Monthly Archives: May 2016

No, the UN has not given glyphosate a ‘clean bill of health’

Anyone seeking out the latest news on glyphosate will find a number of articles that were published yesterday with headlines such as “UN experts find weed killer glyphosate unlikely to cause cancer(first issued by Reuters and taken up widely by other news media around the world), and the Guardian’s headline of “Glyphosate unlikely to pose risk to humans, UN/WHO study says”.

The first line of the Reuters article (and the other publications that took it up) then says “The pesticide glyphosate, sold by Monsanto in its Roundup weed killer product and widely used in agriculture and by gardeners, is unlikely to cause cancer in people, according to a new safety review by United Nations health, agriculture and food experts.”

Yet these statements were actually highly misleading to the reader, especially if they did not go on to read the full article to see that the findings of the UN Panel on Pesticides Residues were only in relation to consuming glyphosate residues from food.

The findings were not in relation to glyphosate exposure via the air during and after applications of this weedkiller – and which constitutes exposure for many ‘humans’ / ‘people’, especially rural residents living near crops sprayed with glyphosate.

So what actually happened yesterday?

A summary report was published from a Joint Meeting of the Food and Agriculture Organization of the United Nations (FAO) Panel of Experts on Pesticide Residues in Food and the Environment and the World Health Organization (WHO) Core Assessment Group on Pesticide Residues (JMPR) that was held at WHO Headquarters, Geneva (Switzerland), from 9 to 13 May 2016.

The pesticide active ingredients Diazinon, glyphosate and malathion were placed on the agenda by the JMPR Secretariat, based on the recommendation of the last session of JMPR to re-evaluate these compounds given the number of new studies that had become available since their last full assessments.

The UN Panel concluded in relation to all three pesticides that they were “unlikely to pose a carcinogenic risk to humans from exposure through the diet.” [1]

This is clearly only referring to whether these three pesticides, including glyphosate, are likely to pose a carcinogenic risk to consumers from exposure through the diet, and so is not regarding the higher level of exposure for other exposure groups.

The UN Panels findings therefore have no bearing on the cancer risks for the high level of exposure for rural residents and communities living in the locality of where these pesticides are used, as this does not appear to have been considered at all by this Panel in any capacity.

Indeed the Guardian article contains a quote from Harry van der Wulp, a senior policy officer at the FAO, in which he appears to try to stress this critical point where he says:

“These conclusions relate to exposure through the diet – that is very important … It is not a general conclusion because anything beyond the diet was not in our mandate. It remains less clear what the situation is with occupational exposure” – and this would obviously also apply to the exposures for rural residents.

The only pesticide out of the three of Diazinon, glyphosate and malathion that are still used in agriculture in the UK is glyphosate. [2]

Glyphosate cancer warnings

Last year the WHO’s International Agency for Research on Cancer (IARC) concluded that glyphosate is a “probable human carcinogen”. [3]

Having reviewed the science, IARC concluded that there was limited evidence of carcinogenicity in humans for non-Hodgkin lymphoma based on studies of exposures, mostly agricultural, in the USA, Canada, and Sweden published since 2001. [4]

In addition, IARC concluded that there is convincing evidence that glyphosate also can cause cancer in laboratory animals. [5]

IARC also noted that one study in community residents reported increases in blood markers of chromosomal damage (micronuclei) after glyphosate formulations were sprayed nearby. [6]

Therefore IARC’s conclusions – unlike those of yesterday’s UN Panel which was solely in relation to glyphosate residues through the diet – were related to those who are exposed from the actual application of glyphosate, including mainly in relation to agricultural use.

Crucial EU vote on glyphosate

An EU Standing Committee of Member State representatives is due to vote this week on whether glyphosate should be reapproved. [7]

The UK Pesticides Campaign sent a letter at the end of last week to the Presidents of the European Commission, the European Council and the European Parliament, and which was copied to members of their cabinets, the Health and Environment Commissioners and members of their cabinets, as well as to all representatives on the relevant Standing Committee, along with all 28 EU Health Ministries (and some environment ones). It was also copied to all Members of the European Parliament.

This letter set out that the draft Commission Implementing Regulation renewing the approval of the active substance glyphosate – as submitted to the relevant Standing Committee for a possible vote this week – breaches the EU authorisation Regulation.

The EU law regarding the authorisation of pesticides (formerly Directive 91/414 and now Regulation 1107/2009) contains the absolute requirement that pesticides can only be authorised for use if it has been established that there will be no immediate or delayed harmful effect on human health. This must apply to all the necessary exposure groups, including operators, workers, residents living in the locality of crop fields, as well as other members of the public exposed (eg. such as bystanders).

No risk assessment for residents for any pesticide

As the campaign I run has continued to highlight since 2001 both in the UK, and in Europe, there are major flaws in the existing methods of exposure and risk assessment for pesticides.

Crucially, it is a matter of fact that there is still no actual risk assessment for the real life exposure of residents who live in the locality of crop-sprayed fields – and which obviously includes babies, children, pregnant women, the elderly, and people already ill and/or disabled (and where any interactions or synergistic effects between pesticides and any medication must be accounted for).

None of the following exposure factors and routes – amongst others – that are necessary to include in the calculations for the real life exposure scenario of residents are included in any risk assessment in either the UK approach or the EU:-

  • exposure to spray drift (droplets) for longer than 15 minutes;

  • exposure to vapour for longer than 24 hours;

  • exposure from hand to mouth-object to mouth for longer than 2 hours, and repeatedly; and exposure via the oral route for all other exposure factors;

  • exposure via the eyes for all exposure factors;

  • long-term exposure to pesticide particles, droplets and vapours in the air in the days, weeks and months after spraying applications;

  • exposure to pesticides via precipitation and reactivation;

  • exposure to pesticides in pollen, dust (including harvest dust);

  • exposure to pesticides transported from outdoor applications and redistributed into an indoor air environment;

  • exposure to pesticides via long-range transportation, as studies have shown pesticides found miles away from where they were originally applied;

  • exposure to the innumerable mixtures and cocktails of pesticides used on crops, as opposed to exposure to just one individual pesticide at any time.

The fact that there is no actual risk assessment across the EU for the real life exposure of rural residents is even further confirmed by two European Commission documents that I have seen that are also to be considered by the EU Standing Committee this week [8]. Those Commission documents show that acute exposure assessments are only currently being considered for operators, and not for residents.

This is despite the fact that EU law – that sets out the data requirements that applicants must submit prior to any pesticides being considered for authorisation – clearly specifies that the risk assessment undertaken for residents has to include both acute and chronic exposures. [9]

The two aforementioned European Commission documents are therefore again inconsistent with EU law.

The maximum exposure for residents can only be known when all the necessary exposure factors, and routes (ie. inhalation, dermal, oral, and eyes), and all the acute and chronic exposures, and to the mixtures of pesticides exposed to, are included in the exposure calculations, and then added together (summed), otherwise a complete assessment of the overall exposure for rural residents in totality cannot be reached.

No protection for rural residents from pesticides

EU law already recognises that exposure for residents living in the locality of sprayed fields is high, as residents are now specifically defined as a “vulnerable group” in Article 3, para 14, of EU Regulation 1107/2009, which clearly recognises and clearly states that residents are “subject to high pesticide exposure over the long term.” [10]

Yet whilst operators will be in filtered cabs and/or have personal protective equipment when using pesticides, rural residents have no protection at all.

Instead millions of rural citizens across the EU have been put in a massive guinea pig-style experiment from exposure to the innumerable mixtures and cocktails of poisons used on crops and for which many of us residents have had to suffer the serious and devastating – and in some cases fatal – consequences.

Reauthorising glyphosate would breach EU law

If the consideration of the active ingredient glyphosate – and its related products – has followed the same flawed approaches set out above then there will have simply been no proper risk assessment for the real life exposure of residents to glyphosate.

Indeed, it is highly noticeable that there is no reference anywhere of the need to protect residents in the draft Commission Implementing Regulation regarding the renewal of the approval of glyphosate to be voted on by Member States this week. [11]

This means the draft Commission Implementing Regulation renewing the approval of the active substance glyphosate – as submitted to the relevant Standing Committee for a possible vote this week – would clearly breach the EU Regulation 1107/2009, as it would not have been established before glyphosate is approved * that there will be no immediate or delayed harm to the health of rural residents living in the locality of fields sprayed with glyphosate.

*This is also the case for the original approval of glyphosate, as well as re-approval.

Although Roundup is probably the most well-known glyphosate product there are in fact 476 products currently approved for use in the UK containing glyphosate the majority of which are for use on crops. [12]

The latest Government statistics on pesticide usage show that in 2014 the total area treated with glyphosate on all crops in Great Britain was 2,241,105 hectares, with the total weight applied being 1,910,524 kg. [13]

Agricultural use is by far and away the largest sector regarding the use of glyphosate not only here in the UK but also across Europe.

