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Hinkley Point C

Hinkley Point is a big mistake and even worse it seems to be getting the green light from the UK government. After Brexit this is now the second major, long-lasting political wrongturn by our friends from the island this year. I just received this statement from Tom Burke, chairman of the well-known climate think tank E3G, which he allowed to be published in its entirety:

Following reports today that the Government is about to give the green light to the Hinkley Point C nuclear power station, E3G, a leading climate change think tank, said it would be a hugely expensive strategic mistake, using expensive 20th century technology that would soon be obsolete.

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This time the news are:

  • Hinkley Point C is still Europe’s most controversial nuclear plant project. Last week the UK government under George Osborne struck a deal with the Chinese, where the Chinese pledge to finance 1/3 of Hinkley Point C. The total costs of HPC are supposed to be 34 billion euros. The Chinese are, of course, not interested in HPC per se. They want to further their own goals: exporting their own nuclear plants. They plan to build their own reactor,  Hualong, on the Bradwell site in UK, and it is becoming more and more evident that Osborne is cutting a deal: You invest in HPC, and I give you the green light for building a Chinese reactor at the Bradwell site in UK. 
    Overall it is still surprising that the UK government pushes for HPC, given that 1) it will need many years (expect at least 10) until completion; 2) nuclear power is not the cheapest way of producing power in the UK anymore: in effect, in may places in UK wind and solar comes at 2/3 of the strike price for HPC; who knows how cheap wind and solar energy will be in 10 years; 3) nuclear plants built with the same technology in France (i.e. with EDF, the company that is also supposed to build HPC) are several years behind schedule and already three times over budget; 4) and the technology of the EPR reactor that is supposed to be built in HPC is currently under scrutiny because of safety issues. Why bet on a Trojan Horse if the alternatives, like wind or solar, are open doors?

And some seminars/conference announcements (as usual you can also find them in my Environmental Economics Calender on the right):

  • This Friday I will present in the 4th Benelux Association for Energy Economics workshop, in Louvain-la-Neuve, Belgium. You can find the programme here: BAEE Schedule.
  • Paris Environmental and Energy Economics Seminar, Maison des Sciences Economiques, Paris Sorbonne, November 5, 4.30PM to 6.30PM, Ujjayant Chakravorty (Tufts University) on “Who is Buying? Fuelwood Collection in Rural India”, followed by Hélène Ollivier (CNRS – PSE) on “Product mix, trade, and the environment: theory and evidence from Indian manufacturing”
  • Sustainable Economic and Financial Development seminar,  École Polytechnique Paris- Department of Economics, Tuesday, November, 10 from 3 to 4:30 pm, Eric Strobl (École Polytechnique) on  “The Inflationary Costs of Extreme Weather”
  • Conference on Sustainable Resource Use and Economic Dynamics  (SURED 2016), to be held in Banyuls-sur-Mer (France), 6th-9th June 2016. As Lucas Bretschger is now the president of EAERE he could not continue to organize the SURED conference in wonderful Ascona (Lago Maggiore) any more. The new organizers are Mireille Chiroleu-Assouline (Paris 1 and PSE), Katheline Schubert (Paris 1 and PSE) and Sjak Smulders (Tilburg University). More information: www.sured2016.fr.
  • In order to go through with `his’ project Hinkley Point C, Chancellor Osborne of the UK makes a deal with China. The point seems more and more like this: Without China there is no more international investor left over for UK to finance Hinkley Point C. In return, the whole reason why the Chinese want to invest in Hinkley Point C is so that they can actually get the contract for the Hualong on the Bradwell site in UK. Seems like a reasonably strategic from a Chinese point of view – invest in Hinkley Point C, thereby get a ticket to build their first nuclear power plant in a nuclear-renowned country (UK), and this would be their way of buying themselves into the international market. The question is: Does the UK population know that if Hinkley Point C goes through then this does not imply that one nuclear power plant will be build but three, and one of them build by the Chinese? Do they really want to give their control over their electricity bill to international investors, and furthermore the control over their nuclear power plant fleet?
  • This week I will present in St Petersburg, Russia, at the very interesting 4th International Workshop on Natural Resources, Environment and Economic Growth, organized by Department of Economics (European University at St. Petersburg, Russia) with the financial support of ExxonMobil and the research center CORE (Université catholique de Louvain, Belgium). You can find more information HERE. I will be talking about: When does Insurance provide a Contribution to Climate Policy? I will give a more detailed talk about the same topic at the Environmental Seminar in INRA, Nancy, the week after on the 8th October.

