The new French energy policy – politics as usual or an act of corporate euthanasia ?

France has a new energy policy. Although some saw the statement presented for debate in the National Assembly ten days ago as simply political rhetoric designed to draw green support behind the Government, beyond the fine words and long term aspirations some of the tough immediate steps being taken suggest that the shift could be more serious. If so the statement will mark the beginning of a gradual but inexorable run down of the French nuclear business.

The statement from Ségolène Royal the new energy Minister certainty lays out some ambitious objectives:

- a 50 per cent cut in total energy demand by 2050

- a target of 40 per cent of power supply to come from renewables by 2030

- an increase in the number of electric vehicles from 10,000 today to 7 million by 2030

- a cap on nuclear production at the current level of 63 GW.

- a reduction in the share of nuclear in French power generation from around 75 per cent today to 50 per cent by 2025.

Such big objectives don’t usually mean much unless they are backed by hard policies. The UK’s Climate Change Act of 2008 entrenched the UK Government’s objectives in law which means that the Government must follow those objectives in everything it does – often to their considerable discomfort. There will be no such Act in France.

That is why many of the people I met in Paris last week shrug and say don’t take any of it too seriously. Life will go on. The statement doesn’t force anyone to do anything. The Greens with whom Ms Royal wants to make common cause might be a little happier but the existing energy mix – dominated by nuclear since the early 70s – will remain in place.

The Fessenheim nuclear plant, which is most often mentioned as being under threat of closure will stay open, even if Flamanville – the latest but unfinished reactor finally manages to start working.

Some limited funds will be applied to making new buildings more energy efficient but with minimal economic growth new construction is very limited. Refurbishing the old buildings of Haussmann’s Paris is unthinkably expensive. The broad long term targets will stay in place until a new Government is returned in 2017.

But Ms Royal’s policy could be much more serious than that. Her other announcement last week involved an extension of the existing freeze on retail electricity prices. This matters less as a gesture designed to help hard pressed consumers but rather as a denial of revenue which is urgently needed to pay for the renovation and upgrading of nuclear plants which have been operating for 40 years. EDF’s estimate is that that will cost some €55 bn.

The amount required could be increased by another of Ms Royal’s announcements – the decision to strengthen the powers of the Autorite de Surete Nucleaire – the French nuclear regulator. The new powers of the ASN will make it harder to extend the lives of existing reactors.

Without the necessary cash the refurbishment will at best be delayed. Old plants could be replaced by new ones but that also involves huge investment and would be difficult to justify given the failure to meet budgets and deadline in the construction of the European Pressurised Reactors at Flamanville and at Olkiluoto in Finland.

What France needs is not just a sensible programme to refurbish existing reactors which have provided secure and emissions free supplies at a relatively low cost for most of the last half century but a serious move to a new generation of reactors which are less complex and more economic than the EPR. The new global energy environment is going to be very competitive and price matters. Those who hoped nuclear would be rescued by a carbon price, or ever rising oil and gas prices are destined to be disappointed. As things stand the EPR technology is uncompetitive and the industry has to move on to something better.

Some research is being done but as in any industry if the pipeline of new work dries up, so will the research funding and the flow of top graduates into the sector. Nuclear engineering used to be a major subject in the UK but after decades without any new reactor construction, it has become marginal. In France as in the UK there is a risk that nuclear becomes yesterday’s industry with an ageing workforce whose main task is to manage the rundown and decommissioning process.

The result of Ms Royal’s announcements, unless there is some intervention from the new Prime Minister Manuel Valls, will be the gradual euthanasia of the new French nuclear industry.

Last week in Paris Luc Oursel, the CEO of Areva was talking about the expansion of the nuclear business worldwide. As well as China and India, a whole range of countries from Poland to Vietnam to the Gulf states including Saudi Arabia who need new sources of energy are looking to nuclear power for the first time. He is right. But the way things are going most of the new capacity will be built by the Chinese or the Russians. This is another chapter in the story of European deindustralisation.