++ Horizon partners pull out of Wylfa B ++

Instead of an expected announcement of what reactor type they planned to use at Wylfa B, Horizon's joint venture partners E.ON and RWE npower have this morning instead announced that they will NOT proceed with plans to build Wylfa B and will instead seek to sell Horizon as an ongoing concern to new investors. The press release from RWE describes the reason as follows:

• The global economic crisis has meant that capital for major projects is at a premium and nuclear power projects are particularly large scale, with very long lead times and payback periods; 

• The effect of the accelerated nuclear phase out in Germany, which has led to RWE adopting a number of measures, including divestments, a capital increase, efficiency enhancements and a leaner capital expenditure budget;

A combination of these strategic factors, together with the significant ongoing costs of running the Horizon joint venture, has led to a situation where capital investment plans have been reviewed.

Press releases here, here and here.

Rumours began to surface last July, following the Fukushima disaster and Kanzler Merkel's decision to close German nuclear plants, that E.ON and RWE npower would "struggle to convey to investors the billions of euros in investment that would be required for building new reactors in the U.K. at a time when cash flows and earnings are under increased pressure after Germany decided to exit all nuclear energy". More recently there had been further rumours that the two partners were looking for a third partner in order to spread risks. With hindsight it becomes clear why the reactor vendor announcement has been continually delayed for the past few months. 

The implications of this news is catastrophic for Ynys Môn as so many other developments are predicated on Wylfa B going ahead, the following being just two examples:

• Land & Lakes holiday resort development on the majority of the Anglesey Aluminium site has a business plan based on providing housing for Wylfa B construction workers
• Coleg Menai's Energy Centre built to train a new generation of nuclear workers

Will this be the end of Wylfa B? I don't believe so: the Department of Energy and Climate Change's own estimates show that of a total of around 75GW in UK generating capacity, 20GW will disappear by 2015 as various ageing nuclear and coal plants will need to be decommissioned over the next few years. And as they current peak demand is around 65GW and growing, that means that the UK could be facing energy blackouts within the next decade — as made clear by the adjacent graph from The Economist.

The reality is that the UK government needs Wylfa B more than Horizon needs to build it — which means that by hook or by crook Wylfa B will eventually have to be built.

The fact of the matter is that the decision to replace the UK's ageing nuclear reactors should have been made years ago, instead Labour spent its 13 years in power obsessing over renewable energy and introducing ever more stringent carbon targets, under Energy Secretary Ed Milliband, which have led to our countryside being covered with hundreds of useless windmills but with no replacement for lost baseload capacity. (Ironically, according to the RWE and E.On's press releases they plan to instead invest in more UK renewable projects, no doubt due to faster returns due to a crazy market deforming subsidies!) 

If you don't believe me that Labour didn't make the necessary decisions, then believe Unite regional secretary for Wales, Andy Richards, who told the Daily Post in January 2009:

"The origins of [Anglesey Aluminium's problems] pre-date the current economic crisis, which is why Unite has been calling for the Labour Government to make the important decisions on energy supply for years. The procrastination over Wylfa means we are now looking at a probable closure, which would be catastrophic for Anglesey and Wales."

It wasn't until the Coalition government came into power two years ago that plans to replace our ageing nuclear fleet were finally put in place. The delay by the previous Labour government has meant that the UK now needs to make the necessary immensely costly infrastructure investments both post-Fukushima and during Europe's lowest economic ebb since WW2. Which puts the recent furore about Pastys into perspective.

Anglesey Aluminium Statement Today (UPDATED)

The owners of Anglesey Aluminium will be making a statement at lunchtime today — probably to reveal to which company or companies they will sell their Penrhos site to. The 184 acre site was put up for sale back in November last year with an expected price tag of £10m. More later.

The beach at Penrhos Coastal Park

UPDATE: Anglesey Aluminium has announced it has signed an option agreement to sell agricultural land and a portion of the Penrhos Coastal Park to a company called Land & Lakes who plan to create a holiday leisure resort there, which could create up to 600 full time jobs (though its not clear how many of these will be construction jobs). Furthermore they promise to sorce 70 percent of their 'produce' from the local area. More information here.

As this announcement relates to agricultural land and parts of Penrhos Coastal Park, this means that the fate of the actual Penrhos site of Anglesey Aluminium is still to be announced.

A real legacy for Ynys Môn

A legacy to Ynys Môn? The Shell site in Rhosgoch. 

One of the more unpredictable side-effects of the heavy snow in December was that it forced a delay in the process of selling Anglesey Aluminium's Penrhos site. Whereas all bids were originally supposed to be in by January 10th, the snow made site visits by potential buyers impossible and consequently the deadline for bids was pushed back to last Friday. The Daily Post quotes a company source saying "the site had attracted strong interest from a range of industrial sectors" including "at least one wind turbine manufacturer and a smelting firm". My guess is that the wind turbine manufacturer involved is Windpower Wales.

There has been a suggestion trailed in the local press by the Labour party that Anglesey Aluminium shouldn't be selling the site but should instead donate it to the Island, similar to the way Shell donated its Rhosgoch tank farm site back in the 1970s. As this would effectively mean transferring the land to Anglesey County Council -- the same body which is currently riven once again by infighting and has failed over the decades to make any effective use of the Rhosgoch site whatsoever -- I would far prefer to see AAM sell the site on the open market to companies which can use it to bring work back to Holyhead as soon as possible.

In fact the prospectus of sale for the site contains some very unusual requirements for potential bidders which gives me great hope that it will not just be sold off to property developers for example. In addition to asking for audited accounts, bank details and so on, bidders are also required to provide the following information:

• Evidence of the company’s track record of purchasing, developing and managing large industrial complexes and sites, and the job creation/quality of jobs created that resulted from these projects.
• A maximum of three relevant examples of projects where you have worked in partnership with the public sector to deliver new employment and regeneration. Please confirm the company’s role and also provide details of the public sectors’ role in these projects including referees from whom we could take up references.

