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The new French energy policy
The new French energy policy
Guy de Carmoy Since 1974 successive govemments have endeavoured to reduce French dependence on imported energy. The latest policies of President Mitterand have given a change of emphasis to the country's objectives rather than a revolutionary change. There will be more control over the nuclear programme, an attempt to limit the growth of consumption and more emphasis on coal and natural gas. Despite this, extemal dependence on imports will not fall below 50% by the end of the century.
France is not well endowed in primary energy resources. Governments have endeavoured to correct this handicap with long-range policies tending both to reduce external dependence and to ensure external supplies. These policies were strengthened under the term of office of President Giscard d'Estaing, which started a few months after the first oil shock. A change of emphasis took place after the election of President Franqois Mitterrand. The new objectives affected the sectoral approaches, particularly in the fields of nuclear generated electricity production and of natural gas supply.
Needs and resources
France's coal reserves amount to some 20 years of consumption, her dwindling gas reserves to three years only. Oil reserves are negligible. Uranium reserves are more substantial at 2.2% of known world reserves. Keywords: Energy; Policy; France France is the fourth world importer of crude oil and petroleum products after the USA, Japan and West Germany, the third world importer of gas The author is Professor Emeritus at the after West Germany and the USA and the second world importer of coal European Institute of Business Adminafter Japan. Table 1 summarizes the French energy balance-sheets in istration (INSEAD), Boulevard de Constance, 77305 Fontainebleau 1973 and 1981. Cedex, France.
Goals and achievements 1973-81 Long-term strategies in each of the energy sectors were revised in 1974. The two main lines of action were energy savings and the acceleration of Table 1. Primary energy demand and supply (1973-1981).
Source: Ministry of Industry, Letter 101, No 165, 25 February 1982. amtoe = million tonnes oil equivalent.
Total demand
1973 mtoe a 177.7
Coal Oil Gas Hydro Nuclear New energies
30.5 117.2 15.0 9.9 3.1 2.0
17.2 66.0 8.4 5,6 1.7 1.1
32.1 90.7 24.7 14.7 22.1 3.4
17.1 48.3 13.2 7.8 11.8 1.8
Domestic production
44.1
24.8
66,1
35.2
Coal Oil Gas Hydro Nuclear New energies
19.1 2.1 7.0 10.5 3.1 2.0
0 3 0 1 - 4 2 1 5 / 8 2 / 0 3 0 1 8 1 - 0 8 5 0 3 . 0 0 © 1982 Butterworth & Co (Publishers) Ltd
1981 % 100
mtoe 187.7
% 100
15,7 2,4 6,6 15.9 22.1 3.4
181
The new French energy poficy
the nuclear programme. The savings drive was efficient: energy consumption grew only by 0.75% per year during the 1973-81 period whilst // G D P grew by 2.45% per year. 1 Thus the global elasticity for that period / stood at 0.31. Oil consumption decreased dramatically from 66.0% of / Ioo total primary energy consumption in 1973 to 48.3% in 1981. Coal conI 4 I o~ sumption remained at about the same level. / m Z The reduction in oil imports was compensated by an increase in gas and O_ 5 coal imports and by a substantial increase in domestic production which Z x~ 50 f/' ~-/ moved up by 50% from 44.1 to 66.1 million tonnes oil equivalent (mtoe). 2 This increase was due mainly to the jump in nuclear-generated industry Z I production which moved up from 3.1 mtoe in 1973 to 22.1 mtoe in 1981, IO I I I I I I I accounting for 11.8% total energy consumption. Domestic coal pro197~ 7 4 7 5 7 6 7 7 7 8 7 9 8 0 1981 duction regressed at a lower pace than in the 1960s and mainly because of Figure 1. French net oil bill. the gradual exhaustion of some pits. Hydroelectric power increased notably in the period. The overall result was a reduction in the external Source: Conjoncture, Banque de Paris et des Pays-Bas, No 11, December 1981, p dependence from 75.2% to 64.8%. Compared to her main Common Market partners, France is somewhat 151. better-off than Italy which has an external dependence of 82%, and worse-off than Germany which stands at 58%, not to speak of the fortunate energy self sufficient economies of the UK and the Netherlands. This dependence entailed a serious balance-of-payments handicap. The oil import bill accounted for 1.1% of the Gross National Product (GNP) in 1973 and for 4.2% in 1981 (Figure 1). As for the total energy import bill, it amounted to 162 billion French Francs (FF) in 1981, ie about 25% of total imports, and was expected to reach 170 billion FF in 1982.2 On the whole the results of the policy followed after the first oil shock have been substantial. A highly centralized decision making process ensured the coordination of actions engaged on all fronts. Imports were diversified: more gas and coal and less oil. Domestic production increased mainly thanks to nuclear energy, this huge investment effort being expected to bear all its fruit at the end of the 1980s.