Indeed, the original text of the resolution that MEPs voted on last month in the European Parliament had already recognised that “76 % of the use of glyphosate worldwide is in agriculture” and that “the general population is exposed primarily through residence near sprayed areas.” [14]

Considering the widespread use of glyphosate in agriculture worldwide then it is not surprising that glyphosate has been detected in the air, in water, and in food. [15]

It is important to stress the fact that farmers cannot control pesticides once they are airborne (either at the time of application or subsequently), and therefore the exposure for residents is not about the misuse, abuse or illegal use of glyphosate – or indeed any pesticides – but about the permitted, approved use of such substances

Establishing no harm to human health and not just cancer

It is also important to stress the fact that establishing there will be no immediate or delayed harm to human health is far wider than just in relation to carcinogenicity. Yet much of the debate over glyphosate in the last year has seemingly been solely in relation to its carcinogenicity with very little being said on the other harm it causes.

For example, glyphosate has been previously linked in certain scientific studies to Parkinson’s disease and infertility, [16] as well as various other health problems.

It has also been reported that dermal exposure to ready-to-use glyphosate formulations can cause irritation and photo-contact dermatitis. Inhalation from spray mist can cause oral or nasal discomfort and tingling and throat irritation. Eye exposure may lead to mild conjunctivitis, and superficial corneal injury is possible if irrigation is delayed or inadequate. [17]

All of these would constitute acute and/or chronic ‘harm’ to human health and so again – under Article 4 of EU Regulation 1107/2009 – glyphosate cannot be approved.

The principal aim of pesticide policy, under the EU Regulation, is clearly based on the risk of harm, and not that harm has to have already occurred. Therefore, under EU law residents are not supposed to be exposed to the risk of harm to their health from any pesticide.

Preventative approach

The significance of these consequences requires the adoption of a preventative approach to make sure the protection of human health is the overriding priority as under EU law there can be no balancing of interests when it comes to public health.

Recital 24 of the EU Regulation 1107/2009 clearly says, “The provisions governing authorisation must ensure a high standard of protection. In particular, when granting authorisations of plant protection products, the objective of protecting human and animal health and the environment should take priority over the objective of improving plant production.

“Therefore, it should be demonstrated, before plant protection products are placed on the market, that they present a clear benefit for plant production and do not have any harmful effect on human or animal health, including that of vulnerable groups, or any unacceptable effects on the environment.”

There are many millions of rural residents across the EU (including babies, children, pregnant women, the elderly, people already ill and/or disabled) who have no protection at all from exposure to glyphosate (or indeed any other pesticide) that is often sprayed in the locality of residents’ homes and gardens.

Therefore glyphosate should not be reauthorised at all considering that this matter involves the health and safety of citizens, especially rural residents, across the EU.

All pesticides approved are unlawful

Under EU law no pesticide should ever have been approved for use in the first place for spraying in the locality of residents’ homes, schools, children’s playgrounds, nurseries, amongst other areas, as EU law is clear that it must be established before a pesticide can be approved for use, on the basis of all the required risk assessments, that there will be no immediate or delayed harm to human health.

This has clearly not been established regarding rural residents and therefore all pesticides that have ever been approved have been done so unlawfully.

This situation is, without a doubt, as I have always correctly stated throughout my campaign, a catastrophic public health and safety failure on a truly scandalous scale.

No more poisons

The only real solution to eliminate the adverse health and environmental impacts of pesticides is to take a preventative approach and avoid exposure altogether with the widespread adoption of truly sustainable non-chemical farming methods.

This would obviously be more in line with the objectives for sustainable crop production, as the reliance on complex chemicals designed to kill plants, insects or other forms of life, cannot be classified as sustainable.

Therefore it is a complete paradigm shift that is needed – to move away from the use of pesticides altogether – as it goes without saying that no toxic chemicals that can harm the health of humans, anywhere in the world, should be used to grow food.

 


 

Georgina Downs is a journalist and campaigner. She has lived next to regularly sprayed crop fields for more than 30 years and runs the UK Pesticides Campaign.

References

1. The Summary Report from the May 2016 Joint FAO/WHO Meeting on Pesticide Residues (JMPR) can be seen at: http://www.who.int/foodsafety/jmprsummary2016.pdf?ua=1

See in particular the following statements in the summary report issued yesterday 16th May:-

  • With regard to route of exposure, studies in which chemicals were administered by the oral route were considered to be of most relevance for evaluating low-level dietary exposures.”

  • An important aspect of the evaluation was whether the genotoxic effect would be likely to occur in humans exposed to low levels of the pesticide present as residues in food.”

  • Regarding glyphosate: “The Meeting concluded that glyphosate is unlikely to be genotoxic at anticipated dietary exposures. Several carcinogenicity studies in mice and rats are available. The Meeting concluded that glyphosate is not carcinogenic in rats but could not exclude the possibility that it is carcinogenic in mice at very high doses. In view of the absence of carcinogenic potential in rodents at human-relevant doses and the absence of genotoxicity by the oral route in mammals, and considering the epidemiological evidence from occupational exposures, the Meeting concluded that glyphosate is unlikely to pose a carcinogenic risk to humans from exposure through the diet.

  • Regarding Malathion: “The Meeting concluded that there is some evidence that malathion is carcinogenic in rats and mice. However, the formation of nasal adenomas was due to a local irritancy caused by prolonged exposure to high concentrations of malathion absorbed via inhaled food particles. Scenarios of prolonged, direct and excessive exposure of human nasal tissue to malathion or malathion metabolites following ingestion of residues is unlikely, and therefore these tumours would not occur in humans following exposure to malathion in the diet … Based on consideration of the results of animal bioassays, genotoxicity assays and epidemiological data, the Meeting concluded that malathion and its metabolites are unlikely to pose a carcinogenic risk to humans from exposure via the diet.”

  • Regarding Diazinon: “The Meeting concluded that diazinon is unlikely to pose a carcinogenic risk to humans from exposure through the diet.”

2. Malathion was no longer used in agriculture in the UK since 2008. Diazinon was no longer used in agriculture on outdoor crops in the UK since around 1994.

3 – 6. Source: IARC statement dated 20th March 2015.

7. The meeting of the Standing Committee on Plants, Animals, Food and Feed – Section Phytopharmaceuticals – Plant Protection Products – Legislation, takes place on 18th/19th May

8. These two European Commission documents are currently unpublished but are also to be considered by the Standing Committee this week.

9. Commission Regulation (EU) No 284/2013 of 1st March 2013.

10. EU Regulation 1107/2009 http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32009R1107

11. There is only some limited reference in the draft Commission Implementing Regulation Annex to Member States paying particular attention to the protection of operators, but no reference for the protection of residents.

12. The pesticide product database is on a secure site and therefore to see the figure of 476 products that are currently approved for use in the UK containing glyphosate, go to https://secure.pesticides.gov.uk/pestreg/ click on number 1 that says “Search for Products by specifying Authorisation features…” etc., then in the form that comes up put glyphosate in the Active column and scroll down and click on Get Results.

13. This is again on a secure site and therefore to see the glyphosate usage figures cited go to https://secure.fera.defra.gov.uk/pusstats/ click on Table Format and then for Survey Year click 2014 and then for Active Substance click glyphosate and then scroll down and click on Submit.

14. Despite this residents were rather perplexed to hear that although MEPs voted last month not to approve glyphosate for various non-agricultural and non-professional uses, as well as for no approval in or close to public parks, playgrounds and public gardens, re-approval was seemingly supported by MEPs for the agricultural use of glyphosate on crops in the locality of residents’ own homes and gardens. So called IPM (Integrated Pest Management) referred to in one of the amendments is a red herring and will change nothing significant as it is system that still uses pesticides to some degree whichever definition one goes by. See further http://www.counterpunch.org/2016/04/18/the-ludicrous-european-parliament-vote-on-glyphosate/

15. Source: IARC statement dated 20th March 2015.

16. http://www.dailymail.co.uk/news/article-2315057/Is-worlds-popular-weed-killer-causing-Parkinsons-New-study-shows-Roundup-herbicide-linked-cancer-infertility.html

17. Toxicol Rev. 2004;23(3):159-6. Glyphosate poisoning. Bradberry SM, Proudfoot AT, Vale JA.

 

 

Dawdling along in a world without norepinephrine

Norepinephrine helps you wake up! (photo credit: blog.bradleygauthier.com)

Norepinephrine helps you wake up! (photo: Bradley Gauthier)

If norepinephrine were suddenly deleted from the face of the earth, you probably wouldn’t wake up in the morning. If you did, you might not get very far from the covers. Norepinephrine is small molecule that is found in the central and peripheral nervous system and it is a master arouser. If you’ve got a problem, norepinephrine is going to help you solve it, or at least bring it to your attention. In the brain, norepinephrine helps neurons focus on important signals and disregard unimportant signals. When everybody is talking at once at the cocktail party, norepinephrine is responsible for helping you selectively listen to your hot date while tuning out all those other voices (a phenomenon known as the cocktail party effect). In a world without norepinephrine, every cocktail party would surely end in heartbreak. But of course, it takes some effort to even start a conversation in the first place. When researchers decrease levels of norepinephrine in the songbird brain, males take longer to sing to females and they put less effort into courting females (Barclay et al. 1996). So, a cocktail party without norepinephrine might not contain much of a clamor.

songbird courtship (photo: efinch.com)

songbird courtship (photo: efinch.com)

In the body, norepinephrine is largely responsible for the flight or fight response. It brings the body to action in the face of emergencies great and small. Without norepinephrine, you won’t be running from or fighting the tiger. But then, in a world without norepinephrine, the tiger probably wouldn’t even bother to chase you. That’s right; norepinephrine has similar effects on all mammals. The job of norepinephrine is similar in all vertebrates. So, from birds to rats to humans, norepinephrine helps to bring the important stuff in the world into focus and helps you disregard what is unimportant.

