Does the Hinkley Deal Involve Subsidy?

There has been some confusion since Ed Davey’s announcement of the details of the plan for building a reactor at Hinkley C in Somerset, and some of this confusion may not be accidental.

First, we have the issue of whether the government is in a position to make this decision. In fact, it is not. Any arrangement that involves explicit or implicit subsidies needs to be investigated under the EU’s state aid rules which are ‘forms of assistance from a public body, or publicly-funded body, given to selected undertakings (any entity which puts goods or services on the given market), which has the potential to distort competition and affect trade between member states of the European Union’ (definition from the BIS website).

During parliamentary questions on 15 May to Michael Fallon, Minister of State for Business and Enterprise, Martin Horwood, MP for Cheltenham, asked the minister ‘how he proposes to comply with the standstill obligation in EU state aid law if he enters into an investment contract or sets a strike price before the European Commission has decided whether to approve such measures’. Fallon replied that ‘Any investment contract, if offered, will contain a condition dependent on a state aid decision from the European Commission’ (Hansard, 15 May 2013).

The minister’s clear view is that the setting of a strike price for energy will require a consideration by the EU Commission in terms of its compliance with competition law, law that relates specifically to the granting of state subsidies that may distort competition. Hence we can infer that the minister himself believed that this arrangement amounted to a public subsidy.

This appears to contradict the statement made on Monday by Ed Davey that ‘For the first time, a nuclear power station in this country will be built without money from the British taxpayer’. This is a carefully phrased statement, since the strike price is an implicit guarantee while the insurance against increasing costs are a risk on the public, which is to say nothing of the responsibility for disposing of the waste the plant generates.

While Davey is nervous about breaking his previous pledge that there would be no subsidies for nuclear, South-West Liberal Democrat MEP Graham Watson is not. As reported back in April he told the somewhat 'Business Green' that he supports subsidies for nuclear power in the South-West. Watson'defended the UK government's right to offer hefty state aid support for new nuclear reactors'.

Specifically in relation to Hinkley C, back in May the minister was asked by Paul Flynn at what stage the negotiations with EDF had reached. The minister replied that ‘in the case of Hinkley Point C, the Government have committed to provide summaries of reports from external advisers and analysis on the value for money of any contract agreed’. These reports were not forthcoming on Monday and I would be interested to see them if anybody knows where to track them down.

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When is A Free Market Not a Free Market?

We have a joke in the South-West Green Party along the lines of the Monty Python sketch about the Romans but ours revolves around the question 'What has the EU ever done for us?' As someone who is critical of Europe, although not a Euro-sceptic, I am glad to be reminded that Europe has constrained the worst excesses of neoliberalism in Britain, and that much of this results from the actions of the powerful Green Group in the European Parliament. Now it looks as thought the EU is the last hope to stop the dangerous decision to build a new nuclear station at Hinkley Point in Somerset.

An article in the Guardian last month suggested that the EU Commission looks set to set up a full-scale inquiry into the massive government subsidies that are needed to encourage EDF to build at Hinkley Point in Somerset following the disastrous planning decision gave the new station the go ahead last month. Ironically, it is the hugely destructive single market regulations that this time might delay or even scupper the project, since that mythical 'level playing-field' must be ensured for all energy generators and, although EDF is not a UK company, if the UK government offers it financial incentives to build at Hinkley Point that could still contravene what is considered to be free competition.

The comment from Doug Parr, policy director for Greenpeace, is most pertinent: 'The government wouldn't need state aid approval for nuclear if it wasn't trying to subsidise a risky technology that could wind up costing more than the renewable alternative'. The misguided policy to give life support to a dying and obsolete industry is also a dangerous diversion from the urgent investments we need to make in the energy generation of the future, the renewable forms of energy generation such as windpower, wavepower and solar that are clean and do not damage the health of current and future generations.