Overview of the new policy Energy policy played a part in the campaign for the 1981 presidential election. Contender Franfois Mitterrand advocated a more diversified energy policy, with a larger share for conservation, coal and new technologies. H e expressed his intention of 'mastering' nuclear energy. In the second run he benefitted by most of the votes of the ecologists, whose candidate polled 3.87% of the votes in the firstrun. In accordance with a promise made during the campaign, the procedures were stopped on the site of Plogoff in Brittany just after the election. They were stopped later on five other sites pending the consultation of the local and regional authorities. One of the basic objectives, and a very sound one indeed, was to introduce more democratic procedures prior to the decision on the construction of any power plant and to circulate at an early stage the information so as to obtain the participation and agreement of the populations 1'Document preparatoire au d~bat de concerned. This step proved rewarding as the consultations on the five I'energie', J.P. Hugon, rapporteur, Sep- sites yielded positive answers. tember 1981, p 40. Another objective was to limit the growth in energy consumption 2'Les nouvelles orientations de la politique 6nerg6tique', Revue Gg,n6rale Nucleaire, whilst continuing a rapid increase in economic growth. Consumption would move up from 188 mtoe in 1981 to 232 mtoe in 1990 and GDP September-October 1981, p 477.
182
ENERGY POLICY September 1982
The new French energy policy Table 2. Energy consumption projections to 1990.
Source: Revue G~nerale Nucleaire, September-
Barre Government mtoe Average %
Mauroy Government mtoe Average %
Coal Oil Gas Hydro Nuclear New energies
33--28 68-80 42-37 14-14 73-73 12-10
35-40 70-75 31-40 14-15 60-66 10-14
Total
242
13 31 16 6 30 4 100
232
17 32 13 6 27 5 100
October 1981, p476.
would expand at 5% per year. The assumptions of the preceding government were different: a higher consumption up to 242 mtoe in 1980 and a rate of growth of the economy of 3.5% per year. The elasticity would be of 0.5 in the first case and of 0.8 in the second case. Forecasts are uncertain anyhow, but 5% economic growth in the 1980s seems out of reach. The projections of the two successive governments are presented in Table 2. The third objective was a change of emphasis. The slower growth in energy consumption allowed for a somewhat lower nuclear-generated electricity production by 1990, for a larger recourse to coal and for a larger spread in the alternative projections for natural gas.
Nuclear energy
3'Energie, une autre politique', Paul Quiles, rapporteur, January 1981. 4Hugon, op cit, Ref 1.
S/bid, p 134.
ENERGY POLICY September 1982
The decision to pursue the nuclear development policy was not an easy one for the government appointed in July 1981. In contrast to the three other political parties - the Communists, the RPR (Gaullists) and the U D F (Giscardists) - who were sold to the nuclear option, the Socialists were divided on the subject. A report adopted by the party in January 1981 - the QuilLs report - called for a curtailment of the programme. 3 The government launched an internal debate within the party on the basis of an exhaustive document, the Hugon report, 4 which was adopted at the end of September by the parliamentary group. This paved the way for the discussion in the National Assembly in October. The nuclear park at the end of 1981 comprised 30 operational reactors (including 6 graphite-gas and 19 PWRs) with an installed capacity of 21.2 G W e (compared to a capacity of 8.6 GWe in the UK and of 10.4 GWe in Germany). 25 PWR reactors with an installed capacity of 28.6 GWe were under construction together with the experimental 1200 MWe breeder Superphenix. The overall installed capacity on the completion of this programme was to stand at around 51 GWe (see Figure 2). The government debate centred on three questions: the rhythm of construction of the new power plants, the future of the breeder reactor and the extension of the nuclear fuels reprocessing plant at La Hague. The previous government had intended to order nine PWR power plants in 1982 and 1983. The QuilLs report advised reducing the order to four plants; the Hugon report opted for six plants. The government supported the latter proposal on the basis of two main arguments. The first was the slower rate of growth of electricity consumption, forecast at 5.4% per year up to 1990 and somewhat tentatively at 3.8% per year from 1980 to 1995. 5 This allowed for a slow-down in the construction rhythm, but not as drastic as the one proposed in the January 1981 report. The second argument pertained to the capacity of Framatome, the builder of the reactor, which would have been largely underutilized at the pace of four
183
The new French energy policy
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Situation on I January 1982 Standardized size
Reactor type
Status
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~" 900 MWe class units
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(~ Heavywater-gas reactor
t 1300MWe class units
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PWR,closedcoolingsystem,towers In operation : 30 units
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21PWR-900, IPWR-300, I breeder. 6 gas-graphite. I heavy-water
12PWR-900, 13PWR- 1300, I breeder
21800 MWe net
28 600 MWe net
Commitmentsexpected in 1982 and 1983 I PWR-900, 5 PWR-1300
7 300 MWe net
Figure 2. French nuclear power plants. Source: CEA, Notes d'lnformation, January-February1982
184
ENERGY POLICY September 1982
The new French energy policy
reactors in two years' time. The critics of the government's choice argued that in case of an excess of electricity production over domestic demand, Electricit6 de France (EDF) might have sold at a profit its surplus current to the neighbouring countries.6 As a matter of fact, the cost of nucleargenerated electricity is and will be much lower than that of electricity generated from oil- or coal-fired power plants (Table 3). In 1976, EDF started work on a commercial size 1200 MWe breeder reactor in association with its German and Italian counterparts. The coupling to the grid was scheduled for 1984. The Government opted in favour of the completion of the plant but reserved its decision on the launching of a series of breeders until the time when it could draw on the experience of the functioning of Superph6nix. The nuclear reprocessing plant at La Hague is an essential part of the fuel cycle mastered over the years by the Commissariat ~ l'Energie Atomique (CEA) and its operational branch, Cogema, and comprising uranium mining in France and overseas and a cooperative enrichment plant, in association with Spain, Italy and Belgium, working at full capacity since 1981. The reprocessing plant has a capacity of 400 tonnes/ year to be extended to 800 tonnes/year by 1984 and to 1 600 tonnes/year by 1985. Contracts are signed with foreign operators for the reprocessing of some 6 000 tonnes of fuel. The government followed the recommendation of the Hugon Report regarding the extension of the plant. According to the Prime Minister, Pierre Mauroy, 'nobody can assert that there is a better solution for irradiated fuels than retreatment'. The National Assembly adopted the government's proposals on 8 October by 331 votes, 67 against and 87 abstentions. The majority of French public opinion is not adverse to nuclear energy. A poll conducted in April 1982 by Sofres - Le Matin found that 65% of the people surveyed were in favour of nuclear energy and 33% were against. The corresponding figures in April 1981, on the eve of the presidential election were 56% and 41%. 7
Natural gas The need for France to ensure new supplies of natural gas derived from three considerations: • •
6Jacques Gihel, 'La tunique de Nessus', Revue de I'Energie, No 339, November 1981, p 557. ~'Deux Franqais sur trois sont pour I'energie nucl6aire', Le Monde, 7 April 1982.
