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Riding a white elephant: Theresa May chooses a path of nuclear dependency and energy uncertainty over sustainability

 

Earlier this year, I wrote an article for ExSE making a number of connections between Laos’s Nam Theun 2 (NT2) hydropower project’s development history and that of the Hinkley Point C (HPC) nuclear power station’s proposed development in Somerset, United Kingdom. Amongst the obvious links was the involvement of the same main developer, the state-owned Électricité de France (EDF); the manner in which proponents have promoted the projects as low carbon sources of energy in an era of climate change; the willingness by the developers to externalise environmental and social costs on wider society and burden future generations; the fact that both mega-projects are presented by leaders as having no or few alternatives by the government (i.e. so-called TINA-syndrome), and the way in which spaces for public discussion are constrained or actively closed down by the respective states until the projects have become a fait accompli.

There was a further connection, linking each of these projects to China’s overseas energy sector engagement, which in the case of Hinkley Point involves China General Nuclear Power Corporation as a major investor in the consortium, while in the case of NT2 by contrast, its development was spurred on by a fear of China taking over the project by the Western backers and financiers, including the World Bank and Asian Development Bank. As things have transpired, the developers needn’t have worried, as now China is one of the main energy infrastructure developers in Laos, and one more dam in their extensive Mekong basin portfolio would have made very little difference in the overall developmental scheme of things. The only impact would have been on the already weakening influence of the Western hydraulic development industry in making a meaningful contribution to the region’s sustainability debates, which have subsequently become a race to the bottom.

But the underlying geopolitics and political economy of these “Macchiavellian Megaprojects”  is what provokes most curiosity and provides tantalising insights into the mores and motivations of powerful leaders and strategic groups, apparently irrespective of whether such projects occur in one party authoritarian states or multi-party, liberal democratic states. This article updates the circumstances surrounding the long-running HPC saga since May, while at the same time, pays brief consideration as to what this may imply about the historical tendency for certain national leaders to readily spurn seemingly rational, broad evidence-based decision-making processes to engender the widest possible social benefit concerning sustainable energy futures, in favour of appeasing strongly vested interests within their own political clique.

While the British government has given the go-ahead for the Hinkley Point C power station to be built, many questions hang over its feasibility and the future of nuclear power in the UK

Bear in mind that HPC was originally the brainchild of Margaret Thatcher, who thought a new generation of nuclear power stations would be the perfect solution to her goal of closing down Britain’s coal industry and privatizing just about every state utility and corporation. She dreamed of a fully-privatized nuclear industry that would stand on its own two feet, without continual government subsidies or recourse to the public purse.

However, Maggie’s vision was brought back down to earth by two events – the first was the disastrous 1986 Chernobyl nuclear accident that led to a plume of radioactivity spreading across Europe from east to west, even contaminating the upland sheep pastures of Britain for a generation[i], and the second was the bankruptcy and subsequent government bailout of the privatised British Energy in 2002, exposing further the hidden costs of maintaining a nuclear power regime. These wake up calls were enough to take some of the becquerels out of the industry’s more outlandish claims and lead to a temporary dampening in government enthusiasm over UK nuclear capacity expansion, but did nothing to dim the headlong rush to nuclear dependency of neighbouring France, who did not have the luxury of North Sea oil and gas to fall back on, but were content to let the state carry the main cost burden.

It is significant that nuclear power came back on to the UK government’s agenda under Tony Blair in 2006, who announced the best way to meet carbon-free national energy needs was to build new nuclear power plants and that failure to act would “fuel global warming, endanger Britain’s energy security and represent a dereliction of duty to the country”. Blair’s evangelism for nuclear power occurred despite strong reservations from members of his own cabinet and warnings from the government-sponsored Sustainable Development Commission that there was “no justification” for a new nuclear programme. In 2008, EDF bought British Energy in a deal worth £12.4 billion, which produced 15 % of the UK’s power from eight nuclear sites and paved the way for a new generation of nuclear plants to be built, including the one at HPC.

The following year, The Guardian newspaper learned of secret government plans to tax consumers to pay for the construction of the nuclear power stations, despite earlier assurances that the industry would not benefit from public subsidies. EDF would be one of the main beneficiaries of this planned levy on bills. By 2010, the Energy Minister announced that there was a huge black hole in financing unavoidable nuclear decommissioning of existing plants and waste management overheads, which would have to be covered by the tax payer. In other words, it is a myth that nuclear power can ever be independent of state subsidies and development and operational costs are only likely to inflate in future.

