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HINKLEY POINT C AND THE ESPOO CONVENTION: THE CURRENT POSITION

We discussed in a previous blog the findings of the Implementation Committee of the Convention of the Environmental Impact Assessment in a Transboundary Context (Espoo Convention), who had investigated complaints from some countries alleging that an accident at Hinkley Point C  would have the potential to cause serious pollution across Europe, and that the UK had failed to properly consider the possible impact of such an incident.

Background

The committee informed the UK Government of their “profound suspicion” that the UK had fallen foul of the Convention, which has been in force since 1997. The UK has long argued that as the Hinkley Point C Project is unlikely to create a “significant transboundary environmental impact”, there was no need for discussions with European neighbours. However, the Implementation Committee last year recommended that the UK:

  • Endorse the committee’s view that the UK is in ‘non-compliance’ with the convention in relation to the planning of the Hinkley Point C project.
  • Engage in discussions with those parties likely to be affected by the Hinkley Point C NPP, including those “that cannot exclude a significant adverse transboundary impact from the activity at HPC”.
  • Report back to the Committee on the progress of any such discussions.
  • Send notifications to all parties that could potentially be affected by an incident at any other Nuclear Power Plant they may plan, bearing in mind the worst possible scenario.

Updated Situation

On 17 February this year, the UK Government indicated its intention to address the Committee’s findings. It had written to all parties to the Convention last December asking whether they considered that a notification under the Convention was “useful” at the current stage of development of HPC.

The UK also indicated that it would in future notify the Parties for all future nuclear power plant development applications, which goes further than the recommendations of the Committee. It is understood that Norway, the Netherlands and Germany have indicated they would find this “useful”.

At the 20-22 February meeting of the Committee, they expressed concern that continuation of development at HPC might influence the views of the parties to the Convention contacted by the UK in December.  They seemed to be worried that this might affect the outcome of any transboundary EIA procedure and render its results irrelevant.

The Committee has said it will ask the UK to consider refraining from carrying out works at the proposed activity until it established whether notification was “useful” and that if a potentially affected party requests it be notified, the UK should suspend HPC development until the EIA procedure is finalised.

In the meantime, the Friends of the Irish Environment has written to the Irish Minister of Communications, Climate Action and Environment complaining that its representations to the Irish Government on the above findings of the Implementation Committee had been ignored and that they should raise the matter with the UK at the upcoming UK-Ireland Contact Group on Radiological Matters. The UK Supreme Court had already rejected a challenge from An Taisce, the Irish National Trust.

Impact on Progress of Development of HPC

So is it foreseeable that the UK will consider asking EDF to suspend its construction activities?

From EDF’s point of view, project delay would be intolerable as the site would have to be suitably prepared, workers laid off and there would surely be breaches of contract with suppliers.

Also, would suspension serve any “useful” purpose in any case?

EDF has said that it’s EIA, prepared for the UK’s Planning Inspectorate, had addressed the transboundary impact issue and the Inspectorate, in granting permission, had concluded that there was no likelihood of significant transboundary effects. The Department of Business, Energy and Industrial Strategy has strengthened this point by saying that the Environment Agency and Office for Nuclear Regulation have also independently assessed the environmental impact of HPC.

With the current confusion about matters nuclear surrounding BREXIT and BREXATOM, further complications from the requirements of the Espoo Convention would appear to be far from “useful”.

The ability of overseas governments to bring two separate lines of attack against the EIA procedure in the HPC case arises from a dispute procedure in the Espoo Convention which is quite distinct from enforcement action in the national (and EU) courts to deal with alleged infringements of the EU EIA Directive which implements the Convention.

Under both the Convention and the Directive, proposals for nuclear power plants which are likely to have significant trans-frontier impacts must be notified by the project host country to other countries likely to be affected.  The onus of deciding whether the notification duty applies rests initially on the project host country whose courts (with possible references to the CJEU) must adjudicate on whether any such decisions have been lawfully made.

However, the Espoo Convention provides for a country which considers that it would be affected by significant trans-frontier boundary effects of a nuclear power plant in another country to trigger discussions with the project host country (in the absence of a notification) and ultimately to submit the question of whether there is likely to be a significant adverse transboundary impact to an inquiry commission.

The possibility (and in the case of HPC, reality) of conflicting decisions is unfortunate.  As indicated above, the UK Government has sensibly decided to avoid such conflicts in the future by pre-notifying other countries of proposals for nuclear power plants irrespective of their likely impacts.  However, it is strongly arguable that the Espoo Convention was not intended to encourage disputes to be carried on under its aegis after the matter has been conclusively settled in the national courts of the host party where overseas governments and their citizens have the right to be represented.

We will continue to monitor the situation and report our findings through this blog.

