Two fallacies around Hinkley Point
Fallacy one: Hinkley should be built to reduce carbon emissions
It appears that Hinkley Point is being built to make a contribution to the government’s carbon reduction programme. At face value, to build a power station that requires 2,500 miles of cables, 230,000 tonnes of steel and 5.6 million cubic metres of earth to be removed does not strike me as being very “environmentally friendly”. However, even if, on balance, nuclear were completely green, the government will be paying a high price to cut carbon emissions – a much higher price than almost any other way of reducing carbon emissions in common use.
This raises all sorts of questions about government intervention in the energy market. Surely, given the emissions trading scheme, it is better for energy companies and their consumers to find the best ways to reduce carbon emissions without government interference. Indeed, reduced government intervention in the energy market is essential to ensure that companies are comfortable making long-term investment plans without worrying that “regime change” will undermine the return on their investments. Indeed, there are many ways to reduce carbon emissions and not all of them relate to how we produce electricity (insulation, wearing warmer clothing, replacing high-carbon with low-carbon generation, driving the car less, replacing low-carbon with no-carbon generation, storage etc). Each one of these has different advantages and disadvantages (intermittent power generation, not being able to walk round in t-shirts when the temperature is -15 degrees, having to cycle or walk more, and so on). There is no single answer about the best way to reduce carbon emissions that suits 60 million people. If we wish to reduce emissions, we should allow power generating companies and households to get on with the job in their own way without government interference.
Fallacy two: Hinkley should be built to create jobs
Perhaps even more bizarrely, the government is arguing that Hinkley will “create jobs”. Jobs are not a benefit of Hinkley point, they are a cost. The reason why Hinkley will be so expensive is because the capital and labour used in its building and operation have alternative uses. To paraphrase Thomas Sowell, the first lesson of economics is scarcity; the first lesson of politics is to ignore the first lesson of economics.
Currently, around 75 per cent of the UK labour force is employed. Given the subsidies provided by the state for child care, the level of taxation and the government-induced high cost of housing more people might be employed than would be without state intervention – that is, there might be “over-employment” in the UK. However, even if there were cyclical or structural unemployment (which is hard to argue in the UK at the moment), building a highly capital-intensive nuclear power station in order to create 25,000 jobs would be a curious way to go about alleviating the problem. The government and commentators contend that these jobs are apparently “quality jobs”. Putting aside the implicit sneering at those in “low-quality” jobs occupied by people who provide us with essential services such as caring for the elderly, cleaning and serving in restaurants, given the widely reported skills shortages, the fact that these are “quality jobs” merely compounds the folly. In other words, well qualified people will be bid away from other valuable activities to build and operate a nuclear power station. If the power station were a massive competitor to McDonalds employing industrious but relatively low skilled (in the technical sense) people in more productive activities then it might be of benefit to those in the labour market who have struggled to see their earnings rise in the last few years. On the other hand, there are plenty of competing uses for engineers who (it is suggested) are in short supply.
Electricity firms should be allowed to build nuclear power plants. It is possible that some arrangement has to be made with the government to provide a predictable legal framework for dealing with accidents, disposal of waste etc – though it could equally be argued that our current tort and liability laws deal with this question. However, the government should not subsidise nuclear power plants to cut carbon emissions. Still less should it build them to create jobs. Hinkley will be an expensive way to cut emissions and the people it employs are a cost of the project and not a benefit – they could be doing more useful things.