Politico.eu, 7/29/16, 7:42 PM CET, Updated 8/1/16, 12:49 PM CET
By Sara Stefanini
David Cameron passed on some big problems to Theresa May and while Brexit tops the list, the £18 billion Hinkley nuclear plant isn’t far behind.
Conceived by Tony Blair and pushed forward by Cameron and his Chancellor George Osborne, Hinkley is the most expensive electricity project in the world, an unusual and heavily subsidized partnership between the U.K., the Chinese government and a French state-controlled energy company.
Late on Thursday, May’s government slammed the brakes on the project, saying it would need until the fall to review the details again, seemingly surprising everyone involved: The marquee had been hired and French and Chinese executives were set to fly in to pop the champagne.
“It ridicules the French partner, and that is really surprising,” said Mycle Schneider, a Paris-based energy and nuclear policy analyst. “EDF prepared a champagne party — they wouldn’t have done that if there was nothing on the British side.”
Whatever motivated May’s actions, her predecessor didn’t leave her many alternatives to Hinkley, and the challenge for Britain is clear. Its fleet of 15 nuclear power plants is approaching retirement age, and its dirty coal-fired power plants have to be phased out by 2025, under the country’s own stringent climate policies.
Hinkley or bust
The country has to figure out how to fill that electricity capacity while continuing to cut greenhouse gas emissions. With coal plants already shutting down earlier than expected, the country could be at risk of energy blackouts as early as 2019. According to the government, Hinkley would provide 7 percent of the U.K.’s energy needs.
Cameron’s administration was so dead-set on filling the energy shortfall with new nuclear plants, starting with Hinkley, that it failed to come up with a Plan B.
Climate advocates have argued that the gap could be filled with solar, wind and other types of renewable energy, combined with new smart technology to better assess when customers actually need electricity and, eventually, with batteries. The oil and gas industry argues lower-emitting gas could step in when the sun sets or wind dies down.
Instead, Cameron opted to pull subsidies for renewable energy sources soon after he won re-election last year, saying they were getting too costly for bill payers. The problem is that Hinkley has been delayed for so long that it’s now unlikely to be completed until the late 2020s at the earliest, assuming May’s government approves it soon.
“The key reason for the U.K. government to go ahead with whatever happens is that there is no Plan B, and this is quite unique,” said Schneider. “This was launched by Tony Blair over 10 years ago, so you can say ‘Well, over that period of time there could have been some kind of a Plan B, by either the Tories or Labour.’”
Labour is in favor of building new nuclear power plants, but believes EDF’s Hinkley technology is too expensive and will take too long compared to other options, according to Barry Gardiner, the shadow energy secretary.
“Ministers have claimed Britain is open for business after the referendum sent shockwaves to investors,” Gardiner said in an email Friday. “This is an appalling signal to send and a humiliating diplomatic move.”
Caution over haste
May has largely kept quiet on Hinkley over the past years. One concern for her may be that Cameron’s government agreed to a generous subsidy scheme under which Hinkley would likely cost U.K. consumers between £150 and £660 each over 35 years – especially since her first speech as prime minister stressed that the focus would be on the “ordinary working-class family.”
“When it comes to taxes, we’ll prioritize not the wealthy, but you,” she said.
It is also notable that one of May’s closest and most loyal staffers, joint chief-of-staff Nick Timothy, criticized the Chinese investment in Hinkley last year, saying it could pose a national security concern by allowing Beijing “to shut down Britain’s energy production at will.”
Her Foreign Secretary Boris Johnson has also balked at the project in the past, calling it “an extraordinary amount of money to spend” last November.
May, who is known to be a particularly cautious politician, may indeed just want some extra time to study the project, since her Business and Energy Secretary Greg Clark took over the portfolio only two weeks ago.
“None of the key ministers have been close to the project, so given its scale and complexity, two weeks of briefing was quite a short time to engage with it fully,” said Matt Hinde, former head of EU strategy at the U.K.’s defunct Department of Energy and Climate Change, which May scrapped when she took over. “The lack of warning was quite surprising though,” added Hinde who is now senior vice president and director of energy at the consultancy Fleishman Hillard.
Passing the buck
Hinkley isn’t the only challenge May has inherited from her predecessor.
May also gets to decide whether to plough ahead with the High Speed 2 railway link between London and Manchester, which has been estimated to cost £30 billion, and the addition of a third runway at Heathrow Airport, pegged at just over £18 billion.
On the one hand, quick approval of the projects would provide business reassurance after the Brexit vote and create tens of thousands of jobs. On the other, May’s government will have limited bandwidth for involved projects such as Hinkley, as it has to deal with actually negotiating the U.K.’s departure from the European Union.
“The government should be trying to do fewer big complex projects because Brexit would take all attention and staff time,” said Jonathan Gaventa, director of the environmental think tank E3G in London, citing the National Audit Office.
Hinkley Point C was supposed to be a boon for jobs, cementing an Anglo-French relationship while attracting Chinese investment to the U.K. Whether or not the delay will derail the project, it at least suggests that communication between Paris and London wasn’t quite clear.
After May discussed Hinkley with French President François Hollande in Paris last Thursday, EDF sent out a press release saying its board would meet to vote on the project, in what appeared to suggest that everyone was in agreement.
France and EDF have a lot riding on the project. But the plant is significant for China too. After Hinkley, it has agreed to partner with EDF for another British station, and then build its own.
“For China it would be the first project in a Western industrial country in the nuclear sector,” said Schneider. That said, it comes with cost and political risks for Beijing and its nuclear company too, which has seen its share value drop by 60 percent over the past year, he added.
“Even the Chinese, who are the only ones that have cash, have limited cash.”