Chancellor George Osborne gives £2bn government guarantee for nuclear plant at Hinkley Point C

UK Chancellor George Osborne, who is on a five-day tour of China, has announced that the government will provide a £2bn (€2.75, $3.11) infrastructure guarantee for the construction of UK's first nuclear power plant in 20 years.

The guarantee, the government hopes, will be the boost needed to push French power company EDF to invest in the plant at Hinkley Point C in Somerset.

Osborne, who is in China with Amber Rudd, the Secretary of State for Energy and Climate Change, is currently discussing Beijing's proposed investment in the power plant.

"Nuclear power is cost competitive with other low-carbon technology and is a crucial part of our energy mix, along with new sources of power such as shale gas. So I am delighted to announce this guarantee for Hinkley Point today and to be in China to discuss their investments in Britain's nuclear industry," Osborne said.

"Britain was the home to the very first civil nuclear power stations in the world and I am determined that we now lead the way again," he said.

The Guardian said that the Hinkley project has been beset with problems, with the plant's developer, EDF, recently saying that the project may be further delayed.

It said EDF has already won a "generous financial aid package" from the government through its contract for difference mechanism but it has yet to sign the definitive deal it needs with China investors.

The guarantee however, is expected to pave the way for a final go-ahead by EDF, supported by China General Nuclear Corporation and China National Nuclear Corporation, according to the Treasury, the paper says.

Rudd said the government will continue to work with EDF to finalise the Hinkley deal, which will "create more than 25,000 jobs" and provide more financial security for working people and their families "as we transition to a low carbon future."

EDF is expected to finally give the green light when China's Prime Minister Li Keqiang visits the UK next month.

Vincent de Rivaz, EDF Energy chief executive said: The Chancellor's approval of the infrastructure guarantee was a clear sign of the government's commitment to Hinkley Point C. The government's determination to bring about a renewal of infrastructure and to attract inward investment to the UK are demonstrated by this good news.

"It is further progress towards a final investment decision on a project which will provide reliable, affordable low-carbon electricity for decades," he said. The new plant is expected to produce enough energy to supply 7% of the country's needs, and powering around 6 million homes.

Project does not have support of all

The building of the plant has not come without controversy. Analysts, the Guardian says, have questioned the economics of the project, which at £24.5bn (€33.66, $38.06bn), is the combined total cost of the Crossrail, the London 2012 Olympics and the revamped Terminal 2 at Heathrow.

The paper said three leading environmentalists had last week urged the government to scrap plans for Hinkley Point C. George Monbiot, Mark Lynas and Chris Goodall said the soaring cost and the delays to the project left ministers with no option but to re-allocate the estimated £34.5bn worth of investments into other low carbon technologies.

Greenpeace UK's chief scientist Dr Doug Parr said: "This announcement is a PR smokescreen to give the impression that this project is moving forward when it's actually bogged down in a swamp of troubles. Hinkley hasn't got funding or safety clearance, and everyone outside the nuclear industry and our blinkered government thinks it's absurd, yet the Chancellor is ignoring them all to plough ahead with this overpriced, overrated, and overtime project."