Conference updates:

  • Monday (09/28): Conférence de Jean Tirole (Prix Nobel d’Economie 2014) à 15h30 en amphithéâtre Poincaré
    “Climat, chômage, avenir de l’Europe, économie industrielle…”
  • Reminder: The next lunch seminar in environmental and resource economics of PSE and Université Paris Panthéon-Sorbonne will take place Thursday October 1st 12:30-13:30 in room S/3 in the annex of the Maison des Sciences Economiques.
  • Conférence de la  Chaire Finance Durable et Investissement Responsable, 2 novembre 2015, à Paris, de 8h30 à 14h. Auditorium Amundi 91-93, boulevard Pasteur, 75015. More information HERE.

This is a Weakends (pun intended…) post, so bear with me please. I am asking the following: Is the European Institution (Union, Commission, etc.) a weak institution? What lessons should we take away from this?

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What a sad, sad day for European Growth Growth transition. “Britain won EU approval for a new nuclear power plant at Hinkley Point on Wednesday, allowing the government to commit to 35 years of financial support for Europe’s biggest and most controversial infrastructure project.”

Molly Scott Cato, a UK MP for the Greens, said: “There can be no doubt that the generous terms being offered by the UK government to EDF on Hinkley C amounts to illegal state aid under EU rules.” She added: “It is a scandal that one of the final acts of the Barroso Commission is to turn a blind eye to the illegality of the Hinkley deal as some kind of quid pro quo for Germany’s renewable energy support scheme.”

(Thanks to Mark Johnston for this information.)

Claude Turmes, a politican from Luxembourg, stated in a recent interview that UK threatened to leave the EU if Hinkley Point C is not approved. Thus, it seems the EC gave in to this pressure… If only renewable sources of energy were to be subsidised by the amount that British taxpayers subsidies Hinkley Point C, then the Green Growth transition would not be a myth anymore but it would be well underway.

 

 

People are always in such a rush. US Presidents are always in such a rush to pardon whoever they can get their hands on during the last day of their office. We call this PardonGate nowadays, and I guess they do it to either potentially benefit from those people in the future or simply for some last-minute drop of altruism towards their own kind.

Then there are people in general who are always in such a rush, and they tend to be shoppers on discount days like Black Friday in the US. There is dramatic video evidence showing what consequences a discount day like Black Friday has on people’s rational thought and behavior:

 

And then there are leaving European Commissioners such as Joaquin Almunia, who, on the deeply contested point of the planned nuclear power station Hinkley Point C in UK, propose in their last days of office to

“propose to the college of commissioners to take a positive decision and in principle the decision should be taken during this mandate of the commission in October”.

A decision like that is not only incredible because of the extent of the subsidies that the UK government guarantees a foreign company, EDF from France, for the next 35 year. The UK government has agreed to pay EDF £92.50 per MWh for the electricity output from Hinkley Point C – roughly twice the current wholesale price of power, for the next 35 years(!) in addition to a public support to finance the project of (at minimum) £17.6bn.

No, even more incredible is this decision because it is yet another decision which is taken by a leaving politician on his last days in office. Now let us face the issue at hand. Why such a rush?

It is well-known that the new, upcoming commissioner is not as supportive as Joaquin Almunia towards nuclear energy. Thus, a politician, in his last days of office, will take a decision that will potentially affect all British citizens for the next 35 years, unless there is obviously an accident, in which case the whole world will be affected for a long time. And, furthermore, the new commissioner who will come on stage in a couple of weeks is likely to block Hinkley Point C.

So, why such a rush?

Why should anyone be allowed to rush and push through a decision of this severity, knowing that it is not going to be supported anymore only a couple of weeks after it has been taken? How can someone feel this is the right decision to take then? And, given the astonishing subsidies that the UK government is going to pay out for Hinkley Point C, how flexible and bendible must the European competition law be in order to get such an uncompetitive decision pushed through? Do we really need a European competition law if such subsidies are allowed by it? And has the European Commission for Competition actually made a full study of the effect of this subsidy on the Green Growth transition of the European Union and on alternative sources of energy like wind and solar? Also, why do we see diminishing subsidies for wind and solar energy while we at the same time allow never-seen subsidies for nuclear energy?  I would love to see answers to these questions at some point, don’t you?

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