The UK Government is planning a suite of retaliations against Austria if it pursues its planned challenge in the European Court of Justice to the Hinkley Point C nuclear plant, according to a leaked document published by Greenpeace UK’s Energydesk.

In the leaked memo, sent from the Austrian Embassy in London to the Austrian government, a senior international diplomat warns:

“The UK has obviously started systematically elaborating countermeasures that could be harmful to Austria … Further steps and escalation ensuing the complaint are not to be ruled out.”

“The new Europe Director at the Foreign and Commonwealth Office, Vijay Rangarajan made clear that the Austrian plans to bring forth a complaint related to the EU State Aid Rules at the European Court of Justice (ECJ) has already shown a negative impact on the bilateral relations.”

There is a “strength of feeling” that goes “all the way up to PM Cameron”, it adds, “and the Prime Minister has instructed all the responsible members of government to call their Austrian counterparts.”

‘We will cause maximum damage to Austria’s interests’

According to the document, Rangarajan also made it clear that the UK would “embrace any future opportunity that arises to sue or damage Austria in areas which have strong domestic political implications.” Three specific points that are envisaged as first steps:

• “A complaint before the ECJ against the labelling of electricity sources of the power provided by electricity suppliers, since, according to the British point of view, this violates the internal market rules.”
• “An investigation of whether the Austrian complaint violates the Euratom Treaty.”
• “Exertion of pressure for Austria – if it is not willing to recognise nuclear power as a sustainable energy source – to bear a greater share in the EU-internal effort sharing” on climate change.

On the face of it is hard to see how providing energy users with information on the source of the electricity they use would violate internal market rules, but as Greenpeace’s Christine Ottery explains: “As nuclear is so unpopular in Austria this in could effect mean Austria would go nuclear free.”

Faced with this onslaught of threats, the un-named Austrian diplomat insisted that “Austria was not under any circumstances interfering with the UK’s sovereign right to choose its own energy mix.”

Rather, they said, “the present case concerns a state aid-related complaint given that the Contract for Difference approved by the EC violates EU State Aid rules. It would be in the interest of rule of law principles that such a decision of the EC be appealed before the ECJ.”

The diplomat also “referred to the consensus of the Federal Government on the issue and to the respective resolution which was passed by parliament.”

Legal challenge imminent

Austria has made no secret of its intention to take legal action over the EU’s decision to allow £17.6bn of subsidies for two Hinkley C nuclear reactors under the bloc’s State Aid (competition) rules, and the legal papers are expected to be filed imminently.

The Hinkley C reactors are projected to provide 7% of the UK’s electricity by 2023 but Austria’s appeal could delay the UK government’s final investment decision by more than two years.

The news of the UK’s countermeasures coincides with the news that the final decision on the project will be delayed until months after the UK general election due to concerns from the projects’ Chinese backers about the creditworthiness of Areva, one of the partner companies involved in the Hinkley C project.

In a surprise decision, the European Commission decided to give the stamp of approval to the UK government’s massive subsidies for Hinkley’s new reactors in October last year.

The 35-year Hinkley subsidy deal, under Contracts of Difference, has been criticised for being poor value for money for UK bill payers with much of the money going to French and Chinese state-owned energy firms.

The subsidy is worth £17.6bn on paper, but a Greenpeace analysis put the total (undiscounted) subsidy to Hinkley over its lifetime as much higher at £37bn – working out as a £14 increase per household per year.

Austrian Chancellor (equivalent to prime minister) Werner Faymann came out against the European Commission approval of the Hinkley subsidy deal, saying: “Alternative forms of energy are worthy of subsidies, not nuclear energy.”

As for the efficacy of the UK’s threats, Fayman said last week that he will not back down over the legal action as nuclear is not “not an eligible new technology” eligible for State Aid, according to the Austrian newspaper Kronen Zeitung.

Principal source: Greenpeace EnergyDesk: ‘Energy Files: UK government threatens to strike back over Austria’s Hinkley legal challenge‘.