March Newsletter No186

Posted by SONE on 30 March 2014 in Newsletters

Tagged with: Climate Change, EDF, Greenpeace, Hinkley Point, State aid, Ukraine, Vincent de Rivaz.

Ukraine strengthens the case for nuclear power

Nothing perhaps over this month has more underlined the need for nuclear power in the UK than the plight of the Ukraine. In truth the West has cut a sorry figure responding to Russia’s annexation of the Crimea.

This is because it is weak, wet and impoverished. The USA has a public debt of $16trillion (thousand billion). The UK’s public indebtedness is around £1.3trillion. Germany, like the UK and the rest of Europe, is steadily blunting its competitive edge with its ridiculous energy policy. France is as arthritic as Britain was in 1979. Southern Europe is in a mess because of the euro straightjacket. And roughly a third of Europe’s gas comes from Russia, much of it through the Ukraine.

There is also a war weariness in the West after fighting – and effectively losing – terrorist wars in Iraq and Afghanistan. The palsy of purpose that has long afflicted much of the EU is now rife in Westminster and Washington. It has been noted in the Muslim world, which, incidentally, also menaces Russia.

This is not to suggest that the West should take up arms against Russia over the Ukraine. But it does argue for the West to be economically strong and independent of the Kremlin if it is to have any chance of making dictators like Putin think twice before indulging his expansionist dreams.

Nuclear power is one way in which the West could be strengthened because it provides security of economic supply over the longer term, even if uranium has to be imported, though on a world rather than a Russian market. Yet what is happening? While Russia (and China) go nuclear, the UK experiences endless delay. President Hollande wants to reduce France’s reliance on nuclear from 75 to 50% and Chancellor Merkel is eliminating nuclear power in Germany. You couldn’t make it up.

The tragi-comedy of state aids

Against this background, the EU state aids investigation of the Government/EdF deal over the proposed Hinkley Point nuclear power station (about which more later) becomes surreal tragi-comedy. Just consider the contradictions.

The EU’s policy is to reduce the use of and external dependence on fossil fuels and the emission of greenhouse gases. That is exactly the purpose served by Hinkley Point and any future nuclear power stations in the UK. Meanwhile, Germany is building 10 coal-fired power stations when already its CO2 emissions have risen for the second year running because of its impractical emphasis on wind and solar power.

Apparently, Germany can get away with this flouting of the purpose of EU energy policy because, we are told, it is not subsidising its new coal-fired power stations. It is nonetheless distorting competition by employing cheap (and dirty) coal against the letter and spirit of EU aims.

The UK is being pursued by the Competition Commissioner because we are alleged to be heavily subsidising Hinkley Point. At first blush, that undoubtedly is the case. It is also extremely unlikely that Edf has understated its £14bn (or it is £16bn?) price tag for the Somerset project. But nobody knows whether this is a good or bad deal for Britain because it is a pure gamble on electricity prices 10 years’ hence. Not even Nostradamus could know what the price of power will be in 2023, always assuming that Hinkley Point has actually been built by then.

There is every reason to assume that the EU has no greater insight. After all, its – and its member-states’ – handling of strategic relations with Putin’s Russia have been inept. This state aids exercise needs to be treated with a certain irreverence. It would be very funny if it did not have the potential to derail Britain’s nuclear development.

Send in the clowns

Meanwhile, as we contemplate life’s rich tapestry of hypocrisy and humbug, we turn to Greenpeace as the exhibitionist stunt boys of the Western world’s eco- loonies. Their irresponsible arrogance and capacity for misjudgment is breathtaking. They seemed to assume that the Russians would put up with their invading an Arctic oil platform. They were certainly outraged when they put about 30 of the “green” raiders in the slammer for a month or two to cool off.

Now these saviours of the planet have taken to invading older nuclear power stations to try to get them closed on grounds of age. The Oskarshamn (Sweden) and Fessenheim (France) stations have recently been illegally entered. Fifty seven of the blighters were reported to have been arrested at the latter station which President Hollande has listed for closure two years hence.