Edward de la Billiere is a Solicitor and co-founder of Prospect Law. He was educated at Newcastle University and trained at the leading Middle East firm Trowers and Hamlins, working in both their London and Dubai offices, predominantly in the oil sector. On qualification, Edward moved to Magnox Electric, which was taken over by the nuclear operator BNFL. He has retained a strong interest in energy related projects and has advised recently in respect of energy and waste projects for corporate, local authority and private clients across the UK and internationally.

Andrew Waite is a solicitor and specialist in environmental law, advising on regulatory and liability issues for a broad range of industries. He defends prosecutions for breaches of environmental legislation, deals with regulatory appeals and civil litigation and advises on environmental issues relating to projects and transactions. He deals with all the main areas of environmental law including waste, energy, nuclear, contaminated land, pollution controls, environmental permitting, water rights, flooding, climate change and nature conservation.

Prospect Law provides legal and business consultancy services for clients involved in the infrastructure, energy and financial sectors.

This article remains the copyright property of Prospect Law and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law.

For more information please contact us on 020 7947 5354 or by email on: edlb@prospectlaw.co.uk.

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BREXIT WHITE PAPER CONFUSES EURATOM DEBATE

The 2008 EU Amendment Act is not a justifiable legal basis for the UK government’s belief that Brexit must also mean an exit from Euratom, write Jonathan Leech and Rupert Cowen of Prospect Law.

The government’s white paper on the UK’s “exit from and new partnership with” the European Union published last week confirms its position that “When we invoke Article 50, we will be leaving Euratom as well as the EU”.” In support of this, the document asserts that the European Union (Amendment) Act 2008 “makes clear that, in UK law, references to the EU include Euratom”.  This is presumably an assertion that references to the EU in the Referendum Act, the referendum question and the withdrawal bill automatically include Euratom – something both the Leave and Remain campaigns omitted to mention.

The 2008 EU Amendment Act tells us that “A reference to the EU in an Act or an instrument made under an Act includes … a reference to [Euratom].” The white paper overlooks the point that the 2008 Act does not apply to Article 50 of the Treaty on European Union – which is of course neither an Act nor an instrument made under an Act. This is significant, because there is a good legal argument that triggering Article 50 of the Treaty on European Union will have no legal effect on the UK’s membership of Euratom, and that to exit Euratom the government will need to trigger equivalent exit provisions in the Euratom Treaty. This would mean, absent that separate trigger, legally the UK remains in Euratom.

The white paper also states that “The Euratom Treaty imports Article 50 into its provisions.”  This is correct – to a point. The Euratom Treaty applies a version of Article 50, re-written to refer to Euratom and the Euratom Treaty in place of references to the EU. Again, this supports existence of a separate Euratom exit process that is similar to but is not part of a single EU Article 50 process. This is an important distinction.  It gives the government a choice, at least in relation to its approach to the timing of Euratom exit – a choice that it would be unwise to ignore.

The legal meaning of the withdrawal bill is also critical. The bill is the government’s response to Supreme Court confirmation that parliamentary authority is required before Article 50 can be triggered. It is highly likely that the government also needs parliamentary authority to trigger exit from Euratom.

Clause 1 is very specific. “The Prime Minister may notify, under Article 50(2) of the Treaty on European Union …”  There is nothing in the 2008 Act to suggest that reference to the Treaty on European Union automatically includes reference to the Euratom Treaty. Arguably the bill as drafted does not therefore give authority to trigger exit under the Euratom Treaty. It would have been preferable to include separate authority for Euratom exit, both to avoid this element of doubt and to provide a clear basis for the government to take additional time before triggering Euratom exit should the government conclude that this is in the national interest.

In addition to securing parliamentary approval for a Euratom exit, the government will need to be confident that, once triggered, the two-year Euratom exit timetable is sufficient to put in place replacement arrangements to avoid a damaging hiatus for the UK nuclear industry. This is likely to require a good deal of preparatory work before starting the 2-year countdown.

Since the UK accession to Euratom in 1973 the regulation and international acceptability of the UK nuclear industry have been closely entwined with Euratom. The Euratom Treaty sets out eight areas of activity: promotion of research, establishing and policing uniform safety standards, facilitating investment, ensuring a regular supply or ores and fuels (via the Euratom Supply Agency), applying safeguards, exercising rights of ownership over ‘special fissile materials’, creation of a nuclear common market and establishing relations with other countries and international organisation to foster progress in nuclear energy. Of these areas, safeguards and international relations are likely to place the greatest strain on the exit timetable.  Withdrawal also creates vast uncertainty for the future of UK fusion research.

Safeguards are essential to international nuclear commerce – verifying for an international audience that nuclear material is where it should be and is used only for its intended purpose.  International safeguards are administered by the International Atomic Energy Agency (IAEA) under the Non-Proliferation Treaty (NPT), which requires that non-nuclear-weapon states accept comprehensive safeguards on all nuclear material.  Similar arrangements are in place to safeguard civil nuclear material in nuclear weapon states (including the UK). Currently the UK satisfies its safeguarding obligations via Euratom, with Euratom inspectors carrying out inspections of UK plant and inventories and submitting reports to the IAEA.

