With reference to the Hinkley Point C project in Somerset - surely an interesting and pertinent question should be

Why would anyone be comfortable with a foreign power (especially China) being involved with constructing a critical component of UK infrastructure?

The following would seem to be relevant considerations

  • Allowing the China National Nuclear Corporation (CNNC) to have such a close access to the UK’s energy infrastructure would give the state-owned firm the potential ability to build weaknesses into computer systems
  • CNNC has military links and developed the country’s atomic bomb and nuclear submarines
  • CNNC was not involved in the original Hinkley although rumour has it that the company agreed in principle to buy half of China’s 33% stake in the £24bn project. Therefore it is gaining 'backdoor' access to a project that it was never involved with in the first place - presumably this means that it was never vetted as a supplier in the first instance?
  • National Security - MI5 and MI6 have been warning the government about China's involvement for months - over national security and links to the Chinese military and Chinese Communist Party. Especially relevant in relation to the UK involvement in NATO and close links with the USA
  • Academic experts have also been warning us - and the government - for months about the dangers of involving China in a nation’s infrastructure construction program
  • The whole matter has been shrouded in a total the lack of transparency from the last Government – David Cameron and George Osborne do not appear to have looked into the background at all, in their headlong rush to 'cosy up' to China, where other considerations take second place
  • The possibility of old technology being used for the reactors - therefore they may well be out of date even before being comissioned
  • Who will build the reactors? - will it be Aviva or will Chinese General Nuclear be involved – if so, then there may well be safety issues
  • It is rumoured that the Chinese own first nuclear power station had building defects and reported minor leakages – however, corroboration is difficult because of state censorship
  • The huge cost of the entire project – both initially and with guaranteed future payments to the consortium building the project. With subsidies nearly 5 times as big as being previously stated - Hinkley Point C cost 30bn top-up payments NAO report - This also potentially breaches the EU’s state aid limits together with the French Governments ‘top-up’ for EDF with challenges coming from Austria & German Greenpeace
  • Eye watering cost to the taxpayer for 35 years from first becoming operational
  • Yet more levels of nuclear waste at a time when no-one has really come up with a viable method of disposing of the existing waste
  • Design of the reactor - so far proved impossible to make work and regarded by some as “unconstructable”
  • Problems exist with the Flamanville plant in Normandy (6 years behind schedule and € 7bn over budget). There would seem to be weak spots in the lid and the bottom which could reduce the resistance of the metal. The head of the French nuclear regulator, Pierre-Franck Chevet, warned any defects could be very costly to rectify - he explained: “This is a serious, even a very serious anomaly as it affects an absolutely crucial reactor component on which no risk of rupture can be taken.” - EDF's real problem is Flamanville not Hinkley Point
  • With all this in mind the Hinkley Point C Nuclear Project can be summed up as massively costly, potentially illegally funded, threat to national security, using outdated & incorrect technology, having safety issues and with a very real prospect of never being finished and costing the UK taxpayer an immense amount of money – hardly a resounding endorsement!

Also never forget the on-going impact of the Fukushima disaster even today with contamination and the very costly failure of the ice wall containment system - Fukushima ice wall a very costly failure

 

Fukushima ice wall a very costly failure

The biggest ticket failure was apparently a $270 million water decontamination system from French nuclear behemoth Areva. Designed to remove radioactive cesium from water gushing from Fukushima Daiichi’s three destroyed reactors, the machine was never fully operational, functioned only three months and processed only 77,000 tons of liquid — in total — a minute fraction of the 300,000 tons of contaminated water flowing from the site (and into the sea) each day

 

And now the Chinese Ambassador is trying to threaten the UK if we do not go ahead with this project - China warns of 'crucial juncture' over Hinkley delay

Quite apart from the USA Government and Companies being under constant threat of being 'computer hacked' by China - although less so since 2014 because they have now reverted to stealing intellectual property

Nevertheless, what price the 'mutual trust' mentioned by the Chinese Ambassador? China Still Successfully Hacking US, But Less - after all trust works both ways and has to be demonstrable not just rhetoric!

 

UPDATE - 11 August 2016

Chinese Hinkley backer is accused of espionage

 

Chinese Hinkley backer is accused of espionage (Times Newspaper)

“Britain’s Chinese partner in the Hinkley Point power station deal is facing nuclear espionage charges in the United States.”

China General Nuclear Power (CGN), a state-owned energy giant, is accused of leading a conspiracy to steal American power industry secrets to speed up the development and production of Chinese reactor technology. Szuhsiung Ho, a senior adviser to CGN, is due in court next week accused of recruiting American experts to obtain sensitive nuclear technology for China in a plot that threatened US security

 

 

UPDATE - 12 August 2016

Australia rejects energy deal with China over security fears

 

Australia rejects energy deal with China over security fears (Times Newspaper)

“Australia blocked Chinese investors from buying the country’s largest electricity network yesterday, citing national security concerns”

The Australian Strategic Policy Institute published a report last week warning that the sale of the network to Chinese investors would make the country’s defence bases and industry vulnerable to interference. The think tank added that Australia would become more vulnerable to cyberattacks originating from China

 

 

Furthermore ...