Theresa May, whose own rise to power came out of the unexpected Brexit result which led to David Cameron’s resignation as Prime Minister, surprised analysts soon after arriving in Number 10 Downing Street by calling for a full and thorough review of the HPC project. This decision stunned EDF and their Chinese investment partners, who had been fully expecting to toast the project’s future success at an on-site celebration on 29 July, the day after the board of EDF had voted ten votes to seven to approve the investment decision on HPC. The cooled champagne and canapés had to be rapidly cleared away, when it was discovered at the eleventh hour that May wanted to delay the UK government’s decision on whether to proceed with construction for a few months more, sending political reverberations from Somerset to Paris and Beijing.

British Prime Minister Theresa May meets Chinese premier Xi Xingping at the G20 Summit in Hangzhou, China on 4 May, when the delayed Hinkley Point decision threatened to overshadow her first major foreign summit

One of the major concerns, according to insiders including the new joint chief of staff, were the economic fundamentals of the project and national security considerations, given the involvement of Chinese state-run nuclear corporations holding a third equity share in the project. However, it was the insanely high electricity wholesale generation price being offered to the development consortium that mostly grabbed the headlines. At a guaranteed strike price of £92.50 per megawatt hour, it was calculated that electricity consumers could end up paying £30 billion in subsidies for the project over its 35 year lifetime. This cost compares unfavourably with renewable energy options, which have been rapidly falling in price over the last few years, and is over double the present UK wholesale price. It seemed to wilfully ignore the economic affordability trends for renewable sources, and cynically could be seen as merely a politically strategy for keeping the UK at the top table of the global nuclear club. In September, the executive director of Greenpeace, John Sauven, called on May to “stop this radioactive white elephant in its tracks”, claiming the deal would be a “monumental disaster for taxpayers and bill payers”.

Cartoon from The Guardian (16 September 2016) spoofing May upon her trusty nuclear pachyderm steed, taking a swipe at cheaper renewable energy sources through the controversial HPC decision. Steve Bell

Independent analysts in the City of London were of the same opinion as Greenpeace, Friends of the Earth and other environmental groups concerning the project’s exceedingly shaky economic credibility[ii], while even EDF board members were divided on the level of existential threat it posed to the future of EDF itself, given the unproven nature of the design and rising economic risks and liabilities to EDF’s nuclear business model at home in France. While the project was seen as crucial to keeping EDF afloat and safeguarding tens of thousands of jobs, The only people in Britain left firmly backing the project seemed to be a core group of construction contractors who stood to benefit financially from the project, some labour unions, a significant rump of Tory MP’s ideologically wedded to nuclear power and the Chinese state, which increasingly became more anxious and threatening about the consequences of cancelling HPC in the following months.

In the days following May’s decision to review the HPC, the Chinese government started to issue veiled threats about the future of UK-China relations, if the HPC project was not approved. Liu Xiaoming, China’s ambassador to the UK, wrote a letter to the Financial Times, warning that bilateral ties stood at a “crucial historical juncture” and hoped the British government would continue to support Hinkley Point – and come to a decision as soon as possible so the project can proceed smoothly.” At May’s first major international summit, ironically the G20 summit in Hangzhou in early September, she was at pains to point out that Britain’s relationship with China were “more than about Hinkley” and that UK had built “a global strategic partnership with China”, claiming it was “a golden era of relations between China and the UK.” Indeed, China’s interests are not solely focused on becoming involved as a partner in the HPC project, but extend to future planned investments in Bradwell B and Sizewell C nuclear power plants on the east coast, where China General Nuclear hopes to employ its own reactor designs and eventually run Bradwell. Majority Chinese involvement in such a sensitive sector as nuclear power generation have understandably raised a number of concerns in numerous quarters over national security which are unlikely to die down in a hurry.

