Monday, 27 June 2016

UKIP set for major boost as Johnson forced into humiliating u-turn on freedom of movement

As predicted in earlier posts on this blog the UK is heading for the worst of all worlds compared to retaining full membership of the EU. Boris Johnson, in a staggering u-turn, has effectively accepted a 'Norweigian' solution whereby we are bound by the EU's rules (including free movement of labour) except that the UK will have no say in making the rules to which we will be subject! See

But at least the British experience will dissuade others from trying the same!

Of course the protection of the economy and the rights of free movement of people are important, vital, objectives, and indeed this concession may take some of the sting out of the Scottish Government's challenge (see previous post). However papering over the cracks torn in the national fabric created by an unnecessary and ill-fought referendum will now be achieved at a terrible political cost. Besides the evisceration of UK influence in and outside the EU, UKIP will be given a major boost as that they will now claim that they have been sold out by Boris Johnson.

Of course Johnson is trying to make out that somehow Britain will increase controls over migration into this country. This surely must be cloud cuckoo land. The idea that the EU is now going to give into British demands now that they are not in the EU to a greater extent than if we are members is itself nonsense. To imagine that the EU are now going to concede to the Swiss in their arguments with the Swiss over immigration controls and anybody else order to agree terms with the UK is the most fanciful of all proposition. The EU are not about to change the whole basis of the original  Maastricht Treaty in 1992 for the sake of some trade deal with the British.

'Open Europe' have given a simple explanation of Norway and Switzerland's position at

But now we face the whirlwind of rising xenophobia. UKIP represents the 'respectable' face of this movement, while in the wings the English Defence League and other far right movements harass people perceived be a 'foreigner'. But as we go into the General Election UKIP will now be presenting itself as the 'guardian' of the Leave vote. Many right wing Tories will be torn between supporting them and the Tory leadership. The result looks like the UK is turning in a very short period from being a tolerant country to just another state with a rising tide of racism and xenophobia.
As UKIP's influence expands, so does their influence over policies, such as green issues, over which they have little real support among the population, but which damage society and the environment.

The terrible irony is that one of, perhaps the main, architect of this situation, Boris Johnson, is set to take over the leadership of the country!

I hate to say 'I told you so' but check out what I wrote near the end of March at
UKIP is successfully hijacking the support of many poorer sections of the population on the basis of the age-old technique of 'blame the foreigner'.

A few days ago I was reading a good popular account of British history written by the archaeologist David Miles (The Tribes of Britain, Phoenix, 2006) and on page 340, he describes conditions in England in the late 17th century. That period saw the arrival in the UK of many 'Hugenot' people fleeing persecution in France.  He wrote on page 340:

'The arrival of Hugenot workers did not meet with universal approval. People complained that they worked too cheaply, drove up the rents and the prices of timber and coal, polluted rivers, ate strange food - such as garlic, snails, oxtail soup and root vegetables. The number of refugees was exaggerated. Popular prejudice blamed them for the Great Fire of London in 1666, and illogically assumed that they were papist agents of the powerful french state'.

So what's new today?

Well, a new twist is that the power and influence of Germany is increasing, ironically, precisely at a period when the Germans want to be part of a democratic Europe. In effect they are being forced to take a leadership position they do not want.
We read about how there are a stream of countries lining up to have referenda about leaving the EU. Well, usually far right parties are saying that - will they get into power? Will any other EU political leader do a Cameron? Maybe not after the growing chaos and ludicrousness that is represented by the British example.

But there would be a growing absurdity if this happened. Like the UK, they would leave, then come to a trade agreement with the EU that would mean they would have to accept EU rules over which they had no control. Imagine it, an increasing number of countries leaving the EU and economic decision-making to Germany!

It's ludicrous, I know.

The reality is that Europe is now so interconnected that it is extremely difficult for one country, even as big as the UK to simply walk away. But, now we have three important countries, Norway, the UK and Switzerland who have decided to give away their effective sovereignty over wide ranges of policy areas to a body over which which they have no control leaving a reluctant Germany to make decisions on their behalf!

