The Alice in Wonderland economics of nuclear power.
The Alice in Wonderland economics of nuclear power
There are so many things I could write about yesterday’s shameful decision by the European Commission to approve the coalition government’s plan to hand over £17.6bn to EDF to build a 1970s style nuclear power station at Hinkley Point.
But the overwhelming sentiment felt by many who have watched this saga is just how extraordinarily disingenuous the advocates of new nuclear have had to be to get this far; and what a shockingly bad and expensive deal it is for the British taxpayer and energy bill payers.
If anyone needs further evidence of why so many people don’t trust politicians to keep their promises, have conviction behind their arguments, or demonstrate fresh thinking and leadership for real change, then this is it.
Consider this; the Conservative Party’s manifesto at the last election signalled their desire to build new nuclear power stations “provided they receive no public subsidy”. The Liberal Democrat manifesto said that the party would “Reject a new generation of nuclear power stations; based on the evidence nuclear is a far more expensive way of reducing carbon emissions than promoting energy conservation and renewable energy”.
The Coalition Agreement highlighted this difference of opinion, but indicated new nuclear power stations might be built “provided that they receive no public subsidy” (those words again). It promised that Lib Dem MPs would abstain in relevant votes.
Then last year, after three years of being locked away in Whitehall bunkers with their coalition partners, the Lib Dems performed a spectacular flip-flop, and officially became pro-nuke. I was at the Liberal Democrat conference last year and saw Ed Davey offer a sincere promise to disgruntled party activists; “There will be no public subsidy”.
If the Conservatives and Lib Dems really believe their own rhetoric on this, then they are delusional. If they don’t, then they are being deceitful.
The government’s contract with EDF locks us into a set price for electricity for the next 35 years. And goodness, what a price: twice the current market rate. It guarantees EDF a 10 percent return on investment over the period. Nice work if you can get it; all paid for by poor old energy consumers.
And if this kind of hand-out is not a subsidy, then I don’t know what is. In fact, yesterday’s decision by the European Commission to approve the deal confirmed it to be a subsidy; just one that they reluctantly agreed, after fierce lobbying by the UK, to be compatible with “state aid” rules.
Proponents of nuclear power should at least have courage of their convictions and be honest about this, rather than try and dupe the electorate and bill payers through wordplay.
It’s right to give public subsidies to support new clean technologies with environmental benefits. But nuclear fails on both counts – it leaves a mountain of waste for countless future generations, and is still no cheaper than it was six decades ago.
For solar and wind, subsidies are needed to bring them to market, and deliver at scale as quickly as possible, bringing costs down. It’s working: the cost of some renewable technologies has fallen by 30 per cent in the last year.
Both solar and on-shore wind are expected to reach cost parity with fossil fuels here in the UK within the next decade or so. At that point, subsidies will no longer be needed, and renewables will be winning on raw economics alone.
The prize of cheap renewables is so large that the sensible thing would be for the government to be doing everything it can to make it happen. Subsidy is worth the short-term cost. But it has not worked for nuclear – and we are already paying a huge price: dealing with nuclear waste alone is already costing us £70 billion. Instead of 35 more years of subsidy it is time to pull the plug on new nuclear.
And where are Labour? So far, they are part of the cosy Westminster consensus supporting new nuclear power.
As the madness of the Hinkley deal unravels over the next few years – as it surely will – it will sit very badly alongside Ed Miliband’s promise of an energy price freeze, and Caroline Flint’s recent and very welcome promises to tacking the scandal of fuel poverty through energy efficiency schemes.
It’s been estimated, for example, that the vast majority of homes in the country could be brought up to Energy Performance Standard C, supported by interest free loans to householders, at a cost to the taxpayer of just over £2billion per annum. This would make a real different to the health and wealth of millions of low income households.
The Hinkley deal, in contrast, takes money away from these same households and gives it to EDF – for the next 35 years.
Thankfully, it’s far from over yet. Austria has announced it is going to challenge the deal in the European courts (hardly known for their agility), and it is highly likely renewable energy companies will do the same.
Labour should take this opportunity to pause and think very carefully about which side of the debate it wants to be on in the years ahead; on the side of consumers, or EDF and the Alice in Wonderland economics of nuclear power.
Craig Bennett is director of policy and campaigns at Friends of the Earth
For a full briefing on why Friends of the Earth opposes the building of new nuclear power stations see here.
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25 Responses to “Hinkley Point – a shockingly bad deal for the British taxpayer”
Guest
We need to push AGCC costs off onto the poor, with coal?
Right. (Nuclear “oddly” won’t get a look in)
And you need to make sure that it’s controlled, for the few.
blarg1987
Sorry I did;t explain myself, we flogged of our nuclear industry because we were told the state was incapable of being able to build such things. Now the irony being that we are relying on a foreign state.
It is true we don;t have the experience now, however that is something we should have written into the Hinckley programme so we can build our own nuclear reactors etc. Short term it would cost more, but long term it could lead to us being an exported of such technologies like we were years ago.
Leon Wolfeson
It’s not something which we should expect EDL, a French company, to address. It’s something which would be UK policy.
MartinC
Probably the second most far-reaching and consequential decision that has been taken in
the modern era about Britain’s energy future, was made in 2005 by the Blair-Brown government. That was when they decided to sell our nuclear builder, BNFL-Westinghouse, to the Japanese for $5bn dollars. That clever little decision permanently stripped us of our ability to build our own nuclear power stations because they sold the lot: designs, licensing rights, absolutely everything. Now, in an industry where we once led the world, we are reduced to going cap in hand to the French, and get to the back of the queue to pay them to build nukes for us. No doubt too, that $5bn has long since been p!ssed away on public-sector pay and pensions.
Since then Labour has compounded the problem; the most far-reaching and consequential decision about Britain’s energy future was made in 2008 by the then Energy Minister of the Gordon Brown government, a Mr. Ed Milliband (heard of him?) who passed the 2008 Climate Change act. This act was drafted by a young and enthusiastic Friends of the Earth activist Bryony Worthington (now a Labour Baroness). It commits us to reducing carbon emissions by 80% by 2050, an impossible target unless we close all energy intensive industry in the UK. To be fair here, the rest of the Commons voted it in like sheep though.
Dakiro
It might not be a very good deal but still remains a good deal.
Waste problem – are you so sure? Just recently a new reactor, BN-800 was opened. It will burn what you think is waste. So here your argument totally fails already.
Do you believe that building more renewable source power plants will cost less human lives than building and maintaining a few good and modern nuclear plants, lets say in the next 100 years? Do your maths yourself.
Solar and wind, any other renewable energy source produces a lot of waste, takes valuable space from green lands, needs access roads (if not on sea). All the considerations about renewables are done using maximal capacity, not what it really produces.
Hinkley-point – a good thing for stability and certainty of power supply, wish it was cheaper as it could have been. If this and the next governments commits, 100 percent of current carbon-derived electric supply can be replaced with nuclear within the next 10-20 years, not the next 100 as with renewables.
There is urgent need to build more, cheaper and more advanced nuclear reactors quickly. In the meantime while they are being built, invest good money in research and design of new types – molten fuel atmospheric pressure for example.