As matters transpired, on 15 September May capitulated to pressure to appease both the Chinese investors and the strident pro-nuclear lobby within her own cabinet, and the £18 billion deal to build HPC was subsequently signed in late September at a “low-key ceremony” in London, attended by Greg Clark, the UK business secretary, Jean-Bernard Levy the CEO of EDF, and He Yu, chairman of China General Nuclear. He Yu noted that, “CGN’s commitment to the UK as one of the world’s leading developers and operators of nuclear power. This flagship program is a triple win for China, Britain, and France and is a culmination of years of cooperation between the three countries. CGN looks forward to providing UK consumers with safe, reliable and sustainable energy and maximizing opportunities for UK suppliers and the UK workforce.”

While engineering unions and contractors welcomed the deal, it was widely criticized by many across the spectrum of media, civil society, business analysts and opposition political parties, who believe that it will lock British energy consumers into an unnecessarily expensive electricity source for two generations, just at the moment when renewable energy sources such as solar, wind and tidal power are rapidly falling in price. Furthermore, it will create a massive radioactive material waste problem that is estimated to equate to 80% of all the material produced thus far in the UK in terms of radioactivity. And all this depends upon whether or not the European Pressurised Reactor (EPR) design chosen by EDF functions or not, given its unproven record and the fact that the only two other nuclear plants adopting the same design have suffered massive technical problems, delays and cost overruns. As EDF’s former chief finance officer who resigned in March 2016 warned, the EPR design represented a “major construction risk” and rhetorically asked, “Who would bet 60 to 70 per cent of his equity on a technology that has not yet been proven that it can work and takes ten years to build?”

As with hydropower development in the Lower Mekong Basin, there appears to be a grim inevitability to the prospect of a tranche of new nuclear plants progressing in the United Kingdom, once HPC construction gets fully underway, as occurred in Laos after the decision to fund NT2 sparked a boom in new hydropower development. While some analysts consider HPC still not a done deal, as there remain many regulatory hurdles to overcome,plus an ongoing challenge by the Austrian and Luxembourg governments in the European Court of Justice over subsidies provided by the UK government to EDF, supposedly breaching European law on distortion of energy markets, the argument that one new nuclear plant will trigger permission for many more is a persuasive one, due to path dependency.

On the other hand, Vietnam recently demonstrated that a nuclear development pathway is in no sense pre-ordained and can be averted through sensible and far-sighted leadership decisions. In early November, the government officially suspended its nuclear development programme, after a series of technical setbacks and delays in its earlier plans to generate 10 % of the nation’s power needs or 15,000 MW from nuclear by 2030. It recently announced that due to a dwindling rate of energy demand expansion and nuclear power’s lack of price competitiveness, the government would postpone its plans indefinitely, a decision that was subsequently endorsed by the national legislature.

An artist’s impression of the proposed nuclear power plant in south-central Ninh Tuan province, Vietnam, that has now been cancelled.

This move came against a background of growing unease about the over-hyped promise of nuclear power’s benefits, general environmental and cost concerns around waste management, and worries about the safety and environmental risks of Chinese nuclear power plants near the Vietnamese border. The government’s decision may temporarily damage, albeit not seriously, economic relations with large investors from Japan and Russia that were seeking to develop the nuclear plants, but at the same time it should open up new space for informed discussion and debate about national and regional energy development futures, not only in Vietnam but more widely, across the Mekong Region. The decision also de-escalates the probability of other regional states wanting to rapidly develop their own nuclear generation capability, with potential implications to weapons manufacturing designs. The challenge for Vietnam now will be to wean itself off fossil fuels, particularly imported oil and gas, while the UK seems to be heading down a road of new nuclear addiction, just at the moment when long-term renewable energy investments have never made more sense.

[i] It took 26 years after the Chernobyl accident for restrictions on the sale and movement of livestock from affected farms in England and Wales. In total, some 10,000 farms were affected due to the contamination of grass by radioactive caesium and iodine isotopes. The Food Standards Agency (FSA) finally lifted farm restrictions on 1 June, 2012

[ii] Critics of the HPC deal from the financial and  business sector have included Legal and General, HSBC, the Institute of Directors, RBC Capital Markets and Moody’s Credit Rating Agency

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From Savannakhet to Somerset: United by controversial EDF megaprojects

Two controversial energy infrastructure megaprojects located on opposite sides of the world, one in Western Europe and the other in Southeast Asia, are linked in more subtle ways than the most obvious bond i.e. they share the same main project developer. Hinkley Point C (HPC) nuclear power station, proposed to be built in the English county of Somerset and the Nam Theun 2 (NT2) Hydropower Project in operation since 2010 in central Laos are both megaprojects awarded to the French state-owned power utility, Électricité de France (EDF) as the main developer and shareholder in the respective project consortia.

