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France: IEA offers praise and advises caution

THE COUNTRY'S centralised energy policy has won praise from the International Energy Agency (IEA) for its past success in ensuring supply security, reasonable prices and low greenhouse-gas (GHG) emissions. But the compliments are accompanied by advice on how to proceed in today's competitive, internationalised energy context.

The accolades and recommendations are in the IEA's recently published 174-page report, France—2004 Review. Although the report commends the government's moves toward the liberalisation of electricity and gas markets, it sees problems in the still-dominant position of incumbent electricity and gas monopolies, Electricité de France (EdF) and Gaz de France (GdF). And it judges that reversing the upward trend of GHG emissions will be a major problem.

Because EdF generates over 90% of French electricity, it has the power to influence prices and deter new entrants, the IEA says. On electricity, the other main criticism is that the government has kept for itself the possibility of launching tenders, or refusing authorisation to build new capacity, in order to achieve the generation portfolio it prefers. Market forces, in line with traditional cost-benefit analysis should determine the choice of power sources, the report says.

While approving the French decision to leave its nuclear option open, the IEA is less enthusiastic about the demonstration unit of the European pressurised reactor (EPR) that the government intends to authorise. It advises that all possibilities for extending the operating life and improving capacity factors of the 54 existing reactors should be explored. If an EPR is built, it should be under market conditions, without subsidies, with companies investing 'only as a profitable venture in a liberalised market'.

For gas, the report considers that there are potential problems about non-discriminatory third-party access to the pipeline network, especially in the south of the country. The IEA is also concerned that the transport system is not completely separated from the commercial side of the gas business and that access to storage sites is limited. GdF, which operates 13 of the country's 15 sites with 83% of the total 11bn cubic metres of capacity, provides access only on a negotiated case-by-case basis.

The IEA regrets that heavy reliance on nuclear generation for electricity supply leaves little room for gas, which represents only 14% of total primary energy supply, compared with a 24% average for European IEA member countries. A greater proportion of plants designed to serve intermediate needs, such as gas-fired combined-cycle generators, would be more economically efficient, the report judges.

France is committed under the EU burden-sharing agreement to return GHG emissions to their 1990 level by the Kyoto protocol's 2008-2012 target. But emissions from the transport and residential sectors are rising, while there is little scope for reduction because of the country's large share of emissions-free power generation, mainly from nuclear. Ambitious plans to curtail final energy consumption and increase the use of renewables need further analysis, the report says.

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