Doesn't sound like AAM is just planning to sell off the site to property developers, does it?

The best possible legacy which AAM could leave for Anglesey would be to ensure that the site is bought by companies which will use the Penrhos site and its infrastructure productively whilst also creating long term jobs. Lets hope that this happens.

From Aluminium to Data?

For Sale: the Anglesey Aluminium site in Penrhos,  Holyhead

If you have deep enough pockets, below you can find the sales prospectus for Anglesey Aluminum's Penrhos site near Holyhead. The total land comes to 33.5 Hectares (184 acres), with 114,781 sqm (1,235,500 sqft) of internal floorspace within the various buildings on the site. AAM will continue to operate a re-melt facility at the site on land rented back from the eventual purchaser. Furthermore, a portion of the land has been earmarked for a biomass plant pending planning permission. AAM have already commenced the decommissioning of the remainder of the site which will take up to 18 months to complete. According to the Daily Post, offers are expected in the region of £10m -- the equivalent of approx. £54K per acre.

Apparently the site has already attracted significant interest from energy and fabrication firms -- indeed, the sales prospectus confidently informs readers that "Expressions of Interest are to be submitted ... by 12.00 Noon on Monday 10th January 2011", in triplicate.

One of the most important aspects of the site's infrastructure is its direct 120MW connection to Wylfa nuclear power station. When operational, Anglesey Aluminium used to use up to 20% of the total electricity consumed daily in Wales. Accordingly possibly the most suitable use for the site would be for a business which requires both huge amounts of energy coupled with an uninterruptible connection to the grid. A regular commenter on this blog has suggested that a Data Centre could fit this bill.

The trend towards cloud computing means that Data Centres -- gigantic, secure facilities which house thousands of computer systems and servers -- are becoming more and more important. Indeed one such plant, the £200m Next Generation Data Centre, was recently completed with some WAG support on the site of an ex-LG factory in Newport, South Wales. As the AAM plant already enjoys a direct electricity supply from Wylfa, has potential access to the "fibrespeed" fibre-optic network already installed at the adjacent Parc Cybi, and access to sea water for cooling purposes, might a Data Centre not only be a suitable use for the site but also provide much needed skilled work in the region too?

Anglesey Aluminium For Sale

What has Ed Miliband ever done for Anglesey?

Ed and Albert pictured struggling in Energy Policy class

So Gordon Brown-loyalist Ed Miliband -- and the man backed by Anglesey MP Albert Owen (another Brown loyalist) -- has become Leader of the Labour Party. As the media begins asking what Ed's leadership could mean for the Labour Party and for the country at large, Its a good time for us to ask ourselves this question: what has Ed Miliband ever done for Ynys Môn?

The answer, despite having only been in Parliament for five years, is quite a lot -- but little of it positive.

Ed's only position of note within government during his short career was as Secretary of State for Energy and Climate Change, a position he was appointed to in October 2008. Just two weeks into that role he suddenly announced that the Government's then target of reducing greenhouse-gas emissions by 60 percent by 2050 was not ambitious enough and promptly upped it to 80 percent -- one of the highest such targets in the world. At the time this move was welcomed by climate scientists and various green pressure groups, and, who knows, over time it may be be proven to have been the correct decision -- but the fact is that it also had important knock-on effects for British industry which were not so widely trumpeted by the Labour Party. Emissions targets such as this, and the carbon-trading scheme implemented by the EU to help implement them, have effectively made it all but impossible for Europe-based primary metallurgical industries -- such as Anglesey Aluminium -- to remain competitive with similar companies operating in Russia, China, or India. A target of 80 percent reductions in emissions indicated that energy prices would almost certainly rise in the future -- not good news for an energy-hungry company such as Anglesey Aluminium which daily consumed 20 percent of the entire electricity supply in Wales. Ed Miliband had effectively put AAM on notice, and when just three months later the Nuclear Decommissioning Agency informed AAM that the cheap electricity deal on which it depended with the now publicly-owned Wylfa power station would have to be scrapped because of EU legislation preventing government subsidising private companies, there could be no other outcome but the closure of Anglesey Aluminium. Unsurprisingly Anglesey Aluminium was not the only such primary metallurgical company to be forced to close at the same time: the Corus Steelworks in Redcar also folded for almost exactly the same reasons.

One thing however we can half-thank Ed Miliband for is that in setting such an extraordinarily high emissions-cut target, he finally woke himself -- and the Labour party -- to the energy black hole the UK was sleepwalking towards. The fact is most nuclear plants and half of the UK's conventional coal plants are scheduled for closure over the next decade and the Labour Party, whilst in government, had completely taken their eye off the problem -- leading to even Ed Miliband's own department predicting possible energy blackouts by 2015. From this point of view it is illuminating to note that when Ed Miliband was appointed two years ago as the Secretary for State for Energy and Climate Change -- this was the first time in 13 years of Labour rule that there had actually been a full Minister in charge of energy policy. Before then the energy portfolio had been just one minor part of the sprawling Department for Trade and Industry's remit. Furthermore the average tenure of DTI Secretaries of State was just a year and a half meaning that there was little continuity or foresightedness at the top of the department.

No wonder therefore we are currently in the position we are now in Anglesey: hoping against hope for a massive £7 billion investment to build Wylfa B immediately following the largest recession since the 1930s, with a UK government facing the highest ever peacetime levels of public debt, and seemingly entirely at the mercy of internal German politics (see here). Had Labour taken action much earlier during the boom years Wylfa B could have already been in place and the Island's largest private-sector employer, Anglesey Aluminium, may well still have been operating. So, thanks for nothing, Ed.

