Energy Files: UK government threatens to strike back over Austria’s Hinkley legal challenge
The UK could retaliate over Austria’s legal challenge to the the Hinkley point C nuclear plant, according to a leaked document published by Unearthed.
In the document, sent from the Austrian Embassy in London to the Austrian government, a senior international diplomat warns that – in their view – the UK will seek to take legal action against Austria or damage the country’s government in areas with significant domestic political implications.
The strong negative feelings about Austria’s probable legal action rise all the way up to PM David Cameron, who has instructed members of the UK government to contact their Austrian counterparts to discuss how this is damaging relations between the two countries, according to the leaked memo.
Austria is has said it would take legal action over the EU’s decision to allow £17.6bn of subsidies for two Hinkley C nuclear reactors under the bloc’s State Aid (competition) rules.
The challenge comes amidst reports that the final decision on the project will be delayed until months after the UK general election due to concerns from the projects’ Chinese backers.
The Hinkley C reactors are projected to provide 7% of the UK’s electricity by 2023 but Austria’s appeal could delay the UK government’s final investment decision by more than two years.
Damage to Austria-UK relations could escalate
Countermeasures in response to Austria’s stance on Hinkley deal are already underway, with a potential for hostilities to escalate, according to the Austrian Embassy assessment of the situation.
In the document, Foreign and Commonwealth Office’s director, Vijay Rangarajan, pointed out three areas that the UK has identified to challenge:
- Austria’s new electricity labelling law, which would mean the source of the electricity must be known. As nuclear is so unpopular in Austria this in effect mean Austria could go nuclear free. The UK believes this law could violate EU internal market rules.
- Investigating whether the Austrian action violates the Euratom Treaty, which contains rules for the use of nuclear energy in the EU.
- Putting pressure on Austria to bear a greater share of the EU climate effort – unless it moves to recognise nuclear as a sustainable source of clean energy.
The European Commission decided to give the stamp of approval to the UK government’s massive subsidies for Hinkley’s new reactors in October last year.
‘Poor value’ Hinkley subsidies
The 35-year Hinkley subsidy deal, under Contracts of Difference, has been criticised for being poor value for money for UK bill payers with much of the money going to French and Chinese state-owned energy firms.
The subsidy is worth £17.6bn on paper, but a Greenpeace analysis put the total (undiscounted) subsidy to Hinkley over its lifetime as much higher at £37bn – working out as a £14 increase per household per year.
Austria’s anti-nuclear stance
Austrian chancellor (equivalent to prime minister) Werner Faymann came out against the European Commission approval of the Hinkley subsidy deal, saying: “Alternative forms of energy are worthy of subsidies, not nuclear energy”.
Fayman said on Tuesday he will not back down over the legal action as nuclear is not a new technology eligible for State Aid, according to the Austrian newspaper Kronen Zeitung.