Greenpeace -- Nuclear Power Subsidy: unfair and illegal State Aid

[Paul Mobbs]

On Mon, 2013-10-21 at 17:09 +0100, Max wrote:
> Greenpeace UK - Nuclear Power
> £92.5/MWh is nearly double the current market price for electricity.

I've had a few arguments about this in the past few weeks and,
unfortunately, thus far everyone appears to miss the deeper realities of
what this contract predicts. Pity -- because I believe that argument
would be more readily considered by the public than the more abstract
nuclear issue within which it is being described.

The importance of this contract *is not* the price for nuclear power --
we all know it's expensive. The REAL issue here is what this contract
demonstrates about underlying energy trends and why the Government is
accepting those trends (primarily because they have no other options
within our current economic model -- which I will expand upon later).


Let's say that electricity bills continue to rise at 7% per year for the
next decade. For any constant exponential rise the "doubling
time" [ http://en.wikipedia.org/wiki/Doubling_time ] is 70 years divided
by the annual percentage rise -- so at 7% p.a. that's a doubling time of
(70/7=) ten years... which is of course when this plant is projected to
come on-line.

Therefore what the price of electricity will be when the plant opens in
ten years times is DOUBLE what it is today, even without the Hinkley C
contract driving those prices (which, as a marker for future prices, it
will undoubtedly do). Therefore, is this a bad deal, or is EdF simply
accepting present (and likely future!) economic realities as part of
their pricing of the contract?


More fundamentally, what DECC has enshrined in the subtext of the
contract for Hinkley C is an abandonment of any allusion to conventional
'econometric theory' within their energy demand and price forecasts --
https://www.gov.uk/government/collections/energy-and-emissions-projections 
-- making a mockery of their assertion to have any control over energy 
markets in general through fiscal or technological measures.

Quite simply this contract prices future power within the bounds of the
expected, depletion-driven present trends to insure a return on
EdF's/China's investment at today's capital rates. That's absurd in any
case given that inflation, and shortly-to-rise global interest rates,
are likely to knacker the capital discount model underpinning the
economics of the build (basically they'll be back for more money in
about five or six years time when it's half-built!).

And what's forcing those prices to rise is not the costs of nuclear
(it's still a minimal component of the overall price -- and highly
intermittent due to shutdowns). It's the depletion of other fossil fuel
sources which are driving up prices, and that in turn drives power
generation costs. And unless we talk about depletion as a key factor in
current decision making -- which DECC/politicians generally will simply
not do -- then you can't present a rational basis for a whole range of
decisions they're taking today; from fracking to new nukes.


The REAL scandal here isn't simply the financing of corporate nuclear
largesse -- although that's a valid criticism and Greenpeace are right
to present it. The greater public scandal here, which must be uncovered
and explained, is the underlying policy of DECC to capitulate to the
constant 6% to 10% per year rise in energy prices, ad infinitum -- and
the process of resource depletion which has been driving those trends
for the last decade or so.

The economy, and especially the poorest groups in Britain today, can't
stand those increases *now* [e.g for an analysis of present trends see
http://themoneycharity.org.uk/debt-statistics/ ] -- let alone in ten
years time when they effectively double the price of power. Miliband
might make token gestures about consumer energy prices (which he could
weasel out of by capping consumer prices and allowing industrial/
commercial power prices to rise instead -- redistributing inflationary
trends indirectly via other consumer prices), but that still doesn't
address the long-term indicators as to where energy and economic are
heading under current growth-based development models.

Long before Hinkley C opens we'll see a progressive worsening and
failure of the UK's current economic model; and unless "they" (by which
I include the public, campaign groups AND the establishment) accept the
underlying ecological limits driving those trends, that system will fail
and will progressively impoverish a greater proportion of the nation
[see pages 37/8, "A Comparison Of The Limits To Growth With Thirty Years
Of Reality", Graham Turner, CSIRO Working Paper Series 2008-09, June
2008, http://www.fraw.org.uk/files/limits/csiro_2008.pdf ].

And on the "limits" issue, don't forget that there have been ongoing
concerns about future uranium production for at least a decade ago now
["Uranium Supply and the Nuclear Option", Paul Mobbs, Oxford Energy
Forum, May 2005, http://www.fraw.org.uk/mei/archive/oies_article.pdf ],
and those fundamental flaws in uranium production have still not been
addressed. Therefore we're likely to see a significant rise in uranium
prices as depletion reduces supply and new nuclear capacity drives
demand in about a decade from now.