Nuclear trade between the UK and other Euratom members relies on common Euratom safeguarding arrangements. Nuclear trade between the UK and other countries relies on either Euratom nuclear cooperation agreements, or bilateral nuclear cooperation agreements predicated on UK continued participation in Euratom safeguards.

Of the circa 50 bilateral nuclear cooperation agreements the UK has entered into since 1956 (when the European Atomic Energy Community came into being), over 30 specifically recite and rely upon UK participation in Euratom safeguards. Without demonstrably adequate safeguards key countries will simply cease trade with the UK in nuclear materials, technology and know-how. For example, absence of a Section 123 Agreement with the US would prevent supply of key components for both the Hitachi-GE ABWR and Westinghouse AP1000 reactors. Absence of a nuclear cooperation agreement with Australia would cut off a key source of uranium imports. Perhaps more crucial would be maintaining supplies of medical isotopes.

If the government continues to assert that Euratom and EU exit timetables must align then it will have two years to:

  • design, resource and implement new UK safeguarding arrangements in line with accepted international standards;
  • replace current safeguarding commitments under the NPT (which are also predicated on Euratom membership);
  • identify and plan negotiation of replacement nuclear cooperation agreements with every country with which the UK has ongoing nuclear trade; and
  • ensure it has the resources to conduct all of those negotiations, and be confident that those negotiations will be concluded successfully before Euratom exit takes effect.

Disentanglement from the Euratom Supply Agency and Euratom ownership arrangement for special fissile materials (including enriched uranium and plutonium) should, hopefully, prove to be predominantly an administrative task, provided that the UK can satisfy continuing Euratom members as to its safeguarding arrangements.

Turning to fusion research, the UK based Joint European Torus experimental fusion facility is dependent on Euratom funding. If the facility is to continue, the UK government will need to negotiate a new basis for UK involvement in the project and new funding arrangements, whether as a “third country”, “associated country” or on some other basis. Exiting Euratom also calls into question UK involvement in the International Thermonuclear Experimental Reactor, in the initial stages of construction in France.  In both cases, in addition to protecting UK involvement in ongoing research, UK interests in intellectual property used or created in those projects will require careful consideration if the UK is not to be disadvantaged in future exploitation of fusion technology.

This article was originally published in World Nuclear News on 9th February: http://www.world-nuclear-news.org/V-Brexit-white-paper-confuses-Euratom-debate-08021702.html 

Prospect Law and Prospect Advisory provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.

This article is not intended to constitute legal advice and Prospect Law and Prospect Advisory accepts no responsibility for loss or damage incurred as a result of reliance on its content. Specific legal advice should be taken in relation to any issues or concerns of readers which are raised by this article.  

This article remains the copyright property of Prospect Law and Prospect Advisory and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

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BREXIT AND EURATOM: NO RUSH TO EXIT?

As the UK government moves towards the formal process to exit the EU, Jonathan Leech and Rupert Cowen consider the implications of Brexit for the nation’s membership of the European Atomic Energy Community (Euratom).

We would challenge the view that withdrawal from Euratom is inevitable, at least at this stage, and consider how the government’s approach now may help or harm its ability to minimise disruption to the UK’s position within the global nuclear community.

It is clear from Theresa May’s speech on 17 January that the government sees little room for compromise in exiting the EU – there is to be no “partial membership of the European Union, associate membership …, or anything that leaves us half-in, half-out. … We do not seek to hold on to bits of membership as we leave.”  It is also clear that Government is committed to re-establishing the supremacy of UK law within the UK. “Leaving the European Union will mean that our laws will be made in Westminster, Edinburgh, Cardiff and Belfast. And those laws will be interpreted by judges not in Luxembourg but in courts across this country. Because we will not have truly left the European Union if we are not in control of our own laws.

Where does this leave UK membership of Euratom?  Created alongside the European Economic Community in 1957, Euratom has long shared the institutions of the EU but continues as a separate and legally distinct entity.  Remaining in Euratom would entail partial membership of EU institutions and would leave significant areas of UK law subject to directives and regulations made in Brussels and (ultimately) interpreted in Luxembourg.

A rapid exit from Euratom could however do serious harm to the UK nuclear industry.  One of the most significant aspects of Euratom is its role in establishing members’ credibility and acceptability within the global nuclear community.  Many of the nuclear co-operation agreements relied on by the UK are in fact Euratom agreements.  Where the UK has current bilateral nuclear cooperation agreements in place, those agreements are predicated on application of the Euratom safeguards regime within the UK. Nuclear cooperation agreements can take much time to put in place, possibly longer than the two-year negotiating window provided by the Article 50 process.

Without adequate arrangements in place for international cooperation, including safeguards to provide assurance that nuclear materials and technology will be applied only for peaceful purposes, in many cases it would not be a matter of trade on unfavourable terms – but simply of no trade at all.  This could have serious implications within the UK for nuclear new build and the nuclear fuel cycle, and also for progress in dealing with the UK’s waste and legacy decommissioning liabilities.

