Hinkley Point C: Electric shock (or nuclear accident?)
Yesterday at the end of a nail-biting process involving disputes and resignations, French power company EDF, backed by the French Government, finally agreed to the terms for the development of the Hinkley Point nuclear power station – billed as “the most expensive power plant in the world”.
And the British government, which has been pressing for the deal which it has said is vital to Britain’s future energy supply (and – so help us – to meeting Britain’s “climate targets”), has announced that it needs more time to think, and may decide in the autumn. The energy industry is stunned and uncomprehending. The French and Chinese governments are shocked (though so far courteous). Let’s think through the details.
Do we need new generating capacity? Emphatically Yes. We have coal-fired power stations closing with the EU’s Large Combustion Plants Directive, and ageing nuclear power stations reaching the end of their lives.
Do we need nuclear? Yes we do. We need a mix of energy technologies. At the moment, with fossil fuel prices at historic lows, nuclear looks expensive. But this is a sixty-year project. Fossil fuel prices won’t remain low for sixty years. While nuclear capacity is very expensive to build, it then delivers reliable base-load power at low and predictable prices.
Won’t renewables fill the gap? No. While claims are made for the “low cost” of renewables, these claims ignore the massive costs and inefficiencies which intermittent and unpredictable generation places on the grid, starting with back-up, and running through to grid redesign, and financial support for gas-fired back-up run uneconomically. The higher the percentage of intermittent power, the greater the grid imbalance problems become. One day, maybe, we shall have very large-scale electricity storage, and renewables may become viable. Right now they’re a non-starter. We have to have base-load capacity – coal, gas or nuclear.
Is Hinkley a good deal? No. The strike price is eye-watering, and the project imposes massive costs on industry and households for decades to come. But the government was forced into this position by (A) the loss of our civil nuclear capacity in the UK – we’ve allowed it to wither on the vine, with no new plants for decades, and (B) Gordon Brown selling off Westinghouse leaving us without a nuclear industry (remember Brown also sold our gold reserves at the bottom of the market).
Regulatory uncertainty: There’s another reason why it’s difficult to find investors for major energy infrastructure projects, and that’s regulatory uncertainty. Who’d want to undertake an £18 billion, sixty-year investment when every new Chancellor and Energy Minister comes up with new wheezes, and Angela Merkel can close down the whole German nuclear fleet on a whim? It is vital we reach a consensus on a long-term nuclear commitment (I’d suggest one new power station should be started every two years), with a consistent, stable and reliable regulatory structure. Right now, the government finds it has only one possible supplier, and that supplier needs a massive guaranteed price to justify the regulatory and other risks.
Chinese financing: Are we happy with it? Does it impose security risks? No and yes. But we have few choices. We need the massive funding, and EDF plus the Chinese are prepared to offer it. There is however one alternative: the government can borrow long-term at extraordinarily low rates. I hate nationalisation, but maybe this is a project too big for the private sector (and arguably with French and Chinese government backing, it’s not private sector at all).
How do France and China feel about this new delay? They seem to be being polite right now, but they must be shocked and perhaps angry. We plead for their support, then kick them in the teeth when it is offered.
A government paralysed?
Theresa May started so well, stamping her authority on the body politic. But that reputation is starting to crumble as the government seems unable to make a decision. London’s airport decision: delayed. Hinkley Point decision: delayed. Article 50 invocation: delayed. Watch it, Theresa. You’re starting to look pusillanimous and indecisive. This is particularly critical in the post-Brexit environment when we want to show that Britain is going places, is open for business, and is a great place to invest. In particular we want to show that we’re keen to maintain business links with our neighbours, even though we’re leaving their political union. Cooperation with France would be a great way to demonstrate that. This latest wobble comes at a very bad time, and sends all the wrong signals.