Germany - the sovereign power in Europe by default!

Sunday, 26 June 2016

Are we heading for constitutional crisis as Sturgeon threatens to 'veto' Brexit

We can see in the headlines that Nicola Sturgeon is threatening to 'veto' Brexit on the grounds that consent from the Scottish Parliament is required to stop Scotland being subject to EU laws. See Are we heading for a full blown constitutional crisis with Scotland simply refusing to withdraw from the EU?

Well, probably not in that sense, but the upshot is likely to be in a sort of quid-pro-quo that the Scottish Government's desire for a another independence referendum will be granted before the UK leaves the EU.
As is argued in a legalistic explanation which you can see at: (and thanks to Paul Cairney for pointing this commentary out), it is the case that for 'normal' legislation the consent of the Scottish Parliament would be needed if Westminster wishes to amend the 1998 Scotland Act. And this Scotland Act specifies that Scotland is subject to EU law.

The apparent downside for the First Minister's strategy is that Brexit is hardly 'normal'! In practice Westminster could amend the 1998 Scotland Act and assume, with some confidence, that the judiciary would uphold Westminster's version of the law. Despite what some of the more excited supporters of Scottish independence may be tempted to suggest, the Scottish Government is not going to make a unilateral declaration of independence under these circumstances.

But then I strongly suspect Nicola Sturgeon realises the likely legal outcomes but is highlighting this issue as part of the pursuit of a strategy to induce the Westminster Government to grant a further 'indyref'. Failure by Westminster to give this concession, and an attempt to disarm the SNP Government by staging, and winning, a new referendum on Scottish independence, is likely to have increasingly problemmatic political consequences. Indeed as tempers rose in the years leading up to the 'Brexit' legislation being passed by Westminster the stage could be set for mass demonstrations, especially one timed for the day that Westminster passed the amendment of the 1998 Scotland Act. Thousands of demonstrating Scots arriving at Westminster..........etc etc

No, the most likely outcome is that Westminster will agree to another indyref to take the sting out of this. The problem for the Westminster Government in dealing with this is that now the ranks of nationalist voters are being supplemented by former unionists who are changing their tune after  their votes to remain in the EU have been frustrated. And there are some quite surprising shifts taking place.
For the moment the Scottish Government's storyline is to keep Scotland in the EU, as well as preparing the way for another referendum on independence. In this they will have the support of the Scottish Greens, giving the strategy a majority in the Scottish Parliament. Even the Scottish Liberal Democrats appear to be showing some sympathy with this and Kezia Dugdale is sounding pretty ambivalent.

Whatever people may say, however, Scotland can't stay part of the EU and part of the UK if the UK leaves the EU. Apart from anything else, the EU will not entertain an application from just a part of another country. Scotland will have to leave the UK first, and then apply to join the EU. But in that case the EU is likely to be a lot more helpful to Scotland than they were in 2014. Many in the EU would want to reward Scotland. Meanwhile many in the EU want to punish  the UK with poor trade terms in order to stop other countries (eg the Swiss) picking and choosing rights such as immigration controls.
The Institute for Fiscal Studies  say there would be big economic penalties for Scotland in leaving the UK. Certainly public finances may suffer very substantially as long as oil prices stay relatively low. But in the current uncertain economic circumstances facing the UK (or reduced UK), such arguments may not carry as much weight as you would think, especially with bravado from Holyrood being spread about possibilities for Edinburgh replacing London as an EU financial centre etc. Besides, how seriously did the people who voted to leave the UK in our recent EU referendum take the predictions of economic disaster? Identity politics seem to be ruling the roost in today's world, like it or not.

Of course it is possible that this strategy could be undermined if Marine Le Pen won the French Presidency next year and talked about 'Frexit'. But it doesn't look like she'll win at the moment. It is beginning to look like it will be a struggle for a divided 'rest of UK' and a weakened unionist position within Scotland to hold the unionist line in another indyref which is may occur as early as a year or 18 months time. Yes, the break-up of the UK is looking now like a very plausible proposition. In that way then, we are heading for constitutional crisis.