Some commentators assert that a UK exit from Euratom is an inevitable consequence of triggering Article 50 to exit the EU. This would place the UK in an invidious position. In addition to untangling all other aspects of Euratom without prejudicing UK interests, it would require wholesale replacement of the UK’s current nuclear cooperation agreements (including arrangements within the Euratom Treaty itself) within the fixed two-year timetable.

All of this would have to be done in the face of an automatic hard exit at the end of that period unless all other members unanimously agree an extension. It may be that, on a political and practical level, ultimately the UK has no real choice other than to exit Euratom and Theresa May’s statements this week certainly point to this. However, put simply, accepting the view that a Euratom exit is automatic would convert the challenge of untangling Euratom within the two-year exit timetable from a shared problem faced by all Euratom members to a UK problem with a UK deadline. This is neither a necessary nor a strong position from which to open negotiations.  It is also not what the Euratom Treaty says.

There is no legal link between the triggering of Article 50 under the Treaty on European Union and an exit from Euratom.

The point turns on the meaning of Article 106a of the Euratom Treaty, which states that (amongst other things) Article 50 of the Treaty on European Union “shall apply to this Treaty”. Article 106a then goes on to explain how Article 50 is to work in context of Euratom – inserting references to Euratom and the Euratom Treaty in place of references to the EU and EU Treaties. Re-writing Article 50 in this way creates a similar but separate exit process.

If Euratom was to be included in a single Article 50 process then Article 106a of the Euratom Treaty would simply have added references to Euratom into Article 50, retaining references to the EU. It does not do this. Triggering exit from the EU therefore has no legal effect on the UK’s membership of Euratom.

There is no legal need for the UK to trigger a Euratom exit at the same time as leaving the EU, or at all.

Aside from the benefits of Euratom membership and the complexity of withdrawal, the objectives set out by the Prime Minister in relation to control of our own laws and control of immigration are of particular relevance to any decision on the need for, and timing of, a UK exit from Euratom.

Remaining within Euratom would of course preserve supremacy of European law over UK law, but only in a very specific field where UK law is ultimately driven by a raft of international treaties and standards and will inevitably remain so.

In the context of immigration, the Euratom Treaty establishes a specific nuclear common market.  The freedoms on which the nuclear common market are based are, however, very different from those underpinning the Single Market. Euratom members must not restrict the rights of nationals of any other member “to take skilled employment in the field of nuclear energy” (Euratom Treaty Article 96) or apply “restrictions based on nationality … to … persons … under the jurisdiction of a Member State, where they desire to participate in the construction of nuclear installations …” (Euratom Treaty Article 97). This is far removed from the free movement of persons without internal frontiers required by EU membership.

Given that there is no legal necessity to trigger a Euratom exit now, arguably there is little to gain and much to lose by doing so. That is not to say that long term UK participation in EU institutions solely for the purposes of Euratom would not itself present challenges, but there is no need for the UK to back itself into a corner and face a cliff edge created by an immediate two-year Euratom exit timetable. Neither is there any need to add nuclear law and cooperation to the already vast list of issue to be dealt with in negotiating terms for withdrawal from the EU.

Instead, any Euratom exit could form part of the “phased process of implementation” advocated by Theresa May for areas such as the future legal and regulatory framework for financial services. Crucially this would allow sufficient time for the UK to negotiate replacement nuclear cooperation agreements and address safeguarding and other requirements without the risk of a destabilising hiatus in international nuclear trade and cooperation.

Rupert Cowen

Rupert Cowen joined Prospect Law having been a partner at Hammonds and then Dentons’ London energy and infrastructure practice. He has worked in various countries on nuclear projects for the developer vendor and has drafted for and provided ongoing guidance to those creating or revising national legal regulatory frameworks. He is recognised as a leading expert in international nuclear law and regulation; he lectures on a frequent basis around the world and has published papers on various aspects of nuclear regulation, particularly nuclear waste strategies.

Jonathan Leech

Jonathan Leech was a partner in Dentons energy practice before joining Prospect Law’s Projects, Energy and Natural Resources team in September 2016. He is a solicitor specialising in project and infrastructure work, with particular emphasis on the energy, nuclear and utility sectors. His work includes advising on legal and contracting strategies and regulatory issues associated with major nuclear development, decommissioning, waste and reprocessing projects, energy infrastructure and other utility and infrastructure related projects.

This article was originally published in World Nuclear News on 20th January: http://www.world-nuclear-news.org/V-Brexit-and-Euratom-No-rush-to-exit-20011701.html

Prospect Law and Prospect Advisory provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.

This article is not intended to constitute legal advice and Prospect Law and Prospect Advisory accepts no responsibility for loss or damage incurred as a result of reliance on its content. Specific legal advice should be taken in relation to any issues or concerns of readers which are raised by this article.  

