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nuclear energy

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?

There is a new petition in Luxembourg against the 32 years (!) life-time extension of the Cattenom nuclear reactor. If you want you can read and sign it HERE, and please do so. Sign if before the 30th of July!! (Don’t forget that you will receive an email in order to activate your signature.)

This nuclear reactor is one of Europe’s biggest, but also the one with most problems. I have written extensively on it HERE. More information (in German) is HERE.

This debate must be viewed in the light of the recent discussion in the Luxembourgish parliament that Luxembourg wants to build an electricity line connecting Luxembourg to France directly. This is most likely in order to connect Luxembourg directly with Cattenom. Obviously, a petition should thus necessarily be linked also to the development of this electricity line: What use is there to try and stop a lifetime extension of a nuclear power plant when, at the same time, the government plans to build an electricity line in order to receive electricity from just that plant?

In my opinion, Luxembourg needs to very carefully think of what kind of electricity mix it envisions for the future, and building an electricity line directly to France will clearly shape its future electricity mix towards nuclear energy. This is not an innocent choice!

My article entitled “An Empirical Study of the Determinants of Green Party Voting” is now forthcoming in the journal Ecological Economics. In this article I show the following:

I empirically study the determinants of individuals’ green voting behavior. For this I make use of three datasets from Germany, a panel dataset and two cross-sectional datasets. The empirically strongest determinants are the voters’ attitude or distance to nuclear sites, the level of schooling and net income. I show that those voters with deviant attitudes or alternative world views are more likely to vote green, a result of the fact that the green party has always had the position of a protest party. I nd little role for demographic variables like gender, marital status or the number of children. This is in contrast to the stated preference literature. Age plays a role for explaining voting behavior only insofar
as it proxies for health.

You can find the version that is forthcoming HERE.

I just received this: Apparently the left wing party in Saarland, Germany, wants to know whether fewer girls are being born around nuclear power plants. Scientifically, there seems to be some evidence that the X-Chromosome gets destroyed quite easily even at already low levels of radiation. The politician who demands this is called Ensch-Engel, and he basically said that (liberally translated): „Because of the closeness to the nuclear power plant Cattenom, it is possible that the gender distribution in Saarland may be subject to alarming changes.“

I live in Luxembourg, which is as close to Cattenom as the German region Saarland, and oddly more girls have been born in my group of friends than boys. Clearly, this is unlikely to be a representative sample, but a quick analysis of the children below one year living in the German regions around Cattenom is enlightening. I find it surprising that a politician cannot do this himself, it took me like 10 minutes. In any case, here are the results.

Basically, in the whole of Germany, 51.27% of children below one year are boys. In Saarland, respectively Merzig-Wadern or Saarlouis, the German regions closest to Cattenom, this number is 51.82, 51.57 and 52.08. Now, I would not call these numbers alarming, but they are marginally higher. If we take a 99% confidence interval of all regions in Germany, then this amounts from 51.05 to 51.5. Each of the regions with close proximity to Cattenom is above this confidence interval, which basically means that, statistically speaking, it is likely that fewer girls are born close to Cattenom.

As a disclaimer, this number is very small. In addition, it could still be due to other statistical irregularities or effects.

Still, a quick check with google shows that this is apparently not only the case around Cattenom, but also across many different regions that are close to nuclear power plants in various countries, see e.g. HERE.  While I would really advice noone to call this difference alarming in any sense, the worrying question is still: Assume radiation reduces the number of girls being born. Then this means that the radiation, despite it being more than 50km away from nuclear plants and being thus really minuscule, still has an impact on our DNA. I would call this the worrying issue! Who knows what else it then may impact…

Persons below 1 year (source: Regionalstatistik Germany)
Total Percent
Total boys girls boys girls
Germany 663026 339973 323053 51.2760 48.7240
Saarland 7062 3660 3402 51.8267 48.1733
Merzig-Wadern, Landkreis 795 410 385 51.5723 48.4277
Saarlouis, Landkreis 1390 724 666 52.0863 47.9137
boys girls
99% Confidence upper 51.5048 48.9528
Interval lower 51.0472 48.4952

As some of you may know, the UK government plans to finance a huge new nuclear power plant, Hinkley Point C, and it should be build by EDF. However, in signing the deal, EDF demanded substantial financial aids. These financial aids are currently subject to vivid discussions, as they do not conform to EU competition laws and destroy incentives for investments in e.g. alternative energy production.