Norepinephrine helps with the fight or flight response (photo: slideplayer.com)

Norepinephrine helps with the fight or flight response (photo: slideplayer.com)

Scientists know a lot about the effects of norepinephrine on the body, brain, and behavior. We have studied its effects on physiology for decades. We have manipulated its levels in the brains of mice, rats, primates, and birds for years. We know that it gives an organism a general call to action. But, like all chemicals in the body, its effects can be both small and large, both nuanced and over-the-top, and there is much left to discover. For example, norepinephrine is also found in plants and invertebrates, where it may do things like regulate stress and immune responses. However, we know a lot less about its jobs in these groups of organisms. So, while a sudden wipe out of norepinephrine from the face of the earth would be a major problem, it would also present an opportunity to learn more the multifaceted actions of this important molecule, assuming of course, that any body could bother to crawl out of bed in the morning to take a look.

Barclay, S. R., Harding, C. F., & Waterman, S. A. (1996). Central DSP-4 treatment decreases norepinephrine levels and courtship behavior in male zebra finches. Pharmacology Biochemistry and Behavior, 53(1), 213-220.

May 16, 2016

UK Green Party Leader Natalie Bennett will step down this summer

Natalie Bennett has announced she will be stepping down as leader of the UK Green Party and will not stand for a third term when the leadership elections take place this summer.

Natalie, who has been in the top job for four years (two terms) has seen membership to the Green Party increase five-fold under her watch. She says: “We’re the only party with a platform that recognises the essential interrelationship between economic and environmental justice – that we must have a society in which no one fears hunger or homelessness, while we collectively live within the environmental limits of our one fragile planet.

“The Green Party offers a genuine alternative to the tired status quo and I am proud that Greens do politics differently.”

UK environmentalist and author, Tony Junpier, paid tribute to Natalie’s achievements but added that a new leadership could be the perfect time to reinvent the message of the Greens to fit better with the world in which we now live.

“Whoever takes on the leadership will have much to thank Natalie for but also a big job of reinvention. This could be a hugely exciting time for Green politics in Britain and I hope the party will select someone up to the task.”

Greg Neale, the new Editor-in-Chief of The Resurgence Trust which owns The Ecologist website, as well as Resurgence & Ecologist magazine, says: “During Natalie’s leadership the party has now established itself in many areas beyond its original centres, while the Green Party in Scotland has grown vigorously.

“At the recent elections for the Scottish Parliament and for the Mayor of London, the Green vote showed that more and more people are beginning to turn towards new solutions to our problems: this is another of Natalie’s legacies.”

 

 

 

 

 

Green Party MEPs prove a point with glyphosate in urine test results

Green MEPs have reported receiving test results that confirm the presence of unsafe levels of the weedkiller glyphosate in their urine.

Glyphosate – described as ‘probably carcinogenic’ by the World Health Organisation (WHO) last year – is still the world’s most widely used herbicide. 

Keith Taylor, MEP for the South East, Molly Scott Cato, MEP for the South West, and Jean Lambert, MEP for London, were among a group of 48 MEPs that took part in a symbolic urine test ahead of the European Parliament vote last month to oppose the EU Commission’s proposal to relicense the controversial toxic substance until 2031.

The inspiration behind what was aptly labelled the #MEPee test were the findings of a recent study in Germany which reported that 99.6% of those tested had glyphosate residue in their urine.

The results of the Green MEPs testing showed that all those tested also had glyphosate traces in their urine. The average concentration was 1.73ng/ml – a level that is 17 times higher than the safe limit for drinking water. The lowest level found among the group was 0.17ng/ml, still almost double the safe level.

Keith, Molly, and Jean have written to Liz Truss urging the UK government to respect the decision of the European Parliament when it is asked to vote on reapproval on Wednesday and Thursday of this week.

Keith Taylor, a member of the European Parliament’s Environment and Health Committee (whose own test results show a glyphosate contamination level of 0.4 ng/ml) says:

“I really am ‘peed off’. Our urine test might seem like an attention-grabbing stunt, but it has proved our worst fears about glyphosate which is that it really is everywhere and that’s why I am now calling on the European Commission to consider not only the widespread opposition to reapproving the weedkiller but also just how prevalent it is in our environment.”

Molly Scott Cato, a member of the European Parliament’s Agriculture Committee (whose personal test results show a glyphosate contamination level of 0.45 ng/m) adds:

“Glyphosate has no place in the human body and we’e also concerned about its impact on biodiversity, following evidence that it has detrimental impacts on the honey bee, monarch butterfly, skylark and earthworm populations, and poses a serious threat to the quality of our soil.

“We also risk handing control of our food supply over to agribusiness. Corporate giant Monsanto produces both Roundup, the world’s leading glyphosate-based weed killer, and glyphosate-resistant GM crops. A marriage of convenience which enables corporate control of food production.

“With the UK government the main cheerleader for GM technology, the blocking of blanket reapproval of glyphosate is another example of why we will argue that we are greener in the EU.”

Jean Lambert, a member of the European Parliament’s Agriculture Committee (whose personal test results show a glyphosate contamination level of 0.67 ng/ml) concludes:

“Our test results show that no matter where we live, what we eat, or what agre we are we cannot escape exposure to this toxic substance. With glyphosate widely used in cities, in urban parks and public spaces, on streets and pavements, the European Commission must bow to public pressure this week and put the safety of people and the environment ahead of the profits of chemical industry giants.”

Glyphosphate is the active ingredient in Monsanto Corporation’s Roundup weedkiller. Both France and Italy have refused several applications for reapproval. Last month the European Parliament voted to oppose the re-approval of glyphosate for most uses and called on the Commission to invoke the ‘precautionary principle’. The EU Commission are due to take a final decision on the renewal of glyphosate at an upcoming standing committee on May 18th & 19th.

 


 

Source: Molly Scott Cato MEP.

 

From one disaster to the next – Hinkley C’s last days?

The remarkable thing about the ongoing Hinkley C fiasco is just how long it’s going on – and how one disaster piles onto another without the project ever quite dying – so far at least.

Today’s news? Moody’s credit rating agency has just downgraded EDF’s debt from A1 to ‘A2 outlook negative’. OK, that’s still not junk grade – after all the company has the French government standing behind it as 85% owner.

But the A2 negative rating will make it all the harder and more expensive for it to raise the cash it needs – not just to build Hinkley C but to finance its forced €2.5 billion takeover of insolvent nuclear components manufacturer Areva, make good its problems, finance the impending closure and docommissioning of its own aging nuclear fleet … you get the picture.

And Hinkley C is an important cause of EDF’s sinking down the credit rating charts. “The negative outlook”, writes Moody’s, “reflects … the incremental risks associated with the Hinkley Point C (HPC) nuclear power station project in the UK, should it go ahead.”

“The outlook could be returned to stable provided that (1) EDF decides not to proceed with the HPC nuclear project”, the rating report continues, helpfully adding: “The ratings could be downgraded if (1) the HPC project were to go ahead”.

And if you ask me, that gives an unusually clear steer to the company as to how they can please credit markets and cut their borrowing costs – something that’s actually very important for a company quite so deeply indebted as EDF.

Also this week: EDF’s projected cost of building Hinkley C just took a £3 billion hike from £18 to £21 billion – though still well short of the £24 billion widely expected elsewhere.

The company also revealed that it expected 115 months (9.5 years) to pass between a final investment decision until the commissioning of the first of the two reactors. In other words, it’s pretty well impossible for it to begin before 2026.

EDF CEO Jean-Bernard Levy also revealed in February that “Definitive construction of what will be built on the site, what we call the first concrete, is on the horizon for 2019” – hardly an indication that action of any kind is imminent.

Areva’s ‘falsified’ safety certificates for nuclear components

And what was it happened last week? Oh yes, it turned out that Areva has been systematically “falsifying” (by the company’s own admission) safety certificates for components it has made for nuclear power stations, with 400 such ‘irregularities’ including to 50 components in operational nuclear reactors.