Meanwhile, South-West MEP Graham Watson has told the somewhat ironically titled Business Green that he supports subsidies for nuclear in the South-West. Following the change of direction of the party, led by Energy Secretary Ed Davey, Watson 'defended the UK government's right to offer hefty state aid support for new nuclear reactors'. He argued that the nuclear industry has a fair case for subsidies because fossil fuel suppliers also receive generous government support. To which we can only suggest that two wrongs do not make a right, and when the risks are as high as they are with nuclear any price is too high a price to pay.
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Not with a Bang - Not Yet

The news that the inquiry into the decision about whether to build a new nuclear station at Hinkley Point in Somerset was complete in less than a year slid out into the public domain almost unnoticed. In spite of the horrors of Fukushima - still unresolved - in spite of the decisions by a number of other countries to abandon their nuclear programmes, the UK government is still ploughing ahead with this dangerous and out-dated technology. Local people demonstrated but were barely covered by national media. Where was the lengthy and dramatic public inquiry, akin to the three-year process that preceded the permission for a new station at Sizewell in 1987?

Such things are now vestiges of a lost democracy, swept away in the brave new world of the Infrastructure Planning Commission, now 'seamlessly transferred' into the Planning Inspectorate. Without any apparent irony the government website informs us that: 'The main change introduced by the Localism Act will be that the relevant Secretary of State will be the decision maker on all national infrastructure applications for development consent. The Secretary of State will have three months to make a decision, following a recommendation from the Planning Inspectorate'. The main consequence of Pickles's commitment to localism is that he will now make all controversial decisions in his department in London.

Being somewhat surprised about the speed with which the Hinkley decision was made I enquired of the National Infrastructure Directorate of the Planning Inspectorate about how the members of the Hinkley panel were chosen and what was their relevant experience. I was told that when the IPC was an independent body the Commissioners were public office-holders whose biographies and personal information was available on the IPC's website. When it was subsumed into the Planning Inspectorate they became civil servants and so it was no longer appropriate to publish their personal details.

Chair of the panel Andrew Philipson appears to set the tone for the approach to people's concerns in the face of the planning juggernaut. According to a press release from Stop Hinkley: 'When local resident and single mother Nikki Clarke asked who would look at the dangers of nuclear power to the health of local children if the IPC were not prepared to do so, Sir Andrew's response was to tell her that her point was irrelevant; when she tried to continue he had her microphone switched off and adjourned the meeting, asking her to leave.'

This is what the Ministry of Localism means: the ministry of centralised decision-making in favour of the elites, within a government committed to communication by doublespeak.

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Demand Clean Energy

A guest post by Friends of the Earth’s Energy Campaigner Paul Steedman

Renewable energy firms, campaigners and Ministers from all over the world waiting for a long over-due keynote speech on the environment were left feeling somewhat deflated last week, as the Prime Minister’s talk at the Clean Energy Ministerial fell far short of expectations. In a speech lasting just seven minutes, Cameron talked up Britain’s natural resources without actually announcing anything new. He said that clean energy, fossil fuels and nuclear would all have an important role to play in future. And in a nod to the Chancellor he stressed that the cost of renewable energy must fall – without setting out ways to drive the investment that’s needed.

David Cameron knows the idea that clean energy is antithetical to a growing economy and a thriving business sector just doesn’t stand up – our full page ad in the FT last week pulled this argument apart. Renewable energy is one of the few sectors growing while the rest of the economy stagnates. New research by the REA shows that the renewables industry already supports 110,000 jobs across the supply chain. The Offshore Valuation says that using just one third of the UK’s wind, wave and tidal resource could create 145,000 more – developing this sector would allow us to export technology and expertise.

When the Electricity Market Reform Bill enters Parliament this year, Ministers will have a once-in-a-generation opportunity to change our broken power market for the better. It’s a chance to end the stranglehold of the Big Six energy firms keeping the UK hooked on expensive fossil fuels, and provide better support to new and smaller companies developing clean British power from our wind, sun and sea. That’s why Friends of the Earth has launched its Clean British Energy campaign, calling on the coalition Government to bin the ‘bad-for-business’ rhetoric and commit to clean energy and a low-carbon future.

Crucially, a switch to clean energy and greater energy efficiency will bring much-needed long-term relief to the pockets of hard-pressed bill-payers – energy regulator Ofgem says it’s our reliance on gas that has driven up fuel bills in recent years. With six million UK households struggling to stay warm in winter, the need to shift from costly gas towards renewable alternatives has never been greater.

If David Cameron is serious about driving down the cost of renewable energy and driving forward low-carbon growth, he needs to act fast. It’s been two years since we were promised the “greenest Government ever” – with the UK entering a double-dip recession, now is the time to deliver. 