Sunday, 19 June 2016

So seriously, how will leaving the EU affect green energy.....

I'm of course for 'in', but I thought I'd try and put the green energy implications of a 'leave' decision in perspective in as balanced a way as I can manage......Technically speaking of course there's nothing to stop the UK pursuing a sustainable energy strategy outside of the EU, but I suppose the summary is that it would help considerably if we stayed in if (especially) we take broader political factors into account. I shall discuss this later on in this post.

Note, where I talk about the 'single market' I also mean the EU's internal market'. I use the terms interchangeably.

Let's break this down into sections

Energy Prices

I can't actually see much direct effect on energy prices if we leave or remain. Energy markets tend to set their own prices levels independent of governance arrangements and such markets tend to be global or regional.
Leave have talked about removing the 5 per cent VAT on energy. This would increase carbon emissions. In practical terms the prospect of removing this tax seems unlikely since you'd either have to increase taxation somewhere else (equally unpopular no doubt) or cut back state spending (more 'austerity').

There would be nothing to stop the UK remaining a member of the EU-ETS - after all, Iceland is a member.

Regulation of energy markets

Now this is an area where the EU has a major impact, and regulation needs to be talked about in different boxes. First there is the overriding regime of the internal market, which, the UK has been driving in the direction of more liberalisation.
But this liberalisation is bounded by complex sets of rules administered by bodies such as the European Network of Transmission System Operators (one for Electricity, ENTSO-E) and one for gas (ENTSO-G). As in the case of some small non-internal market states (like Serbia) The UK would still be members of these bodies, but its role in governance would be reduced. These are obscure, but important bodies since they define a lot of important technical rules and identities. They implement EU rules, and so it follows that if we leave the EU the UK will have much less influence on the rules. On the other hand the general direction of policy favours greater and more transparent energy trading within Europe and this trajectory is unlikely to change. But it would not be so easy for the UK to ensure that the technical changes are to its liking compared to the  present.

Energy efficiency standards

Much controversy about alleged Brussels meddling with our kettles etc is in fact about efforts to improve the energy efficiency of appliances we use. In general, then, to achieve energy efficiency, it serves us to have a European identity rather than just a British one. Outside of the EU and its internal market British manufactured products may become divided into two types: one for the EU market with higher energy efficiency, and one for the British market where the appliances are cheaper to buy but which cost more to run, and which produce more carbon emissions.

Renewable Energy

The EU has certainly had a very big impact on the UK through the 2009 Renewable Energy Directive. There is no mandatory post 2020 EU Renewable Directive, so the impact will be less in the future. However, it is the UK Government,essentially, that controls the regulatory and incentive regime for renewable energy at present, so little would, in a technical sense, change from the present arrangements in this area.

Nuclear Power

Despite the much publicised battle over 'state aid' for Hinkley C, whereby the UK has to get special permission from the European Commission to give 'state aid', the impact would be relatively small. Delays in giving state aid clearance are hardly an important factor in in the non-delivery of nuclear power in the UK (see other posts!). Moreover, it is the UK Treasury that is proving (understandably) reluctant to dole out the multi-billion £s worth of loan guarantees for Hinkley which have been authorised by the EU.

The political context

I would argue that the political context post Brexit will be the crucial determining factor in shaping the UK's energy trajectory, and I believe quite firmly that this would be very damaging for sustainable energy strategies. As I argued in a previous blog UKIP are likely to be big gainers post Brexit. See
In sum, whilst the majority of the House of Commons would negotiate for continuing membership of the EU's internal market, UKIP would denounce this as a sell-out since this settlement would involve the UK having to continue with current immigration arrangements. Tory right wingers would get sucked along with them no doubt, and a strengthening rightist bloc would emerge within the UK. Indeed, one could argue that even if we left the internal market and then even this failed to have that much impact on immigration, the right would gain further given the central focus of immigration in UK politics.
As the right gains more influence then the pressure for green energy policies is much reduced. This can be seen in other countries - eg Denmark where the renewable energy programme is being cut back after gains by the right wing Danish People's Party.
In short, the technical implications for green energy post-Brexit may be relatively moderate, but it is the contextual political ramifications that are likely to feed back to have substantial deleterious consequences for green energy strategies.

