UK uses bullying tactics to save Hinkley
UK Prime Minister David Cameron has threatened to retaliate over Austria's plans to mount a legal challenge to the Hinkley Point nuclear project, according to a document written by Vienna's ambassador to London. Britain's concerns are highlighted in Mr Eichtinger's account of a meeting with Vijay Rangarajan, a senior official at the Foreign Office. According to the letter, the UK has said that it could retaliate in several ways, with officials working on a "systematic creation of countermeasures" against the country.1
Austria confirmed that it would launch a legal challenge against the European Union's (EU) decision to allow billions of pounds of subsidies for Hinkley on 21st January.2
The UK could retaliate by mounting a legal challenge to Austria's electricity (source) labelling on the basis that this breaches common market rules. It could also apply pressure on Austria to shoulder a higher burden in EU "internal effort-sharing" in the bloc's transition to a low-carbon economy. Britain could also begin an investigation into whether Austria's suit violated the Euratom treaty on nuclear power.
Doug Parr, chief scientist at Greenpeace, criticised the government for bullying the Austrians for daring to question the "huge and wasteful energy project", which would raise bills for British consumers. Thankfully the Austrian Government has said it won't be intimidated by threats.3
A spokeswoman for Mr Cameron said he believed that Britain had the right to choose its own energy mix. The UK government said it had no reason to believe that Austria was preparing a legal case that had any merit.4 On the other hand Dr Dörte Fouquet, a lawyer for the Brussels-based law firm Becker Büttner, which specialises in energy and competition law, said she thought that Austria's chances of success were "pretty high."5 And as the Nuclear Free Local Authorities pointed out in letters to the Guardian and Independent, if Hinkley Point goes ahead, with a £17 billion state aid package between the UK Government and EDF Energy, it could see other EU states like the Czech Republic, Poland and Slovakia − all close to Austria − seek to replicate such contractual operations for their own new nuclear ambitions.
It is important to note in 2006 the then Chancellor Alasdair Darling said it will be up to the private sector to "initiate, fund, construct and operate" the nuclear plants. And the UK Coalition Agreement between the Tories and Liberal Democrats allowed the Government to promote the construction of new nuclear reactors provided they receive "no public subsidy".
Councillor Mark Hackett for the NFLA says the UK Government's churlish response is mainly due to it knowing that the writing is on the wall − Hinkley Point will be subject to another long delay, and this makes it ever less likely to be built. Austria should be commended for bringing us to our senses and forcing us to see the necessity of a quite different low carbon strategy; where renewables, energy efficiency and decentralised energy can become the norm.
Investment decision delayed
The Times reported on February 7 that an investment decision would be delayed until several months after the general election because the project's Chinese backers have demanded that the French government protect them if it goes bust.6 The Chinese were reported to have serious concerns about the EPR reactor design and are refusing to invest unless the French government promises to bail out Areva, if necessary, and cover their share of any cost overruns.
Complex negotiations involving British ministers, their opposite numbers in Paris, EDF Energy and the Chinese have been complicated still further by the legal challenge brought by Austria against Hinkley Point. Now EDF Energy is seeking assurances from the UK Government that if Austria wins the case and the project has to be abandoned halfway through, the company will receive compensation for the money invested up to that point.
At first, according to the Burnham-on-sea.com website, EDF Energy denied reports that an investment decision would be delayed until the Autumn. And the Stop Hinkley Campaign pointed out that if EDF Energy or the Chinese demanded any new financial guarantees these would require approval from the European Competition Commissioner.7
Just two days later, The Telegraph reported that EDF Energy appears to have abandoned its March 2015 deadline for making an investment decision and has warned that talks on the project may still take a "considerable" time. EDF described finalising agreement on Hinkley as a "major challenge" facing the company in 2015. EDF said that before it could take a decision it needed to sign deals with co-investors, gain European Commission and UK government approval of waste transfer contract arrangements, finalise a £10 billion loan guarantee from the Treasury and finalise a subsidy contract that was provisionally agreed with the UK Government in 2013.8
Earlier the Financial Times reported that several potential investors have backed away from the project despite the promise of a 35-year index-linked price guarantee backed by the UK taxpayer.9 The Kuwaitis, the Qataris, the Saudi Electric Company and even Hermes, the UK based investment fund, have all been mentioned as possible investors but none has signed up.
On top of all this Areva, the French, mainly State-owned company which would be the main equipment supplier, will have difficulty funding its expected 10% share of the project. Areva is struggling to survive the ongoing mess of the Olkiluoto nuclear plant in Finland, which is years behind schedule and billions over budget. Areva's losses in Finland are currently estimated at €3.9bn. The loss of Areva's share of Nuclear Management Partners Consortium's contract to decommission the Sellafield will not have helped.
Areva's share price has collapsed. It ended its market year with a decline of 52% as a result of financial difficulties caused by mismanagement, hazardous speculations and acquisitions, repeated technical fiascos (i.e. the EPRs in Finland and France), the regression of global nuclear market, and especially the cessation of the Japanese market since the Fukushima nuclear disaster.10
Meanwhile, the government is refusing to say whether it has followed its own rules in allowing the Chinese to invest in Hinkley, citing questions of national security. Chinese involvement in UK energy schemes remains controversial, not least because of the historical links between its industry and the military. The National Security Council (NSC) is supposed to review critical projects. But ministers have consistently refused to say whether this has been the case. The BBC requested information, under Freedom of Information laws, about whether the NSC had discussed China's investment in Hinkley and if it had, whether it had been approved.
In a delayed response, the government confirmed the information was held by the Cabinet Office but refused to say whether the NSC had approved or even discussed China's expected 30−40% stake. Labour MP Dr Alan Whitehead, a member of the Energy and Climate Change Committee, said the government's refusal to say whether it had followed its own rules was "not acceptable".11
Abridged from NuClear News, No.71, February 2015, www.no2nuclearpower.org.uk/nuclearnews/NuClearNewsNo71.pdf
1. FT, 11 Feb 2015, www.ft.com/cms/s/0/905342fa-b214-11e4-80af-00144feab7de.html
2. Guardian, 21 Jan 2015, www.theguardian.com/environment/2015/jan/21/austria-to-launch-lawsuit-hi...
3. Bloomberg 12 Feb 2015 www.bloomberg.com/news/articles/2015-02-12/austria-says-it-won-t-be-inti...
4. FT 11 Feb 2015 www.ft.com/cms/s/0/905342fa-b214-11e4-80af-00144feab7de.html
5. Guardian, 22 Jan 2015, www.theguardian.com/environment/2015/jan/22/uk-nuclear-ambitions-dealt-f...
6. Times, 7 Feb 2015, www.thetimes.co.uk/tto/business/industries/utilities/article4346816.ece
7. Burnham-on-sea.com, 10 Feb 2015, www.burnham-on-sea.com/news/2015/hinkley-point-delay-10-02-15.php
8. Telegraph, 12 Feb 2015, www.telegraph.co.uk/finance/newsbysector/energy/11407745/Hinkley-Point-n...
9. FT, 11 Jan 2015, http://blogs.ft.com/nick-butler/2015/01/11/new-nuclear-2015-is-the-criti...
10. Co-ordination Antinucleaire Sudest, 1 Jan 2015, http://coordination-antinucleaire-sudest.net/2012/index.php?post/2015/01...
11. BBC, 15 Jan 2015, www.bbc.co.uk/news/uk-politics-30778427