Theresa May: “I’ll get the best EU deal”: The Express devotes its front page to the Prime Minister’s claim that she’ll get “the best deal” – despite her dilatory approach to Article 50. She places special emphasis on immigration, and trade deals. But she needs to understand that no one will believe we are serious, and many on both sides of the Atlantic will not enter serious and substantive negotiations, until we put our cards (and Article 50) on the table. The Americans have said that. Brussels has said it. We can’t expect major powers to devote time and resource to major trade negotiations on a “What if?” basis. Bite the bullet, Theresa. Make a decision for once.
Merkel: No going back on open door immigration
Angela Merkel is in “Hear no evil” mode. Ignoring the very justified concerns of the German people – including crime, terrorism and widespread sexual assaults, in addition to overcrowding and the impact on social cohesion – she insists on pressing ahead with her open-door policy. She fails to understand that democracy involves paying at least some attention to the legitimate concerns of constituents. She is also imposing a burden on Europe – since these immigrants will never return – so they will eventually, one way of another, gain German/EU citizenship and be allowed to travel where they choose.
“They’ll go home after the war”: Merkel has apparently sought to reassure German voters that Syrian refugees will go home after the war is over. Hands up anyone who finds this credible. No one? I thought not.
31 in a house: Meantime back in Britain, the Express reports that thirty-one migrants have been found living in a single house in Brent. I think this is what we call “Pressure on social infrastructure”. It’s not an isolated case – the Express quotes a number of examples.
Financial Times economic analysis
In a piece entitled “Earnings expose stark divide in post-Brexit slow-down”, the FT moderates its normal “Project Fear” positioning to admit that there are winners and losers, and that exporters, and manufacturers of essentials, are doing well. Good to have a more balanced view from the FT.
IMF apologises for its “disastrous love affair with the €uro”
Ambrose Evans Pritchard writes that the IMF is having a fit of “Mea Culpa” after its disastrous interventions over the €uro. Christine Lagarde and her predecessors had such blind faith in the €uro currency that they had no plan to deal with a €uro crisis, and their ad hoc response attracted criticism around the world. Oh well – there is joy in Heaven over one sinner that repenteth. Until the next time. Lagarde still doesn’t understand that the €uro, and the EU project, are doing more harm than good.
There has been a reported rise in the level of “hate crimes” against foreigners post-Brexit – though we have to see this in the light of (A) the very broad definition of hate crimes, which now seems to include wolf-whistles; and (B) the probability of higher reporting levels in a post-Brexit context. But the Indy has no doubt, with Adam Lusher laying the blame fair and square on Brexit, and implying that a desire for independence and self-determination is intrinsically xenophobic and racist. Let’s say it again: UKIP condemns verbal and physical abuse against anyone on grounds of nationality or ethnicity. UKIP’s points-based immigration proposal is less discriminatory than our current UK/EU immigration policy.
May reassures Poles in the UK
On a more positive note, we welcome the Prime Minister’s reassurance to Poles living and working in the UK. The Leave campaign always insisted that EU citizens legally resident in the UK before the referendum would be protected, and has been disappointed that Theresa May would not endorse that commitment, preferring to keep EU citizens in the UK in reserve as bargaining chips in future EU negotiations, disregardless of the anxiety and distress she was causing to millions of people. She has now, however, reassured Poles in the UK that their residence status will be protected, at the same time condemning (as we do) racially or nationally motivated attacks. I’m not sure where that leaves the bargaining chips.
We in UKIP have always been particularly positive about our Polish neighbours, remembering their unstinting service in the Second World War, and the Polish cemeteries in Eastern England – not to mention their 21st century reputation as conscientious and reliable employees.
Branson’s five-point plan
Sir Richard Branson has written a five-point plan for Britain’s economy. He seems to have come to terms with Brexit, simply calling for a liberal trade settlement (with which we can all agree). And his five points generally make perfectly good sense. Worth a read.
“Freeze on hiring men”
In a burst of politically correct social planning, the European Commission has said that it will put a freeze on hiring men if its gender targets are not reached.