Thursday, 19 May 2016

Will Japanese or US Governments end up paying for Moorside nuclear plant?

According to spokespersons for the proposed 'NuGen' nuclear development at Moorside in Cumbria either or both the Japanese and American Governments could end up part-paying for the proposed 3.8 GW project. That is if it ever happens (which I doubt).

According to a report in World Nuclear News, NuGen's boss Tom Samson said that they were hoping to get the US and Japanese Government's support to supply export credit guarantees for the debt element of the necessary investments - as well as the British Treasury. What this means is that if there are serious cost overruns on the project that exceed the equity (risk capital)  element of the project then the Governments would end up paying out. Given the track record of the only western-based nuclear plant using the AP1000 technology from Toshiba that is earmarked for the project then this scenario is all too plausible. The only two projects in the West are at Virgil C Summer in South Carolina and Vogtle in Georgia. Both are suffering serious cost overruns and will not be built on time. It is just a question of how high the cost overruns will be. Of course these plant are being built with what amounts to a blank cheque. The developers are monopoly electricity suppliers with compliant regulators who allow the electricity companies to charge the electricity consumer (in advance) for whatever the power plant costs.

In Georgia, one serious estimate is already suggesting that Vogtle will cost 50 per cent more than the original estimate. And this figure could well rise! If the debt element is two-thirds of the total investment then this would already be at the outer margin of what the project could pay for before invoking Government guarantees.

This could lead to the bizarre position of Japan and or the USA paying for a British power station. Given, it seems, that now the only way Hinkley C will be built is for the French Government to contribute to the costs of the power station, this just adds to the bizarreness rating of the British nuclear programme. But then, at least in the case of Hinkley C there are theoretical investors for the equity portion of the investments. These are EDF, for some crazed reason, given their general finances, and the Chinese, who are being given rights to build their own power plant in the UK as a 'reward'. In the case of the NuGen development, there are no plausible investors - no doubt Toshiba can put in a bit, but not much, partly because they couldn't afford to take that risk, and also because manufacturers usually don't pay for their own products.

Quite where the developers will find anybody mad enough to bet billions on the chance that a nuclear power plant will be built more-or-less within project cost parameters is the big question. No nuclear plant that is being constructed in recent times even approaches this notion. Then there is the question of how much the UK Treasury would be persuaded to offer - Hinkley's cost, in current prices is £100 per MWh for 35 years even with the Treasury;'s loan guarantee, and that resting on EDF taking the first risk of cost overruns.

It all sounds highly unlikely to me. The Nugen developers say their plant will be generating in 2025. I will bet them (or anybody else) £100 that it is not generating by then. I am just arranging to pick up £100 in a bet that Hinkley C's construction would not have started by the end of 2015. I'll happily bet the same sum for completion of the Moorside project.

Come on Tom, give us a whirl!

Thursday, 12 May 2016

UK renewable energy auctions system discredited by offshore windfarm contract fiasco

The Government's much vaunted 'contracts for difference' (CfD) auction system for funding renewable energy has been thrown into disrepute after a key project awarded a contract has had its contract cancelled by a government agency. This is because of a delay in a court appeal against the (Scottish) Government's own planning consent for the project. There is no procedure for allowing more time for the project or for awarding a contract to one or more runners up in the auction contest.

The RSPB lodged a judicial review case which began hearings almost a year ago against planning consent given to four Scottish offshore windfarms on the grounds that they damaged bird species. Meanwhile the Government which had awarded a CfD contract in early 2015 to one of them, to Mainstream power for the 448 MW Neart na Gaoithe project near the Forth Estuary, has allowed the contract to be cancelled by the Low Carbon Contracts Company (a government agency). This is on the grounds that the project has failed to meet its milestones to ensure the project begins operation in 2018. Mainstream says that the only thing holding it up before its contract was cancelled was the court procedure.