This is very bad news for EDF not just because the French government is forcing it into a shotgun takeover of what is clearly a company in deep trouble, but because many of these 50 components will be in its own power stations. And if it sues … it will be suing itself.

It also raises serious safety questions over the EPR reactors planned for Hinkley C, and under construction at other sites: Olkiluoto in Finland, Flamanville in France, and Taishan in China – not only for the components whose safety certificates were falsified, but for everything the company has ever produced because of what it reveals about its deeply dysfunctional safety ethic.

The news of the falsified safety certificates may also explain how the reactor vessel and head supplied by Areva at Flamanville went so far as installation at the heart of the plant while suffering from grave metallurgical defects owing to an excess of carbon in areas of the steel, that could lead to embrittlement and cracking of the unit.

This safety problem remains unsolved and in a worst case (for EDF, Areva and French taxpayers) could lead to the power plant’s total abandonment. It is also widely suspected that the two Taishan reactors, also forged by Areva, may suffer from the same defect.

Meanwhile all curent EPR projects are massively over time and budget. Flamanville, begun in 2006, was meant to be complete by 2012, and costs have more than trebled from €3.3 billion to €10.5 billion, with no end in sight.

Construction of the Olkiluoto EPR began in 2005 and it is not expected to commence operating until 2018, nine years late. The estimated cost has risen from €3.2 billion to €8.5 billion. Areva has already provided for a €2.7 billion writedown on the project, with further losses expected. Meanwhile the Finnish utility FTVO and Areva / Siemens are locked in a €10 billion legal battle over the cost overruns.

Which reminds me. Moody’s again: “The A2 rating is based on Moody’s expectation that EDF will have no material exposure to AREVA NP’s liabilities associated with past and existing contracts in its engineering and construction business, including the Olkiluoto 3 nuclear project in Finland.”

Just how they expect to achieve that when EDF is buying the company is hard to understand. That A2 rating could drop even lower.

Those legal cases in the European Court

But that’s not the only legal case that could mess things up for EDF. Austria and Luxembourg have a legal challenge in play against the European Commission for approving an absurdly generous subsidy package for Hinkley C that is set to pay the company almost three times the current wholesale power price for 35 years after it begins to produce power.

A second case was filed in March 2015 by Germany’s Greenpeace Energy and a host of other cooperative and municipal green energy suppliers concerned that the massive subsidy would cause prejudice against renewables in Europe’s energy market.

And last month, new legal risks: UK green electricity supplier Ecotricity and Greenpeace UK are threatening further legal action over the French government’s plan to support EDF’s wobbly finances by taking dividend payments as shares instead of cash, and buying billions of euros worth of additional shares, in order to provide working capital for Hinkley C.

The share purchases actual and proposed, they warn, fall under EU state aid rules and would need to be approved by the Commission before they could go ahead. Any attempt by EDF to sneak a massive share issue out to the French government would be challenged in the courts.

And the simple fact is that state aid is the only way that Hinkley C will ever be built. Private investors won’t touch it with a bargepole, and here’s why. In theory the project offers investors an enviable 9% rate of return. But that’s only if it’s finished on time and on budget. If it’s not, then that number starts falling fast.

The nightmare scenario that’s scaring investors away

But it gets worse. What’s really freaking out investors is the possibility that they could sink all that money into a massive nuclear project that just doesn’t work.

Their return under the ‘contract for difference’ is based entirely on getting that premium rate for their power of approaching £100 per megawatt hour, three times higher than the current wholesale market level. So what if it turns out a lemon?

Now no one expects that it won’t work at all. But what if it keeps on tripping out with mysterious safety alerts generated by all the unbelievably complex software that’s going to run the show? What if it’s unable to pass its commissioning tests as a result? Or what if it’s permanently on the blink and only able to run intermittently?

Then EDF will have turned £21 billion or £24 billion of good money into a massive decommissioning liability. This is the risk that is alarming Moody’s, investors and EDF unions, not to mention the company’s former finance director Thomas Piquemal who resigned in March this year fearing that Hinkley C could just finish EDF off.

And it could happen: at today’s €11.33 share price, EDF is valued at €21.76 billion, or £17.1 billion – considerably less than even the lowest estimates of the Hinkley C project cost.

So what are EDF’s options here? One is to abandon the project in the process writing off the £2 billion it has so far invested in the project, as Moody’s, unions and equity investors hope. Another is to sell the site on to the Chinese General Nuclear Company (CGN) which is poised to take a 33.5% stake in the project in a deal announced last October.

But now even that last possiblity looks like it’s off the cards – perhaps as a result of the British Queen’s unguarded comment at a Buckingham Palace garden party last week that the Chinese delegation to London last October had been “very rude”. And yes, that was the official visit on which CGN’s investment in Hinkley C was wrapped up.

But whatever the reason, CGN has today stated that reports that China was planning to take over the Hinkley C site in the event that EDF backs out were “without foundation”. A CGN spokesman said: “China General Nuclear Power Corporation has no plans to build nuclear reactors at Hinkley Point C. Our intention is to obtain regulatory approval to build our reactor design at Bradwell in Essex.”

In other news, Germany’s energy minister Sigmar Gabriel has just announced plans to invest €17 billion over five years in energy efficient technologies as part of an ‘Effizienzoffensive’ campaign aiming to halve the country’s energy consumption by 2050. That’s under a quarter of the UK’s estimated cost of supporting Hinkley C. Could Gabriel possibly know something we don’t?

But back to Hinkley C: how much longer can the tragicomedy go on before the it’s finally booed off the stage? It really can’t last much longer now.

 


 

Oliver Tickell is Contributing Editor at The Ecologist.

 

From one disaster to the next – Hinkley C’s last days?

The remarkable thing about the ongoing Hinkley C fiasco is just how long it’s going on – and how one disaster piles onto another without the project ever quite dying – so far at least.

Today’s news? Moody’s credit rating agency has just downgraded EDF’s debt from A1 to ‘A2 outlook negative’. OK, that’s still not junk grade – after all the company has the French government standing behind it as 85% owner.

But the A2 negative rating will make it all the harder and more expensive for it to raise the cash it needs – not just to build Hinkley C but to finance its forced €2.5 billion takeover of insolvent nuclear components manufacturer Areva, make good its problems, finance the impending closure and docommissioning of its own aging nuclear fleet … you get the picture.

And Hinkley C is an important cause of EDF’s sinking down the credit rating charts. “The negative outlook”, writes Moody’s, “reflects … the incremental risks associated with the Hinkley Point C (HPC) nuclear power station project in the UK, should it go ahead.”

“The outlook could be returned to stable provided that (1) EDF decides not to proceed with the HPC nuclear project”, the rating report continues, helpfully adding: “The ratings could be downgraded if (1) the HPC project were to go ahead”.

And if you ask me, that gives an unusually clear steer to the company as to how they can please credit markets and cut their borrowing costs – something that’s actually very important for a company quite so deeply indebted as EDF.

Also this week: EDF’s projected cost of building Hinkley C just took a £3 billion hike from £18 to £21 billion – though still well short of the £24 billion widely expected elsewhere.

The company also revealed that it expected 115 months (9.5 years) to pass between a final investment decision until the commissioning of the first of the two reactors. In other words, it’s pretty well impossible for it to begin before 2026.

EDF CEO Jean-Bernard Levy also revealed in February that “Definitive construction of what will be built on the site, what we call the first concrete, is on the horizon for 2019” – hardly an indication that action of any kind is imminent.

Areva’s ‘falsified’ safety certificates for nuclear components

And what was it happened last week? Oh yes, it turned out that Areva has been systematically “falsifying” (by the company’s own admission) safety certificates for components it has made for nuclear power stations, with 400 such ‘irregularities’ including to 50 components in operational nuclear reactors.

This is very bad news for EDF not just because the French government is forcing it into a shotgun takeover of what is clearly a company in deep trouble, but because many of these 50 components will be in its own power stations. And if it sues … it will be suing itself.

It also raises serious safety questions over the EPR reactors planned for Hinkley C, and under construction at other sites: Olkiluoto in Finland, Flamanville in France, and Taishan in China – not only for the components whose safety certificates were falsified, but for everything the company has ever produced because of what it reveals about its deeply dysfunctional safety ethic.

The news of the falsified safety certificates may also explain how the reactor vessel and head supplied by Areva at Flamanville went so far as installation at the heart of the plant while suffering from grave metallurgical defects owing to an excess of carbon in areas of the steel, that could lead to embrittlement and cracking of the unit.

This safety problem remains unsolved and in a worst case (for EDF, Areva and French taxpayers) could lead to the power plant’s total abandonment. It is also widely suspected that the two Taishan reactors, also forged by Areva, may suffer from the same defect.