UPDATE: Just in case you were wondering, this is how Labour Party members in Ynys Môn voted in the leadership contest:

click to enlarge

Good to see such overwhelming support for Ed Miliband despite his sterling work in contributing to making Anglesey's largest private-sector employer unviable.

Albert Owen distorts reality over Anglesey Aluminium closure again

Yesterday it was announced that Anglesey Aluminium will officially commence decommissioning the holyhead plant meaning that aluminium smelting will never again return to Anglesey. In response to this bad news, Albert Owen MP has popped up to once again to apportion blame for the plant's closure on anyone other than his own Labour government. Previously Albert has blamed "Conservative hypocrisy" for its closure, this time he lays the blame squarely on Anglesey Aluminium itself, saying "If the company was serious about continuing to smelter it would have taken up the generous government offer in 2009 to help bridge the gap over a difficult economic period".

Just as Albert never tires in peddling these blame-avoiding half truths, the Druid never tires in setting the record straight here. 

The UK's declining energy capacity
compared to rising peak demand levels
(Source: The Economist)

Anglesey Aluminium was forced to close because it used to consume daily 12% of Wales' total electricity and therefore depended on a cut-price electricity deal with the nearby Wylfa nuclear power station. Now, It was clear for years that the Wylfa reactor - which has been producing electricity since 1971 - would need to be decommissioned around this time, and when that happened the economic viability of Anglesey Aluminium would be severely compromised unless a new reactor was already in place at Wylfa. Unfortunately, as we all know, the previous Labour government's obsession with 'renewable energy' and expanding the proliferation of windmills across the country led it to take its eye of the ball of preserving our essential power supplies. The fact is that most nuclear plants (including the current Wylfa reactor) and half of UK's coal plants are due to close over the coming decade and the Labour government had no concrete plan on how to replace them. The Department of Energy and Climate Change itself estimated last year that, of a total of around 75GW in generating capacity, 20GW will disappear by 2015. And as the current peak demand is around 65GW and growing, that means that the UK could be facing energy blackouts by as soon as 2015.

Anyway, as the current Wylfa reactor inevitably neared the end of its working life, it was acquired by the Government's Nuclear Decommissioning Authority (NDA) to be decommissioned. Now essentially government owned, the NDA's lawyers had to inform Anglesey Aluminium that Wylfa would no longer be able to supply it with the cut-price electricity on which it depended as that would constitute 'state aid' under EU law. Indeed, this was made clear by the NDA in January 2009 when its spokesman said this:

"There’s been no breakdown in the relationship between ourselves and Anglesey Aluminium but we have explained to them the situation. We cannot extend the current contract with them due to new European legislation on providing subsidies to private companies.”

Furthermore, Anglesey Aluminium was anyway sensing difficulties ahead due to the then Labour government's pledge to reduce UK carbon emissions by a staggering 80% by 2050 (incidentally this pledge was made by Ed Milliband - the very man Albert Owen is now backing to become Labour leader). To meet these goals, the EU has introduced a carbon trading scheme - an administrative approach to control pollution (in the shape of 'carbon') by providing economic benefits to companies for achieving reductions in the emissions of carbon. During a debate about the closure of Anglesey Aluminium in the Houses of Parliament, Robert Goodwill MP, the then shadow transport secretary, had this to say about the EU scheme:

"is not the fundamental problem the operation of the European Union emissions trading system, which is making it increasingly difficult for primary metallurgical industries to operate in the EU? It would be all well and good if it resulted in the reduction of global CO2, but it merely results in carbon leakage to other economies such as China and India, which are not constrained in the same way."

Exactly right, and precisely what happened in the case of Anglesey Aluminium - many of whose managers were headhunted to work at Dubai's new state-of-the-art aluminium smelter, operating safely outside the EU's emissions trading system. The simple fact is that charging for carbon adds yet another layer of anti-competitiveness for already struggling heavy industries operating within the UK or Europe.

Due to this 'double whammy' affecting its future viability, is it any surprise that Anglesey Aluminium -without a secure supply of cheap energy - decided to turn down a pre-election bribe of £48m from a panicking Labour government eagerly trying to paper over the cracks of its incompetence and lack of foresight in the field of Energy Policy? 

Bonus Extra: If you need any more persuasion then please read this blogpost where I explain how both the Corus Steelworks in Teeside and Anglesey Aluminium died of the same causes.

Albert Owen: 'Conservative hypocrisy' behind closure of Anglesey Aluminium

  

Regular readers will know that the Druid has often discussed at length the reasons behind the closure of the Island's largest private employer, Anglesey Aluminium (here and here, for example). Ynys Môn's Labour MP, Albert Owen, however has his own theory which he disclosed in a recent interview:

"We [the Labour government] came up with a package to save them, worth £48 million, but they turned it down," he shrugs. "It's Conservative hypocrisy - they don't believe in subsiding business."

I don't want to write a repeat of yesterday's post, but what exactly did 'Conservative hypocrisy' have to do with the closure of Anglesey Aluminium? Perhaps Albert Owen hasn't noticed that his Labour party has been in power for the past 13 years and, as far as I am aware, was certainly still in power in September last year when the plant closed its doors.

For the benefit of Albert Owen: the organisation which doesn't believe in subsidising business is actually the European Union, which bars European governments from creating unfair competition by injecting public funds into private industry. Accordingly, when the Nuclear Power station at Wylfa was acquired by the Government's Nuclear Decommissioning Authority (NDA), the NDA's lawyers had to inform Anglesey Aluminium that they would no longer be able to supply it with the cut-price electricity on which it depended as that would constitute 'state aid' under EU law. Indeed, this was made clear by the NDA in January 2009 when its spokesman said this:

"There’s been no breakdown in the relationship between ourselves and Anglesey Aluminium but we have explained to them the situation. We cannot extend the current contract with them due to new European legislation on providing subsidies to private companies.”