This article remains the copyright property of Prospect Law and Prospect Advisory and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

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HINKLEY POINT GO-AHEAD: HAS THE “GOLDEN ERA” IN UK/SINO RELATIONS BEEN MAINTAINED?

The UK government has given the go-ahead for construction of the nuclear power station at Hinkley Point.  Although there is to be no amendment to the commercial terms of the project, to be built by EDF with co-investment from the China National Nuclear Corporation (CNNC) and China Guangdong Nuclear Power (CGNP), there are to be “new rules governing foreign investment in critical infrastructure”.

In undertaking a review of the “public interest” test in the Enterprise Act 2002, determining when Government can intervene in significant deals, the impact of the nuclear programme is uncertain.

We are told that in future there will be:

  • …[a]…”legal framework for foreign investment in critical infrastructure”; and
  • “…additional security scrutiny to which the government plans to subject future nuclear projects…”.

The first of these, whereby the government will in future hold a golden share in all nuclear power projects, is unexceptional.  But of more concern, potentially to Beijing, is the as yet unclear nature of additional security scrutiny.

China agreed to invest £6bn into Hinkley Point so as to be able to build its own reactors in the UK as a shop window for its capabilities.  None of the major components in the Hinkley power plant, all of which have already been procured, will come from China. Should additional regulatory scrutiny restrict China’s other nuclear ambitions in the UK, notably a planned power plant at Bradwell, it could jeopardise the rationale for Chinese investment at Hinkley Point.  EDF has warned that, without Chinese money, it may not proceed with the Hinkley scheme.

Although the concerns of security chiefs and Nicholas Timothy, the prime minister’s adviser, have been addressed with a compromise that avoids an outright block, there is no clarity on the extent to which China is to be encouraged to play a strategic role as an investor in the UK nuclear programme.

Prospect Law and Prospect Advisory provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.

This article is not intended to constitute legal advice and Prospect Law and Prospect Advisory accepts no responsibility for loss or damage incurred as a result of reliance on its content. Specific legal advice should be taken in relation to any issues or concerns of readers which are raised by this article.   

This article remains the copyright property of Prospect Law and Prospect Advisory and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

For more information please contact Edward de la Billiere on 01332 818 785 or by email on: edlb@prospectlaw.co.uk.

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HINKLEY POINT C: DECISION DELAY

“At its meeting on 28 July 2016, EDF’s Board of Directors made the final investment decision and gave the President the authorisation to ensure its full execution in the framework of the signature process of all the contracts and agreements necessary to build the two nuclear reactors at Hinkley Point C (HPC) in Somerset, in south-west England.” So reads EDF Energy’s press release.

However, the decision has suffered a last minute hitch with Business Secretary Greg Clark now saying that the government will “consider carefully” before backing it, much to the consternation of EDF’s CEO and no doubt many others.

After months of delays, rumours and counter rumours, two senior executive resignations, and voicing of serious reservations by the French unions, the board of EDF has finally given approval to its two-thirds share of the £18bn construction cost of Hinkley Point C nuclear power plant.

This is certainly a major decision by the French utility giant. Not only is it investing in a country which has recently decided on Brexit from the European Union, but one-third of the finance is being stumped up by the Chinese. Much has also been made of the £92.50 per megawatt-hour “strike price” the UK government has guaranteed it will subsidise, with the National Audit Office saying that future top-up payments would rise from about £6bn to nearly £30bn over the 35-year length of the contract. This does not necessarily mean the consumer will pay more than it would have done – estimated at £10 per year – because of the way the plant is financed.

Hinkley Point C will comprise two European Pressurised (water) Reactors (EPRs) providing 3200 MW(e) or 7% of the UK’s electricity supply for 60 years. By comparison, its neighbours the Hinkley Point B twin Advanced Gas Cooled Reactor delivers 955 MW(e) but will close in 2023 after 47 years operation, and the first generation Hinkley Point A delivered ~470 MW(e) between 1965 and 2000. If successful, more EPRs will follow at Sizewell in Suffolk to add to the ones under construction in Finland, France and China. The ones currently under construction have faced various well publicised difficulties, but EDF and its Chinese partners clearly have the confidence that these will be overcome by the time Hinkley point C starts its 10-year construction period in 2019.

It is interesting to note that it is financial risk which is causing most detractors of the project their concerns, rather than nuclear risk; even Greenpeace’s executive director focused on the “terrible value for money”. This is despite the events at Fukushima-Daiichi and other countries moving away from nuclear such as Germany, Switzerland, Japan and, of course, Scotland.

So what benefits may the development of Hinkley Point C bring? A quick look at EDF Energy’s website and you will see a plethora of statistics: 25,000 employment opportunities over its 10-year construction, £100m per year into the regional economy at peak construction with £40m per year during its operation, and more than 60% of the construction value will go to UK suppliers.

Hinkley Point C will also contribute to the UK’s obligations to meet its emission reduction targets, along with solar and wind power, but, crucially, it will provide baseload power which some sources of power cannot.