We trust EdF has strengthened its defences since Greenpeace says it has also been invading stations in Belgium, Holland, Switzerland and Spain. EdF is proposing to extend the lives of its seven AGR power reactors in the UK by an average of eight years while, incidentally, the Americans are proposing lives beyond 60 years for some of their nuclear plants.

There is, of course, no point in telling Greenpeace it is sabotaging its own objective of lowering CO2 emissions by targeting nuclear power stations. They are impervious to reason. But what we can say to more mature minds is that Greenpeace is irrelevant to the conquest of global warming with its hostility to nuclear power. Moreover, it cares not a jot for jobs, our ability to compete or the economic strength of the West with its passion for renewables.

If they had not strayed into the Arctic, they would now be seen as Putin’s little puppets.

The fading of the light

While we are on the environment, it is pertinent to note that the current Scientific Alliance (SA) bulletin reported that the latest UN global warming jamboree in the middle of this month in Bonn passed virtually without notice. It was one of a series of preparatory meetings for the next Conference of the Parties (COP 20) in Lima (Peru) in December.
The light has been going out on this series since the failed Copenhagen COP15 in 2009, though that will not stop thousands of campaigners and NGOs burning up vast amounts of aviation fuel to get to other preparatory gatherings in Ventiane (Laos), Luanda (Angola) and Bogota (Colombia). The SA says the press has to a large degree lost interest, “with climate change becoming part of the background noise rather than the main signal for the majority of people”.

We would like to think it is because of the utter failure of all these COPs to make the slightest impact on the supposed cause of all our troubles – CO2 emissions – that have risen steadily over the past 20 years. The entire exercise has lost credibility along with an unexplained failure for the globe to warm for the last 16 years.

Ed Davey says “Shut it”
Now two Manchester University academics – Professor David Schultz (meteorology) and Dr Vladimir Jankovic (climate historian) – have warned against “obsessing” over “climate change” because it is distracting politicians from dealing with floods and storms. They claim that “linking climate change and high-impact weather events has been a social and policy disaster”. Weather happens, they say, whether or not climate change is occurring, and for most purposes any change due to climate change is a less immediate concern than the impact of the weather itself.

Some members of SONE will regret the fading of the light because they see global warming, as we prefer to call it, as central to nuclear power’s appeal. They need not worry while Energy Secretary Ed Davey is around. He has just told two Conservative global warming sceptics – Lord (Nigel) Lawson, former Chancellor and Energy Secretary, and Peter Lilley, former Industry Secretary – to “shut it” – i,e, to stop questioning the scientific evidence that man-made emissions are causing global warming.

To go back to the Ukraine, the real justification for nuclear power is the security of electricity supply at long term affordable cost that is crucial to a sound economy on which a convincing diplomatic and defence strategy can be built. Nuclear power matters to jobs, to the viability of firms, to prosperity, yes, to our ability to improve the environment – and to stability in a dangerous world. European Commission please note.

Chancellor undoes a bit of bad work

We now come to March 19, 2014 – Budget Day – which banged another nail in the coffin of current energy policy. Chancellor George Osborne was responding to pressure from heavy industry that fears it will be driven out of the UK by high energy costs. So he capped the carbon floor price, designed to stimulate investment in low carbon infrastructure, with a reported saving for businesses of up to £4bn by 2018-19 as well as £15 off a typical household energy bill.

In other words, a Chancellor strapped for cash was forced to forgo “green” tax because of risks to the economy. Not surprisingly, it brought forth an agonised chorus from vested interests. The renewables lobby pointed out the Chancellor was rowing back on his own policy and moving the goal posts for investors in what they call green energy. And Greenpeace said the Budget “throws a multi- million pound bung to coal plants”.