So, Albert, please do explain how 'Conservative hypocrisy' or their stance on subsidising businesses in anyway contributed to the closure of Anglesey Aluminium - with, let me add, a loss of at least 450 well paid direct jobs and an estimated 240 others through indirect and induced effects. 

In order to further underline his complete abdication of responsibility, Albert Owen concludes his interview with these words on the closure:

"I don't think I'm going to take as big a hit on that as my opponents think."

Is this serial fantasist, clearly more concerned with his own political survival than the welfare of his constituents, really the MP that Ynys Môn deserves?

    

The Druid gets a bad review & my reply

     

The Druid returned home to Môn from his travels last night to find this comment:

Ouch! Dishonest and insincere, am I? Permit me to reply:

My dearest La Pasionara, its strange that you would think that "fighting for Ynys Môn" should mean bashing the Conservatives or Peter Rogers. As you may have noticed Anglesey hasn't been represented by a Conservative MP since 1987 -- 23 years ago -- nor has there been a Conservative administration in the UK since 1997 -- 13 years ago. What I'm concerned with is the CURRENT state of Anglesey and those who bear political responsibility for it NOW. And, La Pasionara, like it or not, the facts are:

• Ynys Môn has now been represented by Plaid Cymru's Ieuan Wyn Jones as either MP or AM for the past 23 years
• The UK has had a Labour government in Westminster since 1997 and Ynys Môn has had a Labour MP in the shape of Albert Owen since 2001
• The Welsh Assembly has been governed by Labour since 1999 until the emergence of a Labour/Plaid Cymru coalition in 2007

Therefore, La Pasionara, the truth is that Ynys Môn has been administered at some level by Labour and Plaid Cymru for almost quarter a century, yet you think that as an Anglesey resident I should somehow be directing my ire on the Conservatives or Peter Rogers for the Island's woes?

Speaking of which, lets remind ourselves of what exactly the Island's woes are:

• Anglesey is the poorest county in the UK with a GDP per head of only half of the UK average according to the Office of National Statistics;
• Anglesey has the lowest GVA per head in the UK at just 53% of the UK’s average; 
• Anglesey is poorer than some of the poorest parts of Poland according to a recent OECD report;
• Data for full-time employees show that average earnings in Anglesey were approximately £396 per week in 2007, compared with £415 per week in Wales and £456 per week in the UK. It should also be pointed out that gross average earnings were distorted by wages paid to employees at Wylfa and Anglesey Aluminium, which are substantially higher than other wages in the area. 
• But we don't have to worry about Anglesey Aluminium distorting average earnings on the Island anymore because it has been forced to close wiping out at least 450 jobs directly and an estimated further 240 jobs through indirect and induced effects;
• In addition Anglesey has also lost Octel in Amlwch, Eaton Electric in Holyhead, Peboc in Llangefni and Welsh Country Foods has restructured in Llangefni and Gaerwen losing thousands of more jobs;
• A rising unemployment rate currently standing at 5.8% and economic inactivity rate of 25.1% - even before most of the above companies closed; 
• Remarkably farming in North Wales has fared even worse than the economy. During the period 1997 to 2007, the economic contribution of agriculture to the North Wales and Anglesey economy fell by a staggering 67% compared to an overall UK decline of just 7%;
• On top of all this, Anglesey County Council is poorly managed, riven with infighting, and planning on raising Council Tax by 15% over three years - though with almost everyone apart from Council workers out of a job, the Druid wonders who is going to pay it.

So lets be clear: its not just that the situation on Anglesey is just a little rubbish - the situation on Anglesey is arguably the WORST in Wales and in the UK as a whole. Thats what drives the Druid.

Yet despite the situation being as bad as it is, both Labour and Plaid Cymru - responsible for Anglesey for most of the last quarter of a Century - refuse to accept any portion of the blame. Indeed as recently as just two weeks ago on the Politics Show special edition on Anglesey, when asked whether Labour was responsible for any of the problems on Anglesey, Albert Owen replied:

"No, I came into politics in the 80s when it was a damn sight worse than it is now, we have to be honest about that. There was mass unemployment and mass depopulation in the 80s and 90s. Its certainly a lot better now."

Got that? Nothing to do with Labour at all - and anyway things were much worse under those nasty Tories 30 years ago... Unbelievable. As I've pointed out before, the 80s were rough but all of the companies which have closed in the last couple of years managed to survive the 80s, and are only closing now. That must tell us something about the current business environment and the policies which have been implemented from Westminster and Cardiff for the past 13 years. Plus when you are now officially the poorest place in the UK things by definition can't have been any worse - or at least have not improved.

So, La Pasionara, if you would like to explain to me why I should attack the Conservatives and Peter Rogers more than Labour and Plaid Cymru for the current problems in Anglesey I'm happy to listen to your arguments. Otherwise, change your ID as frankly you're giving Dolores Ibárruri a bad name.
    

Anglesey Aluminium and Corus both died of the same causes

   

Anglesey Aluminium and Corus - both died of the same causes

As I wrote about one BBC programme yesterday, I thought I may as well write about another one today: 'QuestionTime' from last Thursday (19th February, 2010).

Many of you may have watched it, in which case you'll know it was broadcast from Teeside and the closure of the Corus steelworks with the loss of 1600 jobs was the dominant topic. During the programme the panel discussed that the cause of the plant's closure was reduced demand due to the global recession. There probably is a lack of demand but if the fundamentals of a business are sound a temporary lack of demand can be ridden out until the economy improves again. Clearly there must be other reasons for the plant's closure - and that is why a blog about Anglesey is writing about the closure of a steelworks hundreds of miles away in Redcar. The fact is that the real reasons behind the closure of the Corus plant are almost identical to those behind the closure of Anglesey Aluminium and its worth examining them in detail as it shows that Anglesey Aluminium's closure was not an isolated incident but is the direct result of policy failure by our current government.