Why is the UK government now apparently having second thoughts? No doubt there is more to this perhaps than meets the eye. There has been talk of security concerns this morning, centering on the involvement in the Hinkley Point C project of a major Chinese state owned enterprise. The Government is now saying that its final decision will be made in the “early autumn”. Heathrow’s third runway decision has also been deferred until around then. We will continue to monitor the situation.

Prospect Law and Prospect Advisory provide legal and business consultancy services for clients involved in the infrastructure, energy and financial sectors.

This article remains the copyright property of Prospect Law and Prospect Advisory and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

For more information please contact Edward de la Billiere on 07824 506 022 or by email on: edlb@prospectlaw.co.uk.

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THINKING OF GOING NUCLEAR? SMALL MODULAR REACTORS (SMRs) IN THE UK

In 2014, a National Nuclear Laboratory (NNL) led consortium published a feasibility study for the Department of Energy and Climate Change (DECC).

In summary, this considered whether the UK should develop its own SMR design, either alone or in partnership, or purchase an existing design. The report concluded that there is an opportunity for the UK to regain technology leadership in the ownership and development of low-carbon generation and secure energy supplies through investment in SMRs.

The Government announced in the Chancellor’s 2015 Autumn Statement that DECC will invest £250m in an “ambitious nuclear R&D programme designed to make the UK a global leader in innovative nuclear technologies”. In March of this year, it announced the first phase of a competition which would gauge market interest among SMR developers and potential investors, eventually leading to identifying the best value SMR design for the UK.

But why would the UK want to invest in SMR’s when there are plans for new reactors to be built at Hinkley Point in Somerset, Sizewell in Suffolk, Wylfa on Anglesey, Oldbury in Gloucestershire, Moorside in Cumbria and Bradwell in Essex?

These sites have not yet received their final investment decisions and not all have completed their regulatory review through the Generic Design Assessment process. The first of these new reactors is not due to be commissioned until 2025 and the Government aims to have 16 GW(e) installed capacity by 2030; SMR deployment could supplement this by a further 7 GW(e).

It is interesting to note that the Government welcomes the diverse approach of several different reactor designs for the large scale projects; however, with respect to SMRs it just wants to choose one. Thirty-eight companies submitted expressions of interest to the Government’s competition and it is reported 33 will go through to the next stage.

It should also be noted that no SMR has yet been licensed and built anywhere in the world, although several are under construction. So a key step in the UK case is that the chosen design will need to go through the GDA process, which to date takes about five years. This means construction of the first SMR could also be achieved by 2025 with commissioning by 2030.

Not only will this help with the UK’s low-carbon policy, but success in the UK will undoubtedly lead to it becoming an exporter of the technology and UK manufacturing getting a good slice of the anticipated £250-450 billion global market.

Prospect Law provides a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.

This article remains the copyright property of Prospect Law and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law.                                                                                                                                                                  

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THE IMPACT OF BREXIT ON THE UK NUCLEAR AND RENEWABLE ENERGY SECTORS

Brexit has become reality. No member of the EU has ever decided to leave, so the process of withdrawal is untested, although the vote for Brexit is only the start – not the end – of a process which may or may not, result in complete withdrawal. The position of the UK at the end of this process is as yet unclear.

It is important to understand that until the process of withdrawal is complete the UK continues to be a full member of the EU and remains subject to EU law.

The Main Question: Trading Relations and the Single Market
The main questions to be resolved between the UK and the EU will relate to trading relations. The extent to which applicable law will be capable of change depends on whether the UK wishes to enter the European Economic Area, with continuing reciprocal market access. This question was not a matter for the referendum and will be decided by Parliament following negotiations with the continuing states. The degree to which EU laws and regulations will need to be unpicked depends on those negotiations.

It is the trading relationship between member states and the UK as a non member state that will determine the extent to which the UK is required to maintain current EU legislation.

It is too early to have any view as to the likely relationship that the UK will have with the EU and, while it is possible to draw parallels between the EU’s current arrangements with states outside the EU, none of these can be said to offer a precedent. No indication has been forthcoming from the EU as to what terms may be on offer, and indeed there will, inevitably, be differing views between members states each of which hold a veto.

Fundamentally, if open access to the EU market is to be maintained through membership of the EEA / EFTA, the UK will have to agree to the free movement of goods, services and, in theory at least, labour – a compromise which, if carried through to reality, would seem to perpetuate the primary concerns of those who have recently voted to leave the EU.
Against this developing background we have sought to consider some of the issues likely to be relevant to those working in the nuclear and renewable energy sectors in the UK.

Nuclear Energy
The nuclear sector is most affected by safety and environmental law, which is governed by a number of layers. International treaties, conventions, EU directives, EU regulations, and laws established by the devolved administrations. Withdrawal from the EU will not mean automatic repeal of these various layers.

