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France's changing energy mix

The Macron government faces the difficult task in 2018 of juggling competing demands for France's energy cocktail

The past year was an interesting one for French energy policy. The presidential campaign offered a wide range of options, from right-wing enthusiasm for nuclear power to left-wing plans to phase it out within 25 years. After the election, Emmanuel Macron's newly designed government didn't waste time: it unveiled a long-term vision with a "plan climat" (climate plan) designed to fulfil a commitment to the Paris Agreement and reach carbon neutrality around 2050. A law was passed accordingly to ban oil and gas exploration and production by 2040, a mostly symbolic move, given France's huge dependence on imported hydrocarbons. A more concrete and immediate step was the inclusion of a sharp carbon-tax increase in the 2018 budget. Finally, a reform of public support for household investment in energy efficiency was signed into law at the end of 2017.

With so many new regulations, it might have been wise for the government to take a step back and wait to see how things unfolded. But that's not going to happen. In 2018, France has to adopt its medium-term energy strategy, a sensitive process that may prove to be a turning point for the French nuclear industry.

This year, for the first time, government has to adopt a full Programmation pluriannuelle de l'énergie (PPE). This is a roadmap for energy policy in mainland France, springing from the 2015 Energy Transition Law. It will cover at least six areas for all energy sources over 10 years: security of supply; consumption reduction; renewables; grids and storage; prices; and future development needs. The roadmap will thereafter be reviewed every five years—following every general election. This stipulation was made with the aim of providing more consistency to energy policy and to offer economic actors the visibility they require for long-term investments. Its legal value, however, is limited: the PPE is a decree, not a law, and can easily be ignored by executive and legislative bodies. As a result, its content is more a political commitment from a newly elected government than a legally binding pledge.

A PPE was adopted in 2016, but only for a two-year trial period. In 2018, this tool will be tested for the first time and the adoption process is expected to take the whole year. Workshops have already started to receive input from civil society. This will lead to the adoption of various scenarios, scheduled for the end of the Q1 2018. These scenarios will be developed into macro-economic models and tested during Q2. A first draft of the PPE is expected in June. At this point, the Energy Transition Law requires a long list of mandatory consultations, which are expected to last until November. If everything goes according to plan, the PPE could be adopted, just in time, in December. It would then be presented to both chambers of parliament, but without a vote.

List of goals

As thorough and lengthy as this process may seem, there's still a good chance that it will fall behind schedule. This is primarily because there's no consensus in government, let alone in the country, on the roadmap's targets. In theory, they were defined in the Energy Transition Law itself. Its first article provides a long list of goals, including: reduction of greenhouse gas emissions (down 40% in 2030 and 75% in 2050 compared to 1990); reduction of primary energy consumption (down 20% in 2030 and 50% in 2050 on 2012); reduction of fossil fuel consumption (down 30% in 2030 compared to 2012); reduction of nuclear dependence (from approximately 75% today to 50% of the total electricity production in 2025); increase of renewable production (32% of primary energy and 40% of electricity in 2030).

But there's a catch: the constitutionality of this article was challenged by the opposition. At the same time, the Conseil Constitutionnel, the highest court in France, ruled that it wasn't unconstitutional because such long-term targets have no legal value in the first place. In other words, Macron's government can ignore the objectives written into law by its predecessor. And it has already made clear that it intends to do so, at least for nuclear power: in November, Nicolas Hulot, the minister in charge of energy transition, declared that it wasn't possible to decrease nuclear's share in electricity production to 50% in 2025 without increasing greenhouse-gas emissions.

As a result, what was supposed to be a technical discussion circumscribed by the 2015 law is turning into a battle to try and move various targets up or down. The first task of the government will be to set up the goals of the PPE and build at least some consensus around them. To avoid delay in the adoption of the roadmap, this has to be completed during Q1 of 2018—a very short period to tackle such contentious questions.

Nuclear energy, of course, will be a flashpoint. Dismissing the 50%-in-2025 target, even though Macron endorsed it during the campaign, was a widely anticipated turnaround. More surprising was that the government didn't immediately come up with an alternative target. Apparently it still supports a gradual decrease of nuclear power in the electricity mix, only with a longer timescale or a less ambitious objective. But on an issue where there's little middle ground, this position may well alienate both pro- and anti-nuclear camps. It will certainly be hotly debated and probably challenged in court—another potential cause for delay.

Nuclear confusion

For the French nuclear industry, this discussion will take place against a background of considerable organisational change over a few months. French nuclear multinational Areva, 16 years after its creation to unite various companies active in nuclear-reactor construction, sold this core business to Électricité de France (EDF). Thus the largest nuclear plant operator in the world took a leap of faith, becoming almost overnight a major plant builder.

The merger was completed on New Year's Day for €2.5bn ($3bn). For its new division, EDF chose a name reminiscent of old glories: Framatome, short for Franco-Américaine de Construction Atomique. This is the name of the company originally created in 1958 to import the pressurised water reactor technology in France which is in service at all 58 reactors currently active in the country.

We'll soon have the first indication of whether the new Framatome can live up to the old one: after years of delays, four EPRs, French third-generation reactors, are scheduled to come online in the next two years: one in Flamanville (France) in Q4 2018; two in Taishan (China) in 2018 and 2019; and one in Olkiluoto (Finland) in May 2019.

50%—Target energy share from nuclear by 2025

As if this wasn't enough, EDF will also have to deal with another industrial challenge: the shutdown of its two oldest reactors, in Fessenheim, scheduled for the end of 2018. They will be the first second-generation reactors to be decommissioned in France. A total of 56 more are waiting in line. With EDF regularly accused of underestimating its nuclear fleet's end-of-life costs, it's clear this project will be closely watched.

The outcome of all these three challenges could either cement France as a leader in nuclear engineering or accelerate its downfall. And naturally, the PPE adds a layer of complexity: a slower decrease of nuclear power in the energy mix, for example, means that reactors will shut down and enter decommissioning at a slower pace, to the relief of EDF. This will be an important factor for the success of the roadmap as, despite being more than 80% state-owned, the French utility didn't hesitate in the past to resist energy policies that weren't to its liking. Under the previous government, for example, EDF actively fought to keep Fessenheim open, even though François Hollande pledged to close it during his successful presidential campaign. When the utility was required to publish a strategy on how to reduce nuclear's share in the electricity mix to reach 50%, it simply ignored the issue, effectively crushing any chance to fulfil this other electoral promise.

It's worth recalling that both Hollande and Nicolas Sarkozy suffered humiliating defeats on energy policy during the first two years of their terms. Hollande's plan for the progressive pricing of electricity was met with public incomprehension. His policy, one of the first topics on its legislative agenda, was ultimately censured by the Conseil Constitutionnel. Sarkozy also had his carbon tax project, a key measure from its Grenelle Environment Forum, censured. These setbacks weakened their authority and caused energy issues to be pushed to the bottom of the agenda. Decisions were eventually made too late to be implemented during their presidencies, and neither leader achieved much to be remembered for. With the PPE, Macron and his government face the same risk but, arguably, with much higher stakes.

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