It has been pointed out that it is not much of a bung because the carbon floor tax has been capped at around £20 a tonne whereas the collapsed EU’s emissions trading tax has fallen to less than Euros7 per tonne. This means that British industry is still handicapped vis-à-vis mainland Europe. But then we are the world’s masochists. The Times reported on March 3 that Britain is “a global leader on climate change targets, committed to make more reductions in emissions than any other European country” over the next 10 years.

So the Chancellor, who does not think we should be out in front of the rest of the world, has only eased the burden. There is no use crying over spilt milk but if we had replicated Sizewell B, as intended, we would have no need for punitive carbon taxes or renewables and would be a lot better off. Enemies of nuclear power are truly enemies of the people.

Delay a way of life

The news of the month took nobody by surprise. EdF has put back a decision on Hinkley Point until the autumn, which is something of a moveable feast. This is because of the EU’s state aids inquiry, which never looked like meeting EdF’s revised target decision month of July.

Originally we were told Hinkley Point would be generating power by the end of 2017. EdF then set the end of 2012 as its target for a decision to go ahead. That slipped to March 2013. Then last October it set a new deadline of July this year. That has now gone with the wind. EdF still says the project is on track for generating by 2023. Meanwhile, the Department of Energy puts on a determined show of relaxation. The Daily Telegraph quoted it this month as being unconcerned about the timing of the state aids investigation – a routine part of the process for large scale infrastructure projects.

EdF praise for British energy policy
We were also amazed to discover from the Daily Telegraph on March 17 that Vincent de Rivaz, CEO of EdF, thinks the UK has the right energy policy – “a response that is well thought through and internationally respected”. Crucially, he said, the political consensus and stability of these policies have given investors the confidence to put their money into Britain.

Well, they have not put their money into nuclear yet and now we are told they are running away from wind, solar and biomass because subsidies are being cut. We should point out that Mr de Rivaz was perhaps moved to generosity about Britain’s energy policy because he was lobbying the Government to keep the carbon floor price unfrozen. It was, he said, “tipping the balance away from coal to lower carbon gas”… and “encouraging spending on low carbon wind, biomass and nuclear to give us a more resilient and balanced energy system”.

Mr de Rivaz can keep his wind and biomass. What we want – and need – is his nuclear power for security of supply, preferably with a few £billions knocked off its price. Until we get it – and a lot more nuclear after that – there is no rhyme nor reason to British energy policy. It is failing at every turn.

The Grimston case for approving Hinkley Point

This brings us to the best justification we have heard yet for the EU to approve the Hinkley Point deal. It was provided by Malcolm Grimston, a SONE member and honorary senior research fellow at Imperial College. We have sent his presentation to those who have provided us with their e-mail addresses but we should inform the other two-thirds of the members of the case he presented to SONE’s committee on March 3.

First, he traced the history of electricity supply liberalisation over the past 25 years from the central planning of the old CEGB/Area Boards, bringing a dramatic change to the fuel mix with the neutralising of the coal miners’ strike weapon. In 1990 67% of electricity was generated by coal and none by gas. By 2000 gas was generating 40% and coal 33%. By 2000 we had ample and diverse capacity but it became impossible to make money from generation in a cut- throat market and only the emergent Big Six survived because they had a captive market of consumers who did not shop around.

Electricity became cheap and plentiful. Little generating capacity had been added in this century and assets had been sweated. After writing off nuclear’s economics as “unattractive” in 2003 the Government concluded in 2008 it had a role to play and had cross party support in doing so. But so far no new nuclear power station was being built. There was now an urgent need for new generating plant but there was a big question mark over whether a liberalised market could deliver new investment quickly enough.
In a truly liberalised market the fuel of choice would be gas. So the Government had had to work hard to persuade the market to pursue other choices.

Investment in nuclear was so large that no company was likely to big or brave enough to bear the risks alone and would seek guarantees, effectively sharing them with the consumer/taxpayer. The Energy Bill/Electricity Market Reform (EMR) sought to create the conditions in which those risks were not entirely borne either by the investor or the consumer/taxpayer.