Join over 7,000 people who have already taken action, and add your voice to the call for a switch to clean British energy at www.cleanbritishenergy.com.  
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Nuclear Industry Provides Object Lesson

A year on from the Japanese tsunami I would like to think about how the consequent disaster at the Fukushima nuclear plant is something of a parable of the problem of increasing scale without rethinking design. This is a story told by Adam Curtis in his documentary : here I apply it to the need to rethink our economic scale.

In its early days the nuclear industry was dominated by scientists; sometimes they were rather over-exuberant and they made claims that they later found it hard to meet, but for the first generation of nuclear developers, science was queen, and their respect for her was appropriate. What they designed was a nuclear reactor for use aboard submarines, to enable them to continue to function without the need for refuelling, a crucial geopolitical advantage in the era of the Cold War.

At the size necessary to power a submarine the reactor could not go into meltdown; there was simply insufficient fuel to enable this to happen. But at this scale nuclear reactors to generate electricity could not be profitable: in order to create a nuclear generation programme the reactors needed to be built on a much larger scale. A difficult conflict arose between the need for safety, which can never be guaranteed when a chain reaction is technically possible, and the need for scale in order to create scale economies and ensure profitability.

The argument was won as soon as the US companies Westinghouse and General Electric moved into the production of nuclear plant on a large scale. They gambled that they could persuade the engineers to move with them, and they sidelined the question of safety by inventing the concept of ‘containment’. Although much of the debate around the Fukushima disaster has focused on this concept, it is in reality an example of discourse manipulation rather than scientific debate. It is of the nature of nuclear energy that it is explosive and cannot be contained: once a chain reaction begins it will generate energy beyond the control of engineering systems. 'Containment' is a concept that makes us feel safe with nuclear power, a PR word and not a scientific concept.

I introduce this example to demonstrate how the gap between scientifico-technical responses and policy can be jumped without adequate democratic debate, especially when matters of survival can be cited as justification. Similar unaccountable decisions are being made right now, in the context of climate change, about the next generation of nuclear power-stations.

The example is also useful in demonstrating that what is meant by ‘economies of scale’ cannot really be interpreted without bearing in mind the economist’s other notion of an ‘externality’. Economies of scale can be achieved by ensuring that the costs of a production process are minimised. In the case of the nuclear industry this meant ensuring that any potential risks could be excluded from the cost curves of the companies engaged in developing the technology: the costs of accidents and decommissioning would not, and never have been, borne by those who built the plant.
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What the Fukushima is Going on?

Well how could we possibly know? The major consequence of the Fukushima disaster in this household is that we now have a dish aerial so that we are no longer reliant on the BBC's coverage which, in this case, I can only designate as propaganda. The truth is beginning to emerge from Tepco, who are now admitting that three of the Fukushima plant's reactors melted down within days of the tusnami. Those presumably were the days during which the BBC was engaging a range of pro-nuclear stooges to reassure us that there was no problem.

While the internet appears to be ephemeral it can in reality provide a trace, and we can use this trace to assess exactly what we were being told by the BBC. On 14 March BBC churnalists were reporting the view of 'international nuclear watchdogs' (presumably the IAEA) that there was no sign of a meltdown, balanced by the comment of an unnamed minister that the 'melting of rods' was 'highly likely'. On 27 March the BBC reported that workers were 'trying to cool the reactor core to avoid a meltdown' at a time when we now know that three meltdowns had already occurred. Perhaps strangest of all was the constant repetition of the bizarre phrase 'partial meltdown', as though nuclear fuel could somehow resemble a chocolate fondant pudding.

We were, throughout the early days of the disaster, when people were still listening to the stories, being reassured that this was an old plant whose design is no longer used. This is, as made clear in a film made for the BBC by Adam Curtis back in 1992, when it still had a degree of independence, to entirely miss the point. The real question is why these plants were still running if they were not safe: and that is a question about politics not science.

The BBC's inability to provide clear information about the nuclear threat is no doubt a consequence of the increasing political pressure it has been under in recent years, making the inference that we no longer have an independent national broadcasting channel a sad but inevitable one. No wonder, then, that there has not been a reaction against nuclear power in Britain, compared to Germany, where the tide of revulsion from a better informed public has led to the closure of the entire nuclear industry by 2022 and the election of green governments in a number of the country's regions. Tweet

Why Are Nuclear Reactors Like Dangerous Dogs?

