Saturday 27 May 2017

More delays in EPRs signal more problems for Hinkley C

It's now the middle of 2017 and still, after 12 years of trying to build the French European Pressurised Reactor, there is still no model in operation. Even in China, which has, according to some of its domestic critics, let us say a more relaxed attitude to safety requirements compared to western agencies, the EPR at Taishan is still not generating electricity.
It was 16 months ago that the constructors announced that 'cold start' tests had been successful and that the whole of the plant (including two sets) would be fully functional this year (2017). Now they say that this will not happen, although one set 'will' be running sometime in the second half of this year. But then the plant, which begun construction in 2009, was supposed to be finished in 2013.
This failure does present the question of how it is that other nuclear plant built in China have not been subject to this much delay. How can we explain this? The obvious reason is that the EPR is a turkey that is widely regarded as bordering on, if not actually, 'unconstructable'. The difference with other nuclear plant built in China may simply be that the EPR was designed to suit western safety standards. It's an easy guess to say what this means for Chinese plans to build nuclear power plant in the UK!

In France construction at the EPR at Flamanville began in 2007 and completion by 2019 seems possible but uncertain. The other EPR at Olkiluoto started in 2005 and is about, so they say. to undergo 'cold tests'. On the basis of what has happened in Taishan this doesn't mean that it is about the generate electricity, though.

Of course none of this would be happening unless the French state was shovelling, in stages, numerous billions of euros into the different projects, including, it seems, Hinkley C. The EPR would have been abandoned withoiut these massive payments from the French state. Even many workers and leaders of EDF have marvelled at the paradox of the French Government pouring several billion euros into financing building power stations in other countries, especially the UK with Hinkley C

Of course some day this has to end, and EDF, which has mounting financial problems from various angles, will be restructured, maybe privatised. EDF's own, ageing French nuclear fleet is in deep trouble, and vague Government plans to increase electricity prices to shore them up may be the straw that break's the camel's back of French public tolerance of EDF. Nuclear power stations last 60 years, nuclear supporters will say. Well, only if you carry on paying a lot of money to refurbish them.

Some have said that EDF will get a lot of money when it starts up the Hinkley C project, whenever that is completed - the projected start date of 2026 can be regarded with some scepticism in view of the history of building EPR plant - but by then so much money will have been spent that for so long a period on the EPRs that this could not possibly justify what has been done.

British advocates of the Hinkley C say that the British Government is effectively indemnified by the contract with EDF to build the plant with EDF taking the risk. But that of course assumes that EDF will continue to exist as a company over the next decade. If it does not, and Hinkley C is still half built, we'll see how much that contract and all the lawyers fees that took to draw it up is worth. And the British consumer may be asked to come up with even more money than the £92.50 at 2012 prices for 35 years we are committed to pay at the moment.

What is happening in the USA with the Westinghouse designed AP1000 reactors in Georgia and South Carolina is a bad omen. There there are worries that with Westinghouse's bankruptcy the already increased cost of completing the power plant will balloon, and that electricity consumers will be asked to fork out more and more dollars for projects that never seem to get completed (see http://www.myajc.com/business/kempner-radioactive-question-looms-over-georgia-nuclear-mess-vogtle/LO9kYtkyPgtRfer2SpU8rL/ and http://www.utilitydive.com/news/westinghouse-bankruptcy-could-grind-us-nuclear-sector-to-a-halt/440153/)

It should be remembered that nuclear power is and always has been governed by politics, not commercial considerations. The spectacle of a half-built nuclear power plant (originally began by the nationalised CEGB) having to be re-financed afflicted the last nuclear power plant to be competed in the UK - Sizewell B. Privatisation, in 1990 meant that even though the plant was half-built, it still wasn't profitable under standard commercial criteria for privatised interests to complete it. This experience was wished away among a smokescreen of talk of decommissioning costs, which although real, were besides the point that it was the construction cost that stopped it being completed - until the electricity consumer was given a hefty bill.

Will this happen again and will more British as well as French consumers and taxpayers money be ploughed in to Hinkley C than is already slated? We will have to wait several years for the answer to this question. Meanwhile tremendous amounts of money that could be spent on real green energy that would be working and saving energy and pollution will be poured down a big black and ever deepening hole.


http://www.world-nuclear-news.org/NN-First-Taishan-EPR-completes-cold-tests-0102164.html

http://www.powermag.com/taishan-epr-nuclear-reactor-project-delayed/

http://www.nucnet.org/all-the-news/2016/10/19/milestones-announced-as-finland-s-olkiluoto-3-epr-heads-towards-completion

Wednesday 3 May 2017

Why the left should focus on countering inequality rather than banging on about globalisation


The 'debate' we are currently having about globalisation, is at best distracting, at worst highly toxic to the cause of spreading peace, equality and green politics in today's world. To put it simply, rather than banging on about globalisation the left and greens ought to be focussing on the issues that count.