Both projects are touted by their proponents as low-carbon energy alternatives to fossil fuel burning power plants that are designed to economically supply perceived unmet energy demands; both represent the biggest infrastructure projects the respective host nations have built at the time of construction; both projects have considerable externalities not being shouldered by the developers due to taxpayer subsidised risk guarantees; and both are mired in complex multi-stakeholder debates over their socio-economic and environmental sustainability credentials.

Beyond these similarities, both HPC and NT2 share a common pattern of politicisation at the highest levels of government, both at home and abroad, as vested interests clamour for each project to proceed at whatever the cost (both financially and politically). This situation inevitably leads to some serious political and economic distortions and inherent risks that emerge with time, that could have been avoided had less high profile, cheaper, smaller, more accountable, devolved and transparent energy projects been developed. Thus, it might be an interesting exercise to compare these two megaprojects and see if any wider lessons can be drawn from the common linkages discernible, despite the significant physical distance and domestic development context that separates them.

Nam Theun 2 – a dam too far for EDF and the Banks?

As the historically older case, this hydropower project had an extended period of gestation between initial development plans being proposed and eventual construction many decades later. A pre-feasibility study was first conducted in 1986, although basin planners with the multi-lateral river basin organization, the Mekong Committee, had already identified the dam site as holding potential for hydropower generation in the 1960s[1]. With the Indochina War being expedited across Laos (as “the other theatre”) and eventual 1975 regime change in Laos ushering in a one party communist state, geo-political conditions were not conducive for the project to be resurrected until the early 1990s, when the plans were dusted off once more by international actors.

The 39 m high Nam Theun 2 dam under construction in 2008. Much of the work was sub-contracted out to Thai construction companies and the cement was sourced from over 600 kms away in Saraburi, Thailand (Source: International Rivers)

The 39 m high Nam Theun 2 dam under construction in 2008. Much of the work was sub-contracted out to Thai construction companies and the cement was sourced from over 600 kms away in Saraburi, Thailand (Source: International Rivers)

It took ten years in the appraisal and preparatory stage from 1995 before final approval by the World Bank’s Executive Directors in lending countries was granted, thereby rubber-stamping the proposed social and environmental safeguards to mitigate and compensate for project impacts. This approval followed a year long period of “public consultations” and “participatory workshops”, conducted both internationally and domestically (though it was widely acknowledged that no meaningful participation was possible in the Lao context). In no reasonable sense could the developer claim to have gained broad public acceptance or employed a “fair, informed and transparent decision-making process”, according to World Commission on Dams principles, given the depth of opposition expressed by civil society globally.

I attended the Bangkok leg of the “technical consultations” held in August 2004, at which numerous civil society actors and dam-impacted villagers from Thailand, including a handful of impactees from the World Bank-funded Pak Mun dam, gave a series of heartfelt and well-reasoned arguments why it was an ill-conceived idea to build the NT2 dam project. The Pak Mun dam in Northeast Thailand became infamous for the multiple impacts it caused to fisheries and aquatic resources based livelihoods, sparking local protests and wider social conflict that still simmers today. But the Bank officials brushed off the objections with their own technocratic arguments as to why constructing the project was Laos’ only option to deliver it from abject poverty through electricity revenue generated and develop economically based on a rational utilisation and export of its natural resource asset base. At all the other consultations worldwide, voices of opposition outweighed those in support both in terms of numbers and credibility of the arguments presented. However, it was clear the decision to proceed had been taken long before the consultations were held and the World Bank was more interested in issuing a “blank cheque” to the developers, as maintained by David Hales of the Worldwatch Institute who chaired the public workshop on NT2 in Washington in September 2004.

The NT2 Hydropower Company (NTPC) that built, owns and operates NT2 is itself a consortium of three main shareholders, namely EDF International (40 %), the Electricity Generating Public Company of Thailand (EGCO) (35 %), and the government of Lao PDR’s Laos Holding State Enterprise (25 %). NTPC sell 90 % of the power generated from the 1,070 MW installed capacity plant to the Electricity Generating Authority of Thailand (EGAT), with the remainder consumed domestically in Laos.