There are now some news from various places that the EU is likely to rule that the UK state aid for Hinkley Point C is illegal. A rejection like this will also again tilt the scale against further developments of nuclear energy in Europe, since the new nuclear power plants cannot anymore be built without precisely those large state aids that are illegal from the EU perspective.

The European Commission will almost certainly find that EDF Energy’s funding mechanism for the construction of the Hinkley Point C nuclear unit in the UK is illegal state aid, an Austrian law professor told Platts. Franz Leidenmuhler, who specializes in EU state aid cases and European competition law, said in an email that he believed “a rejection is nearly unavoidable. The Statement of the Commission in its first findings of December 18, 2013 is too clear. I do not think that some conditions could change that clear result.” The new Hinkley unit will be built based on a funding model in which the UK government guarantees a floor price for future power sales. This floor price, known as a “strike price,” is the reference price below which EDF would receive UK government financial support and above which EDF would pay back money, effectively a guaranteed price for the power. Leidenmuhler indicated he believed EDF’s funding mechanism for Hinkley Point C did not meet these criteria to be granted an exemption for state aid. However, George Borovas, an energy lawyer at Shearman and Sterling in Tokyo, said in an email to Platts that he believed some form of negotiation was likely take place before the EC formally rejected EDF’s proposals. “While the Commission has expressed substantial criticisms and concerns, it would be unusual for a project of this nature to be prohibited outright on State aid grounds,” he said. Borovas said that “instead, there will likely be a negotiation between the UK and the EU, resulting in a settlement of some sort, on issues such as the period of the CfD and the level of the strike price.” The issue of a potential precedent being set was a point emphasized indirectly by Leidenmuhler in his presentation, when he cited the recent decision by the Czech government not to offer aid guarantees for the construction of a new nuclear unit at Temelin that would be similar to the guarantees offered by the UK government for Hinkley Point C.
According to the Westminster-based think tank, CentreForum, the private financing behind the project will cost British consumers £12.4bn more over 35 years than government backed procurement. The think tank said the lack of government investment will result in an additional bill of at least £15 a year per UK household “for a generation, while the taxpayer underwrites double digit returns to French and Chinese nationalised industry”. The report made eight recommendations, which included, setting a new nuclear strike price by auction and building long-term infrastructure to support nuclear growth such as laboratories and research centres.
Construction News 8th May 2014
http://m.cnplus.co.uk/8662275.article
(Thanks to Paul Dorfman for these news.)

 

hinkley

This post concerns Hinkley Point C and the subsidies the UK government wishes to provide Electricité de France with in order to build and run it for the next years.

Paul Dorfman, Honorary Senior Research Associate at UCL Energy Institute and founder of the Nuclear Consulting Group, just sent this:

The European Commission has opened an in-depth inquiry to examine whether UK State Aid for the construction and operation of two new nuclear power plants at Hinkley Point C in Somerset are in line with EU legislation.

We conclude that the proposed UK government State Aid for new nuclear is incompatible with EC Legislation, does not represent a genuine ‘Service of General Economic Interest’ under Art 107(1) TFEU, will distort the European energy market, is neither transparent nor proportionate, will not make a timely contribution to UK security of supply or decarbonisation, and will not contribute to affordability, price stability and least-cost for the UK energy consumer.

An in-depth analysis of why a very large set of key UK and pan-EU energy policy and civil society stakeholders come to this conclusion is provided in THIS PDF DOCUMENT which I advice any interested reader or policy maker to go through. Thanks to Paul for this very important contribution!