1. Energy Policy Failure

As previously discussed here, when Anglesey Aluminium was operating it used to consume daily 12% of Wales' total electricity and depended on a cut-price electricity deal with the nearby Wylfa nuclear powerstation. With Wylfa approaching its official decommissioning date that cheap electricity deal came to an end on 30th September, 2009, and the closure of Anglesey Aluminium came very shortly afterwards. Anglesey Aluminium's own management said at the time that it had "worked intensively with the UK Government and others" to find an alternative power supply, "but had been unable to do so". Similarly, the Corus steelworks was also one of the UK's largest electricity customers with an annual bill in excess of £80 million and was also suffering from lack of cheap electricity. Here is Labour MP, Denis MacShane in the Commons last year:

"Corus Engineering Steel has been crippled by high electricity prices compared to the EU average".

He goes on to blame EDF Energy for this, but the real reason is that electricity prices are being pushed up because demand is rising whilst supply is dwindling, as evidenced by the below graphic from The Economist.

The fact is that most nuclear plants (including the current Wylfa reactor) and half of UK's coal plants are due to close over the coming decade and as of yet there is still no concrete plan on how to replace them. The Department of Energy and Climate Change itself estimates that, of a total of around 75GW in generating capacity, 20GW will disappear by 2015. And as the current peak demand is around 65GW and growing, that means that the UK could be facing energy blackouts by as soon as 2015.

And this surely is the crux of the matter: this government has for too long prevaricated about rebuilding a series of power stations which are essential for both the UK's industry base and home-life. In other words it has failed to deal with one of the most fundamental requirements of a modern society: a secure and efficient energy supply. And the knock-on effects of this is not only more expensive energy for consumers but also the loss of huge amounts of jobs in energy-hungry heavy industries which depend on competitively-priced electricity in order to be competitive themselves on the world markets. Furthermore the likelihood is that Anglesey Aluminium and Corus, being amongst the largest electricity users, are probably just the first companies to be forced to close because of Labour's lack of a coherent energy policy.

2. Climate Change and Carbon Trading

On top of the energy problems above, the second issue we need to explore are the side-effects of the government's slavish adherence to the theory of man-made global warming. As many of you will know, in the name of fighting climate change the current government has pledged to reduce UK carbon emissions by a staggering 80% by 2050. To meet these goals, the EU has introduced a carbon trading scheme - an administrative approach to control pollution (in the shape of 'carbon') by providing economic benefits to companies for achieving reductions in the emissions of carbon. During a debate about the closure of Anglesey Aluminium in the Houses of Parliament, Robert Goodwill MP, the shadow transport secretary, had this to say about the EU scheme:

"is not the fundamental problem the operation of the European Union emissions trading system, which is making it increasingly difficult for primary metallurgical industries to operate in the EU? It would be all well and good if it resulted in the reduction of global CO2, but it merely results in carbon leakage to other economies such as China and India, which are not constrained in the same way."

Exactly right, and precisely what happened in the case of Anglesey Aluminium - many of whose ex-workers were headhunted to work at Dubai's new state-of-the-art aluminium smelter, operating safely outside the EU's emissions trading system. The simple fact is that charging for carbon adds yet another layer of anti-competitiveness for already struggling heavy industries operating within the UK or Europe.

Even more perversely such schemes can actually make the closing of heavy industrial businesses, like Corus, more profitable than keeping them open. As Dominic Lawson wrote in January:

"The owners of the Corus steel company stand to gain up to $375m (£234m) in European Union carbon credits for closing their plant in Redcar, only to be rewarded on a similar scale by the United Nations’ Clean Development Mechanism fund for switching such production to a new “clean” Indian steel plant."

The simple fact is that the government's pledge to dramatically cut emissions by 80% is in effect a manifesto to subsidise the closure of large swathes of the UK's industrial base and transfer those jobs to developing countries. If you believe in man-made climate change then perhaps you believe that such drastic actions are necessary - but it should be made absolutely clear to the electorate by whichever government is in charge that following such policies will result in dramatic job losses as heavy industries in this country become less competitive. And right now it is not clear whether all the jobs being lost in Anglesey Aluminium and Corus can be replaced by the promised 'green jobs' of the future.

There are other reasons behind the closure of Anglesey Aluminium and Corus such as high regulatory costs, high rates of corporation tax, and the recession forcing steel or aluminium using industries outside of the UK or Europe thus forcing up transportation costs. But the Druid believes that the above two issues are demonstrably the two major factors - and neither are to do with the global recession/reduced demand etc but are the direct result of political incompetence.
  

Hain: People of Anglesey rejoice - the good times are back! (updated)

Politicians are never slow in claiming credit for good ideas. For example the Druid hears that certain Anglesey County Councillors are privately displeased with Albert Owen's hijacking and use of their 'Energy Island' concept to promote himself - despite having had no hand in its creation.

Today's Daily Post brings another such example. Ahead of Peter Hain's visit to Anglesey today, he has briefed the paper that an unnamed company is very interested in converting the Anglesey Aluminium premises into a wind turbine factory in order to produce the thousands of units required by the huge offshore wind farms the government wants to build. Apparently the deep port at Anglesey Aluminium could be ideal for such a plant to allow easy transportation of the turbines out to sea where they would be used.

According to Hain:

“There is a very good prospect of hundreds of jobs being created.