The apparent failure to deliver this project, in addition to the failure to deliver solar pv projects awarded contract means that so far it is all but certain that at least nearly a quarter of the renewable energy capacity awarded contracts will not be delivered. We do not know how many more projects will not now be delivered. This is an indictment of the auction system in general and in particular the British version of it which fails to pick up on the experience of auction systems organised elsewhere in the world, especially in nearby Denmark for its offshore wind schemes.
There are a lot of claims permeating the web these days about how auction systems are driving down the cost of renewable energy (RE). There is no evidence for this, as my own research demonstrates. See my paper on renewable energy auctions at 
Auction systems have been introduced in a period of rapid decline in renewable energy costs and it is the technology that is driving costs down, and the competition among manufacturers to supply it to the developers, not the contract procurement process.

I comment in this paper that, amongst various other things, for RE auction systems to work, Governments have to give certainty of grid connection and planning consent to projects that are awarded contracts. The UK Government has lamentably failed to do this. Of course the RSPB (or anyone else) is perfectly entitled to seek judicial review, but in that case the Government has to take action to ensure that the project can still go ahead if its planning consent is confirmed or ensure that somebody else can build the capacity. The Government has done neither. Of course in Denmark the Government ensures that all of the planning issues are resolved before asking for bids to develop offshore wind projects in sites that have been carefully researched and planned in advance.

So now future renewable CfD contracts are liable to challenged by well resourced groups who know that all they have to do is to get permission for a judicial review to be held to kill the project. This makes the auction scheme into a shambles. In the UK in the 1990s the last time we had an auction system three-quarters of the projects never got implemented, a lot of the time because of planning failure. Also a big cause of failure to implement the projects is that the developers themselves bid unrealistically low prices in an effort to secure the contracts, and many schemes were not carried out as a result. This has already been seen to be the case with a couple of projects in the first CfD auction. So here we are again, 20 years later, and we've learned very little!

One of the most outrageous aspects of all of this is the fact that offshore wind schemes can get their contracts withdrawn for flimsy reasons while Hinkley C, now at least 8 years behind schedule, is kept on the government books!

Amber Rudd's claims that we have lots of renewable energy investment is a shambles. Confidence in RE investment in the UK has crashed, and it seems the Minister is unable even to deliver the capacity that it claims to have awarded contracts. The UK has crashed down the attractiveness list of countries for RE investment. See

Altogether the UK Government is developing a reputation of issuing press releases about fantasy power schemes. Maybe the Ministry should be renamed the 'Department of Fantasy Energy and Climate Change'. Of course Amber Rudd is only the monkey, with George Osborne being the organ grinder as far as the messages are concerned. The Treasury's determination about  ensuring renewable energy projects go ahead is about as strong as the alcohol content in orange juice.

See also references:

Friday, 22 April 2016

EDF postpones Hinkley C decision until next year

A report in the Independent says that the EDF Board of Directors has agreed to undertake discussions with the company consultative council before taking a decision, a process which is likely to take a long time ie until next year. However this could well be a cover for the numerous problems facing the project, not least EDF's own parlous financial position and the fact that it needs the French Government to bail it out even without going ahead with the Hinkley C project.

There has been a game of 'pass the decision' to abandon a project that no independent financial consultant would come within a light year of recommending for the go-ahead. The French Government has been faced with what seems to many to be the ludicrous prospect of heavily subsidising a power station to supply the British with electricity. This is despite the fact that the British themselves have promised to pay EDF around £100 per MWh in current prices for 35 years with the British Treasury agreeing to guarantee a £17 billion loan for the project! It is not as if even such a project could be a 'loss leader' for the French. Two versions of the same (EPR) plant design have been spectacular construction disasters already in Finland and France. Various engineers and managers, company unions and employee shareholders have pleaded for the project to be abandoned or put in deep freeze, and last month the Chief Financial Officer of EDF resigned in protest at the apparent determination of the EDF leadership to proceed with the project.

