Energy policy in Britain has been a self-destructive mess for as long as I can remember, and by the look of it, things may be about to get messier still.
The resignation of Thomas Piquemal as chief financial officer at EDF has been widely depicted as another, potentially fatal, blow for the planned Hinkley Point nuclear power station in Somerset. Would that it were so, for this eye-wateringly expensive and wholly unnecessary folie de grandeur has long deserved to be scrapped.
Unfortunately, Mr Piquemal’s dramatic exit may, by removing one of the last remaining obstacles to the required project finance, act in precisely the opposite manner. Mr Piquemal has been an opponent of the £18bn investment all along, arguing that EDF can ill afford such a high risk project at a time when the same technology is facing multiple challenges and cost overruns at Flamanville in Northern France and Olkiluoto in Finland.
Coming on top of the priority of nuclear renewal in France, Mr Piquemal feared that the additional burden of Hinkley might be the ruination of EDF, if indeed such an outcome is not already pre-baked. Never mind Hinkley, judging by the share price, which has lost nearly 90pc of its value in the past eight and a half years, investors already Eanticipate massive dilution by way of bail-outs by the French state.
But let’s not worry unduly about EDF’s financial travails; it is the ruination of the British consumer, and thereby the competitiveness of the UK economy, that should concern us most. The UK government has bent over backwards to accommodate EDF, underwriting much of Hinkley’s construction cost and guaranteeing an inflation-proofed strike price of approximately double the going rate for wholesale power.
When it became obvious that even this degree of gold-plating still wouldn’t be enough to persuade EDF to finally commit, Downing Street gladly welcomed in Chinese, state-controlled partners, kowtowing to Beijing as if Britain’s very future depended on it. In so doing, the UK Government has promised China its own nuclear power station on UK soil.
If Britain had subcontracted its civil nuclear programme to the Ayatollahs of Iran, it would scarcely have looked more humiliating or as potentially dangerous for national security. Indeed, the whole wretched endeavour long ago lost all touch with commercial reality and seems instead to have become an exercise in international diplomacy, with Britain’s energy future playing the role of bargaining chip.
To understand the origins of this madness, you have to go back to the errors in UK energy policy that started under Tony Blair and Gordon Brown, and were then reinforced throughout five years of Coalition government. All this is charted by David [Lord] Howell, an energy secretary under Margaret Thatcher, in a brilliant new book published this week – Empires in Collision: The green versus black struggle for our energy future.
Post-Chernobyl, there was a public backlash against new nuclear plants, which essentially put paid to the fleet of pressurised water reactors originally announced by Lord Howell back in the first year of the Thatcher government. Only one of them – Sizewell B – was ever built. With the advent of plentiful North Sea oil and gas, the rest of the programme was quietly forgotten.
The global warming agenda changed things anew. Wind power alone, it was quickly appreciated, would be insufficient to provide Britain with the low carbon future it aspired to; without new nuclear plants the UK would struggle to meet its emission targets. The upshot was that Labour began to nuance its previously intransigent opposition to new nuclear power stations and eventually ended up with a kind of fudge; if the private sector could off its own back finance a new generation of reactors, the government wouldn’t stand in the way. EDF was amongst the first to offer up its services.
From the start, the whole scheme was complete fantasy.