“Anglesey Aluminium’s closure has been a body blow to the local economy but we have been working to get new, high quality jobs to the area.

“They are eligible for some government assistance and convergence funding. It is a very serious and viable project and I think it could be the beginning of good times, especially with the likelihood of a Wylfa B.”

"The beginning of the good times"? What does that say about how good for Anglesey the previous 13 years of Labour rule have been?

Of course this could be fantastic news for Anglesey which is still reeling from approx. 3,000 job losses over a relatively short period of time. However the Druid thought it was strange that the company in question could not be named apparently because "talks are commercially sensitive". Really? More likely because the company in question doesn't want to be used as an electoral political football by opportunistic politicians thought the Druid. And sure enough a few hours later the BBC's Betsan Powys popped up to blog that she had met with the individual behind the plan and confirmed that he thought it had become "political fodder" and that Hain is basically indeed taking credit for a great deal of work done by him and others. Surprise surprise.

Considering how during one of the worst recessions since the 1920s the Welsh Assembly Government has managed to spend less than a quarter of its business support budget six months into the financial year, politicians would be better off doing more and spinning less.

UPDATE: When the Druid wrote the above he had only read the online version of the Daily Post story. Now he has seen the actual paper version and it is even more sickening:

"My" wind power plan? "Hain bid" to turn ex-smelter in to turbine factory? Anybody would think that Peter Hain actually had something to do with the plan, rather than just grabbing credit for the hard work of others. Well done to Betsan Powys for revealing the real story - and shame on The Daily Post for being so craven.

UPDATE 2: The following comment by 'forlonehope' on Betsan's blog is worth reproducing in full here:

To build the towers you need large scale steel fabrication, a bit like a shipyard. To build the blades you need large scale composite fabrication, a bit like an aircraft factory. To build the generator you need gearbox and heavy electrical engineering works. To cast the hub you need a precision iron foundry. None of that looks like a redundant aluminium smelter or, for that matter, the kind of skills required to operate it. What it does look like is another bit of electioneering. It's particularly cruel as it will build up hopes only to dash them.

Albert Owen asked to repay £983.57 in expenses

    
From the BBC website:

Albert Owen (Ynys Mon), Labour: Overpaid £400 for food and £583.57 on mortgage payments.

Mr Owen said the review team had issues relating to mortgage interest in 2004 and 2008.

He said: "I complied with the request for full information and it demonstrated an under payment in 2004-05 and an over payment in 2008-09. Had this information been available to me at the time I would have supplied it and altered my claims accordingly.

"I have also paid back for subsistence/food which was claimed under the wrong heading of food instead of 'other items'. This followed advice I was given at the time. While I accept the decision I was disappointed that the review team was arbitrary and only concentrated on the over-claim, despite an under-claim of a similar amount in 2004-05. I did not appeal against the recommendation as I have supported the new rules including independent external audits."

Total £983.57 - paid.

The Druid has looked at Albert Owen's expenses previously here.


UPDATE: The room bookings on the Palace Estate files have also now been published online so we can see who MPs have been inviting to official functions in the Houses of Commons. Here's the data for Albert Owen:

• November 2004: A dinner for 38 people in Dining Room A on behalf of "The Industrial Pioneer" - a trades union periodical
• April 2008: A dinner for 13 people in Dining Room D for Anglesey Aluminium*
• March 2009: A breakfast for 16 people in the Astor Suite for the Aluminium Federation*

* It should be noted to Albert Owen's credit that he is the Chair of the all-party group on the Aluminium industry - not that it was enough to save the job losses at Anglesey Aluminium.
  

Wylfa: to B, or not to B?

    

Albert Owen MP pops up in the Letters Page of the Holyhead and Anglesey Mail this week to sling mud at the newly appointed Tory candidate, Anthony Ridge-Newman, and the Conservative Party's position on Wylfa B.

Albert thunders, "David Cameron’s closest energy advisor Zac Goldsmith clearly states that if the party sticks to its existing policy it would never allow the building of a new nuclear power station. Well that rules out Wylfa B under the Tories."

If Wylfa B is given the go-ahead it could provide up to 9,000 construction jobs and a further 1,000 to 1,200 highly-skilled, permanent and well paid nuclear jobs. Accordingly, on an island struggling with vast job losses, Wylfa B offers a path to some kind economic salvation - and the quarrel over whether the project will proceed or not will undoubtedly be the defining issue of the 2010 General Election on Anglesey. Albert Owen's letter to the Mail effectively signals the start of the general election campaign on Ynys Mon.

As this is such an important issue for Anglesey the Druid thinks Albert's letter represents the perfect opportunity to examine his claims and to compare and contrast where all the major parties stand on the issue of nuclear power and the building of Wylfa B.

Labour

Let's start with Labour itself. In his letter to the Mail, Albert Owen lauds the Labour party's "political leadership and vision on energy projects including Wylfa". 

Yet with most nuclear plants (including the current Wylfa reactor) and half of UK's coal plants due to close over the coming decade, the Department of Energy and Climate Change itself estimates that, of a total of around 75GW in generating capacity, 20GW will disappear by 2015. And as the current peak demand is around 65GW and growing, that means that the UK could be facing energy blackouts by as soon as 2015 - as shown in the excellent graphic below from the Economist:

But surely we can either extend the life of some of the existing reactors or quickly build some new ones to avoid blackouts, right? 

Wrong. Most nuclear plants are over 25 years old and far too ancient to carry on. Wylfa was granted a nine month life extension but after that point it simply will have to close. And, on top of that, even the most optimistic nuclear engineers don't beleive a new nuclear reactor could come online before 2017 - which will already be too late. Plus lets not forget that EU carbon trading regulations will pretty much prevent the building of any new coal-fired coal plants.