Nuclear energy, its further development, and obviously its safety are the topics these days. Not only due to Fukushima, but also due to the shutdowns as a result of Germany’s Energiewende, and furthermore due to UK’s recent plan to build of one of the largest and most expensive nuclear power plants in the world (using a contract that puts all the risk on the tax payer and none on the operator, see discussions by Paul Dorfman HERE, by Peter Kirby HERE, and more generally HERE).

Interestingly, for the UK nuclear plans at Hinkley Point, it is international pressure that is currently putting up concerns and barriers. For example, the UN feels that there is a ““profound suspicion” that the UK failed to properly consult neighbouring countries, including Norway and Spain, over the possible environmental impact that Hinkley Point C could have on them.” Consequently, nuclear policies should not only be viewed as a national issue, but most definitely as an international one due to the potential spillovers to neighbouring countries, or even the whole world.

While we should be worried about the plans to increase nuclear energy in some countries, we should also not forget that some countries are still running really ancient plants with minimal safety standards that apparently fail any currently accepted international technology standard.

Obviously, if we build new plants, invest billions in order to make these somewhat safe at least according to the currently available technology, but at the same time neglect those old ticking nuclear time bombs, then we may nevertheless see an increasing number of accidents in the future.

The lack of investments in older plants has recently been forcefully discussed by Vladimir Kuznetsov (Professor at the Arkhangelsk Arctic State University and previously an engineer in Reactor 3 in Chernobyl until the accident) in front of the Commission for Environmental protection and nuclear safety in the German Bundestag.

Professor Kuznetsov said that there are many more nuclear power plants in Russia of the same type as the one of Chernobyl, and these nuclear power plants have no uniform safety standards and are aging virtually without safety investments. Since the Russian government does not provide finances to shut down these plants or decomission them, they are still being used for energy production.

If a country does not possess the finances to adequately improve the safety standards of its nuclear industry which may lead to possibly widespread international disasters, then common sense would dictate that this country should not run nuclear power plants in the first place. This is like saying: Look, if you have no driving license then you must not drive. I think everyone nowadays accepts this principle. This should especially hold for nuclear energy, which may lead to an accident of a much more massive scale.

The question is: What to do?

Two possibilities come to mind:

1) Further development of insurance to allow compensation in case of a disaster

2) Increased international cooperation to improve safety standards

While an increased development of insurance is certainly important, it is only an ex post measure. Furthermore, while in general insurance may also raise the incentives to increase investments in safety, this is not going to be the case in countries that are financially constrained and are anyway unable to invest in safety.

As a consequence, the only reasonable means by which it may be possible to effectively reduce the probability of a disaster in this case is international cooperation. One issue here is obviously moral hazard: If a poor country knows that it does not have the finances to improve its aging nuclear sector but it can count on foreign finances, then why should this country undertake safety improvements at all? Knowing that the international community will come to its help, it may even reduce investments in nuclear safety and instead spend the money on other problems.

Thus, a simple international principle should be: If your disaster is also our concern (due to international spillovers), then so is your safety!

An approach along these lines is followed by the International Atomic Energy Agency. In its Convention on Nuclear Safety, the main treaty that covers international cooperation when it comes to issues of nuclear safety, they however wrote

The Convention is an incentive instrument. It is not designed to ensure fulfillment of obligations by Parties through control and sanction but is based on their common interest to achieve higher levels of safety which will be developed and promoted through regular meetings of the Parties.

Furthermore, one of the articles is that the signatories are

“Reaffirming that responsibility for nuclear safety rests with the State having jurisdiction over a nuclear installation;”

Again, it should be emphasized that if a potential disaster transcendents international borders, then the responsability lies with the state the operator of the nuclear plant is in, yes, but the costs are also born by the neighbouring states!

So while it is certainly important to improve the international insurance framework, much more priority should be placed on international cooperation, with a clearer notion of how international spillovers need to be handled and evaluated in and for Cost-Benefit Analyses of new projects (like Hinkley Point in UK) and older plants.  This should be done in a way such that next time when Professor Kuznetsov visits the Bundestag he can give a less worrisome speech.

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