France adopted an ambitious energy transition package in August 2015 that sets out various targets designed to achieve the gradual de-carbonisation and increased sustainability of its economy.

The package includes consumption reduction targets, energy production cuts and provisions for a long-term programming scheme for public authorities to manage the country’s energy mix.

The Objective

Consistent with the EU’s energy strategy, France’s objective is to:

• reduce its energy consumption by 50 percent by 2050 (with reference to 2012 energy consumption levels)
• achieve an intermediate target of an overall 20 percent reduction by 2030
• reduce fossil fuels consumption by 30 percent by 2030

In parallel, and perhaps more controversially, France aims to significantly reduce its production of nuclear electricity. France currently sources 75 percent of its electricity from nuclear energy – the highest worldwide – and is targeting a one third reduction of its nuclear energy sourcing by 2025.

The Strategy and its Challenges

For the above to be implemented through the energy transition package, two 5-year energy programming schemes (programmation pluri-annuelle de l’énergie or PPE) will have to be enacted by decrees.

The purpose of the PPEs is for the authorities to prioritise the means available to translate the package’s objectives into actual reductions. Decisions will be based upon a sector-by-sector analysis, and will factor in the needs of energy-intensive activities, changing population demographics, economic growth scenarios, the trade balance and energy efficiency objectives.

At this stage, eight months after the enactment of the package, the first PPE decree is yet to be published. After several postponements, a new draft is expected by the end of July 2016. The package will still need to be adopted after the text has been agreed upon. The absence of a PPE at this stage is troublesome insofar as it jeopardises the stakeholders’ visibility of the energy market in the medium to long term. Subsequently, it prevents traditional energy producers from making strategic capacity choices at a time of relative overcapacity and low market prices, and also prevents new operators in the renewables sector from making long term strategy decisions. Although the renewable energy production objectives (set in a December 2009 Ministerial Order) have recently been revised for the 2018-2023 period in an updated Ministerial Order, this instrument, which is yet to be published, is not legally binding. Therefore, a comprehensive PPE is required to provide a domestic energy policy encompassing all energy sources, including nuclear.

Future Nuclear Phase-Out

Unsurprisingly, the issues surrounding the future of France’s nuclear energy capacity constitute the core obstacle to the adoption of the PPE. France currently operates 58 reactors from 19 sites. The overall consumption of electricity has been rather stagnant in recent years due to slowed economic growth and relatively mild weather. Based on the probable outlook of continuing flat electricity consumption levels, a reactor shut down plan is inevitable.

According to France’s Court of Auditors’ (Cour des comptes) latest annual report, if the 2025 target reduction of nuclear energy sourcing is to be met, no fewer than 17 to 20 reactors will have to be decommissioned. Considering the set-back that has already taken place with the long-promised-and-always-postponed closure of France’s two oldest reactors (first in operation in 1978) in Fessenheim, this significant number of decommissioning projects will not be easily implemented. However, these closures are not only consistent with France’s future energy strategy, but are required to ensure economic viability of its energy mix:

• France’s aging nuclear reactor portfolio will have to be significantly upgraded to allow the older reactors to extend their lives beyond the 40-year mark at an estimated total cost of €100 billion (based on the current 58-reactor portfolio).
•  Overcapacity in the nuclear sector would lead to a dangerous slump in electricity prices thus endangering further the financing of the transition towards a balanced energy mix.

In conclusion, France’s future energy strategy should become clearer when the first PPE is adopted. Only when the objectives are set in concrete terms of energy savings and renewables increases can the life expectancy of reactors be adjusted and phase-out planned accordingly. At that time, a new phase will then begin with the upgrade and re-permitting of selective reactors. Technical, financial and legal challenges associated with decommissioning activities across France will likely be unprecedented.

This post was prepared with the assistance of David Desforges from Desforges Law.