Delays and Deferrals in Nuclear Waste Disposal: A Stochastic Analysis of Funding Shortfalls of Germany's Waste Fund KENFO
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arXiv
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| Format: | Preprint |
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2024
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| author | Awawda, Mahdi Wimmers, Alexander |
| author_facet | Awawda, Mahdi Wimmers, Alexander |
| contents | Germany is tasked with ensuring the safe and final storage of high-level radioactive waste in a deep geological repository. Since 2022, the ambitious target year of 2031 to identify a suitable location for such a site has been deferred by most public actors. The target year was pushed back by several decades to 2046 or even 2068, consequently delaying the completion of all waste management activities well into the 22nd century. Most radioactive waste management activities in Germany are funded via the external fund KENFO that was initiated with an initial endowment of EUR24.1 bn. in 2017. KENFO hopes to achieve average returns on invest (ROI) of 3.7% over the coming decades to ensure that sufficient funds remain. However, the delays in the current process will likely result in overall cost increases. Thus, in this analysis, we conduct a stochastic analysis of the potential delays in the site selection procedure and their corresponding cost effects to assess whether KENFO's target ROI will suffice for the long-term funding requirements. We find that even under optimistic assumptions, KENFO's ROI would have to be increased to at least 5.91%, up to 6.63%. Alternatively, lump sum injections of up to EUR31.07 bn. as of 2024 could reduce funding shortfall risks. We conclude that in order to minimize the financial burden on future generations, German policymakers must address this issue of potential funding shortfalls proactively, either by reducing costs, via, e.g., delay minimization, or by increasing revenues, via, e.g., capital injections. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2412_16126 |
| institution | arXiv |
| publishDate | 2024 |
| record_format | arxiv |
| spellingShingle | Delays and Deferrals in Nuclear Waste Disposal: A Stochastic Analysis of Funding Shortfalls of Germany's Waste Fund KENFO Awawda, Mahdi Wimmers, Alexander General Economics Economics Germany is tasked with ensuring the safe and final storage of high-level radioactive waste in a deep geological repository. Since 2022, the ambitious target year of 2031 to identify a suitable location for such a site has been deferred by most public actors. The target year was pushed back by several decades to 2046 or even 2068, consequently delaying the completion of all waste management activities well into the 22nd century. Most radioactive waste management activities in Germany are funded via the external fund KENFO that was initiated with an initial endowment of EUR24.1 bn. in 2017. KENFO hopes to achieve average returns on invest (ROI) of 3.7% over the coming decades to ensure that sufficient funds remain. However, the delays in the current process will likely result in overall cost increases. Thus, in this analysis, we conduct a stochastic analysis of the potential delays in the site selection procedure and their corresponding cost effects to assess whether KENFO's target ROI will suffice for the long-term funding requirements. We find that even under optimistic assumptions, KENFO's ROI would have to be increased to at least 5.91%, up to 6.63%. Alternatively, lump sum injections of up to EUR31.07 bn. as of 2024 could reduce funding shortfall risks. We conclude that in order to minimize the financial burden on future generations, German policymakers must address this issue of potential funding shortfalls proactively, either by reducing costs, via, e.g., delay minimization, or by increasing revenues, via, e.g., capital injections. |
| title | Delays and Deferrals in Nuclear Waste Disposal: A Stochastic Analysis of Funding Shortfalls of Germany's Waste Fund KENFO |
| topic | General Economics Economics |
| url | https://arxiv.org/abs/2412.16126 |