•
the domestic field of Lacq, covering 30% of consumption in 1981, will yield only one half of its present output by 1990; the Netherlands which supply about 40% of France's present requirements, will be drastically reducing their deliveries by 1990; and the overall consumption of gas is expected to grow from 24.7 mtoe in 1981 to a bracket of 31.40 mtoe in 1990.
Thus the previous government had considered to increase its purchases both from the USSR and from Algeria (another small supplier being the Table 3. Comparative costs of the nuclear and thermic kWh for a power plant working 6200 hours per year. a Nuclear
Source: Document preparatoire au Rapport sur I'Energie, 1981, p 71.
Note: Plant depreciation over 21 years, actualizatlon factor, 9%. aCosts in centimes at 1 January 1981.
ENERGY POLICY September 1982
Coal
Oil
Investment Running costs Fuel Desulphurisation
8.5 3.0 4.2 -
6.5 3.1 15.0-20.5 2.8
5.6 2.8 43.4 3.5
Total
15.7
27.4-32.9
55.3
185
The new French energy policy
S'A un mauvais moment?', Le Monde, 24 January 1982. 9B.A. Rahmer, 'Big gas deal with West Europe', Petroleum Economist, January 1982, p 14. loPaul Lewis, 'French Soviet gas deal signed despite US plea', International Herald Tribune, 11 February 1982; 'L'arriv6e du gaz sib6rien en Europe pourrait avoir deux ans de retard', Le Monde, 11 February 1982. 11Bruno Dethomas and Daniel Junqua, 'L'AIg~rie livrera ~ la France chaque ann6e 9,15 milliards de rr~tres cubes de 9az & un prix 16gerement sup~rieur au cours mondial', Le Monde, 4 February 1982; Bruno Dethomas, 'Une indexation & 100% sur le cours de differents petroles', Le Monde, 5 February 1982. t2Maudce Delarue, 'Deux Iogiques', Le Monde, 4 February 1982.
186
Norwegian sector of the North Sea). The present government brought the negotiations with the USSR and Algeria to their conclusion. The initial contract with the USSR called for the delivery of 5 billion m 3 of gas per year and was operational since 1980. The Barre government was considering a supplementary contract for another 5 billion ma/yr to be transported by pipeline from the large west Siberian gas field of Urengoi. This was to be part of a 40 billion m 3 operation involving West Germany, Italy, Austria, Switzerland, Belgium and the Netherlands. Germany was the first country to sign up for 10.5 billion m3/yr in November 1981. France followed on 22 January 1982 for an amount of 8 billion m3/yr which, together with the initial contract, would account by 1990 for some 35% of the total gas consumption and for approximately 5% of the total energy consumption of the country by 1990. The German industry was to supply a large part of the pipes and the French industry a number of pumping stations and some turbine parts and electronic equipment for the telemonitoring network. The deal was criticized for its timing - a couple of months after the declaration, under Soviet instructions, of the state of emergency in Poland. s The USA attacked both the German and French contracts on the grounds that they would make Western Europe dangerously dependent on Soviet energy: 'Europe's determination to resist Soviet aggressiveness might, in certain circumstances, be weakened by actual or implied Soviet threats to suspend natural gas supplies'. 9 The USA refused permission for the General Electric Co to export crucial parts for the compressor stations, which might delay by two years the arrival of the Soviet gas in Europe. lo Following two years of discussion and a few days only after the Soviet deal, the Socialist government concluded a dual contract with Algeria. On the one hand, the Algerian oil and gas company, Sonatrach, will sell Gaz de France (GDF) 9.15 billion m 3 of gas at a price of $4.50 fob per million Btu indexed at 100% on a basket of eight crude oils, in which heavy fuels account for one half. On the other hand, the French budget will grant Algeria 'a bonus for the valorisation of the commodity' amounting to $0.60 per million Btu. To these two factors will be added the cost of transportation and regasification. The total price, to be backdated, will be in the range of $5.80, comparing with $4.95 for the Soviet gas and with $4.65 for the Dutch gas delivered at the French border. 11 The reason for the extra price is political. 'The FrancoAlgerian agreement is not a simple commercial deal, it is a fundamental co-development agreement'. Industrial countries disposing of technology and lacking natural resources should organize complementary deals with developing countries. 12 Algeria, a sovereign state, will use the French budget contribution of its own accord. It is hoped that industrial contracts will follow. The Algerian deal has been criticized on several grounds. First because of Algeria's past attitude. In 1980, Algeria had unilaterally interrupted a previous gas contract and had refused to renew an oil delivery contract to Compagnie Fran~aise des P6troles at the time when Iraq, waging a war against Iran, was unable to fulfil its commitments, la Second, doubts were expressed about the Algerian capacity to purchase large amounts of equipment as its government intended to reverse its strategy of industrialization in favour of agriculture. Third, gas becoming more expensive than oil would not contribute to energy susbtitution; some industries might shift from gas to fuel oil. Fourth, negotiations on Algerian gas are