International treaties, such as the Paris and Brussels Conventions, and the domestic enabling legislation, the Nuclear Installations Act, are independent of EU legislation and will continue unchanged.

The Euratom treaty is also an independent legal treaty which, although entered into at the same time as the Treaty of Rome creating the EEC, remains independent from the subsequent Maastricht and Lisbon Treaties. The Euratom treaty is however, administered by the European Commission on which, following withdrawal, the UK will cease to have representation. The UK and the remainder of the EU will undoubtedly wish for the UK to remain subject to Euratom and therefore this is an area for future discussion.

EU directives are directly applicable in states and require domestic legislation to implement them, whereas EU regulations apply once in force. The domestic legislation implementing EU directives is made under specific legislation which can be repealed. There will have therefore, to be an evaluation exercise as to whether EU laws should be replaced by similar laws or repealed.

Renewable Energy
The UK commitment to the Kyoto protocol and the Climate Change Act 2008 is unlikely to be revoked and so, policies to encourage the generation of power through low carbon sources will continue.

It will be difficult for the UK to have substantially different policies to the remainder of Europe on global issues such as decarbonisation and cross border energy distribution if any trading relationship is to be maintained.

One area of concern is energy subsidy, where EU funding has provided an element of the financing for ROC and FIT. These will need to be covered by the UK government if continuity of projects currently under development is to be maintained.

Conclusion
At present, without further clarity being provided as to either the timetable for or the actual extent of the planned UK withdrawal from the EU, it is difficult to offer precision in relation to the effect of Brexit on these sectors. We are monitoring developments and will begin to prepare regular bulletins as to how clients should consider protecting themselves.

Introduction to Prospect Energy and Prospect Law
This article is not intended to constitute legal advice and Prospect Law and Prospect Energy accepts no responsibility for loss or damage incurred as a result of reliance on its content. Specific legal advice should be taken in relation to any issues or concerns of readers which are raised by this article.

Prospect Law and Prospect Energy provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.

This article remains the copyright property of Prospect Law and Prospect Energy and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Energy.

For more information please contact Edmund Robb on 01332 818 785 or by email on: er@prospectlaw.co.uk

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THINKING OF GOING NUCLEAR: SMALL MODULAR REACTORS (SMRs) EXPLORED

In this series of blogs, we look at a major decision a country would need to consider before pursuing the nuclear option for energy generation; the choice of reactor.

The alternatives are the so-called small modular reactors (SMRs), or the full scale offerings. With the latter, there is then the choice of vendors of which there appears to be no shortage, a subject we may cover at another stage. However, to date no newcomer country has opted for an SMR.

It is first of all worth explaining what an SMR is. “SMR” can stand for either “small modular reactor” or “small and medium sized reactor”. However, the “modular” acronym seems to have come into wider use these days, and will be used here.

An SMR is usually defined as an advanced reactor with 300 MW(e) to 500 MW(e) output, whereas the full scale modern varieties are around 1000 MW(e) to 2000 MW(e) output. By way of comparison, EDF Energy’s Sizewell B PWR and its Advanced Gas Cooled Reactors have ratings around 1200 MW(e), and the older Magnox were between 50 MW(e) and 490 MW(e) (these would never be described as SMRs as they were not “advanced” in their design).

SMRs can be deployed either singly or in multiples to build up to the required capacity. Deploying single units will be convenient for countries with dispersed centres of population but without any grid connection between them. Moreover, as well as power supply for homes and businesses, they can be utilised for heavy industry purposes including process heat and desalination. Being modular, new units can be added to a suite of existing ones when needed, or when further finance becomes available (which can be generated from the profits of the existing ones).

As with the larger reactors, there is a large range of designs of SMRs – up to 45 according to the IAEA. They fall into four broad categories: light water cooled reactors, high temperature gas cooled reactors, molten salt and liquid-metal (sodium or lead) cooled fast reactors.

Additional advantages of SMR’s include:

Ease of Construction: They can be factory built and transported on the back of a truck or railcar to site, thus assuring the construction programme and minimising the need for onsite activities. The Russians even have floating designs – not to be confused with nuclear propelled vessels which have been around for some time.

Affordability: Being smaller, they are more affordable and open up a number of financing models.

Safety: The advanced design means they have inherent and passive safety features which have fewer moving parts that can go wrong and a reliance on natural circulation of the coolant if something does.

It’s not just newcomer countries that are interested in SMRs. Those with existing nuclear programmes, such as the US and Russia, are also looking at their use, as is the UK. The total global market is estimated to be between £250 and £400 billion.

Prospect Law and Prospect Energy provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.

This article remains the copyright property of Prospect Law and Prospect Energy and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Energy.
For more information please contact us on 01332 818 785 or by email on: info@prospectlaw.co.uk

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HINKLEY POINT C: UK IN “NON-COMPLIANCE” WITH ESPOO CONVENTION

The UK has been found in “non-compliance” with its obligations under the Espoo Convention, a treaty that requires signatories to discuss major activities likely to have a cross-border environmental impact.