Meanwhile all curent EPR projects are massively over time and budget. Flamanville, begun in 2006, was meant to be complete by 2012, and costs have more than trebled from €3.3 billion to €10.5 billion, with no end in sight.

Construction of the Olkiluoto EPR began in 2005 and it is not expected to commence operating until 2018, nine years late. The estimated cost has risen from €3.2 billion to €8.5 billion. Areva has already provided for a €2.7 billion writedown on the project, with further losses expected. Meanwhile the Finnish utility FTVO and Areva / Siemens are locked in a €10 billion legal battle over the cost overruns.

Which reminds me. Moody’s again: “The A2 rating is based on Moody’s expectation that EDF will have no material exposure to AREVA NP’s liabilities associated with past and existing contracts in its engineering and construction business, including the Olkiluoto 3 nuclear project in Finland.”

Just how they expect to achieve that when EDF is buying the company is hard to understand. That A2 rating could drop even lower.

Those legal cases in the European Court

But that’s not the only legal case that could mess things up for EDF. Austria and Luxembourg have a legal challenge in play against the European Commission for approving an absurdly generous subsidy package for Hinkley C that is set to pay the company almost three times the current wholesale power price for 35 years after it begins to produce power.

A second case was filed in March 2015 by Germany’s Greenpeace Energy and a host of other cooperative and municipal green energy suppliers concerned that the massive subsidy would cause prejudice against renewables in Europe’s energy market.

And last month, new legal risks: UK green electricity supplier Ecotricity and Greenpeace UK are threatening further legal action over the French government’s plan to support EDF’s wobbly finances by taking dividend payments as shares instead of cash, and buying billions of euros worth of additional shares, in order to provide working capital for Hinkley C.

The share purchases actual and proposed, they warn, fall under EU state aid rules and would need to be approved by the Commission before they could go ahead. Any attempt by EDF to sneak a massive share issue out to the French government would be challenged in the courts.

And the simple fact is that state aid is the only way that Hinkley C will ever be built. Private investors won’t touch it with a bargepole, and here’s why. In theory the project offers investors an enviable 9% rate of return. But that’s only if it’s finished on time and on budget. If it’s not, then that number starts falling fast.

The nightmare scenario that’s scaring investors away

But it gets worse. What’s really freaking out investors is the possibility that they could sink all that money into a massive nuclear project that just doesn’t work.

Their return under the ‘contract for difference’ is based entirely on getting that premium rate for their power of approaching £100 per megawatt hour, three times higher than the current wholesale market level. So what if it turns out a lemon?

Now no one expects that it won’t work at all. But what if it keeps on tripping out with mysterious safety alerts generated by all the unbelievably complex software that’s going to run the show? What if it’s unable to pass its commissioning tests as a result? Or what if it’s permanently on the blink and only able to run intermittently?

Then EDF will have turned £21 billion or £24 billion of good money into a massive decommissioning liability. This is the risk that is alarming Moody’s, investors and EDF unions, not to mention the company’s former finance director Thomas Piquemal who resigned in March this year fearing that Hinkley C could just finish EDF off.

And it could happen: at today’s €11.33 share price, EDF is valued at €21.76 billion, or £17.1 billion – considerably less than even the lowest estimates of the Hinkley C project cost.

So what are EDF’s options here? One is to abandon the project in the process writing off the £2 billion it has so far invested in the project, as Moody’s, unions and equity investors hope. Another is to sell the site on to the Chinese General Nuclear Company (CGN) which is poised to take a 33.5% stake in the project in a deal announced last October.

But now even that last possiblity looks like it’s off the cards – perhaps as a result of the British Queen’s unguarded comment at a Buckingham Palace garden party last week that the Chinese delegation to London last October had been “very rude”. And yes, that was the official visit on which CGN’s investment in Hinkley C was wrapped up.

But whatever the reason, CGN has today stated that reports that China was planning to take over the Hinkley C site in the event that EDF backs out were “without foundation”. A CGN spokesman said: “China General Nuclear Power Corporation has no plans to build nuclear reactors at Hinkley Point C. Our intention is to obtain regulatory approval to build our reactor design at Bradwell in Essex.”

In other news, Germany’s energy minister Sigmar Gabriel has just announced plans to invest €17 billion over five years in energy efficient technologies as part of an ‘Effizienzoffensive’ campaign aiming to halve the country’s energy consumption by 2050. That’s under a quarter of the UK’s estimated cost of supporting Hinkley C. Could Gabriel possibly know something we don’t?

But back to Hinkley C: how much longer can the tragicomedy go on before the it’s finally booed off the stage? It really can’t last much longer now.

 


 

Oliver Tickell is Contributing Editor at The Ecologist.

 

From one disaster to the next – Hinkley C’s last days?

The remarkable thing about the ongoing Hinkley C fiasco is just how long it’s going on – and how one disaster piles onto another without the project ever quite dying – so far at least.

Today’s news? Moody’s credit rating agency has just downgraded EDF’s debt from A1 to ‘A2 outlook negative’. OK, that’s still not junk grade – after all the company has the French government standing behind it as 85% owner.

But the A2 negative rating will make it all the harder and more expensive for it to raise the cash it needs – not just to build Hinkley C but to finance its forced €2.5 billion takeover of insolvent nuclear components manufacturer Areva, make good its problems, finance the impending closure and docommissioning of its own aging nuclear fleet … you get the picture.

And Hinkley C is an important cause of EDF’s sinking down the credit rating charts. “The negative outlook”, writes Moody’s, “reflects … the incremental risks associated with the Hinkley Point C (HPC) nuclear power station project in the UK, should it go ahead.”

“The outlook could be returned to stable provided that (1) EDF decides not to proceed with the HPC nuclear project”, the rating report continues, helpfully adding: “The ratings could be downgraded if (1) the HPC project were to go ahead”.

And if you ask me, that gives an unusually clear steer to the company as to how they can please credit markets and cut their borrowing costs – something that’s actually very important for a company quite so deeply indebted as EDF.

Also this week: EDF’s projected cost of building Hinkley C just took a £3 billion hike from £18 to £21 billion – though still well short of the £24 billion widely expected elsewhere.

The company also revealed that it expected 115 months (9.5 years) to pass between a final investment decision until the commissioning of the first of the two reactors. In other words, it’s pretty well impossible for it to begin before 2026.

EDF CEO Jean-Bernard Levy also revealed in February that “Definitive construction of what will be built on the site, what we call the first concrete, is on the horizon for 2019” – hardly an indication that action of any kind is imminent.

Areva’s ‘falsified’ safety certificates for nuclear components

And what was it happened last week? Oh yes, it turned out that Areva has been systematically “falsifying” (by the company’s own admission) safety certificates for components it has made for nuclear power stations, with 400 such ‘irregularities’ including to 50 components in operational nuclear reactors.

This is very bad news for EDF not just because the French government is forcing it into a shotgun takeover of what is clearly a company in deep trouble, but because many of these 50 components will be in its own power stations. And if it sues … it will be suing itself.

It also raises serious safety questions over the EPR reactors planned for Hinkley C, and under construction at other sites: Olkiluoto in Finland, Flamanville in France, and Taishan in China – not only for the components whose safety certificates were falsified, but for everything the company has ever produced because of what it reveals about its deeply dysfunctional safety ethic.

The news of the falsified safety certificates may also explain how the reactor vessel and head supplied by Areva at Flamanville went so far as installation at the heart of the plant while suffering from grave metallurgical defects owing to an excess of carbon in areas of the steel, that could lead to embrittlement and cracking of the unit.

This safety problem remains unsolved and in a worst case (for EDF, Areva and French taxpayers) could lead to the power plant’s total abandonment. It is also widely suspected that the two Taishan reactors, also forged by Areva, may suffer from the same defect.

Meanwhile all curent EPR projects are massively over time and budget. Flamanville, begun in 2006, was meant to be complete by 2012, and costs have more than trebled from €3.3 billion to €10.5 billion, with no end in sight.

Construction of the Olkiluoto EPR began in 2005 and it is not expected to commence operating until 2018, nine years late. The estimated cost has risen from €3.2 billion to €8.5 billion. Areva has already provided for a €2.7 billion writedown on the project, with further losses expected. Meanwhile the Finnish utility FTVO and Areva / Siemens are locked in a €10 billion legal battle over the cost overruns.

Which reminds me. Moody’s again: “The A2 rating is based on Moody’s expectation that EDF will have no material exposure to AREVA NP’s liabilities associated with past and existing contracts in its engineering and construction business, including the Olkiluoto 3 nuclear project in Finland.”

Just how they expect to achieve that when EDF is buying the company is hard to understand. That A2 rating could drop even lower.

Those legal cases in the European Court

But that’s not the only legal case that could mess things up for EDF. Austria and Luxembourg have a legal challenge in play against the European Commission for approving an absurdly generous subsidy package for Hinkley C that is set to pay the company almost three times the current wholesale power price for 35 years after it begins to produce power.