Suddenly Albert Owen's lauding of Labour's "vision" and "leadership" on Energy Policy looks very hollow indeed - if not downright deceitful.

As the Druid noted previously when writing about Anglesey Aluminium, the current government has failed to deal with one of the most fundamental requirements of a modern society - a secure and efficient electricity supply:

While it has been pratting around with its obsession with "renewable energy" ... pushing the proliferation of useless windmills across the land, it has taken its eye off the ball and let vitally needed supplies run down. This is nothing short of criminal negligence that will cost our economy – and us – dear.

Well, they may have screwed that all up, but at least the Labour leadership is 100% behind Wylfa B, right?

Wrong again. Jane Davidson, the Labour Assembly Member and Welsh Environment Minster has demanded a public inquiry "on the grounds of concern over the safety and security of the management of future nuclear waste". We are still waiting to hear whether Westminster will accede to her request or not.

Albert Owen is obviously keen to throw as much mud as possible at the Tories in order to divert Anglesey's electors away from his own Party's dismal record on Energy Policy and the mixed messages coming from the Labour top brass about the desirability of Wylfa B.

Conservatives

As noted above, Albert Owen slams Anthony Ridge-Newman's support for Wylfa B by saying "David Cameron’s closest energy advisor Zac Goldsmith clearly states that if the party sticks to its existing policy it would never allow the building of a new nuclear power station".  Its certainly true that Goldsmith said that - but what exactly is the Conservatives' 'existing policy'? Well, the Conservative Party website clarifies the issue like this:

Nuclear power will be part of the energy mix if it is economically viable, but new nuclear power stations should not leave taxpayers with liabilities for their running, decommissioning or waste. Nuclear is not an alternative to developing and expanding renewable forms of energy.

In other words: a Conservative government will only allow new nuclear reactors to be built as long as they do not require any public subsidy during any stage of their life. On Goldsmith's own blog he expands:

There should be zero subsidies (direct or indirect) for nuclear, and nuclear providers must demonstrate an ability to cover future costs of waste disposal and decommissioning. My view – shared by almost all the energy experts I’ve consulted - is that there can be no new nuclear power without government support. There never has been ... Subsidies should be for start up, immature technologies.

So its clear that the Conservatives do not oppose nuclear power per se, they oppose the need for public money to support what should be private enterprise. 


But hold on a moment - as recently as last week Philip Hunt, the Labour minister of state at the Department of Energy and Cimate Change, said that Labour's policy was:

"absolutely clear" that the cost of new nuclear power plants must be met in full by the commercial companies themselves, including the cost of decommissioning and waste management.

Which appears to be exactly identical to the Conservatives' position. So Albert Owen is effectively attacking the Conservative Party for having exactly the same policy as his own Party! What a twpsyn!


Anyway, we can conclude that the construction of Wylfa B will be supported by either a Labour OR Conservative government as long as the E.ON and RWE Npower joint venture (which has bought the land around the exisiting Wylfa reactor to develop Wylfa B) does not require any public subsidy.

Plaid Cymru

Plaid Cymru has a long tradition of opposition to nuclear power, as the following clips from various manifestos reveal:

• 1997 General Election Manifesto: "Nuclear energy is now a broken dream. The only safe way forward is to reduce the demand for energy and develop the use of renewables." 
• 1999 Assembly Election Manifesto: "We will operate on the basis of a presumption against further open cast mining and nuclear power stations."
• 2001 General Election Manifesto: "As our dependence on fossil fuels must be reduced and since nuclear energy is not an acceptable option, we shall press for very substantial growth in renewable energy."
• 2003 Assembly Election Manifesto: "We will call for the devolution of responsibility for large-scale energy projects to the Assembly. This will enable us to block any new nuclear energy stations."
• 2005 General Election Manifesto: "Plaid Cymru the Party of Wales does not support new nuclear power stations."
• 2007 Pre-manifesto, Change for the Better: "Plaid Cymru does not support nuclear power."

And here's the relevant snippet from their most recent Manifesto for the 2009 Euro Elections:

So underlined in big bold black letters they "reaffirm our total opposition to the construction of any new nuclear power stations in Wales". Notice the weasel word "new" however - which allows Ieuan Wyn Jones, Plaid Leader and AM for Anglesey, to simultaneously stand for both "no nuclear power" and for "nuclear power in Anglesey as it is not a new power station". 


Like the White Queen in Lewis Carroll's "Through The Looking Glass", Ieuan Wyn Jones has an uncanny ability to believe in as many as two impossible things before breakfast. No wonder he's into Unicorns too.

Lib Dems

Opposed. Nothing more to add.


Conclusions


Nuclear energy is an emotive subject and, as we have seen above, leads politicians to tie themselves up in knots so as to be on both sides of the argument at the same time (*cough* Ieuan Wyn Jones *cough*). However as the construction of new Nuclear Reactors is not a devolved matter, we can discount Plaid's wriggly, slippery behaviour. Likewise we can ignore the Lib Dems total opposition as they have no chance of forming the next Administration. That leaves us with Labour and the Conservatives.


As the Druid's investigations prove above, Albert Owen's letter to the Mail is misleading in many ways - the most outrageous being his attacking the Conservatives for having exactly the same nuclear policy as his own Labour party! However, that said, it would appear that neither the Labour Party (excepting Jane Davidson AM) nor the Conservative Party would oppose the construction of Wylfa B as long as E.ON and RWE Npower joint venture does not requite public subsidy.

What were the real reasons behind the closure of Anglesey Aluminium?

Excuse my tardiness in posting on this topic - but please remember that the Druid has been dead for most of the past 2000 years so better late than never!