Construction officially began in November 2005 and NT2 was commissioned in March 2010, having cost about $1.45 billion, with funding derived from multiple sources, including France’s Coface, Sweden’s EKN, Norway’s GIEK, the ADB, Multilateral Investment Guarantee Agency, the World Bank, the French Development Agency, the Export-Import Bank of Thailand, Nordic Investment Bank, nine international banks and seven Thai banks. The Lao government’s equity share in NTPC was financed chiefly by a loan from the European Investment Bank (EIB) and Asian Development Bank (ADB), with the multi-lateral banks providing political risk guarantees to the developers and private lenders, in effect, thus placing the main burden of risk on taxpayers in the contributing countries and into the future, with the Lao people.

Due to its size, prestige and symbolic nature, NT2 neatly embodied for all representatives of the temporarily thwarted dam building industry (domestically and internationally) a significant step towards the realisation of the popular narrative created that Laos could become the “Battery of Asia” or “Kuwait of Southeast Asia”, if the slumbering nation could only maximise the development of its hydropower potential. Technically, the dam project appears to have performed reasonably, but socially and environmentally the dam has been a predictable disaster, with the impacts falling particularly heavily on the downstream riparian people living along the Xe Bang Fai river in Khammouan and Savannaket provinces.

The downstream channel constructed below the power station takes 350 m3/s of turbinated water down to the Xe Bang Fai river, adding significantly to its normal background flows and seriously impacting the aquatic ecology and river-dependent livelihoods (Source: Aurecon Group)

The downstream channel constructed below the power station takes 350 m3/s of turbinated water down to the Xe Bang Fai river, adding significantly to its normal background flows and seriously impacting the aquatic ecology and river-dependent livelihoods (Source: Aurecon Group)

A significant, but invariably overlooked, historical feature of NT2 and the manner in which funding approval was granted by the multi-lateral banks, relates to the highly politicised nature of the campaign pushing for its development,  that included being able to harness the support of national leaders at critical moments. At one point in late 2004, it seemed like commitment was wavering from several crucial parties to backing the project, including some ambivalence on the French and American sides as to whether this was a worthy project to be involved in, given the patently high social and environmental impacts that would result and rising voices of opposition. Seemingly in a carefully calculated bid to sway any doubters of the project’s strategic importance, proponents started playing the “China card”, suggesting that if the Western institutions failed to back it, then China would fill the gap in a trice and takeover the project. This scare tactic seemed to do the trick, because French President Jacques Chirac was understood to have intervened and secured European loans and grants to secure EDF’s central involvement, a fact tacitly acknowledged by the French Ambassador to Laos at the project’s powerhouse construction inauguration ceremony in November 2005. The ceremony was also attended by the Lao Prime Minister, Bounnhang Vorachit and then Thai PM, Thaksin Shinawatra, representing the country likely to benefit most from the project in terms of immediate construction contracts, subsidised imported energy and externalisation of socio-ecological costs. Building large dams in Thailand has been controversial since the early 90s, thanks to an active civil society and relatively free media.

The Nam Theun 2 Hydropower Project (NT2) in central Laos and relative position of Savannakhet, where the bulk of the project’s power leaves Laos for the Thai market (Source: Baird and Quastel, 2015)

The Nam Theun 2 Hydropower Project (NT2) in central Laos and relative position of Savannakhet, where the bulk of the project’s power leaves Laos for the Thai market (Source: Baird and Quastel, 2015)

There were strong suspicions amongst civil society observers and energy analysts that the World Bank doctored its figures and used incorrect assumptions in order to make the economic argument for the dam stack up, prior to final appraisal in March 2005. Civil society critics had always argued that there was no credible economic case for the NT2 project going ahead, above and beyond its poor social and environmental score sheet, as the amount of electricity it was supposed to produce for export could easily be covered by demand side management in the Thai energy market. At least 153 NGOs recorded their opposition to the dam project going ahead during the evaluation phase.