A second case was filed in March 2015 by Germany’s Greenpeace Energy and a host of other cooperative and municipal green energy suppliers concerned that the massive subsidy would cause prejudice against renewables in Europe’s energy market.

And last month, new legal risks: UK green electricity supplier Ecotricity and Greenpeace UK are threatening further legal action over the French government’s plan to support EDF’s wobbly finances by taking dividend payments as shares instead of cash, and buying billions of euros worth of additional shares, in order to provide working capital for Hinkley C.

The share purchases actual and proposed, they warn, fall under EU state aid rules and would need to be approved by the Commission before they could go ahead. Any attempt by EDF to sneak a massive share issue out to the French government would be challenged in the courts.

And the simple fact is that state aid is the only way that Hinkley C will ever be built. Private investors won’t touch it with a bargepole, and here’s why. In theory the project offers investors an enviable 9% rate of return. But that’s only if it’s finished on time and on budget. If it’s not, then that number starts falling fast.

The nightmare scenario that’s scaring investors away

But it gets worse. What’s really freaking out investors is the possibility that they could sink all that money into a massive nuclear project that just doesn’t work.

Their return under the ‘contract for difference’ is based entirely on getting that premium rate for their power of approaching £100 per megawatt hour, three times higher than the current wholesale market level. So what if it turns out a lemon?

Now no one expects that it won’t work at all. But what if it keeps on tripping out with mysterious safety alerts generated by all the unbelievably complex software that’s going to run the show? What if it’s unable to pass its commissioning tests as a result? Or what if it’s permanently on the blink and only able to run intermittently?

Then EDF will have turned £21 billion or £24 billion of good money into a massive decommissioning liability. This is the risk that is alarming Moody’s, investors and EDF unions, not to mention the company’s former finance director Thomas Piquemal who resigned in March this year fearing that Hinkley C could just finish EDF off.

And it could happen: at today’s €11.33 share price, EDF is valued at €21.76 billion, or £17.1 billion – considerably less than even the lowest estimates of the Hinkley C project cost.

So what are EDF’s options here? One is to abandon the project in the process writing off the £2 billion it has so far invested in the project, as Moody’s, unions and equity investors hope. Another is to sell the site on to the Chinese General Nuclear Company (CGN) which is poised to take a 33.5% stake in the project in a deal announced last October.

But now even that last possiblity looks like it’s off the cards – perhaps as a result of the British Queen’s unguarded comment at a Buckingham Palace garden party last week that the Chinese delegation to London last October had been “very rude”. And yes, that was the official visit on which CGN’s investment in Hinkley C was wrapped up.

But whatever the reason, CGN has today stated that reports that China was planning to take over the Hinkley C site in the event that EDF backs out were “without foundation”. A CGN spokesman said: “China General Nuclear Power Corporation has no plans to build nuclear reactors at Hinkley Point C. Our intention is to obtain regulatory approval to build our reactor design at Bradwell in Essex.”

In other news, Germany’s energy minister Sigmar Gabriel has just announced plans to invest €17 billion over five years in energy efficient technologies as part of an ‘Effizienzoffensive’ campaign aiming to halve the country’s energy consumption by 2050. That’s under a quarter of the UK’s estimated cost of supporting Hinkley C. Could Gabriel possibly know something we don’t?

But back to Hinkley C: how much longer can the tragicomedy go on before the it’s finally booed off the stage? It really can’t last much longer now.

 


 

Oliver Tickell is Contributing Editor at The Ecologist.

 

From one disaster to the next – Hinkley C’s last days?

The remarkable thing about the ongoing Hinkley C fiasco is just how long it’s going on – and how one disaster piles onto another without the project ever quite dying – so far at least.

Today’s news? Moody’s credit rating agency has just downgraded EDF’s debt from A1 to ‘A2 outlook negative’. OK, that’s still not junk grade – after all the company has the French government standing behind it as 85% owner.

But the A2 negative rating will make it all the harder and more expensive for it to raise the cash it needs – not just to build Hinkley C but to finance its forced €2.5 billion takeover of insolvent nuclear components manufacturer Areva, make good its problems, finance the impending closure and docommissioning of its own aging nuclear fleet … you get the picture.

And Hinkley C is an important cause of EDF’s sinking down the credit rating charts. “The negative outlook”, writes Moody’s, “reflects … the incremental risks associated with the Hinkley Point C (HPC) nuclear power station project in the UK, should it go ahead.”

“The outlook could be returned to stable provided that (1) EDF decides not to proceed with the HPC nuclear project”, the rating report continues, helpfully adding: “The ratings could be downgraded if (1) the HPC project were to go ahead”.

And if you ask me, that gives an unusually clear steer to the company as to how they can please credit markets and cut their borrowing costs – something that’s actually very important for a company quite so deeply indebted as EDF.

Also this week: EDF’s projected cost of building Hinkley C just took a £3 billion hike from £18 to £21 billion – though still well short of the £24 billion widely expected elsewhere.

The company also revealed that it expected 115 months (9.5 years) to pass between a final investment decision until the commissioning of the first of the two reactors. In other words, it’s pretty well impossible for it to begin before 2026.

EDF CEO Jean-Bernard Levy also revealed in February that “Definitive construction of what will be built on the site, what we call the first concrete, is on the horizon for 2019” – hardly an indication that action of any kind is imminent.

Areva’s ‘falsified’ safety certificates for nuclear components

And what was it happened last week? Oh yes, it turned out that Areva has been systematically “falsifying” (by the company’s own admission) safety certificates for components it has made for nuclear power stations, with 400 such ‘irregularities’ including to 50 components in operational nuclear reactors.

This is very bad news for EDF not just because the French government is forcing it into a shotgun takeover of what is clearly a company in deep trouble, but because many of these 50 components will be in its own power stations. And if it sues … it will be suing itself.

It also raises serious safety questions over the EPR reactors planned for Hinkley C, and under construction at other sites: Olkiluoto in Finland, Flamanville in France, and Taishan in China – not only for the components whose safety certificates were falsified, but for everything the company has ever produced because of what it reveals about its deeply dysfunctional safety ethic.

The news of the falsified safety certificates may also explain how the reactor vessel and head supplied by Areva at Flamanville went so far as installation at the heart of the plant while suffering from grave metallurgical defects owing to an excess of carbon in areas of the steel, that could lead to embrittlement and cracking of the unit.

This safety problem remains unsolved and in a worst case (for EDF, Areva and French taxpayers) could lead to the power plant’s total abandonment. It is also widely suspected that the two Taishan reactors, also forged by Areva, may suffer from the same defect.

Meanwhile all curent EPR projects are massively over time and budget. Flamanville, begun in 2006, was meant to be complete by 2012, and costs have more than trebled from €3.3 billion to €10.5 billion, with no end in sight.

Construction of the Olkiluoto EPR began in 2005 and it is not expected to commence operating until 2018, nine years late. The estimated cost has risen from €3.2 billion to €8.5 billion. Areva has already provided for a €2.7 billion writedown on the project, with further losses expected. Meanwhile the Finnish utility FTVO and Areva / Siemens are locked in a €10 billion legal battle over the cost overruns.

Which reminds me. Moody’s again: “The A2 rating is based on Moody’s expectation that EDF will have no material exposure to AREVA NP’s liabilities associated with past and existing contracts in its engineering and construction business, including the Olkiluoto 3 nuclear project in Finland.”

Just how they expect to achieve that when EDF is buying the company is hard to understand. That A2 rating could drop even lower.

Those legal cases in the European Court

But that’s not the only legal case that could mess things up for EDF. Austria and Luxembourg have a legal challenge in play against the European Commission for approving an absurdly generous subsidy package for Hinkley C that is set to pay the company almost three times the current wholesale power price for 35 years after it begins to produce power.

A second case was filed in March 2015 by Germany’s Greenpeace Energy and a host of other cooperative and municipal green energy suppliers concerned that the massive subsidy would cause prejudice against renewables in Europe’s energy market.

And last month, new legal risks: UK green electricity supplier Ecotricity and Greenpeace UK are threatening further legal action over the French government’s plan to support EDF’s wobbly finances by taking dividend payments as shares instead of cash, and buying billions of euros worth of additional shares, in order to provide working capital for Hinkley C.

The share purchases actual and proposed, they warn, fall under EU state aid rules and would need to be approved by the Commission before they could go ahead. Any attempt by EDF to sneak a massive share issue out to the French government would be challenged in the courts.

And the simple fact is that state aid is the only way that Hinkley C will ever be built. Private investors won’t touch it with a bargepole, and here’s why. In theory the project offers investors an enviable 9% rate of return. But that’s only if it’s finished on time and on budget. If it’s not, then that number starts falling fast.

The nightmare scenario that’s scaring investors away

But it gets worse. What’s really freaking out investors is the possibility that they could sink all that money into a massive nuclear project that just doesn’t work.

