French threat to UK energy: Fran?ois Hollande could close nuclear plants

Six years ago today Tony Blair figuratively pushed Britain's nuclear button.

Pre-empting the outcome of his review into the country's future energy needs, he announced that to "keep the lights on" and prevent global warming the Government was backing the creation of the first new generation of nuclear power stations in a decade. If we don't do this now, he said, "we will be committing a serious dereliction of our duty to the future of this country".

On the sixth anniversary of that historic statement, Britain's nascent new nuclear programme is in trouble, due to a combination of the economic crisis, the disaster in Fukushima and changing political winds.

Yesterday, giving evidence to Parliament, the Energy Minister Charles Hendry appeared to be unable to guarantee with certainty that any of the five agreed new nuclear power plants would go ahead.

And while he expressed optimism that the projects were still on-track, many industry observers are now pessimistic that Blair's original ambitious plans to rebalance our energy supply to can be delivered on time and at a price which is acceptable. That, in turn, leads to the disturbing question first raised by Blair in 2006: with all of our current nuclear power plants due to stop working within 10 years, if things go wrong with new nuclear now, what will it cost to keep the lights on?

The first sign of trouble came in March when the German power companies, RWE npower and E.ON, announced they were pulling out of their joint venture to build two of the six planned new nuclear reactors at Wylfa in North Wales and Oldbury-on-Severn, Gloucestershire. The companies had been hit by Angela Merkel's decision, in the wake of Fukushima, to pull back from nuclear power.

This meant that not only did they have to spend billions decommissioning the existing plants, but economies of scale meant it was not practical to go-ahead with a ?15bn investment in the UK.

Now doubt has been cast over the commitment of a joint EDF Energy/Centrica consortium to fulfil its commitment to build two other nuclear reactors at Hinkley Point in Somerset and Sizewell in Suffolk.

EDF is state-owned and while President Sarkozy had a warm relationship with the nuclear sector, his successor, Francois Hollande does not. During his election campaign, M Hollande pledged to close 24 of France's 58 reactors and to reduce reliance on atomic power.

With EDF expected to make a final decision on whether to go ahead with the UK projects by the end of the year the change of Government could not have come at a worse time.

Last month the credit ratings agency Moody's said it would downgrade the company's credit rating if it went ahead citing the risky nature and long lead times of building nuclear power plans and uncertainly over future power prices.

Not only that, but with Mr Hollande's emphasis on investment in the eurozone to off-set the effects of austerity, he is unlikely to be enthusiastic about a large French company tying up valuable resources in the UK.

The third nuclear consortium, Nugen, comprises Iberdrola, owner of Scottish Power, and GDF Suez, the French state-owned gas giant. Scottish and Southern Energy (SSE) was part of the consortium, but pulled out in September, citing huge costs. GDF Suez faces similar problems to EDF, while Iberdrola has been hit by the economic downturn in Spain, its home market. It will make a final decision on whether to go ahead with its Sellafield project in 2015. All of this creates a considerable headache for the Government. As Tim Yeo, Chairman of the House of Commons Energy and Climate Change Committee puts it: "Nuclear energy is exposed to what happens around the world.

"The industrial nuclear accident in Japan, a decision taken in Germany, the change in Government in France ? all these three things have a direct impact on global investment in nuclear in this country. However good the intention is, we are exposed in a particular way ? unlike with some other energy sources ? to what happens in countries quite a long way away which are outside our control."

Mr Hendry confirmed yesterday that the British Government has no objection to allowing the contracts for new nuclear to pass to nuclear nations such as China, Russia and Japan to keep the programme alive. He said: "As long as they can satisfy us on the safety and the security then we are happy to talk to them."

The handing over of such sensitive technology to China or Russia is certain to re-ignite concerns. But we may have little option. Ministers are still faced with the dilemma that led Blair down the nuclear road in the first place. Coal and gas mean carbon emissions which we are legally obliged to reduce, renewables can't yet fill the gap and ultimately we have to keep on the lights.

Q. Why does Britain want to build a new generation of power stations?

A. The short answer is Tony Blair's view of climate change. By the end of his second term in office, in 2005, both Mr Blair and his Chief Scientific Adviser, Sir David King, were convinced that the warming climate presented a global threat of the same order as terrorism, and that nuclear energy was absolutely essential in trying to combat it.

The reason is that atomic power does not produce the large amounts of carbon emissions which result from burning the fossil fuels coal, gas and oil, and which are driving the global-warming process.

By the time of the May 2005 general election it was clear Mr Blair and Sir David were thinking seriously about new nuclear power stations, and 12 months later ? six years ago today ? Mr Blair announced that nuclear power was officially back on the agenda.

A formal nuclear policy was gradually drawn up and set out in the 2008 Energy White Paper, and it was adopted by the Conservatives when David Cameron took office in the 2010 Coalition. The Tories' Liberal Democrat coalition partners had been strongly anti-nuclear, but they agreed not to rock the boat as part of the price of taking office.

Q. Do the Conservatives want new nuclear power stations for the same reason?

A. It would be fair to say that the Tories accept the argument that nuclear energy is a key part of fighting climate change, but they are perhaps even keener on it as a low-carbon way of keeping the lights on. Britain's energy security is of increasing concern as North Sea oil runs out.

New coal-fired power stations are not an option until low-carbon technology comes on stream, and so we are increasingly dependent on imports of gas from countries such as Russia ? which may one day be minded to turn off the tap.

Sir David King identified a particular vulnerability termed the "energy gap", likely to appear as big coal-fired plants and ageing atomic power stations come to the end of their natural lives over the next decade.

Q. Can't we fill the energy gap with renewable energy?

A. Not in time, runs the pro-nuclear argument. Another argument is that wind power, which is really the only renewable game in town at the moment, suffers from "intermittency" ? the wind does not blow all the time and so wind farms are often idle and not generating.

A certain amount of constantly generated power is needed to provide the "base load" of the electricity supply ? the current which must always be there. Nuclear can be relied on for this, but wind power cannot.

Q. Why do some people object to nuclear energy?

A. A lot of environmentalists have long been against nuclear, because the waste is the most difficult and dangerous substance to deal with on Earth and remains active for thousands of years, and also because nuclear material can be used to make weapons of mass destruction.

The Fukushima disaster in Japan in March last year, when a big power plant was overwhelmed by a tidal wave and went into meltdown, reinforced many of these fears, and led to the scrapping of all planned nuclear energy in Germany, which has always been the most anti-nuclear country.

Anti-nuclear feeling in Britain rose after Fukushima but polls show it then fell back, although Britain is now feeling the Fukushima effect as the two big German energy companies which were going to build some of our new nuclear stations, RWE and Eon, have both had to withdraw as their domestic nuclear business has gone into meltdown itself.

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