Market failure
Mr Grimston said the current market did not incentivise diversity or security of supply or long term certainty over carbon prices. Nuclear power also faced political risks as demonstrated in Germany. Moreover, Brtiain was on the periphery of the European grid and would always have less and much more expensive interconnection than countries on the Continental mainland. This meant that the UK and Ireland would always have more difficulty managing large-scale variation of output from renewables.

The European Commission allowed state aids if projects helped to meet the EU’s broader economic and environmental goals, provided they were necessary and proportionate, non-discriminatory and did not distort competition. In response to robust questioning by the EC, the UK was arguing that the proposed Contract for Difference for Hinkley Point:

  • contributes to EU objectives of secure, low carbon supply likely to be economic over the plant’s lifetime.
  • is necessary because of market failings and is proportionate.
  • is not discriminatory against other ways of delivering the objectives – eg renewables
  • does not distort competition – operators have to gain the market price for their output and face normal business risks; they will have to repay the consumer if the wholesale price rises significantly; there will be renegotiation of the strike price after 15 and 25 years; and British business will have more certainty over power prices.

Mr Grimston concluded that EMR might not be perfect but it was by far the best option available. It should prevent EdF from making “super-normal” profits but deliver the first new nuclear build and stimulate future projects at lower strike prices. In other words, Mr Commissioner, it’s the best of a bad job. Let’s get on with it.

Fukushima’s legacy – safer nuclear power

While we sit and wait for the bureaucrats, Japan seems to be recovering slowly from the shock of the tsunami-induced disaster at Fukushima three years ago where, so far as is known, not a single life has been or is likely to be lost on nuclear grounds. Indeed, the latest study claims that most people in the prefecture are unlikely to receive a radiation dose significantly different from normal background levels. This raises the question, as some SONE members have done, as to whether many should have been evacuated in the first place.

The third anniversary this month of the disaster has been marked by:

  • official sanction for the first of 146,000 evacuees to be allowed back permanently into their homes;
  • Ministerial (but not yet Cabinet) approval of a new energy plan giving nuclear key baseload responsibility as long as safety can be assured; the nuclear regulation authority is trying to speed up the re-start of offline reactors.
  • nuclear experts reviewing events are united in arguing that nuclear power is safer after all the work that has gone into learning and applying the lessons of Fukushima; it is pointed out that not a single plant in Europe was recommended for closure under the EU’s new stress tests.
  • The US Government Accountability Office has reviewed 16 countries and found all have strengthened safety since Fukushima. It looked at the Argentine, Armenia, Belgium, Canada, China, France, Indonesia Japan, Pakistan, Russia, South Korea, Sweden, United Arab Emirates, the UK and Vietnam as well as the USA. Thirteen of these countries have commercial reactors and the other three are contemplating going nuclear. Edf has announced its four regional nuclear emergency offices in France are in full operation.

The insenitivity of the man

Who needs Energy Secretary, Ed Davey, when we have John Kerry, US Secretary of State? Speaking recently at the American cultural centre in Jakarta, Indonesia, he declared global warming was “perhaps the world’s most fearsome weapon of mass destruction”. He and President Obama, he said, did not have time to meet global warming sceptics – “The Flat Earth Society”.

But he took the biscuit when, as a man with a bob or two from a nation that built its (self-impaired) wealth on fossil fuels, he said that emerging Indonesia should not use its fossil fuels to build up its wealth.

With but one mind

Finally, six days after we wrote the front page of this Newsletter, Michael Fallon, Energy Minister, said (March 24) that Russia’s seizure of the Crimea drove home the urgent need for the UK to develop more domestic sources of energy such as nuclear and shale gas. For once, we are on song. Praise the Lord.


We regret to record the death of a long-standing member, Commander Clem Cambrook, of Tavistock.