Their return under the ‘contract for difference’ is based entirely on getting that premium rate for their power of approaching £100 per megawatt hour, three times higher than the current wholesale market level. So what if it turns out a lemon?

Now no one expects that it won’t work at all. But what if it keeps on tripping out with mysterious safety alerts generated by all the unbelievably complex software that’s going to run the show? What if it’s unable to pass its commissioning tests as a result? Or what if it’s permanently on the blink and only able to run intermittently?

Then EDF will have turned £21 billion or £24 billion of good money into a massive decommissioning liability. This is the risk that is alarming Moody’s, investors and EDF unions, not to mention the company’s former finance director Thomas Piquemal who resigned in March this year fearing that Hinkley C could just finish EDF off.

And it could happen: at today’s €11.33 share price, EDF is valued at €21.76 billion, or £17.1 billion – considerably less than even the lowest estimates of the Hinkley C project cost.

So what are EDF’s options here? One is to abandon the project in the process writing off the £2 billion it has so far invested in the project, as Moody’s, unions and equity investors hope. Another is to sell the site on to the Chinese General Nuclear Company (CGN) which is poised to take a 33.5% stake in the project in a deal announced last October.

But now even that last possiblity looks like it’s off the cards – perhaps as a result of the British Queen’s unguarded comment at a Buckingham Palace garden party last week that the Chinese delegation to London last October had been “very rude”. And yes, that was the official visit on which CGN’s investment in Hinkley C was wrapped up.

But whatever the reason, CGN has today stated that reports that China was planning to take over the Hinkley C site in the event that EDF backs out were “without foundation”. A CGN spokesman said: “China General Nuclear Power Corporation has no plans to build nuclear reactors at Hinkley Point C. Our intention is to obtain regulatory approval to build our reactor design at Bradwell in Essex.”

In other news, Germany’s energy minister Sigmar Gabriel has just announced plans to invest €17 billion over five years in energy efficient technologies as part of an ‘Effizienzoffensive’ campaign aiming to halve the country’s energy consumption by 2050. That’s under a quarter of the UK’s estimated cost of supporting Hinkley C. Could Gabriel possibly know something we don’t?

But back to Hinkley C: how much longer can the tragicomedy go on before the it’s finally booed off the stage? It really can’t last much longer now.

 


 

Oliver Tickell is Contributing Editor at The Ecologist.

 

From one disaster to the next – Hinkley C’s last days?

The remarkable thing about the ongoing Hinkley C fiasco is just how long it’s going on – and how one disaster piles onto another without the project ever quite dying – so far at least.

Today’s news? Moody’s credit rating agency has just downgraded EDF’s debt from A1 to ‘A2 outlook negative’. OK, that’s still not junk grade – after all the company has the French government standing behind it as 85% owner.

But the A2 negative rating will make it all the harder and more expensive for it to raise the cash it needs – not just to build Hinkley C but to finance its forced €2.5 billion takeover of insolvent nuclear components manufacturer Areva, make good its problems, finance the impending closure and docommissioning of its own aging nuclear fleet … you get the picture.

And Hinkley C is an important cause of EDF’s sinking down the credit rating charts. “The negative outlook”, writes Moody’s, “reflects … the incremental risks associated with the Hinkley Point C (HPC) nuclear power station project in the UK, should it go ahead.”

“The outlook could be returned to stable provided that (1) EDF decides not to proceed with the HPC nuclear project”, the rating report continues, helpfully adding: “The ratings could be downgraded if (1) the HPC project were to go ahead”.

And if you ask me, that gives an unusually clear steer to the company as to how they can please credit markets and cut their borrowing costs – something that’s actually very important for a company quite so deeply indebted as EDF.

Also this week: EDF’s projected cost of building Hinkley C just took a £3 billion hike from £18 to £21 billion – though still well short of the £24 billion widely expected elsewhere.

The company also revealed that it expected 115 months (9.5 years) to pass between a final investment decision until the commissioning of the first of the two reactors. In other words, it’s pretty well impossible for it to begin before 2026.

EDF CEO Jean-Bernard Levy also revealed in February that “Definitive construction of what will be built on the site, what we call the first concrete, is on the horizon for 2019” – hardly an indication that action of any kind is imminent.

Areva’s ‘falsified’ safety certificates for nuclear components

And what was it happened last week? Oh yes, it turned out that Areva has been systematically “falsifying” (by the company’s own admission) safety certificates for components it has made for nuclear power stations, with 400 such ‘irregularities’ including to 50 components in operational nuclear reactors.

This is very bad news for EDF not just because the French government is forcing it into a shotgun takeover of what is clearly a company in deep trouble, but because many of these 50 components will be in its own power stations. And if it sues … it will be suing itself.

It also raises serious safety questions over the EPR reactors planned for Hinkley C, and under construction at other sites: Olkiluoto in Finland, Flamanville in France, and Taishan in China – not only for the components whose safety certificates were falsified, but for everything the company has ever produced because of what it reveals about its deeply dysfunctional safety ethic.

The news of the falsified safety certificates may also explain how the reactor vessel and head supplied by Areva at Flamanville went so far as installation at the heart of the plant while suffering from grave metallurgical defects owing to an excess of carbon in areas of the steel, that could lead to embrittlement and cracking of the unit.

This safety problem remains unsolved and in a worst case (for EDF, Areva and French taxpayers) could lead to the power plant’s total abandonment. It is also widely suspected that the two Taishan reactors, also forged by Areva, may suffer from the same defect.

Meanwhile all curent EPR projects are massively over time and budget. Flamanville, begun in 2006, was meant to be complete by 2012, and costs have more than trebled from €3.3 billion to €10.5 billion, with no end in sight.

Construction of the Olkiluoto EPR began in 2005 and it is not expected to commence operating until 2018, nine years late. The estimated cost has risen from €3.2 billion to €8.5 billion. Areva has already provided for a €2.7 billion writedown on the project, with further losses expected. Meanwhile the Finnish utility FTVO and Areva / Siemens are locked in a €10 billion legal battle over the cost overruns.

Which reminds me. Moody’s again: “The A2 rating is based on Moody’s expectation that EDF will have no material exposure to AREVA NP’s liabilities associated with past and existing contracts in its engineering and construction business, including the Olkiluoto 3 nuclear project in Finland.”

Just how they expect to achieve that when EDF is buying the company is hard to understand. That A2 rating could drop even lower.

Those legal cases in the European Court

But that’s not the only legal case that could mess things up for EDF. Austria and Luxembourg have a legal challenge in play against the European Commission for approving an absurdly generous subsidy package for Hinkley C that is set to pay the company almost three times the current wholesale power price for 35 years after it begins to produce power.

A second case was filed in March 2015 by Germany’s Greenpeace Energy and a host of other cooperative and municipal green energy suppliers concerned that the massive subsidy would cause prejudice against renewables in Europe’s energy market.

And last month, new legal risks: UK green electricity supplier Ecotricity and Greenpeace UK are threatening further legal action over the French government’s plan to support EDF’s wobbly finances by taking dividend payments as shares instead of cash, and buying billions of euros worth of additional shares, in order to provide working capital for Hinkley C.

The share purchases actual and proposed, they warn, fall under EU state aid rules and would need to be approved by the Commission before they could go ahead. Any attempt by EDF to sneak a massive share issue out to the French government would be challenged in the courts.

And the simple fact is that state aid is the only way that Hinkley C will ever be built. Private investors won’t touch it with a bargepole, and here’s why. In theory the project offers investors an enviable 9% rate of return. But that’s only if it’s finished on time and on budget. If it’s not, then that number starts falling fast.

The nightmare scenario that’s scaring investors away

But it gets worse. What’s really freaking out investors is the possibility that they could sink all that money into a massive nuclear project that just doesn’t work.

Their return under the ‘contract for difference’ is based entirely on getting that premium rate for their power of approaching £100 per megawatt hour, three times higher than the current wholesale market level. So what if it turns out a lemon?

Now no one expects that it won’t work at all. But what if it keeps on tripping out with mysterious safety alerts generated by all the unbelievably complex software that’s going to run the show? What if it’s unable to pass its commissioning tests as a result? Or what if it’s permanently on the blink and only able to run intermittently?

Then EDF will have turned £21 billion or £24 billion of good money into a massive decommissioning liability. This is the risk that is alarming Moody’s, investors and EDF unions, not to mention the company’s former finance director Thomas Piquemal who resigned in March this year fearing that Hinkley C could just finish EDF off.

And it could happen: at today’s €11.33 share price, EDF is valued at €21.76 billion, or £17.1 billion – considerably less than even the lowest estimates of the Hinkley C project cost.

So what are EDF’s options here? One is to abandon the project in the process writing off the £2 billion it has so far invested in the project, as Moody’s, unions and equity investors hope. Another is to sell the site on to the Chinese General Nuclear Company (CGN) which is poised to take a 33.5% stake in the project in a deal announced last October.