ENERGY POLICY September 1982
The new French energy policy
engaged with Italy, Spain, and the USA: France's move did not pave the way to Western solidarity. Will Italy, who completed in 1981 the still unused trans-Mediterranean pipeline, accept a political price? Higher gas prices will certainly be claimed by would-be new suppliers to Europe such as Nigeria and Cameroon. To avoid the consequences of interruptions in gas supply either from the Soviet Union or from Algeria, GDF has equipped underground reservoirs in porous rocks with a storage capacity of 4 billion m a which could be increased to at least 10 billion m 3 by 1990.14
Oil No mention has so far been made of oil, because no change of policy occurred. The two French companies, CFP and Elf-Aquitaine are pursuing their exploration effort in some 30 countries. Their resources abroad amount to 62 million tonnes in the form of right to oil and long-term contracts. They are affected, as other European companies, by surplus capacity in refining and by insufficient capacity for the conversion of residual fuel in lighter products. Refineries were working in 1981 at 59% of capacity. The need to close some distillation units is recognized. A new pricing system for petroleum products is under consideration and would involve a modicum of liberty within the limits of a supply plan presented by each company.
Coal France imported 52% of her coal consumption in 1981. Her main suppliers were South Africa (28%), West Germany (24%), the USA (22%), and Poland (10%). The average extraction cost was 72 F per kilo-therm compared to 48 F per kilo-therm for imported coal. The 1981 subsidy amounted to 4 billion F including old age pensions. The government objective is to raise domestic production from 22 million tonnes to around 30 million tonnes. This would require the continued exploitation of some depleting coal mines that the previous government was proposing to close and the opening of new mines. The implementation of this latter proposal will require long delays, first for the completion of a geological survey, and second for the equipment of the selected mines. It is impossible at this stage to evaluate the investment outlays. A ceiling has been fixed for the subsidy to national coal in the amount of 2.5 centimes per therm, ie 155 F per tonne, is The policy of investments in overseas mines will be pursued. It is to be feared that cheap nuclear energy will be replaced by expensive domestic coal.
Hydroelectricity, new energies, energy savings No significant increase is expected in hydroelectricity production. The existing equipments are close to their ceiling, considering the improvements realised in the 1973-1982 period. The expected contribution from new energies by 1990 is about the same 13Andr6 Giraud, 'Les raisons d'une in the Barre and in the Mauroy forecasts. Solar energy made a good start d6route', Le Figaro, 5 February 1982. both in household heating and in thermodynamic solar, with the comple14Marc Ambroise-Rendu, 'Gaz de France tion in 1980 of the Themis power plant, of 2 MWe capacity, the largest in Ioge ses r~serves au centre de la term', Le the world at the time. A survey of the biomass resources is under way Monde, 10 June 1981. ISHugon, op cit, p 118. together with a plan to incorporate alcohol to petrol.
ENERGY POLICY ,~:)tember 1982
187
The new Frenchenergypolicy The government is merging the agencies dealing with solar, cogeneration and energy savings in a National Agency for the Mastery of Energy, the budget of which is to reach 1.2 bilfion F. On the basis of 1970 = 100, the energy intensity or energy consumption per unit of GNP had fallen to 90 in 1980.16 The fall was sharper in Britain, but the per capita energy consumption in France was and remains much lower so that there was less room for improving energy efficiency.
Conclusion
= ~ u e de Paris et des Pays-Bas, Conjoncture, December 1981.
188
The new energy policy marks an inflexion, not a revolutionary change, in regard to the one that was pursued from 1974 to 1981. France is still strongly engaged in the nuclear field with an impressive advance on her European partners. By 1990, the share of nuclear generated electricity will amount to 27% of total energy requirements compared to 30% according to the forecasts of the preceding government. The fulfilment of this goal will depend upon the firmness of the government vis-d-vis the local authorities which are endowed with larger advisory capacity. Natural gas supplies from sources outside western Europe involve of necessity political risks which the EEC countries could not or would not face jointly. It seems that France and Germany kept contact when negotiating with the USSR. A similar attitude apparently did not take place when France contracted with Algeria pending the Italo-Algerian negotiations. An opportunity was missed for the launching of a common energy policy. The French energy situation remains fragile. External dependence will not fall below 50% by the end of the decade. The weight of the energy bill is dependent upon the strength of the currency and therefore upon the general economic policy.
