RIP Hinkley Point C?

Mooted as being capable of supplying 7% of Britain's electricity needs by the early 2020s – the equivalent of about five million homes – the proposed Hinkley Point C (HPC) nuclear power station in Somerset has been dogged by delay and controversy since its French owners EDF (Électricité de France) first announced plans to build it in 2008. Supporters claim that in the absence of a viable, non-fossil-fuel alternative, HPC is vital to ensuring that Britain meets its carbon emission targets. Critics, however, counter that quite apart from being heinously expensive (the last estimate was in excess of £23 bn), years behind schedule and as yet untried (four so-called ‘new generation’ are currently under construction in Finland, France and China, but none yet up and running), it is likely that by the time it is in operation (currently estimated to be 2026), cheaper, renewable options would already be available. And that's just the economic argument. Controversy came to a head during Chinese President Xi Jinping's visit last October, when a deal in which nuclear giant China General Nuclear Corporation (CGN) would take a 33% stake in the project raised concerns about national security. These are now famously encapsulated in Joint Chief of Staff Nick Timothy's claim that the deal, which included an agreement for CGN to build a smaller reactor at Bradwell, meant that «the Chinese could use their role to build weaknesses into the computer systems which would allow them to shut down Britain's energy production at will». In spite of this, when EDF's board finally voted in favour of the project on 28 July, all looked set to go ahead. Then, on 29 July, a mere few hours before the signing ceremony, came Prime Minister Theresa May's surprise decision to order a new review, with a decision pending in the autumn – and just over a week later, the news that CGN had been implicated in a charge of espionage by the US Government.

In view of this latest and most dramatic of episodes and the allegations therein, it is probably reasonable to surmise that an announcement from No. 10 that the project has now been cancelled is imminent. No matter that the other named defendant – Nuclear Engineer Allen Szuhsiung Ho, is a US citizen from Taiwan – Taiwan, whose ruling KMT (Nationalist) Party has technically been at war with Mainland China's Communist counterparts since 1946. Let us, for the fun of it, temporarily suspend belief and continue in the vein of spy thriller plot lines which this episode invokes. The first question to present itself might then be: would not the mere fact of his links with Taiwan make him more of a risk than an asset to CGN? What if he turned double (or even triple) agent and sold China’s nuclear secrets to Taiwan and the US? A poor choice for a spy by any standards. Perhaps it would be wisest to await the evidence before declaring, as one expert recently did, that the case demonstrates the «clear and present» danger of Chinese involvement in Britain's nuclear projects?

When dealing with such volatile stuff as nuclear material, however, security considerations must of course be paramount. So let us turn our attention briefly to these. First, there is the small matter of the reactor itself: the proposed European Pressurised Reactor or EPR for Hinkley Point C, was developed predominantly by France and Germany. Chinese input to the HPC reactor is, as I understand, limited to elements of the cooling and waste disposal systems, with no access to computer or operating systems at all. There is also the fact that before bringing CGN on board, EDF will have had to subject them to all the security checks the EU demands of its foreign investors, who in this instance is a country on which an arms sales embargo is still in force. Thirdly, there is the history of Franco-Chinese nuclear co-operation: this goes back to the early 1990s with the building of China’s Daya Bay Nuclear Power Station (whose turbines are incidentally British-designed and built), and continues today, with the joint construction of two EPRs currently underway in China. All things considered, the threat to national security is probably fairly minimal – but if we are (and we should be) concerned about China’s burgeoning nuclear capabilities, would it not be to our advantage to have a piece of their technology on our own shores, where we can monitor it at close quarters and take any defensive precautions as needed? If there is one thing that we can be absolutely sure about, it is that China – now actively seeking new markets to which to export its civilian nuclear technologies – would not risk its reputation or commercial integrity by cutting corners, or installing second rate fixtures on foreign soil. Hinkley Point C was always envisaged as a Flagship Project (capitals intended). Failure, Fukushima-type disasters, and any hint of foul play are not an option.

It is interesting to note that when, in May this year, EDF board members delayed their final investment decision on financing HPC yet again, and it was suggested by George Osborne’s father-in-law Lord Howells that HPC could be built by the Chinese without French backing, China’s CGN moved swiftly and publicly to scotch the notion. China’s stance was clear: they wanted a tripartite arrangement, with Britain, France and China – a third pair of eyes ‘the better to watch you with’, as it were, which would minimise the risk of any one party (and particularly China) taking the brunt of the blame should anything go wrong. In this instance, three was not a crowd, it was essential.

As they say though, sling enough mud at something and some of it is sure to stick. Add to that the fact that the present government regards relations with China as, at best, a necessary evil, and you have a situation where relatively little mud will almost certainly suffice as grounds enough to call the whole thing off.

But who would be the net losers of a non-deal?

The received view is that the Chinese ‘need’ Hinkley: China is looking for new markets and a deal with the French and the British gives them credibility. The ‘credibility’ and prestige that such a contract would lend to the China brand would certainly be considerable – not least because EU and particularly UK safety requirements are the most stringent in the world. But conversely, can the UK, with its almost 7% current account deficit, the uncertainties of Brexit to deal with, and a possible recession around the corner, really afford to turn away major investors? Moreover, should HPC fall through, is there any reason why the Chinese should not take their money and considerable nuclear know-how elsewhere? The One Belt One Road (OBOR) initiative to build a modern Silk Road linking Asia with Europe offers a wealth of opportunity. Closer to home, word is that talks on a programme of joint research and the building of a series of new, smaller reactors in France are already underway, a preliminary agreement imminent. Were that to happen, where would that leave the UK? Out in the cold perhaps?

For the one aspect of the Hinkley deal on which there seems to have been very little reported is the research funding that was agreed as part of the Hinkley package: during the Chinese President’s State Visit last year, China National Nuclear Corporation (CNNC), China’s national body for nuclear research strategy, signed a deal worth £50 million with the UK’s National Nuclear Laboratory, in which the governments of both countries’ committed to funding a research programme on nuclear energy cycles – in simplest terms, research that seeks to increase the efficiency of reactors and reduce significantly, the level of nuclear waste. It would have meant a much-needed boost to Britain’s long-neglected nuclear research programme, the prospect of developing new technologies, new intellectual properties, new patents, renewed capability and all that that implies. For a country like Britain whose economy and exports are increasingly knowledge-based and innovation-driven (take the £24 bn sale of Cambridge-based ARM Holdings to Japan's Soft Bank, for example), a ‘research deficit’ of this scale, not to mention the threat of being consigned to oblivion in an area in which one once led, is surely not desirable? Which, along with the possible break-up of the United Kingdom is not something that Mrs May would like held over her head? And that’s before we even touch upon the tens and thousands of jobs that HPC would have created.

Predictions are dangerous in this business – but I would venture to posit that unless the May government performs a U-turn on HPC, EDF may soon be celebrating the prospect of billions of Euros’ worth of Chinese investment being channelled straight into France, and China will have another win-win partnership in its pocket: one that gives it all the advantages of a European project while relieving it of an increasingly toxic relationship with Britain.