Not-So Green Banking

Another interesting story here from the Guardian, it suggests that the governments Green Investment banking funds might be used to build nuclear power stations. Needless to say this has the Green party types (notably Caroline Lucas) in a right old tissy.
http://www.guardian.co.uk/environment/2011/jan/13/green-investment-bank-build-nuclear-reactors

Ignoring the pro or against arguments for nuclear power (we’ll be here all night otherwise), this would be a bad idea for a number of practical reasons. Firstly this Green investment bank is intended to provide seed money for Green Energy projects which would have difficulty raising initial start-up capital commercially, using it to fund “mature” technologies such as nuclear would defeat the whole purpose of the fund and undermine its core goals (as the energy secretary himself implied in the article below).
http://www.guardian.co.uk/politics/2010/dec/14/huhne-backtracks-bank-green-projects

Another problem is the shear volume of money nuclear projects take up. A new French designed EPR type plant costs between £3 billion to £5 Billion depending on who you ask. Just one or two such projects would soak up most of the Green investment banks money supply, leaving little for renewable energy projects and effectively turning the bank into little more that a taxpayer backed slush fund for the nuclear industry. Furthermore there is the time issues with nuclear, it takes a good decade to go from green field to operational reactor, 50 years running time, then many decades and centuries of decommissioning. If, in the case of renewable energy projects, it turns out in 10 years time that the government is being taken for a ride, i.e. we take all the financial risks and the green energy companies rake in all the profits, the contracts and structure of this fund can be renegotiated, or it can even be gradually wound up. If the Green bank invests in nuclear, such renegotiation simply won’t be an option, as the shear scale of nuclear projects (compared to renewable), the long time periods involved and the risk that cutting off funds could compromise safety, all mean that in such a scenario it would be a case of tough titty! We’ll be locked into a bad financial deal for decades, possibly centuries.

Finally the mantra you here over and over again from Nuclear power lobbyists is “oh! We don’t actually want subsidies!” Well if that were true, why are you trying to wriggle you’re way into a government backed fund? If nuclear power is truly capable of being done commercially it should be a simple case of going to a bank (or other leading financial institutions) and negotiating a loan, just as any other company would do to finance a major energy project. Of course the fact that the nuclear industry has been trying to do this for a least two decades without success, and indeed the very fact they are trying to get access to this green investment fund, suggests to me that the markets have taken one look at the financial mess that is the Olkiluoto 3 plant (the first major nuclear project of the so-called nuclear Renaissance) and they (the banks) have basically concluded that nuclear energy is just too hot to handle.
http://www.psr.org/safe-energy/the-myth-of-the-european.html%5D
http://www.nytimes.com/2009/05/29/business/energy-environment/29nuke.html?_r=1

While yes, nuclear energy might be viable, the financial risks if something goes wrong (plant doesn’t get built on time costing billions in lost generating time & interests payments, accidents and breakdown costs, construction cost overruns, decommissioning costs, etc) are potentially crippling and far outweigh the potential for profits. This is especially true while the fossil fuel industry, and indeed all of us (with our cars, central heating systems, cheap flights, etc.), get a massive free subsidy by being allowed to dump carbon dioxide into the atmosphere free of charge.

As a consequence of the above, I would suggest that if we do go down the road of building nuclear reactors the obvious solution is to do it the same way the French do with state owned companies. If new nuclear reactors are build in Britain (something I would personally be against as a waste of money), let’s face it, the government is going to have to shoulder all the risks anyway (as I’ve pointed out above, the markets clearly won’t), put up most of the capital and so the government may as well end up owning the reactors and either profiting from electricity sales, or do what the French do and lower bills to give everyone cheaper electricity.

Of course mention this fairly obviously reality to any of the (mostly) Conservative leaning supporters of nuclear Energy and watch as they’re faces turns white. This is why we see this strange dance of “oh! We don’t want subsidies….what we want instead is….something like a subsidy….just it isn’t called a subsidy”. Look guy’s I hate to burst you’re little Tory bubbles here, but if you feel that we face such an overwhelming crisis with future energy supplies as a consequence of global warming and peak oil, and you feel that we need to pull out all the stops, even nuclear, well the only way we are going to get nuclear energy to work is via state owned companies, as the only places in the world where nuclear reactors are being build are by state backed organisations. Yes, this would essentially mean part nationalisation of a large chunk of the energy industry, and yes, this will involve a partial roll back of a key Thatcher era policy, but it’s the only way Nuclear power is going to work, at least in a way that meets the basic requirements in terms of safety and protects the interests of the taxpayer.

If, on the other hand, you’re a Daily Mail reader type fearful that a roll back of Thatcher- era policy would put us on the road to communism (and being overrun by immigrants…you do know the French will be building and running these plants guys?), well maybe you have to conclude that nuclear power is simply more trouble than it’s worth, in which case, you might want to join these guys:
http://www.greenpeace.org.uk/donate

Of course one solution to all this would be some sort of a carbon tax, that would make both renewable and nuclear projects much more financially viable (thought I suspect nuclear would still some sort of government support to deal with waste, decommissioning, security and the potential costs of a serious nuclear accident) but of course these are Tory’s we’re dealing with, where the dreaded “T” word (that which we do not speak of) is an ancient curse invoked by a coven of evil necromancers.

Unfortunately, all rumours coming out of the energy industry from insiders suggests some sort of a “done deal” behind closed doors to build one or two reactors with the tax payer (that’s you and me) effectively bank rolling it it via some form of stealth subsidy. This again will mean, like the situation with the banks, we the taxpayer will take all the risks and the companies (it will be most likely French companies who will build, own and operate the reactors) will make most of the profits, while our ability in influence matters (such as stopping them fleecing us with excessive electricity costs that we are ourselves subsidising!) will be limited, as on paper these will be “privately” built and owned (ultimately by the French taxpayer!). We’ll also likely be left to pick up the cheque for decommissioning costs and spend fuel storage (currently at £80 Billion and climbing!).

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One thought on “Not-So Green Banking

  1. Pingback: Weekend News Roundup | daryanblog

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