ENERGY POUCY September 1982
Guy de Carmoy Since 1974 successive govemments have endeavoured to reduce French dependence on imported energy. The latest policies of President Mitterand have given a change of emphasis to the country's objectives rather than a revolutionary change. There will be more control over the nuclear programme, an attempt to limit the growth of consumption and more emphasis on coal and natural gas. Despite this, extemal dependence on imports will not fall below 50% by the end of the century.
France is not well endowed in primary energy resources. Governments have endeavoured to correct this handicap with long-range policies tending both to reduce external dependence and to ensure external supplies. These policies were strengthened under the term of office of President Giscard d'Estaing, which started a few months after the first oil shock. A change of emphasis took place after the election of President Franqois Mitterrand. The new objectives affected the sectoral approaches, particularly in the fields of nuclear generated electricity production and of natural gas supply.
Needs and resources
France's coal reserves amount to some 20 years of consumption, her dwindling gas reserves to three years only. Oil reserves are negligible. Uranium reserves are more substantial at 2.2% of known world reserves. Keywords: Energy; Policy; France France is the fourth world importer of crude oil and petroleum products after the USA, Japan and West Germany, the third world importer of gas The author is Professor Emeritus at the after West Germany and the USA and the second world importer of coal European Institute of Business Adminafter Japan. Table 1 summarizes the French energy balance-sheets in istration (INSEAD), Boulevard de Constance, 77305 Fontainebleau 1973 and 1981. Cedex, France.
Goals and achievements 1973-81 Long-term strategies in each of the energy sectors were revised in 1974. The two main lines of action were energy savings and the acceleration of Table 1. Primary energy demand and supply (1973-1981).
Source: Ministry of Industry, Letter 101, No 165, 25 February 1982. amtoe = million tonnes oil equivalent.
Total demand
1973 mtoe a 177.7
Coal Oil Gas Hydro Nuclear New energies
30.5 117.2 15.0 9.9 3.1 2.0
17.2 66.0 8.4 5,6 1.7 1.1
32.1 90.7 24.7 14.7 22.1 3.4
17.1 48.3 13.2 7.8 11.8 1.8
Domestic production
44.1
24.8
66,1
35.2
Coal Oil Gas Hydro Nuclear New energies
19.1 2.1 7.0 10.5 3.1 2.0
0 3 0 1 - 4 2 1 5 / 8 2 / 0 3 0 1 8 1 - 0 8 5 0 3 . 0 0 © 1982 Butterworth & Co (Publishers) Ltd
1981 % 100
mtoe 187.7
% 100
15,7 2,4 6,6 15.9 22.1 3.4
181
The new French energy poficy
the nuclear programme. The savings drive was efficient: energy consumption grew only by 0.75% per year during the 1973-81 period whilst // G D P grew by 2.45% per year. 1 Thus the global elasticity for that period / stood at 0.31. Oil consumption decreased dramatically from 66.0% of / Ioo total primary energy consumption in 1973 to 48.3% in 1981. Coal conI 4 I o~ sumption remained at about the same level. / m Z The reduction in oil imports was compensated by an increase in gas and O_ 5 coal imports and by a substantial increase in domestic production which Z x~ 50 f/' ~-/ moved up by 50% from 44.1 to 66.1 million tonnes oil equivalent (mtoe). 2 This increase was due mainly to the jump in nuclear-generated industry Z I production which moved up from 3.1 mtoe in 1973 to 22.1 mtoe in 1981, IO I I I I I I I accounting for 11.8% total energy consumption. Domestic coal pro197~ 7 4 7 5 7 6 7 7 7 8 7 9 8 0 1981 duction regressed at a lower pace than in the 1960s and mainly because of Figure 1. French net oil bill. the gradual exhaustion of some pits. Hydroelectric power increased notably in the period. The overall result was a reduction in the external Source: Conjoncture, Banque de Paris et des Pays-Bas, No 11, December 1981, p dependence from 75.2% to 64.8%. Compared to her main Common Market partners, France is somewhat 151. better-off than Italy which has an external dependence of 82%, and worse-off than Germany which stands at 58%, not to speak of the fortunate energy self sufficient economies of the UK and the Netherlands. This dependence entailed a serious balance-of-payments handicap. The oil import bill accounted for 1.1% of the Gross National Product (GNP) in 1973 and for 4.2% in 1981 (Figure 1). As for the total energy import bill, it amounted to 162 billion French Francs (FF) in 1981, ie about 25% of total imports, and was expected to reach 170 billion FF in 1982.2 On the whole the results of the policy followed after the first oil shock have been substantial. A highly centralized decision making process ensured the coordination of actions engaged on all fronts. Imports were diversified: more gas and coal and less oil. Domestic production increased mainly thanks to nuclear energy, this huge investment effort being expected to bear all its fruit at the end of the 1980s.
