Allied investment: Britain blocks China from nuclear plant stake

London: Britain has drawn up laws that will effectively boot out the Chinese from its nuclear plants as it looks to Australian super funds to help support its path to achieving its net-zero climate goals.

The British government has been facing a sustained campaign by MPs who want it to stamp out Chinese involvement in critical infrastructure, following the years-long tussle that eventually resulted in the UK adopting Australia’s ban on Huawei.

A worker enters the intake tunnel on the construction site for the Hinkley Point C nuclear power station near Bridgwater, Britain. Credit:Bloomberg

Under the new model, Britain will seek a broad range of private investors from allied countries to invest. One of its key targets will be Australia’s super funds which are worth nearly $4 trillion and favour the long-term and low-risk investment options energy infrastructure projects provides.

It will also oblige consumers to pay a small amount, estimated to be a “few pounds per month” in their electricity bills to fund the plants’ construction.

This method, called the Regulated Asset Base (RAB) model was used to build Heathrow Airport’s newest terminal.

Currently, the scheme seeks major investors who take on more of the risk of building the new infrastructure but yield higher investor returns as a result. The government says the RAB method will also lead to longer-term savings for consumers of about £30 billion ($50 billion).

A Chinese state-owned company blacklisted in the United States, CGN, had applied to build Britain’s Sizewell Reactor with its French partner EDF. China would have held a 20 per cent stake.

While the legislation won’t block any single investor by changing the funding mechanism, it is believed that the demand from new investors will be more than strong enough to make up the stake CGN might have held.

US pollster Frank Luntz speaks to British cabinet minister Kwasi Kwarteng at the Conservative Party conference in Manchester.Credit:Latika Bourke

Business Secretary Kwasi Kwarteng who drew up the changes said they were about guaranteeing investment certainty.

“We urgently need a new approach to attract British funds and other private investors to back new large-scale nuclear power stations in the UK,” he said.

“Our new model is a win-win for nuclear in our country. Not only will we be able to encourage a greater diversity of private investment, but this will ultimately lower the cost of financing new nuclear power and reduce the costs to consumers and businesses,” he said.

But former Conservative Leader Iain Duncan Smith and one of the British co-founders of the Inter-Parliamentary Alliance on China (IPAC) told The Sydney Morning Herald and The Age that the result was a big win for those who had been demanding the government rid Britain’s critical infrastructure of Chinese involvement.

“IPAC has been campaigning on this and at last the government is beginning to listen, we’re winning the battle – this was one of our targets to get rid of Chinese investment, so I welcome this,” he said.

Around 16 per cent of Britain’s energy supply comes from nuclear. The same CGN-EDF consortium is building the first of the country’s new plants at Hinckley Point C.

The intake tunnel system on Hinkley Point C nuclear power station.Credit:Bloomberg

Nick Timothy, who served as chief of staff to then-prime minister Theresa May tried to halt that from going ahead in 2016 but was ultimately unsuccessful.

“This is undeniably unalloyed good news and marks an important step for keeping China out of our critical national infrastructure,” he told this masthead.

The Sizewell C media team released a statement which welcomed the new legislation before Parliament: “70 per cent of the construction value will go to British companies and the legislation means Sizewell C could be majority owned by British investors,” the statement said.

“Sizewell C will provide home-grown low carbon electricity to 6 million households and will help to reduce our reliance on energy imports. It will play a key role in helping the UK achieve net zero.”

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