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Flushed with their success at changing UK government policy towards Huawei, rebel Conservative MPs are now turning their attention to a proposed Chinese project to build a nuclear power station at Bradwell-on-Sea in the south-east of England.
In their sights is an agreement forged by the government of David Cameron, that would allow the Chinese nuclear group CGN to build its own nuclear plant in return for backing two giant French-led nuclear projects in Britain.
The first of those French projects — a plant at Hinkley Point in the south west of England that could cost £22.5bn — is well under way and CGN has already pumped billions into the scheme.
“There are an awful lot of Tory MPs who will use their summer break to get their heads around the CGN situation,” said one person close to the rebel MPs. “Bradwell will be the focus of attention.”
Just as with the decision to remove telecoms company Huawei from Britain’s 5G mobile phone networks by 2027, they are being encouraged by a US administration vocal in its opposition to China’s involvement in Britain’s nuclear programme.
In 2018, the US assistant secretary for international security and non-proliferation, Christopher Ashley Ford, warned the UK against partnering with the company, saying Washington had evidence it was taking civilian technology and converting it to military uses. CGN declined to comment.
At a private meeting with MPs last month, the subject of CGN’s activities was raised by US secretary of state Mike Pompeo, according to one person in the room.
The senior Tory MP, Iain Duncan Smith has called for a review of nuclear contracts on the grounds that China is not a “trusted vendor”, and has likened Britain’s commercial dealings with Beijing to 1930s appeasement.
The closer scrutiny of China’s role in Britain’s nuclear programme comes at a crucial moment. The UK’s Committee on Climate Change has said that the country might need 38 per cent of its power from non-weather-dependent sources to help achieve “net zero” carbon emissions by 2050. Supporters of nuclear say it is the only proven technology capable of delivering that target.
Yet despite this, plans to build a fleet of new reactors using private sector funding have stalled.
First, Toshiba of Japan scrapped its project to build reactors at Moorside in Cumbria at the end of 2018, then Hitachi mothballed a similar scheme on Anglesey in North Wales the following year. That leaves just the two French projects led by the energy group EDF; Hinkley and Sizewell in Suffolk, as well as CGN’s Bradwell scheme.
CGN was brought in originally because of its willingness to help finance deals without recourse to UK state cash. The quid pro quo of Bradwell offered the company the chance to showcase its HPR1000 reactor technology in an advanced economy with respected regulatory standards, potentially opening the door to export sales worldwide.
Some MPs believe that Britain no longer needs CGN’s money because Boris Johnson’s government may be willing to contemplate public subsidies.
The government last year launched a consultation on an alternative funding model, Regulated Asset Base (RAB), which is used for other infrastructure such as the Thames Tideway “super sewer” and would see consumers pay for nuclear plants upfront via their energy bills. Some experts have also floated the idea of the state taking direct stakes in schemes.
“Nuclear economics are very sensitive to the cost of capital, and the RAB or an equivalent funding mechanism would cut this dramatically,” said Tim Stone, chairman of the UK’s Nuclear Industry Association. “Direct funding by the state with interest rates so low would cut it a great deal more.”
People familiar with CGN’s thinking say it remains committed to developing the Bradwell site. It is currently seeking regulatory approval for its reactor and expects to hear the outcome of one part of that process, the Generic Design Assessment (GDA), overseen by the independent Office for Nuclear Regulation, in the next 18 months.
Tearing up the deal could cause a new escalation in tensions between the UK and China following the recent decision on Huawei and Beijing’s imposition of a new security law on Hong Kong, which has been condemned by Britain.
Despite the UK’s past promises to Beijing over CGN, MPs could seek to block one strand of the approval process, known as regulatory justification, through which the government assesses whether the economic, social or other benefits associated with a nuclear technology outweigh health or safety risks, according to three people familiar with the process.
There is also talk of MPs considering whether to try to amend the National Security and Investment bill — which is expected to tighten the rules governing overseas takeovers — to block CGN when the draft legislation is published in the autumn.
Recent events have sharpened concerns about Britain becoming dependent on a state-owned supplier from a country whose goodwill cannot be relied on.
“Certainly if we ended up with just one Chinese plant at Bradwell, and all of the supply chain was in China, there would be a certain spare part and upgrade risk,” said one nuclear expert.
Another worry is that CGN could at some stage become subject to international sanctions. Last year an alleged espionage incident led Washington to place the company on the “entity list” that prohibits US companies from doing business with it.
So far CGN has invested £3.8bn in the UK, the majority in Hinkley. CGN is funding a third of the construction costs for Hinkley and 20 per cent of the development costs of Sizewell C in Suffolk.
“The big question is: if CGN were chucked out of Bradwell, whether they would walk from Hinkley,” said Stephen Thomas, emeritus professor of energy policy at University of Greenwich. “They are contractually obliged but good luck suing the Chinese government.”
Aside from the financing questions, this could potentially increase the construction risk at Hinkley. “The Chinese have an engineering role in the project,” said one nuclear expert. “It would be a blow if they took away that know-how.”
Were Britain either to block Bradwell or exert sufficient pressure to force China to walk away, the UK government would “find itself in a world of difficult choices after that”, according to Josh Buckland, a former energy adviser to the government and now a director at the consultancy Flint.
Nuclear industry executives presume the government would step in to save Hinkley but after that “you’ve got really just Sizewell left if you decide to block any more CGN involvement and Sizewell is one project”, said Mr Buckland. “Three gigawatts is not going to fill your nuclear gap.”
Ministers are yet to deliver their verdict on the RAB funding model and have continuously delayed a white paper on energy, originally expected last year, and which nuclear industry executives hope will emerge in October.
Last week the managing director of Hinkley Point C, Stuart Crooks, said the UK government “needs to decide if it wants nuclear or not.”
Supporters of nuclear energy argue a failure to replace Britain’s ageing fleet of reactors would stymie the government’s chance of meeting its 2050 net-zero target but environment groups such as Greenpeace insist there are far cheaper, greener ways of meeting the future country’s energy needs, such as offshore wind power.
Rebel MPs believe that state help will be forthcoming, given the climate imperatives. “Money is so cheap, capital markets are almost giving money away, so why do we need the Chinese at all?” said one Tory MP.
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