This is part of a series exploring climate change regulation and how it affects companies globally.
The future of nuclear power generation in Europe, North America and most of the developed world is being decided on an English coastal headland called Hinkley Point. Sadly, for the U.K., this is no great British engineering breakthrough; the technology of the new nuclear reactors is French and a third of the money is Chinese. Instead of celebrating a big foreign investment, the new post-Brexit British Prime Minister, Theresa May, has kicked into the long grass a £25-billion project that could deliver more than a tenth of Britain's electricity for the next six decades.
It's all gone wrong because of different perceptions of risk – political, financial or public and personal. Hinkley Point is iconic of everything that has gone wrong in the nuclear power industry since the first civil reactor, Calder Hall, began to deliver electrons into the U.K.'s electricity grid in 1956. There was huge excitement when the Queen signalled the start of the "atomic age" and the government promised electricity that would be "too cheap to meter." Instead, electricity generated by nuclear fission has turned out to be very expensive, and the contract underpinning EDF's investment in Hinkley Point has been struck at £92.5 per megawatt hour, twice the prevailing market price when the deal was done in 2012.
That makes it sound like a great deal for French state-owned generator EDF and its Chinese partner, if not for British consumers. Unfortunately, no one at EDF headquarters is grinning. Instead, the company is split down the middle over the merits of a project whose escalating cost is reckoned by some to be potentially ruinous.
In March, EDF's finance director, Thomas Piquemal, resigned in opposition to the £18-billion construction cost of Hinkley Point, the majority of which would be underwritten by the French power generator. It was a risk too far for a heavily indebted company. The reactor design, the EPR, has proved ruinous for Areva, the French nuclear technology company. It has yet to be fully tested commercially, and the EPR's launch project at Olkiluoto in Finland is nine years behind schedule and €5-billion over budget. The Finnish disaster forced Areva to sell the reactor business to EDF, but the second EPR project, at Flamanville in France, has also been beset by delays and cost overruns of €7-billion.
It would be easy to dismiss the EPR as failed technology; it would be better described as too perfect or gold-plated technology. The history of civil nuclear power is as much about politics as engineering. The French economy is underpinned by the power generated by EDF's portfolio of nukes and in the aftermath of a series of nuclear accidents – at Three Mile Island and Chernobyl – and public alarm over terror threats, Areva's engineers took on the challenge to build the safest nuclear facility, capable of withstanding any disaster, even a strike by a large aircraft.
The precautionary principle – the idea that a technology must be proven to be harmless before it can even be considered for adoption – has been the ruin of the nuclear power industry. The EPR's over-engineered and overly complex design would be unthinkable, even laughable, in any other sector of the energy industry.
Making energy is a deadly business and it always has been so. Coal mining kills countless thousands every year. The oil and gas industry is a notorious killer, and even in the developed countries of the OECD, the fossil fuel industry was responsible for 9,000 deaths in the three decades to 2000. Yet, during the same period, not a single life was lost due to a nuclear power-related incident in the developed world.
Every year in the U.K., about 50 people die from carbon monoxide poisoning, mainly due to emissions from faulty gas boilers in their homes. Since the fire at Windscale in 1956, where there were no fatalities, no one has died as a result of nuclear power.
Supporters of the precautionary principle point out that accidents such as the Windscale fire and the Fukushima earthquake and tsunami, not to mention the much greater Chernobyl disaster ( where 56 people died directly from the explosion), result in emissions and radiation contamination that can raise the risk of thyroid cancers for many years after the incident. Even so, the public policy question is not whether the risk of death or disease exists but how much death or disease is tolerable in a society that also requires huge amounts of energy to keep the population fed, healthy and safe.
Even if all nuclear power generation contains a latent threat of fatalities that we cannot easily measure, we know that all fossil fuel power generation carries an annual toll in deaths from explosions, poisoning and long-term respiratory illness. Yet we put up with these health and safety risks because everyone wants the lights to stay on. It is less costly to accept the carnage than reject the incumbent technology. Into this difficult public policy equation, scientists have now suggested that politicians add a new component: this risk of climate change due to fossil fuel emissions. However, one of the most promising technologies that might provide a low-carbon energy solution, nuclear power, has been emasculated and deprived of investment due to bad policy principles.
If we want energy, somewhere, some people will lose their lives. The task for those developing public policy is not to abolish risk but to manage it intelligently. Sadly, in the case of nuclear power, it looks like the abolitionists have probably won.
Carl Mortished is a Canadian financial journalist based in London.