In 2011, the World Bank published a report entitled “Doing a Dam Better: the Lao People’s Democratic Republic and the story of Nam Theun 2”, in which it is claimed the story of NT2’s development would provide “valuable insights and lessons that can be applied in future projects of similar size, scope, and complexity”. It was also held up as “strong evidence” of the Bank’s re-engagement in and commitment to supporting the large hydropower sector, after a decade-long hiatus prior to and after the seminal World Commission on Dams (WCD) report. Thus, the NT2 project fulfilled many functions for the dam lobby, not only in terms of Laos but worldwide, as a harbinger of renewed lending for “high risk, high reward” hydraulic development projects. And sure enough, it did open up a flood of cheap finance, subsidies and externalisation of risk for the ever-thirsty industry across Asia, Africa and Latin America.  The World Bank’s storyline of success with the project has continued since, despite the many reports issued that challenge this stale narrative with compelling evidence, including those from the project’s own Panel of Experts (PoE), but also numerous civil society studies conducted.

The project is expected to generate total revenue of $1.9 billion over the course of its 25 year concession period, of which some 25 % should, in theory, make it into Lao government coffers to help fund rural poverty alleviation programmes. However, because the project’s financial arrangements are so murky, particularly on the Lao government side, there is no guarantee in place that the funds generated will be spent where they were originally intended. Due to a culture of intense secrecy and unaccountability within the heart of Lao state governance, it is uncertain to what extent dividends, taxes and royalties from NT2 have been directed towards social security, education or health programmes. Without an independent audit, suspicions remain that revenues are just co-mingled with other public resources or even mis-appropriated, calling into question any claims by the Banks of a “model project” in water or energy governance. Tellingly, a spate of subsequent hydropower projects in Laos have ignored the long list of “safeguards” touted as the new standard by the NT2 proponents and fast-tracked dam construction without even basic public consultations. In Transparency International’s 2015 Corruption Perception Index, Laos was ranked 139th out of 168 nations worldwide.

Children bathe in the dam’s 450 km2 Nakai reservoir near a resettlement village. Despite assurances by the developers to remove all vegetation prior to flooding, much of it was left and is slowly rotting in the water (Source: FIVAS)

Children bathe in the dam’s 450 km2 Nakai reservoir near a resettlement village. Despite assurances by the developers to remove all vegetation prior to flooding, much of it was left and is slowly rotting in the water (Source: FIVAS)

Meanwhile, most of the goals of the social and environmental mitigation programme remain unmet, while many of the impacts identified by critics (and some additional ones) have been borne out in practice. Resettled families have not been made demonstrably better off and many are still reliant on dwindling material handouts from the NTPC and Lao government to survive, while downstream along the Xe Bang Fai recipient river in Khammouan and Savannakhet provinces, fish populations have crashed and riverside vegetable gardens lost amongst a catalogue of impacts, impoverishing the livelihoods of the tens of thousands of people that once relied on them. Rainy season flooding has been exacerbated by the power station additional flows, further eroding the sustainability of local livelihoods through destruction of rice crops. Meanwhile natural forests have been destroyed and wildlife decimated in the “protected area” in the headwaters of the NT2 reservoir, despite the assurances of the dam proponents that the project’s development would ensure their protection.  As Professor Thayer Scudder, an eminent global expert on the social impact of dams, Commissioner for the World Commission on Dams and one of the three person Panel of Experts for the NT2 project, commented in a New York Times article in August 2014, after nearly two decades spent closely monitoring the dam’s development process, “Nam Theun 2 confirmed my longstanding suspicion that the task of building a large dam is just too complex and too damaging to priceless natural resources”.

 

Hinkley Point C – more economic madness?

Nuclear power was first developed in the United Kingdom during the 1950s and 60s with the somewhat cornucopian promise of abundant clean, cheap and reliable energy for present and future generations to benefit from. The British public generally believed the claims made by the industry and politicians, so little overt opposition to nuclear energy (unlike nuclear weapons) appeared until the first large-scale nuclear accident occurred at Three-Mile Island in 1979 followed six years later by nuclear meltdown disaster at Chernobyl. These events and various setbacks within the industry prompted a much wider debate about the technology with a resulting fall in public support. At its peak in 1997, nuclear power generated 27 % of the nation’s electricity, but this has subsequently declined to about 18.5 % (in 2012) from 15 nuclear reactors, as the original fleet of power stations has been gradually retired for decommissioning and not been replaced. Based on rhetorical concerns about future energy security and pressures to reduce national emissions of carbon dioxide, the UK government announced in 2008 that it had given the go-ahead for a new generation of nuclear power stations to be constructed, with eight potential sites announced the following year, one of which was Hinkley Point.