Overview of the new policy Energy policy played a part in the campaign for the 1981 presidential election. Contender Franfois Mitterrand advocated a more diversified energy policy, with a larger share for conservation, coal and new technologies. H e expressed his intention of 'mastering' nuclear energy. In the second run he benefitted by most of the votes of the ecologists, whose candidate polled 3.87% of the votes in the firstrun. In accordance with a promise made during the campaign, the procedures were stopped on the site of Plogoff in Brittany just after the election. They were stopped later on five other sites pending the consultation of the local and regional authorities. One of the basic objectives, and a very sound one indeed, was to introduce more democratic procedures prior to the decision on the construction of any power plant and to circulate at an early stage the information so as to obtain the participation and agreement of the populations 1'Document preparatoire au d~bat de concerned. This step proved rewarding as the consultations on the five I'energie', J.P. Hugon, rapporteur, Sep- sites yielded positive answers. tember 1981, p 40. Another objective was to limit the growth in energy consumption 2'Les nouvelles orientations de la politique 6nerg6tique', Revue Gg,n6rale Nucleaire, whilst continuing a rapid increase in economic growth. Consumption would move up from 188 mtoe in 1981 to 232 mtoe in 1990 and GDP September-October 1981, p 477.
182
ENERGY POLICY September 1982
The new French energy policy Table 2. Energy consumption projections to 1990.
Source: Revue G~nerale Nucleaire, September-
Barre Government mtoe Average %
Mauroy Government mtoe Average %
Coal Oil Gas Hydro Nuclear New energies
33--28 68-80 42-37 14-14 73-73 12-10
35-40 70-75 31-40 14-15 60-66 10-14
Total
242
13 31 16 6 30 4 100
232
17 32 13 6 27 5 100
October 1981, p476.
would expand at 5% per year. The assumptions of the preceding government were different: a higher consumption up to 242 mtoe in 1980 and a rate of growth of the economy of 3.5% per year. The elasticity would be of 0.5 in the first case and of 0.8 in the second case. Forecasts are uncertain anyhow, but 5% economic growth in the 1980s seems out of reach. The projections of the two successive governments are presented in Table 2. The third objective was a change of emphasis. The slower growth in energy consumption allowed for a somewhat lower nuclear-generated electricity production by 1990, for a larger recourse to coal and for a larger spread in the alternative projections for natural gas.
Nuclear energy
3'Energie, une autre politique', Paul Quiles, rapporteur, January 1981. 4Hugon, op cit, Ref 1.
S/bid, p 134.
ENERGY POLICY September 1982
The decision to pursue the nuclear development policy was not an easy one for the government appointed in July 1981. In contrast to the three other political parties - the Communists, the RPR (Gaullists) and the U D F (Giscardists) - who were sold to the nuclear option, the Socialists were divided on the subject. A report adopted by the party in January 1981 - the QuilLs report - called for a curtailment of the programme. 3 The government launched an internal debate within the party on the basis of an exhaustive document, the Hugon report, 4 which was adopted at the end of September by the parliamentary group. This paved the way for the discussion in the National Assembly in October. The nuclear park at the end of 1981 comprised 30 operational reactors (including 6 graphite-gas and 19 PWRs) with an installed capacity of 21.2 G W e (compared to a capacity of 8.6 GWe in the UK and of 10.4 GWe in Germany). 25 PWR reactors with an installed capacity of 28.6 GWe were under construction together with the experimental 1200 MWe breeder Superphenix. The overall installed capacity on the completion of this programme was to stand at around 51 GWe (see Figure 2). The government debate centred on three questions: the rhythm of construction of the new power plants, the future of the breeder reactor and the extension of the nuclear fuels reprocessing plant at La Hague. The previous government had intended to order nine PWR power plants in 1982 and 1983. The QuilLs report advised reducing the order to four plants; the Hugon report opted for six plants. The government supported the latter proposal on the basis of two main arguments. The first was the slower rate of growth of electricity consumption, forecast at 5.4% per year up to 1990 and somewhat tentatively at 3.8% per year from 1980 to 1995. 5 This allowed for a slow-down in the construction rhythm, but not as drastic as the one proposed in the January 1981 report. The second argument pertained to the capacity of Framatome, the builder of the reactor, which would have been largely underutilized at the pace of four
183
The new French energy policy
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Figure 2. French nuclear power plants. Source: CEA, Notes d'lnformation, January-February1982
184
ENERGY POLICY September 1982
The new French energy policy
reactors in two years' time. The critics of the government's choice argued that in case of an excess of electricity production over domestic demand, Electricit6 de France (EDF) might have sold at a profit its surplus current to the neighbouring countries.6 As a matter of fact, the cost of nucleargenerated electricity is and will be much lower than that of electricity generated from oil- or coal-fired power plants (Table 3). In 1976, EDF started work on a commercial size 1200 MWe breeder reactor in association with its German and Italian counterparts. The coupling to the grid was scheduled for 1984. The Government opted in favour of the completion of the plant but reserved its decision on the launching of a series of breeders until the time when it could draw on the experience of the functioning of Superph6nix. The nuclear reprocessing plant at La Hague is an essential part of the fuel cycle mastered over the years by the Commissariat ~ l'Energie Atomique (CEA) and its operational branch, Cogema, and comprising uranium mining in France and overseas and a cooperative enrichment plant, in association with Spain, Italy and Belgium, working at full capacity since 1981. The reprocessing plant has a capacity of 400 tonnes/ year to be extended to 800 tonnes/year by 1984 and to 1 600 tonnes/year by 1985. Contracts are signed with foreign operators for the reprocessing of some 6 000 tonnes of fuel. The government followed the recommendation of the Hugon Report regarding the extension of the plant. According to the Prime Minister, Pierre Mauroy, 'nobody can assert that there is a better solution for irradiated fuels than retreatment'. The National Assembly adopted the government's proposals on 8 October by 331 votes, 67 against and 87 abstentions. The majority of French public opinion is not adverse to nuclear energy. A poll conducted in April 1982 by Sofres - Le Matin found that 65% of the people surveyed were in favour of nuclear energy and 33% were against. The corresponding figures in April 1981, on the eve of the presidential election were 56% and 41%. 7
Natural gas The need for France to ensure new supplies of natural gas derived from three considerations: • •
6Jacques Gihel, 'La tunique de Nessus', Revue de I'Energie, No 339, November 1981, p 557. ~'Deux Franqais sur trois sont pour I'energie nucl6aire', Le Monde, 7 April 1982.
