukushima could have similar economic consequences on a global basis. Officials in Germany, Switzerland, Russia, India and China already are delaying plans for nuclear energy development, according to Reynolds.
Policymakers should be careful, he says, not to exaggerate the scope of the problem in Japan; it is bad enough as it is, and the poor flow of information in Japan and inflammatory comments from officials in Europe aren’t helping people to keep the crisis in perspective. It is highly unlikely to become a full meltdown like the disaster at Chernobyl, in the Ukraine in 1986, according to Reynolds. There were no containment vessels at Chernobyl and vast amounts of radiation were thrown directly into the atmosphere, traveling far and wide.
At Fukushima, radiation levels are elevated, but still below levels that are harmful to human health, he said.
On Wednesday, the Japanese military was using helicopters to pour water on the reactors in a bid to cool them. That effort produced mixed results on Thursday. The U.S. government has called radiation levels in the area of the stricken reactor “extremely high” and recommended a 50-mile evacuation area, which is four times as large as the one imposed by authorities in Japan.
Even if one of the reactors goes into a full meltdown, it will be buried in sand to limit radioactive emissions, according to Reynolds.
The facts are quite bad enough, though. As a result, the growth of the nuclear power industry will be dramatically slowed. China had been counting on nuclear power to satisfy about 30 percent of its new energy needs over the coming years.That role is likely to be cut in half as a result of misgivings over Fukushima. And Reynolds says 5 percent of Japanese power generation will be taken off line due to the crisis.
The reduction in nuclear power generation will lead to increase in the use of liquefied natural gas and thermal coal. Central appalachian coal is now selling for about $72 a ton, up from the mid-60s just a few weeks ago. Reynolds says it could go to the 80s by the middle of the year. Spot prices for liquefied natural gas are going for $12 for 1,000 metric cubic feet, and could go to $15, he says.
Uranium prices, meanwhile are tanking. The market vectors Uranium and Nuclear Energy ETF fell about 1 percent on Wednesday to $21.23, down from a 52-week high of $27.28 on February 11.
How long will these dynamics last? “I don’t want to say it is going to be something like one-to-two years, because it could be two-years-to-forever,“ Reynolds said.