There has been of late much gnashing of teeth from Anglesey's Labour MP, Albert Owen, over the recent closure of Anglesey Aluminium with the loss of over 400 jobs. Here he is in the House last week carefully covering his back hailing the Government's failed intervention:

"The decision by Rio Tinto Alcan to cease production at Anglesey Aluminium has left a massive hole in the regional economy of north-west Wales, but I put on the record my thanks to the Wales Office and, indeed, to the Government for their efforts with their generous offer and intervention to keep production going. Unfortunately, the company's internal matters took precedent."

Albert Owen is right to be despondent. The jobs which have been lost at Anglesey Aluminium were of the highly-skilled and high-value-added variety - in other words ones which Anglesey can most ill afford to lose. 

In fact so highly skilled are the AA ex-workers that they are now being headhunted by Dubai's new state-of-the-art Aluminium smelter 4000 miles away. So we can be sure these jobs will never return to Anglesey.

So how did the Island lose its jewel in the crown? The apparent reason was the demise on September 30th, 2009, of the cut price electricity deal which the company enjoyed with the nearby Wylfa nuclear power station. Aluminium smelting is a vastly power hungry process and AA used 12% of the Wales' electricity supply daily - making it the largest single user of electricity in the whole of the United Kingdom. AA was able to access cheap electricity as it provided a permanent base load for Wylfa and thus saved the National Grid the cost of keeping a power station on standby. A win-win situation one would have thought.

Electricity Supply planning failure

So why and how did it go so wrong?  The Welsh Office did offer AA a grant of £48 million to stay open after all - was that not evidence of the Government's best of intentions? One not so charitable to the Government as Albert Owen - the Druid for instance - might ask why was not more done earlier? The Nuclear Decommissioning Authority (NDA), which owns the Wylfa power station, said "There's been no breakdown in the relationship between ourselves and Anglesey Aluminium but we have explained to them the situation. We cannot extend the current contract with them due to new European legislation on providing subsidies to private companies." That doesn't sound very helpful.  Indeed the company management says it had "worked intensively with the UK Government and others" to find an alternative power supply, "but had been unable to do so". And this surely is the crux of the matter: the government has for too long prevaricated about rebuilding a series of power stations which are all about to be decomissioned. As the admirable EU referendum blog says on this subject:

That - EU interference apart - is the reality of the Government's failure to deal with one of the most fundamental requirements of a modern society – a secure and sufficient electricity supply.

While it has been pratting around with its obsession with "renewable energy" – with the support, one might add of the Blue-Green Conservatives - pushing the proliferation of useless windmills across the land, it has taken its eye off the ball and let vitally needed supplies run down. This is nothing short of criminal negligence that will cost our economy – and us – dear.

Quite. Wylfa B may well be commissioned (though that is still far from certain - this is a subject the Druid will be returning to shortly) but it in all likelihood will not come into service for another 10 or more years. A bit bloody late for Anglesey Aluminium then.

There is little point in Albert Owen and the UK Government wailing that they did everything they could to save AA. Their failure to address the issue of power supply sooner has directly lead to the loss of 400 plus skilled jobs in an area which can least afford it. That's criminal.

But there is more to this story.

EU Import Tariffs

Step forward Peter Mandelson. As a Druid it could be said I know something of supernatural forces, but even my not inconsiderable powers pale in comparison to those of the Dark Lord.

We have already noted that EU legislation prevented the NDA providing a cut-price electricity deal to AA. But it also transpires that in 2007, when Mandelson was still the Trade Commissioner, the EU decided to cut duties on the import of raw aluminium into the EU from 6% to 3%. A prime beneficiary of this move was the Russian metals giant Rusal which has been estimated to have saved them up to £117 millon a year in import duties ever since. Who is the owner of Rusal? One Oleg Deripaska - on who's yacht Mandelson enjoyed such well publicised hospitality last summer. The Druid can put it no more eloquently that David Jones MP, Shadow Wales Minister, who said:

“The lack of reliably-priced electricity was the principal cause of Anglesey Aluminium’s demise, but the 2007 duty decision put further pressure on them at the worst possible time.”

The closure of Anglesey Aluminium is metaphorically beginning to resemble one of the War Elephants employed by Hannibal which the Druid remembers so vividly. Sadly these proud beasts died not of one fatal wound, but of a thousand small pricks.

So, predictably, there is one more.


Carbon Trading

The final point we need to consider in this tragedy is the World's current obsession with Carbon. As you may know, the current Government has rushed to pledge that it will cut the UK's carbon emissions by a staggering 80% by 2050. An until recently little documented 'side effect' of this obsession strategy has been to make the closing of heavy industrial plants, such as the Corus steel works in Northern England, more profitable than keeping them open. Dominic Lawson writes:

"The owners of the Corus steel company stand to gain up to $375m (£234m) in European Union carbon credits for closing their plant in Redcar, only to be rewarded on a similar scale by the United Nations’ Clean Development Mechanism fund for switching such production to a new “clean” Indian steel plant."

Could something similar also be behind the closure of AA here in Anglesey? Indeed Robert Goodwill MP, the Shadow Transport for Minister, said the following during last week's Anglesey Aluminium debate in the House:

"is not the fundamental problem the operation of the European Union emissions trading system, which is making it increasingly difficult for primary metallurgical industries to operate in the EU? It would be all well and good if it resulted in the reduction of global CO2, but it merely results in carbon leakage to other economies such as China and India, which are not constrained in the same way."

It sounds to the Druid that he is hitting the nail squarely on its head. But he will leave the last word to Dominic Lawson:

"the three main British political parties — under the mistaken impression that CO2 is itself a pollutant — are asking us to vote for them on the promise that they are committed to subsidise the closure of what is left of our own industrial base."

Pithily put.

In conclusion perhaps Albert Owen and his Labour Government, despite their bleating, are not so blameless in the closure of Anglesey Aluminium as they would like us to think.