•
the domestic field of Lacq, covering 30% of consumption in 1981, will yield only one half of its present output by 1990; the Netherlands which supply about 40% of France's present requirements, will be drastically reducing their deliveries by 1990; and the overall consumption of gas is expected to grow from 24.7 mtoe in 1981 to a bracket of 31.40 mtoe in 1990.
Thus the previous government had considered to increase its purchases both from the USSR and from Algeria (another small supplier being the Table 3. Comparative costs of the nuclear and thermic kWh for a power plant working 6200 hours per year. a Nuclear
Source: Document preparatoire au Rapport sur I'Energie, 1981, p 71.
Note: Plant depreciation over 21 years, actualizatlon factor, 9%. aCosts in centimes at 1 January 1981.
ENERGY POLICY September 1982
Coal
Oil
Investment Running costs Fuel Desulphurisation
8.5 3.0 4.2 -
6.5 3.1 15.0-20.5 2.8
5.6 2.8 43.4 3.5
Total
15.7
27.4-32.9
55.3
185
The new French energy policy
S'A un mauvais moment?', Le Monde, 24 January 1982. 9B.A. Rahmer, 'Big gas deal with West Europe', Petroleum Economist, January 1982, p 14. loPaul Lewis, 'French Soviet gas deal signed despite US plea', International Herald Tribune, 11 February 1982; 'L'arriv6e du gaz sib6rien en Europe pourrait avoir deux ans de retard', Le Monde, 11 February 1982. 11Bruno Dethomas and Daniel Junqua, 'L'AIg~rie livrera ~ la France chaque ann6e 9,15 milliards de rr~tres cubes de 9az & un prix 16gerement sup~rieur au cours mondial', Le Monde, 4 February 1982; Bruno Dethomas, 'Une indexation & 100% sur le cours de differents petroles', Le Monde, 5 February 1982. t2Maudce Delarue, 'Deux Iogiques', Le Monde, 4 February 1982.
186
Norwegian sector of the North Sea). The present government brought the negotiations with the USSR and Algeria to their conclusion. The initial contract with the USSR called for the delivery of 5 billion m 3 of gas per year and was operational since 1980. The Barre government was considering a supplementary contract for another 5 billion ma/yr to be transported by pipeline from the large west Siberian gas field of Urengoi. This was to be part of a 40 billion m 3 operation involving West Germany, Italy, Austria, Switzerland, Belgium and the Netherlands. Germany was the first country to sign up for 10.5 billion m3/yr in November 1981. France followed on 22 January 1982 for an amount of 8 billion m3/yr which, together with the initial contract, would account by 1990 for some 35% of the total gas consumption and for approximately 5% of the total energy consumption of the country by 1990. The German industry was to supply a large part of the pipes and the French industry a number of pumping stations and some turbine parts and electronic equipment for the telemonitoring network. The deal was criticized for its timing - a couple of months after the declaration, under Soviet instructions, of the state of emergency in Poland. s The USA attacked both the German and French contracts on the grounds that they would make Western Europe dangerously dependent on Soviet energy: 'Europe's determination to resist Soviet aggressiveness might, in certain circumstances, be weakened by actual or implied Soviet threats to suspend natural gas supplies'. 9 The USA refused permission for the General Electric Co to export crucial parts for the compressor stations, which might delay by two years the arrival of the Soviet gas in Europe. lo Following two years of discussion and a few days only after the Soviet deal, the Socialist government concluded a dual contract with Algeria. On the one hand, the Algerian oil and gas company, Sonatrach, will sell Gaz de France (GDF) 9.15 billion m 3 of gas at a price of $4.50 fob per million Btu indexed at 100% on a basket of eight crude oils, in which heavy fuels account for one half. On the other hand, the French budget will grant Algeria 'a bonus for the valorisation of the commodity' amounting to $0.60 per million Btu. To these two factors will be added the cost of transportation and regasification. The total price, to be backdated, will be in the range of $5.80, comparing with $4.95 for the Soviet gas and with $4.65 for the Dutch gas delivered at the French border. 11 The reason for the extra price is political. 'The FrancoAlgerian agreement is not a simple commercial deal, it is a fundamental co-development agreement'. Industrial countries disposing of technology and lacking natural resources should organize complementary deals with developing countries. 12 Algeria, a sovereign state, will use the French budget contribution of its own accord. It is hoped that industrial contracts will follow. The Algerian deal has been criticized on several grounds. First because of Algeria's past attitude. In 1980, Algeria had unilaterally interrupted a previous gas contract and had refused to renew an oil delivery contract to Compagnie Fran~aise des P6troles at the time when Iraq, waging a war against Iran, was unable to fulfil its commitments, la Second, doubts were expressed about the Algerian capacity to purchase large amounts of equipment as its government intended to reverse its strategy of industrialization in favour of agriculture. Third, gas becoming more expensive than oil would not contribute to energy susbtitution; some industries might shift from gas to fuel oil. Fourth, negotiations on Algerian gas are