 

According to UK Government - Solar and wind power will be cheaper than nuclear (Times Newspaper)

“Solar and wind power will be cheaper than nuclear electricity before the Hinkley Point power station could be open, according to the UK Governments own projections”

 

 

UPDATE - 14 August 2016

As previously mentioned

May given legal get-out to pull plug on Hinkley nuclear plant

 

Sister Project - Flamanville in Northern France (Times Newspaper)

“Two years ago the EU approved a generous subsidy scheme that the government had agreed with EDF and CGN to underwrite the project. A key part of the deal was a Treasury guarantee for up to £17bn in loans”

“According to article 56 of the Brussels ruling, this guarantee was conditional on “objective evidence” that EDF’s reactor technology worked. This must be proven by Flamanville completing its “trial operation period” by the end of 2020”

“Flamanville is using the same reactor design intended for Hinkley. Under construction since 2007, the French project has fallen years behind schedule and gone billions of euros over budget”

“France’s nuclear regulator, the ASN, last year found “anomalies” in its steel reactor vessel. The watchdog is not expected to report back with suggested remedies until 2017”

 

 

UPDATE - 23 August 2016

China - State-run company’s rigs are ‘strategic weapons’

China takes control of North Sea oil drilling

 

State-run company’s rigs are ‘strategic weapons’ (Times Newspaper)

“A decade ago Cnooc was blocked from buying a US oil company over national security concerns. No concerns appear to have been raised in Britain when the company bought Nexen, a Canadian oil operator with a large stake in North Sea oil, in 2012. Cnooc has also drawn criticism for its operations in the South China Sea, which China has claimed for itself despite an international tribunal ruling to the contrary”

“In 2012 Wang Yilin, Cnooc’s former chairman, told Communist Party superiors that “large-scale deep-water rigs” of the sort used in the disputed region were China’s “mobile national territory and a strategic weapon””

 

 

UPDATE - 09 November 2016

Hinkley firm may have to turn off lights

 

Hinkley firm may have to turn off lights (Times Newspaper)

“The French company chosen to build Britain’s new nuclear plant at Hinkley Point may have to switch off the lights in its home country because of safety concerns over its reactors. With 20 of the 58 nuclear reactors in France out of service, officials fear that EDF, the state-owned energy giant, will be unable to meet demand if temperatures fall this winter”

“The scandal came to light after it emerged that the reactor vessel at Flamanville — where EDF is building a reactor of the sort intended for Hinkley Point — contained potentially dangerous flaws. Amid fears that EDF’s existing nuclear plants could also contain unsafe components, France’s nuclear watchdog ordered a programme of tests on 18 reactors. Analysts said that a drop in output because of the tests was likely to cost EDF at least €1 billion”

 

 

Tags: | Categories: China | Energy | UK Government

The trouble with Government & Central Bank interference in markets is the law of unexpected / unknown consequences and this has been a situation repeated over history

Recessions are the markets way of weeding out potential issues. Inevitably some businesses go to the wall but in theory a severe downturn does leave a stronger more vibrant market with more opportunities, for those who can weather the storm

However, once Central Banks get involved in their misguided attempts to influence markets, a short sharp recession can drag on for years or decades whilst ‘zombie’ businesses are propped up and can keep going despite the fact that they should have been wound up years before

This is where we are today – a global foul up by Central Bankers, who, for some reason, seem to believe they know better than anyone else and continue to implement damaging policies in attempts to bolster consumer spending and all manner of other remedies to avoid a recession. Most of which only make the situation worse by kicking the problem into the 'long grass' for the future

  • Unfortunately they never seem to take on board the resulting fall out
  • Why are houses so expensive that the UK younger generation cannot afford to get a foothold on the housing ladder? - could it be because the knock on effect of low interest rates is increased property prices 
  • Is it really a good thing to encourage consumer spending at all costs – and ignoring the individual debt cost - generally incurred by those who can least afford it?
  • What happens when pensioners who were able to live on the interest from their capital can no longer do this with zero interest rates - inevitably they will go to the State for support to supplement their non-existent interest receipts - so this backfires on the State. After all we are now being told that within 8 years 20% of the population will be over 65 year old - so how many of these have been let down by the BOE decisions & how are they to make up for their shortfall in their income as a direct result of Central Bankers?

Therefore, how does a race to the bottom by Central Bankers benefit anyone with ever lower interest rates, whilst each country tries to 'steal a march' on others by reducing their rates even further?

Furthermore, why is there such a disparity between Credit Card interest rates and the BOE rate? – and what, if anything, has been done about the usury rates charged by Credit Card providers. How about policies such as making Credit Card interest rates no greater than say the Bank Rate plus 10%

And now these 'Masters of the Universal' have hit upon negative interest rates, helicopter money and all sorts of ideas that will only exacerbate the current situation in an attempt to ensure short term fixes at the expense of future problems

Enter Perpetual Bonds – Wow, here is a winner! 

We all know that global debt is pretty much beyond counting so this could be the answer to Government dreams

Essentially Perpetual Bonds - aka Consols but potentially ex coupon - have no maturity date, and when one couples this with zero or negative interest rates, Governments around the world suddenly have an epiphany

Why don’t we issue ‘perps’ combined with zero/negative interest – which would solve the global debt problem. After all if one can get enough ‘suckers’ to buy these bonds then:

  • It is very cheap money (borrowing) – bond holders are paying you interest to hold your paper
  • Here is the kicker, you never have to pay the money back (perpetual bond) and over time the debt will erode to nothing anyway

So why not load up these bonds with the entire global debt and just move on - problem solved

OR SO THEY THINK!

Tags: | Categories: Bank of England | Economics | UK Government