In February the Implementation Committee of the Convention of the Environmental Impact Assessment in a Transboundary Context investigated complaints from Belgium, Spain, the Netherlands and Norway, who alleged that an accident at Hinkley Point would have the potential to cause serious pollution across Europe, and that the UK had failed to properly consider the possible impact of such an incident.

The committee informed the Department of Communities and Local Government of their “profound suspicion” that the UK had fallen foul of the convention, which has been in force since 1997.

The UK has long argued that as the Hinkley Point C Project is unlikely to create a “significant transboundary environmental impact”, there is no need for discussions with European neighbours. However, the UN Economic and Social Council have now found the UK to be in “non-compliance” with Article 2, Paragraph 4 and Article 3, Paragraph 1.

The Council recommended that the UK:

  • Endorse the committee’s view that the UK is in “non-compliance” with the convention in relation to the planning of the Hinkley Point C project.
  • Engage in discussions with those parties likely to be affected by the Hinkley Point C NPP, including those “that cannot exclude a significant adverse transboundary impact from the activity at HPC”.
  • Report back to the Committee on the progress any such discussions.
  • Send notifications to all parties that could potentially be affected by an incident at any other Nuclear Power Plant they may plan, bearing in mind the worst possible scenario.

The planned total capacity of the Hinkley Point C Nuclear Power Plant is 3.2GW, enough to cover 7% of the UK’s electricity needs. However, EDF Energy, the French developer with responsibility for the project, recently announced that they are unlikely to make a final investment decision on whether to build the Nuclear Power station until September.

In light of this latest setback, whilst some do question the likelihood of Hinkley Point C ever materialising, it should not be forgotten that the Horizon Nuclear Power and the NuGen projects continue to proceed. Further, in addition to the Chinese funding of Hinkley Point C and Sizewell C, they have aspirations to build their own HPR1000 design at Bradwell – it will be interesting to see if this ambition will survive a negative EDF decision.

Report of the Implementation Committee of the Convention of the Environmental Impact Assessment in a Transboundary Context on its thirty–fifth session:

http://www.unece.org/fileadmin/DAM/env/documents/2016/EIA/IC/ece.mp.eia.ic.2016.2.advance_unedited_8Apr2016.pdf

Introduction to Prospect Energy and Prospect Law

This article is not intended to constitute legal advice and Prospect Law and Prospect Energy accepts no responsibility for loss or damage incurred as a result of reliance on its content. Specific legal advice should be taken in relation to any issues or concerns of readers which are raised by this article.           

Prospect Law and Prospect Energy provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.

This article remains the copyright property of Prospect Law and Prospect Energy and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Energy.

For more information please contact Edward de la Billiere on 01332 818 785 or by email on: edlb@prospectlaw.co.uk.      

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NUCLEAR INSTALLATIONS (LIABILITY FOR DAMAGE) ORDER 2016: IMPLICATIONS FOR THE UK’S NUCLEAR LIABILITIES REGIME

After some 12 years of discussion and development, the Nuclear Installations (Liability for Damage) Order 2016 was made on 4 May 2016.  The Order will change the UK’s nuclear liabilities regime, implementing the 2004 Protocols to the Paris and Brussels Conventions on nuclear liabilities.  Those Protocols were themselves a response to the 1986 Chernobyl disaster and a realisation that existing compensation provisions are inadequate.

In essence the Protocols and the Order will make more compensation available to a wider class for wider heads of loss.

  • More losses covered, including reinstatement of impaired environment, loss of income derived from the environment and cost of preventive measures.
  • More potential claimants, including those suffering damage in a non-convention state with no nuclear installations.
  • Increased liability caps, from the current cap of £140m up to €70m, €160m or €1200m, depending on the category of installation, and €80m for incidents in transit.
  • Inclusion of disposal sites.
  • Increased limitation periods, including 30 years for death and injury and 10 years for other claims.

The Order will come into force when the Protocols themselves come into force.  These have been subject to repeated delays due to the need to synchronise ratification by EU member states and to ensure that adequate insurance cover is available to meet the increased extent and duration of potential liabilities.

Prospect Law and Prospect Energy provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.       

This article is not intended to constitute legal advice and Prospect Law and Prospect Energy accepts no responsibility for loss or damage incurred as a result of reliance on its content. Specific legal advice should be taken in relation to any issues or concerns of readers which are raised by this article.

This article remains the copyright property of Prospect Law and Prospect Energy and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Energy.

Rupert Cowen has worked in various countries on nuclear projects and has drafted for and provided ongoing guidance to those creating or revising national legal regulatory frameworks. He is recognised as a leading expert in international nuclear law and regulation; he lectures on a frequent basis around the world and has published papers on various aspects of nuclear regulation, particularly nuclear waste strategies.

For more information please contact us on 01332 818 785 or by email on: info@prospectlaw.co.uk.

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