ENERGY POLICY September 1982
The new French energy policy
engaged with Italy, Spain, and the USA: France's move did not pave the way to Western solidarity. Will Italy, who completed in 1981 the still unused trans-Mediterranean pipeline, accept a political price? Higher gas prices will certainly be claimed by would-be new suppliers to Europe such as Nigeria and Cameroon. To avoid the consequences of interruptions in gas supply either from the Soviet Union or from Algeria, GDF has equipped underground reservoirs in porous rocks with a storage capacity of 4 billion m a which could be increased to at least 10 billion m 3 by 1990.14
Oil No mention has so far been made of oil, because no change of policy occurred. The two French companies, CFP and Elf-Aquitaine are pursuing their exploration effort in some 30 countries. Their resources abroad amount to 62 million tonnes in the form of right to oil and long-term contracts. They are affected, as other European companies, by surplus capacity in refining and by insufficient capacity for the conversion of residual fuel in lighter products. Refineries were working in 1981 at 59% of capacity. The need to close some distillation units is recognized. A new pricing system for petroleum products is under consideration and would involve a modicum of liberty within the limits of a supply plan presented by each company.
Coal France imported 52% of her coal consumption in 1981. Her main suppliers were South Africa (28%), West Germany (24%), the USA (22%), and Poland (10%). The average extraction cost was 72 F per kilo-therm compared to 48 F per kilo-therm for imported coal. The 1981 subsidy amounted to 4 billion F including old age pensions. The government objective is to raise domestic production from 22 million tonnes to around 30 million tonnes. This would require the continued exploitation of some depleting coal mines that the previous government was proposing to close and the opening of new mines. The implementation of this latter proposal will require long delays, first for the completion of a geological survey, and second for the equipment of the selected mines. It is impossible at this stage to evaluate the investment outlays. A ceiling has been fixed for the subsidy to national coal in the amount of 2.5 centimes per therm, ie 155 F per tonne, is The policy of investments in overseas mines will be pursued. It is to be feared that cheap nuclear energy will be replaced by expensive domestic coal.
Hydroelectricity, new energies, energy savings No significant increase is expected in hydroelectricity production. The existing equipments are close to their ceiling, considering the improvements realised in the 1973-1982 period. The expected contribution from new energies by 1990 is about the same 13Andr6 Giraud, 'Les raisons d'une in the Barre and in the Mauroy forecasts. Solar energy made a good start d6route', Le Figaro, 5 February 1982. both in household heating and in thermodynamic solar, with the comple14Marc Ambroise-Rendu, 'Gaz de France tion in 1980 of the Themis power plant, of 2 MWe capacity, the largest in Ioge ses r~serves au centre de la term', Le the world at the time. A survey of the biomass resources is under way Monde, 10 June 1981. ISHugon, op cit, p 118. together with a plan to incorporate alcohol to petrol.
ENERGY POLICY ,~:)tember 1982
187
The new Frenchenergypolicy The government is merging the agencies dealing with solar, cogeneration and energy savings in a National Agency for the Mastery of Energy, the budget of which is to reach 1.2 bilfion F. On the basis of 1970 = 100, the energy intensity or energy consumption per unit of GNP had fallen to 90 in 1980.16 The fall was sharper in Britain, but the per capita energy consumption in France was and remains much lower so that there was less room for improving energy efficiency.
Conclusion
= ~ u e de Paris et des Pays-Bas, Conjoncture, December 1981.
188
The new energy policy marks an inflexion, not a revolutionary change, in regard to the one that was pursued from 1974 to 1981. France is still strongly engaged in the nuclear field with an impressive advance on her European partners. By 1990, the share of nuclear generated electricity will amount to 27% of total energy requirements compared to 30% according to the forecasts of the preceding government. The fulfilment of this goal will depend upon the firmness of the government vis-d-vis the local authorities which are endowed with larger advisory capacity. Natural gas supplies from sources outside western Europe involve of necessity political risks which the EEC countries could not or would not face jointly. It seems that France and Germany kept contact when negotiating with the USSR. A similar attitude apparently did not take place when France contracted with Algeria pending the Italo-Algerian negotiations. An opportunity was missed for the launching of a common energy policy. The French energy situation remains fragile. External dependence will not fall below 50% by the end of the decade. The weight of the energy bill is dependent upon the strength of the currency and therefore upon the general economic policy.
ENERGY POUCY September 1982