With the delay on the new Hinkley Point C plant, we explain the security issues surrounding the pause within the Scottish context
THE UK Government has decided to delay giving the go ahead for a new nuclear plant, Hinkley Point C, in Somerset amid renewed concerns about cost, efficiency and overall security.
It has been suggested that Prime Minister Theresa May is more cautious of any China-UK key infrastructure deals because, as home secretary, she was privy to MI5 briefings on Chinese violations of the UK’s industrial security.
It started out as a debate over a controversial nuclear power plant in Somerset, but it has become a diplomatic row threatening as much as £100bn of investment into the UK.
China's state-controlled news agency Xinhua issued a strong statement to the UK Government yesterday after last week's decision to delay final approval of the Hinkley Point nuclear project until September.
We look at the Scottish interest involved in the UK deal with China made by former prime minister David Cameron and former Chancellor George Osborne, and explore what these security concerns mean for Scotland.
Hinkley Point: What is it and why is it important?
There are already two nuclear facilities at Hinkley called Point A and Point B. The proposed – and now delayed – new site would be called Point C and it be the first new nuclear facility in 20 years in the UK.
Point C was to be financed by the French company EDF, which committed £18bn to the project after approving its investment last week before the surprise move by the UK Government to wait until early autumn to review the scheme.
China is expected to fund one third of the project for the construction of reactors and may later build a Chinese-designed nuclear power station in Essex, along with taking a 33.5 per cent stake in the plants.
What is the Scottish interest in Hinkley?
As EDF planned to finalise contracts, it had already identified Scottish preferred bidders and announced that 60 per cent of the construction value of Hinkley would go to UK companies, including three major Scottish companies.
These are: Actan (joint venture) – comprising of Doosan Babcock, Renfrew and Crawley – which handles heating, ventilation and air conditioning.
The other two companies from Scotland involved would be the Weir Group in East Kilbride for large pumps for cooling water, and SPX Clyde Union Pumps which would provide main pumps for the feedwater and cooling water systems.
Nuclear power in Scotland: Why is it important?
The Office for National Statistics shows that Scotland’s nuclear power sector was worth more than £660m to Scotland's economy in 2014, and employed around 2,000 full-time staff.
In Scotland, nuclear power accounts for nearly 12 per cent of all turnover from low-carbon industries – including wind, hydro and solar – compared to 7.5 per cent in England.
As a proportion of turnover from all low carbon-generating industries, including wind, hydro and solar, nuclear accounts for 11.8 per cent of the turnover – while in England, the proportion is just 7.5 per cent.
Of its low-carbon industry workforce in the nuclear power sector there is 9.3 per cent in Scotland compared to 6.7 per cent in England.
In Scotland, Hunterston A nuclear power plant in Ayrshire is in the process of being decommissioned. Hunterston B will remain open until 2023. Torness power station near Dunbar will remain in operation until 2030.
What are the implications for Scottish-Chinese trade?
On 21 March, the Scottish Government signed a £10bn agreement with two Chinese firms that it said could lead to major investment in Scottish infrastructure.
It was the Chinese press that initially reported the details of the 'memorandum of understanding' with Chinese investment group SinoFortone and China Railway No. 3 Engineering Group, the largest construction company in the world.
When asked by CommonSpace, the Scottish Government declined to comment on wether any security concerns had been noted or viewed with regards to Scottish-Chinese transactions.
What are the Chinese connections to Hinkley?
Earlier this year, the Guardian obtained papers from Companies House which showed the recent listing of General Nuclear System Limited and Bradwell Power Holding Company alongside other groups such as Libra International and Sagittarius International.
All these companies involved in the Hinkley Deal are directed by Zhu Minhong, the director of the state-owned China General Nuclear Power Corporation (CGN). It is unclear exactly how CGN is structured, with many groups, such as Libra International and Sagittarius International, acting as holding companies.
CGN will also take a 20 per cent stake in developing a second EDF-led plant at Sizewell.
What has the Chinese reaction to the delay been like?
China's state-run news agency, Xinhua, has stated: "The delay not only draws queries from the international community about its openness towards foreign investment, but also adds uncertainties to the 'golden era' of China-UK ties".
It went on: "Giving green light to a $24bn project can never be an easy decision, and China fully understands and respects British Government's requirement for more time to ponder.
"However, what China cannot understand is the 'suspicious approach' that comes from nowhere to Chinese investment in making the postponement."
The news agency said China could "wait for a rational British government to make responsible decisions, but can not tolerate any unwanted accusation against its sincere and benign willingness for win-win cooperation".
Why are there the fears about security?
Dieter Helm, professor of energy policy at Oxford University, said: “It is a no-brainer if you add in the military and security issues of letting Chinese state-owned companies into the heart of the British nuclear industry.
"It seems positively perverse to prefer Chinese government money to British government money in so sensitive a national project.”
Nick Timothy, Theresa May's chief of staff and a long-time adviser, has also previously expressed criticisms of the Hinkley deal citing previous cyberwarfare attacks and intelligence leaks of intellectual property from western companies in the past to Chinese sources.
Does China already have interests in UK infrastructure?
The UK already has a Chinese company, Huawei, running key parts of its telecommunications networks with investments of up to $2bn in the UK over five years from 2013 to 2017.
But led by the US, several other western countries have barred Huawei's involvement in key telecommunications networks on national security grounds.
No other major developed economy has invited Chinese involvement in a key nuclear energy project.
What might be the consequences of breaking trade ties with China?
Already this week, Chinese diplomats have hinted that as much as £100bn of investment in the UK could be withdrawn as a result of the delay on Hinkley.
David Cameron incurred Beijing's wrath when he ignored Chinese protests and met the Dalai Lama in 2012, resulting in no senior figure in the UK Government being invited to China for the following 18 months.
Pictures courtesy of The First Minster of Scotland, HM Treasury, Martin Burns, Paul Wordingham, Crowcombe Al, Number 10, Xinhua News Hong Kong, MoD, Fabio Achilli
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