This move proved controversial, with many NGOs, including Greenpeace, Friends of the Earth, the Campaign for Nuclear Disarmament and the World Wildlife Fund opposing the shift back to nuclear power solutions, on the basis of uncertain cost-benefit appraisal, the opacity of the planning process and environmental concerns. By marked contrast with NT2, nuclear plants like HPC do not require the resettlement of 6,500 households nor do they have the same direct negative impacts on the livelihoods of tens or hundreds of thousands of people, so the short term social and environmental impacts could be said to be more limited and manageable. However, the long term environmental and health impacts and risks posed are less favourable, due to the problems of nuclear material transport to and from site, safe disposal of radioactive waste and plant decommissioning issues passed on to future generations to resolve.

After a long period in the consultation and planning stages, a third reactor is scheduled to be built alongside two existing plants at the Somerset coastal site, namely Hinkley Point A (Magnox reactor) and B (Advanced Gas-cooled Reactor). The landscape-dominating plants occupy a low-lying, rural spot barely above sea-level next to the Bristol Channel, famed for having the second highest tidal range in the world after the Bay of Fundy, eastern Canada. This fact is material, when considering the United Kingdom’s energy futures in an era of awareness of the need to build alternative, safe and sustainable energy sources to mitigate predicted climate change. The UK government is legally committed to a gradual decarbonisation of the nation’s energy production mix up to 2050.

A view across Bridgwater Bay to the Hinkley A and B power station site. HPC will be developed alongside, at an estimated cost of £ 18 billion (David J.H. Blake)

A view across Bridgwater Bay to the Hinkley A and B power station site. HPC will be developed alongside, at an estimated cost of £ 18 billion (David J.H. Blake)

While the original A plant closed in 1999 and is being decommissioned, Hinkley B is still operating under EDF ownership and is not expected to cease operations until at least 2023. The entire site is vulnerable to future increases in sea levels, something that was not well understood when Hinkley A and B were built, but should be a high priority for HPC planners. In 1607, a major tsunami is recorded as engulfing much of this coastline and killing an estimated 2,000 people, but neither this historical event nor future predicted sea level rises of at least two metres by the end of this century and more severe weather events precipitated by climate change seems to have dampened the appetite of the proponents to push ahead with HPC, regardless of potential risks. When I visited the site in early April 2016 at high water on a spring tide, the sea was already lapping over the first line of concrete defences around the existing reactors (see picture). I can foresee extra marine erosion and flood protection measures, adding further to the costs of the project in the foreseeable future.

The coastal perimeter of the HPC site is threatened with coastal erosion, expected to worsen in future under conditions of rising sea levels, stormier weather and an underlying soft geology (David J.H. Blake)

The coastal perimeter of the HPC site is threatened with coastal erosion, expected to worsen in future under conditions of rising sea levels, stormier weather and an underlying soft geology (David J.H. Blake)

HPC was originally proposed by the government as an ideal solution to “keeping the lights on” in a climate change challenged world, able to supply 7 % of the UK’s present energy needs at a single location, through a 3,200 MW installed capacity and reliably high plant load factor[2]. The trouble is, the European Pressurized Reactor (EPR) design EDF have proposed to use is thus far unproven technology and at the four other sites where a similar nuclear reactor type is being constructed in France, Finland and China, the projects have been dogged by unforeseen technical problems leading to steep cost and time overruns.

During a spring tide in early April 2016, the sea breached the first line of sea defences near the plant. In 1607, this coastline was struck by a major tsunami that swept many miles inland and drowned thousands (David J.H. Blake)

During a spring tide in early April 2016, the sea breached the first line of sea defences near the plant. In 1607, this coastline was struck by a major tsunami that swept many miles inland and drowned thousands (David J.H. Blake)

As a political party, the incumbent Conservatives have traditionally offered strong support for nuclear power, although up until a few years ago the leadership insisted that it should not be subsidised by the taxpayer but subject to normal market forces and open competition. However, this stance shifted under the Conservative-Liberal Democrat coalition government (2010-15), when ministers decided that the UK should pursue a nuclear-fuelled future, with the provision of state subsidies to sector investors, riling both free-marketeers and renewable energy campaigners alike. This policy position remained unchanged even after the sobering wake-up call of the potential dangers surrounding nuclear power delivered by the March 2011 Fukushima disaster. Yet the British public have proven far less averse to nuclear power than the German population, perhaps partly because the former have been fed a regular line from the government that without further nuclear development the UK may be looking at future brown-outs. Such a fear-invoking narrative was recently admitted to be a myth by the government’s own Secretary of State for Energy and Climate Change, when Amber Rudd publicly stated that the nation’s lights would not go out if it was not developed, as had been claimed by her predecessors.

