Guidance

Energy Security Bill factsheet: Enabling accession to the Convention on Supplementary Compensation for Nuclear Damage

Updated 1 September 2023

These measures will enable the UK’s accession to a second international nuclear third-party liability (NTPL) Treaty, the Convention of Supplementary Compensation for Nuclear Damage (CSC). This will strengthen the UK’s NTPL regime, making available greater compensation to potential victims in the unlikely event of a nuclear incident, and provide greater reassurance to private sector investors and the supply chain for new nuclear.

Why are we legislating?

The legislation will enable UK accession to an international NTPL Treaty, the Convention on Supplementary Compensation (CSC). This will work alongside another NTPL Treaty that the UK is already Party to, the Paris Convention and Brussels Supplementary Convention. The Conventions are implemented in the UK by the Nuclear Installations Act 1965.

NTPL regimes aim to ensure that victims of a nuclear incident have access to adequate compensation, as well as supporting investor confidence by channelling liabilities to the nuclear operator and placing limits on their liability.

New nuclear has an important role to play in domestic energy security and in reducing greenhouse gas emissions to net zero in 2050. Key to achieving this will be attracting private sector investment and increasing the confidence of the supply chain, which the CSC will facilitate.

Enhancing the UK NTPL regime by accession to the CSC will support nuclear to deliver its important role in the UK and remove some potential barriers to future investment. Key nuclear strategic partners to the UK, including the US, Canada, and Japan, are parties to the CSC. These countries play a significant role in the UK nuclear sector, with the potential to play a much greater role in the government’s aims to significantly accelerate new nuclear. Expanding Treaty relations to these key partners removes some of the potential barriers to investment in UK nuclear, as well as offering reciprocal benefits to UK suppliers.

Nuclear and radiation safety is a top priority for government and our arrangements are kept under regular review. We have a well-respected regulatory system which reflects international best practice. However, in the unlikely event of a nuclear incident in the UK, victims would be able to draw on the international fund that the CSC establishes. As of March 2022, with the UK as a member of the CSC, the total CSC fund would be around £116 million. The UK’s contribution to this would be approximately £7.5 million. To date, no party has drawn on this fund.

How the Bill will achieve this

The Nuclear Installations Act 1965 already implements the requirements of the Paris-Brussels NTPL regime. The Bill will introduce amendments to the Nuclear Installations Act implementing the requirements of the CSC enabling the UK’s accession to the CSC. The key amendments to the NIA will be to Section 16, with new subsections (1ZAA) and (3BA) – (3BD) setting out the liability limits for claims relating to the CSC.

FAQ

How will joining the CSC contribute to the UK’s net zero objectives/UK energy security?

Nuclear third-party liability is a key enabler for driving new nuclear projects, and as such will support decarbonisation and energy security for the UK by creating an improved investment climate for new nuclear projects.

Will there be an increased cost to the UK joining the CSC?

As operators are already liable under Paris-Brussels for a greater amount than the CSC minimum compensation limits, there is no expected increase in their liability in the event of a nuclear incident in the UK. As such, there are not expected to be any additional burdens on operators. As a member of the CSC, accession will create a contingent lability for the Government and therefore the taxpayer. This would only be used to compensate victims in the event of an incident in a CSC country that exceeds the operator liability limit. Under present conditions, the potential UK liability would be around £7.5 million, and we do not expect significant divergence from this in the short to medium term. The UK would also be able to call upon these international funds should it be required.

What are the benefits of the CSC?

Being a member of the CSC provides increased compensation for victims and further clarity to victims as to whom the claim should be brought against. This will increase the number of countries that the UK has reciprocal arrangements with and will support new nuclear.

Background

Nuclear Third-Party Liability (NTPL) treaties are international agreements that ensure that in the unlikely event of a nuclear incident that there is a minimum amount of compensation available to victims and that claims are channelled to operators of the nuclear installation (and not the supply chain). Operators are required to have sufficient coverage to meet their liability cap to ensure that compensation would be available to victims, who need to prove harm and not fault. These treaties ensure that claims are heard in the country that the incident occurs which gives clarity to victims regarding which jurisdiction claims should made in. This brings benefits to potential victims, whilst encouraging investment by limiting the potential liability of operators who can cover their liability through private insurance. Additionally, some regimes create an international pooling mechanism amongst contracting parties to provide additional funds to victims if the operator liability cap is reached. The UK is currently party to the 1960 Paris Convention and 1963 Brussels Supplementary Convention (together Paris-Brussels) and has ratified the 2004 Protocols that came into force on 1 January 2022.

Further information

The following documents are relevant to the measures and can be read at the stated locations:

• OECD/NEA nuclear liabilities – the Paris and Brussels Conventions
• IAEA nuclear liabilities – the Convention on Supplementary Compensation for Nuclear Damage