I feel moved to say this now because of the terrible spectacle of left-wingers suggesting that it is best to be neutral between the xenophobic right wing (Trump, Le Pen) and the 'neoliberals' (Clinton, Macron). This has a few lurking  echoes with the position taken by communists in the early 1930s in Germany when they refused to back the social democrats and the centre against the Nazis. Now I am not suggesting that Le Pen and Trump are fascists. But there is no doubt that they have encouraged xenophobia, and I totally dismiss any argument that just because they profess antagonism to 'globalisation' they have anything in common with leftist objectives. This should be obvious; on economic grounds alone Trump's economic programme is oriented towards widening tax and state spending inequalities. The same, I am sure, would be the case for Le Pen if she was elected.

What we are left with is some xenophobic notion that the foreigners are taking stuff away from the workers, an impression which I was disturbed to see reproduced in a recent video produced by Momentum (Labour's pro-Corbyn group) supporting rail re-nationalisation. As if the job losses in countries around the world had much to do with foreigners or trade policies.

The point about 'globalisation' is that it actually has very little to do with the reasons we have had economic dislocation, job losses and rising inequality in recent decades. High up on the list of job losses is automation. The old industrial working class are a disappearing force. In addition to this as economies develop, so the employment patterns shift towards services and away from traditional industries. That's good news, by the way for ecology since it means lower energy outcomes. It is happening in China today something which I have noted in my new book 'China's Role in Reducing Carbon Emissions' , which, by the way you can buy as an e-book for £25 from Routledge now at  https://www.routledge.com/Chinas-Role-in-Reducing-Carbon-Emissions-The-Stabilisation-of-Energy/Toke/p/book/9781138244412

It's not that countries just buy their industrial products from somewhere else with lower labour costs - you can find some example of that - but that's not what is changing the patterns of work and economy. As in China, after a certain point the need to put in place the initial foundation of infrastructure, road, rail, bridges, water supplies, electricity wires etc declines. The surge in people buying many manufactured products such as fridges and TV sets declines to replacement rates once most families have got them. In other words demand for manufacturing declines relative to earlier industrial phases. Moreover, information technology and robots is dramatically reducing the number of workers needed to produce such products.That doesn't mean unemployment rises, but it does mean that people do different jobs.

This 'deindustrialisation' is not specific to particular places and the result of 'foreigners'. It is not connected in any particular way with what people call 'globalisation' either (see an LSE blog post below about this). You could actually have siege economies 'protected' by high tariffs and the same trends would be visible in almost exactly the same way. I don't recommend protectionism, I emphasise. Putting someone out of a job somewhere else will not even even do any good for your domestic economy, especially when the economic retaliation sets in and acts as a political bedfellow to rising xenophobia.  Going on about globalisation actually encourages such dead-end thinking.

What we need is not a self-defeating 'jobs for Brits' , Americans, French etc narrative but a drive to reverse the  devastating trends towards inequality throughout the world that have been going on since the 1980s (see some references below). This has a lot to do with changing marginal tax rates. The political right has had us locked in what is a distracting argument that somehow lowering higher income tax rates will not harm the total tax take. That's dubious, although it gets a lot of attention.

What is almost always avoided is the evidence that reducing taxes on higher income earners simply encourages them to go for higher and higher salaries. The most important point about the reduction in marginal tax rates for the better off that has occurred since the 1970s has nothing to do with the tax take. It is the fact that in any given company, the top bosses will be encouraged to take bigger and bigger salaries at the expense of the rest of the workforce. Yes, there is evidence for this generated by the famous Professor Picketty. The CEOs are simply taking the money off the rest of us, not increasing productivity. They would not do this if the tax system was a much more progressive one. The claim made for regressive tax systems is that they increase prosperity for everyone. Yet, even in the narrow term of economic growth figures this claim does not stack up since growth levels in the West have been lower since the 1980s than before.

Of course we can rightly criticise centrist politicians, including Macron, for implying that a political project called globalisation is somehow necessarily connected to the technological changes in information and robots and that this has a lot to do with trade liberalisation. Whatever the arguments about trade liberalisation, such trends are irrelevant to the issue about technological change and income inequality. And in any case the trends towards increased international trade are not as strong as is generally believed.

Our focus, however, should definitely not to point to some sort of equivalence between Macron and Le Pen and shy away from backing Macron as (I was devastated to see) was done by Melenchon. It should be to stop going on about globalisation and talk about the most important issues of encouraging international peace and cooperation, equality and ecological protection.


See http://piketty.pse.ens.fr/fichiers/public/PikettySaezStantcheva2013.pdf

http://blogs.lse.ac.uk/brexit/2017/04/28/de-industrialisation-rather-than-globalisation-is-the-key-part-of-the-brexit-story/

Piketty, T., Saez E., and Stantcheva, S.,  (2014) "Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities", American Economic Journal: Economic Policy, Vol 6(1), 230-71. 
http://piketty.pse.ens.fr/fichiers/public/PikettySaezStantcheva2013.pdf

References on income inequality since the 1970s:
http://www.latimes.com/business/hiltzik/la-fi-hiltzik-ft-graphic-20160320-snap-htmlstory.html

https://www.iser.essex.ac.uk/research/publications/working-papers/iser/2015-01.pdf

https://www.oecd.org/unitedkingdom/OECD-Income-Inequality-UK.pdf