Across the world we are waiting to find out whether Fukushima is to join the list of nuclear disaster zones: a place which, once unfamiliar, becomes a household name. In spite of the familiar faces of 'nuclear experts' trailing through TV and radio studios, it is clear that nobody can answer this question. The situation is out of control and the only science that is relevant is statistics. We are in the realm not of knowledge but of chance.

As a retired anti-nuclear agitator I find it amusing to watch the Grimes and Grimston show. Their webpages indicate that both are pro-nuclear, yet their TV appearances are bravura performances of scientific disinterest and thoughtful reassurance. The emerging line is that the power-station was damaged in the earthquake, which seems to me to gloss over the fact that the reason it is in trouble is that electricity and water supplies have failed. Such failues are common even in highly technological societies, and can only become more frequent as climate change leads to more unpredictable and more extreme weather events.

But what does all this have to do with our canine companions? I have been afraid of dogs since I was a child. What made me suspicious was my instinct that they were not really domesticated. That somewhere within them lurked the potential for sudden savagery. I can still remember my rage when owners used to say blandly 'He won't hurt you'. 'He won't hurt you', I thought back, but that isn't really the point is it? Just as the owners of those dogs thought they had them under control, so the proponents of nuclear power boast of their ability to 'tame the atom'. But the release of the energy of the nuclear bond has always been a high-risk endeavour. The myth of control is undermined by routine emissions and occasional catastrophes. It cannot be any other way, which is why Greens have always opposed nuclear power.

When the unpredictability of the dangerous dog is expressed the damage is one dead child or a person with a patchwork face. These are tragedies, of course, but on a relatively small scale. The tragedies that will be caused if Fukushima is in the midst of meltdown will be far more devastating. Direct deaths will be the source of infinite debate, and may even be statistically massaged away altogether. The brave workers who sacrifice their lives to save their fellow citizens, like the Chernobyl liquidators, will have their courage insulted by scientific manipulation of data. Who knows where the indirect deaths will occur? If the emergency results in radioactive emissions into the atmosphere we will all spend the rest of our lives with a few more atoms of Caesium or Strontium ticking away, decaying unpredictably, within our cells.
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The Courage of Conviction

Central to the myth of progress, what Vandana Shiva has called capitalism’s creation myth, is the idea that you can always have more. The lesson of wisdom, of most of the world’s religions, is that there must always be balance. The joy of new love is always balanced by the pain of opening up to another person; the precious love for children is bought at the cost of the fear of their loss; the thrill of being alive is balanced by the fear of death. Balance is the central lesson of life.

It is because of the refusal to accept the pain that accompanies the joy that we are left with a culture devoid of depth and relationships devoid of meaning. We value the instant karma of the reality TV show or the next gadget, while laughing at those who invest their lives in seeking a deeper, more valuable wisdom. When the entrepreneur tells you there is no such thing as a free lunch, he is thinking that everything must be paid for in terms of money, which we are prepared to work for and offer up. But how many of us still understand the price of a meaningful human life, and are prepared to pay for that?

The managerialist politicians who predominate today would probably argue that in order to change something you need to be able to measure it. A cynical wag recently undercut the purported objectivity of this process with his comment that the Blair government has moved from evidence-based policy-making to policy-based evidence generation. The balancing of costs and benefits in the public policy debate demonstrates clearly the predominance of utilitarianism. The downside of this sort of calculation is that it yields outcomes which are repugnant to many citizens.

This is especially apparent in debates over nuclear power, where politicians have decided on our behalf that the number of lives lost as a result of nuclear irradiation are a fair trade-off for the generation of electricity to power homes and factories. Similar arguments are made when decisions are taken to situate landfill sites or incinerators. The welfare of the average citizen predominates over that of the affected individual, making the cost-benefit analysis an inherently immoral calculus. Utilitarianism is also guilty of species chauvinism since the impact of economic decisions on the non-human inhabitants of the planet are never considered, let alone measured.

It is easy to laugh at the economist or politician who attempts to put a price on human life, or the cost of climate change, or the total annihilation of the planet, or who finds that it is best to encourage Czech citizens to smoke because their early deaths save the government money. It is harder – and therefore more vital – to have the courage of our convictions, and of our intuitions and judgements – when we are in situations where important decisions must be made. Tweet