Such admissions are grist to the mill for the national and local civil society opposition to Hinkley, movements like Stop Hinkley which have doggedly campaigned against the project for many years, long before HPC was proposed. Although such citizen groups are ideologically opposed to nuclear power development in principle, their economic arguments against the project have been given added weight in recent years by a number of studies by financial and economic analysts, such as Liberium Capital which described the strike price as “economically insane” and “as far as we can see this makes Hinkley Point the most expensive power station in the world.”

Despite the generous government guarantees provided by a strike price (at £92.50 per MW/h) for the electricity produced of over twice the current wholesale price for electricity in the UK, the parlous state of EDF’s finances and massive debt mountain mean that HPC is a risky proposition for the utility. Its own workers’ union opposes the project and in February 2016, Thomas Piquemal, EDF’s chief financial officer resigned, warning that building HPC could ruin the company. As a result, the French government has said it plans to provide financial support to EDF, a move that will likely fall foul of EU legislation to ensure fair competition in the energy market and disallow unfair state aid to individual companies, something that the UK government is already being challenged on in the European courts by the Austrian government. With national pride and the reputation of French nuclear technology potentially at stake (EDF is also looking to invest in China and other countries), a decision from the French government on whether to bailout EDF has been delayed time and again, and a decision is not now anticipated until at least September 2016.

One remarkable point of difference between NT2 and HPC is that with the former, China was portrayed by some as a threat to EDF and Western venture capital’s regional interests, had it been allowed to gain a stake in the dam project. With the benefit of hindsight, China was poised to build dozens of other dams in Laos, with or without EDF’s involvement. But now China is actively courted as a nuclear investment partner, both for the injection of funds it can offer, but also, potentially for its technological expertise. Indeed, the China General Nuclear Power Corporation has taken a one third stake in HPC, with the deal inked just hours before the state visit of President Xi Jinping to London in October 2015. Much to the chagrin of human rights groups, the President was afforded the red carpet treatment for his visit, with PM Cameron and Chancellor Osborne hoping HPC would be the springboard for further Chinese investment in nuclear power stations in Essex and Suffolk.

With the latest twist in the Hinkley saga looking like a legal challenge will be launched against the UK and French governments, one Southwest region Green MP referred to HPC as an uneconomic “white elephant” which is being pushed regardless, because there is “now a political battle where the stakes for both the UK and France are just too high to admit failure”.

Both NT2 and NPC would qualify as prime examples of what Danish economist Bent Flyvbjerg refers to as “Machiavellian Megaprojects”, which are shown to follow a time-honoured formula:

(underestimated costs) + (overestimated revenues) + (undervalued environmental impacts) + (overvalued economic development effects) = (project approval)

As Flyvbjerg stresses in his analysis of such megaproject development by a relatively few societal elites, the monomaniacal pursuit can frequently lead to the deception of “parliaments, the public and the media about the costs and benefits of the projects”.

It seems there is more linking the development paradigm of Savannakhet and Somerset than citizens in both the U.K and Laos may fully appreciate. There is still a glimmer of hope, however, that commonsense may prevail in London and Paris, and the HPC case of folie de grandeur may be stopped in its tracks. In the case of NT2, Laos has now been locked into a project with multiple negative social and environmental consequences, many irreversible such as permanent loss of valuable terrestrial and aquatic biodiversity, that will ultimately cost its citizens and the wider Mekong basin populations dearly into the future.

[1] Interestingly, in the address given by Pierre Lellouche, Minister of State with responsibility for Foreign Trade at the Nam Theun 2 project’s inauguration ceremony on 9 December 2010, he claimed that the site was first identified back in 1927 by an engineer, presumably of the French Indochina colonial government.

[2] The plant load factor is the ratio between the actual energy generated by the plant to the maximum possible energy that can be generated with the plant working at its rated power over the duration of a year.

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