US celebrates ‘victory’ as Britain seeks to expel China from nuclear power sites

Washington welcomes the UK’s efforts to kick a Chinese company out of a precision nuclear power project, according to people familiar with the US commitment on the matter.

The United States, which has long opposed energy ties between the United Kingdom and China, sees London’s plans to ask Chinese energy giant CGN to give up its 20% stake in the Suffolk nuclear power plant in Suffolk as a long-controversial diplomatic victory.

The British government has grown increasingly uneasy about China’s control of the energy sector in recent months. Meanwhile, the Biden administration launched a new campaign earlier this year to protect energy infrastructures from attacks, including cyber attacks.

This plan was crafted specifically with Russia and China’s adversaries in mind, and their cyber hostility, according to a person familiar with the plan.

This comes at a time when the United Kingdom has tried to strengthen its close security relations with Washington, through the trilateral nuclear submarine deal with the United States and Australia dubbed “Ocos” in recent weeks. Avoiding referring directly to China, Prime Minister Boris Johnson said in a statement earlier this month that the agreement was part of a broader effort “to maintain security and stability in the Indo-Pacific region”.

The United States is also examining the energy security of its NATO allies, each of whom are dependent on China and Russia. Now, efforts to seize CGN’s stake by the British government are seen as a reward for Washington, after it lobbied London over China’s ties to Britain’s sensitive nuclear energy infrastructure.

It is a sure victory for the United States and the United Kingdom. A person familiar with US energy security policy commented, it seems that the serious threats posed by some countries to energy security are receiving sufficient attention.

Britain is considering acquiring CGN’s 20% stake in the $26 billion (£20 billion) Sizewell C nuclear power plant project. The government can sell the stake to institutional investors or put it up to the public, according to a person familiar with the government’s idea.

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EDF, which owns the remainder of the Sizewell and Hinkley Point C project, declined to comment. CGN did not respond to a request for comment.

There is no official figure that reflects the full extent of Chinese ownership of British assets in the energy sector, in part because it is difficult to quantify the extent to which the system uses intermediaries. However, China’s control over a number of parts of the UK’s energy infrastructure is significant.

The Chinese state holds a stake in British gas distribution company Cadent Gas through its sovereign wealth fund, after the China Investment Corporation led a consortium to buy the network from National Grid. State-backed Chinese companies also own stakes in British oil and gas companies, and in renewable energy facilities, including wind farms.

CGN is also involved in building the Hinkley Point C site in Somerset with French energy company EDF, providing nearly a third of the investment at the site. Washington is concerned about the Sizewell and Hinkley projects, but especially the plans for a plant at Bradwell-on-Sea in Essex, which could use China’s own nuclear reactor technology, rather than follow well-known European technology.

The same people familiar with America’s commitment to energy hope that China will be excluded from the Bradwell-on-Sea project.

A government spokesperson noted: “CGN is a significant partner in Hinkley Point C and a shareholder in Sizewell C up to the time of the government’s final investment decision. Negotiations are ongoing and no final decision has been made.”

The government, which sees nuclear power as an essential part of the energy mix as the UK tries to reduce carbon emissions, plans to introduce new legislation on how to finance large nuclear power projects in the future.

The preferred approach is the Regulated Asset Base (RAB) route, where investors can raise money from consumers through energy bills while the plant is being built.

A representative of the US government did not comment prior to publication.