But now even that last possiblity looks like it’s off the cards – perhaps as a result of the British Queen’s unguarded comment at a Buckingham Palace garden party last week that the Chinese delegation to London last October had been “very rude”. And yes, that was the official visit on which CGN’s investment in Hinkley C was wrapped up.

But whatever the reason, CGN has today stated that reports that China was planning to take over the Hinkley C site in the event that EDF backs out were “without foundation”. A CGN spokesman said: “China General Nuclear Power Corporation has no plans to build nuclear reactors at Hinkley Point C. Our intention is to obtain regulatory approval to build our reactor design at Bradwell in Essex.”

In other news, Germany’s energy minister Sigmar Gabriel has just announced plans to invest €17 billion over five years in energy efficient technologies as part of an ‘Effizienzoffensive’ campaign aiming to halve the country’s energy consumption by 2050. That’s under a quarter of the UK’s estimated cost of supporting Hinkley C. Could Gabriel possibly know something we don’t?

But back to Hinkley C: how much longer can the tragicomedy go on before the it’s finally booed off the stage? It really can’t last much longer now.

 


 

Oliver Tickell is Contributing Editor at The Ecologist.

 

From one disaster to the next – Hinkley C’s last days?

The remarkable thing about the ongoing Hinkley C fiasco is just how long it’s going on – and how one disaster piles onto another without the project ever quite dying – so far at least.

Today’s news? Moody’s credit rating agency has just downgraded EDF’s debt from A1 to ‘A2 outlook negative’. OK, that’s still not junk grade – after all the company has the French government standing behind it as 85% owner.

But the A2 negative rating will make it all the harder and more expensive for it to raise the cash it needs – not just to build Hinkley C but to finance its forced €2.5 billion takeover of insolvent nuclear components manufacturer Areva, make good its problems, finance the impending closure and docommissioning of its own aging nuclear fleet … you get the picture.

And Hinkley C is an important cause of EDF’s sinking down the credit rating charts. “The negative outlook”, writes Moody’s, “reflects … the incremental risks associated with the Hinkley Point C (HPC) nuclear power station project in the UK, should it go ahead.”

“The outlook could be returned to stable provided that (1) EDF decides not to proceed with the HPC nuclear project”, the rating report continues, helpfully adding: “The ratings could be downgraded if (1) the HPC project were to go ahead”.

And if you ask me, that gives an unusually clear steer to the company as to how they can please credit markets and cut their borrowing costs – something that’s actually very important for a company quite so deeply indebted as EDF.

Also this week: EDF’s projected cost of building Hinkley C just took a £3 billion hike from £18 to £21 billion – though still well short of the £24 billion widely expected elsewhere.

The company also revealed that it expected 115 months (9.5 years) to pass between a final investment decision until the commissioning of the first of the two reactors. In other words, it’s pretty well impossible for it to begin before 2026.

EDF CEO Jean-Bernard Levy also revealed in February that “Definitive construction of what will be built on the site, what we call the first concrete, is on the horizon for 2019” – hardly an indication that action of any kind is imminent.

Areva’s ‘falsified’ safety certificates for nuclear components

And what was it happened last week? Oh yes, it turned out that Areva has been systematically “falsifying” (by the company’s own admission) safety certificates for components it has made for nuclear power stations, with 400 such ‘irregularities’ including to 50 components in operational nuclear reactors.

This is very bad news for EDF not just because the French government is forcing it into a shotgun takeover of what is clearly a company in deep trouble, but because many of these 50 components will be in its own power stations. And if it sues … it will be suing itself.

It also raises serious safety questions over the EPR reactors planned for Hinkley C, and under construction at other sites: Olkiluoto in Finland, Flamanville in France, and Taishan in China – not only for the components whose safety certificates were falsified, but for everything the company has ever produced because of what it reveals about its deeply dysfunctional safety ethic.

The news of the falsified safety certificates may also explain how the reactor vessel and head supplied by Areva at Flamanville went so far as installation at the heart of the plant while suffering from grave metallurgical defects owing to an excess of carbon in areas of the steel, that could lead to embrittlement and cracking of the unit.

This safety problem remains unsolved and in a worst case (for EDF, Areva and French taxpayers) could lead to the power plant’s total abandonment. It is also widely suspected that the two Taishan reactors, also forged by Areva, may suffer from the same defect.

Meanwhile all curent EPR projects are massively over time and budget. Flamanville, begun in 2006, was meant to be complete by 2012, and costs have more than trebled from €3.3 billion to €10.5 billion, with no end in sight.

Construction of the Olkiluoto EPR began in 2005 and it is not expected to commence operating until 2018, nine years late. The estimated cost has risen from €3.2 billion to €8.5 billion. Areva has already provided for a €2.7 billion writedown on the project, with further losses expected. Meanwhile the Finnish utility FTVO and Areva / Siemens are locked in a €10 billion legal battle over the cost overruns.

Which reminds me. Moody’s again: “The A2 rating is based on Moody’s expectation that EDF will have no material exposure to AREVA NP’s liabilities associated with past and existing contracts in its engineering and construction business, including the Olkiluoto 3 nuclear project in Finland.”

Just how they expect to achieve that when EDF is buying the company is hard to understand. That A2 rating could drop even lower.

Those legal cases in the European Court

But that’s not the only legal case that could mess things up for EDF. Austria and Luxembourg have a legal challenge in play against the European Commission for approving an absurdly generous subsidy package for Hinkley C that is set to pay the company almost three times the current wholesale power price for 35 years after it begins to produce power.

A second case was filed in March 2015 by Germany’s Greenpeace Energy and a host of other cooperative and municipal green energy suppliers concerned that the massive subsidy would cause prejudice against renewables in Europe’s energy market.

And last month, new legal risks: UK green electricity supplier Ecotricity and Greenpeace UK are threatening further legal action over the French government’s plan to support EDF’s wobbly finances by taking dividend payments as shares instead of cash, and buying billions of euros worth of additional shares, in order to provide working capital for Hinkley C.

The share purchases actual and proposed, they warn, fall under EU state aid rules and would need to be approved by the Commission before they could go ahead. Any attempt by EDF to sneak a massive share issue out to the French government would be challenged in the courts.

And the simple fact is that state aid is the only way that Hinkley C will ever be built. Private investors won’t touch it with a bargepole, and here’s why. In theory the project offers investors an enviable 9% rate of return. But that’s only if it’s finished on time and on budget. If it’s not, then that number starts falling fast.

The nightmare scenario that’s scaring investors away

But it gets worse. What’s really freaking out investors is the possibility that they could sink all that money into a massive nuclear project that just doesn’t work.

Their return under the ‘contract for difference’ is based entirely on getting that premium rate for their power of approaching £100 per megawatt hour, three times higher than the current wholesale market level. So what if it turns out a lemon?

Now no one expects that it won’t work at all. But what if it keeps on tripping out with mysterious safety alerts generated by all the unbelievably complex software that’s going to run the show? What if it’s unable to pass its commissioning tests as a result? Or what if it’s permanently on the blink and only able to run intermittently?

Then EDF will have turned £21 billion or £24 billion of good money into a massive decommissioning liability. This is the risk that is alarming Moody’s, investors and EDF unions, not to mention the company’s former finance director Thomas Piquemal who resigned in March this year fearing that Hinkley C could just finish EDF off.

And it could happen: at today’s €11.33 share price, EDF is valued at €21.76 billion, or £17.1 billion – considerably less than even the lowest estimates of the Hinkley C project cost.

So what are EDF’s options here? One is to abandon the project in the process writing off the £2 billion it has so far invested in the project, as Moody’s, unions and equity investors hope. Another is to sell the site on to the Chinese General Nuclear Company (CGN) which is poised to take a 33.5% stake in the project in a deal announced last October.

But now even that last possiblity looks like it’s off the cards – perhaps as a result of the British Queen’s unguarded comment at a Buckingham Palace garden party last week that the Chinese delegation to London last October had been “very rude”. And yes, that was the official visit on which CGN’s investment in Hinkley C was wrapped up.

But whatever the reason, CGN has today stated that reports that China was planning to take over the Hinkley C site in the event that EDF backs out were “without foundation”. A CGN spokesman said: “China General Nuclear Power Corporation has no plans to build nuclear reactors at Hinkley Point C. Our intention is to obtain regulatory approval to build our reactor design at Bradwell in Essex.”

In other news, Germany’s energy minister Sigmar Gabriel has just announced plans to invest €17 billion over five years in energy efficient technologies as part of an ‘Effizienzoffensive’ campaign aiming to halve the country’s energy consumption by 2050. That’s under a quarter of the UK’s estimated cost of supporting Hinkley C. Could Gabriel possibly know something we don’t?

But back to Hinkley C: how much longer can the tragicomedy go on before the it’s finally booed off the stage? It really can’t last much longer now.

 


 

Oliver Tickell is Contributing Editor at The Ecologist.