Earlier today Greenpeace announced a legal opinion which said that the French Government would need to apply to the European Commission for state aid for the billions of euros of money that they would need to throw down a probable Hinkley black hole. The Commission consented to the British state aid request in 2013, but a further consent could not be taken for granted - indeed, under the circumstances it would seem a bizarre request. In any even such an application (if it was ever made) would take a year or more to be resolved.

Certainly many nuclear experts have, in any case, been scratching their heads wondering how on Earth EDF could take a 'final investment decision' before the results of the safety tests being conducted on dodgy-looking EPR reactor vessels by the French safety regulators, the ASN, were known (they will not be known until next year). The suspicion must be that the directors of EDF, the French Government and the British Government are just stringing out the death-knell of a project that they know is not going ahead in the hope that a different member of this troika than themselves will take the blame. Who knows, maybe the troika have decided that they can take the matter to the Commission in the hope that they will refuse the state aid request and everybody can blame the EU! - As often happens for decisions that other people do not want to take themselves!

Thanks to 'Bristolboy' for pointing out to me the Independent piece; See

Wednesday, 20 April 2016

French Government obfuscates on Hinkley C as EDF managers predict legal action if EDF goes ahead

The insanity of the Hinkley C project for the French nation in general and EDF in particular was underlined today by two events. First, the French Government found itself unable to solve the gordian-like knot of problems facing EDF. Second a group of EDF managers wrote a letter warning  the directors that they could face legal action to make them take responsibility for taking on the Hinkley C project if, as they fear, the project goes wrong. This follows an earlier letter from engineers doubting the wisdom of proceeding with Hinkley C and the resignation, last month, of EDF's Chief Financial Officer who feared Hinkley C would undermine EDF's finances.

Yet again a high level political meeting of French ministers billed as giving a green light for the project has prevaricated. It is a wondrous testament to the trust we wrongly place in the press releases issued by EDF and its allies that we believe every one of the now dozens of times that the green light for the project is to be given for the project. Of course, if it is so certain, why the need for these repeatedly stated 'final investment decision' meetings that never resolve the issue? Why aren't they just building the damn thing!

Now of course with any privately owned company the merest hint that there were serious internal doubts about a project would send the shareholders scattering and the project would not be implemented. Indeed the employee shareholders have opposed the project and EDF's share price has plummeted. But this matters not to the directors who try and browbeat the Government, who own 85 per cent of the shares, to go ahead with the self-destruction, mainly it seems, to have one last gasp attempt to rescue the pride of the EDF leadership. Any notion that this is a vaguely competitive project - even with offshore wind projects, is rendered nonsensical by all of this, with some made-up price that the British would have to pay being paraded as the 'cost'. Now it seems the cost includes the French Government injecting billions of euros in various types of support even if all goes well. The chances are it will not, and the French state will be on the hook to pick up the pieces of EDF which will effectively collapse as a result - indeed the company could well go under even without the added weight of Hinkley C.

Then Amber Rudd comes out and says that EDF is taking the risk of the project according to the contracts. Well, legally, some risk maybe. Except that we are on the hook for may £17 billion worth of loan guarantees. And we're protected from paying this out are we because of the legal paraphernalia? Think again about what happens in the nuclear business, which is really not a business at all despite the made-up fantasy costs (as high as they may be) that are bandied around in government press statements.

Ultimately whatever the contract terms actually say, the politics are that if EDF runs out of money half way through (they already have!) because of cost overruns and says 'we can't complete it', of course the British Government will step in. Just as they did with Sizewell B post privatisation and declare it was now economically necessary to pour even more cash in.....

Strange attitudes are developing. Increasingly many pro-nuclear supporters are hoping that the project is cancelled for fear that the coming disaster will ruin the prospects of nuclear power in Europe forever. On the other hand anti-nuclear advocates are hoping that the project is actually attempted on the grounds that will finally destroy EDF and its nuclear power mission.

see also my earlier comment on the bleak prospects facing EDF at