Likewise shale gas -- forget it. Even the USA now accepts that its
natural gas prices are going to double in the next 20 years or so due to
"developing new incremental production needed to support continued
growth in natural gas consumption" [page 76/figure 88, "Annual Energy
Outlook 2013", US Energy Information Agency, April 2013,
http://www.eia.gov/forecasts/aeo/pdf/0383%282013%29.pdf ] -- in other
words, shale gas is more expensive than conventional production, and so
prices will have to rise to pay for new unconventional gas sources.

In any case even the best probabilistic values (so called "P90" values)
of future UK shale gas resources, distributed across the likely
production period, suggests that this will only ever supply a very small
proportion of current UK gas demand. Thus even if we massively despoil
and pollute the countryside, it will make little real difference to UK
energy supply and thus prices in the end -- which questions the core
principle of that policy given that other options (e.g. marginally
cheaper renewable sources and energy demand reduction) might be funded
with that investment capital.


Renewable sources might more expensive now, but we might expect to see a
tailing-off of prices as the underlying capital cost of the transition
is paid for. However, renewable energy sources will never replace the
value of energy we're currently expending from fossil fuels, nor could
they without themselves causing ecological damage (e.g. biofuels --
http://www.biofuelwatch.org.uk/ ).

Renewable energy technology -- in particular the mega-watt+ turbines,
many of the latest tidal devices, and PV panels -- will not be a
viable/affordable option beyond the next decade or two. Just like
uranium or natural gas, the finite mineral resources they are
manufactured from are themselves depleting/are in short supply, and that
will ultimately limit their global applicability to displace fossil fuel
use [see "Critical Metals in Strategic Energy Technologies", EC JRC,
2011, http://www.fraw.org.uk/limits/ec_jrc_metals_2011.pdf ].


There is one strategy which CAN get us away from the fundamentally
unsustainable trends which are driving the failure of our current
economic process -- "DEGROWTH" [ http://en.wikipedia.org/wiki/Degrowth
-- but for a more expansive definition see Latouche's editorial in the
Journal of Cleaner Production, vol.18 pp519-522, 2010,
http://www.fraw.org.uk/files/economics/latouche_2010.pdf ]. Inevitably
such an approach entails accepting the underlying validity of the
"limits to growth" model, its efficacy for analysing strategies for
meeting our future needs as both a national and global community, and
its continued accuracy in depicting the current development trends which
are driven by the growth-based economic model [e.g. see
http://www.youtube.com/playlist?list=PL2817969CA87E5B47 especially
videos 5, 6 and 7].

As environmentalists, surely that's what we all desire, isn't it?  ;-)


The problem is that the key players in the environment movement --
including Greenpeace and others -- apparently refuse to make any
"limits"-based economic argument, or allude to the projected collapse of
"growth economics" over the next few decades if these trends do not change.
Mainstream environmentalism, it seems, is as fearful as mainstream
politics of asserting any evidence-based argument for the imminent
collapse of consumerism and the need for a transition to a simpler/less
material intensive development model.

However, in the final analysis, that's where the data leads us -- and if
they are not willing to face up to that basic truth then "they" (by
which I include the public, campaign groups AND the establishment)
should accept that they have failed just as much as the economic model
which their inaction over the "limits" issue seeks to protect.



Peace 'n' love 'n' simple pleasures,

P.



-- 

"We are not for names, nor men, nor titles of Government,
nor are we for this party nor against the other but we are
for justice and mercy and truth and peace and true freedom,
that these may be exalted in our nation, and that goodness,
righteousness, meekness, temperance, peace and unity with
God, and with one another, that these things may abound."
(Edward Burrough, 1659 - from 'Quaker Faith and Practice')

Paul Mobbs, Mobbs' Environmental Investigations
3 Grosvenor Road, Banbury OX16 5HN, England
tel./fax (+44/0)1295 261864
email - mobbsey at gn.apc.org
website - http://www.fraw.org.uk/mei/index.shtml
public key - http://www.fraw.org.uk/mei/mobbsey_public_key-2013-2.asc
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