World Review | French energy plans could destabilise the European network

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French energy plans could destabilise the European network

French energy plans could destabilise the European network
Inspection time at the Penly nuclear plant near Dieppe in northern France (photo: dpa)

FRANCE has a new energy policy in the pipeline. Segolene Royal, the new Environment Minister, presented a bill which will be discussed in Parliament in the autumn of 2014.

It claims to ignite a new ‘French energy model’, in line with the European strategy and objectives. But is this bill of ‘programming the energy transition for a green growth’ likely to spark unintended consequences? writes Dr Emmanuel Martin.

France’s final energy consumption stood at 154 Mtoe (millions of tons of oil equivalent) in 2012. Of this, 42 per cent came from petroleum, 24 per cent from electricity, 21 per cent from gas, 10 per cent from renewables and three per cent from coal.

The service and residential sectors absorbed 44 per cent of the energy, transport 32 per cent, industry 21 per cent and agriculture three per cent.

French electricity comes mainly from nuclear power, more than 77 per cent. Heating is essentially based on electricity and represented 23 per cent of the electricity consumption of the residential and service estate in 2009.

Driving the programme is the new European strategy which aims at a 40 per cent reduction in greenhouse gas (GHG) emissions by 2030 compared with 1990, an EU-wide binding target for a share of renewable energy of at least 27 per cent, as well as ensuring efficiency and securing supply.

Ms Royal’s project has five main goals:

• Reduce GHG emissions to fight climate change and contribute to the European goal

• Reduce fossil fuels consumption by 30 per cent by 2030

• Reduce the share of nuclear power in the production of electricity from 75 per cent to 50 per cent by 2025

• Increase the share of renewables in electricity production to 40 per cent in 2030 - 32 per cent of the final energetic consumption

• Halve the final national consumption of energy by 2050.

Indirect objectives include reducing the country’s ‘energy bill’ - which stands at 70 billion euros (US$90 billion) a year - improving the competitiveness of French companies and creating some 100,000 ‘green’ jobs in three years, as a large part of the programme focusses on housing ‘energy saving’ renovations.

One aspect is to force a reduction in consumption, which will stimulate the insulation of housing. Households will be offered incentives including tax deductions, zero interest loans and third-party financing of advances for renovation.

Saving energy is a laudable goal but such incentives are problematic.

Local governments and cities will also be able to enjoy special ‘energy transition and green growth’ loans for renovation of public buildings, with no down payment and instalments over 20 to 40 years.

Unfortunately the incentives do not appear right as these measures go against the accountability of present politicians.

Ms Royal also wants to boost electric cars. A 10,000 euros ‘cash for diesel clunker’ scheme will subsidise the purchase of an electric vehicle.

There is also scepticism about renewable energies, which are problematic in terms of both intermittence and unpredictability.

They typically require the assistance of quick-start gas power plants to take over, which will not work in an optimal way and most probably not on a profitable basis, and may require subsidies.

The locations of renewables are numerous and decentralised, requiring a major adjustment of the grid itself. The goals of decarbonation and securing supply are conflicting, again because of intermittence and unpredictability.

Producers of renewable electricity typically enjoy a big subsidy: a fixed selling price much higher than the market price. This creates massive price distortions which consumers and taxpayers eventually pay for.

In France EDF, the largely government owned utility company, must buy ‘renewable’ electricity from competitors at a price seven times that at which it can sell its ‘compulsory share’ (25 per cent of its nuclear production) to them.

A conservative estimate by the audit office in 2013 put the extra cost of renewables at 70 billion euros between 2005 and 2020.

A 2012 report from the French Senate estimated an increase of 50 per cent in the cost of electricity, in small part because of renovation costs of nuclear plants, and in a large part due to renewables.

Ms Royal’s bill has the potential to weaken France as an energy player – when it claims the opposite. Consumers and taxpayers will pay much more for their energy.

France is the first world exporter of electricity. It has a major role as a stabiliser in the European network, enabling greater security of supply than there would otherwise be. This has major consequences, especially because the continent’s electricity system is in crisis.

Dr Emmanuel Martin

Emmanuel Martin holds a PhD in economics from the University of Aix-en-Provence in France. He has been the editor of the Francophone programme of the Atlas Economic Research Foundation fo ...

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