Identifier
Created
Classification
Origin
06PARIS762
2006-02-06 15:36:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Paris
Cable title:  

FRENCH PROPOSALS FOR AN EU ENERGY POLICY

Tags:  ENRG EPET SENV EIND EINV PREL PGOV FR 
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061536Z Feb 06
UNCLAS SECTION 01 OF 03 PARIS 000762 

SIPDIS

SENSITIVE

STATE FOR EUR/WE, OES/GC, ISN, EB/ESC, AND EB/CBA
USDOC FOR 4212/MAC/EUR/OEURA
DOE FOR ROBERT PRICE PI-32 AND KP LAU NE-80
USEU FOR TSMITHAM

E.O. 12958: N/A
TAGS: ENRG EPET SENV EIND EINV PREL PGOV FR
SUBJECT: FRENCH PROPOSALS FOR AN EU ENERGY POLICY


NOT FOR INTERNET DISTRIBUTION

Summary
-------
UNCLAS SECTION 01 OF 03 PARIS 000762

SIPDIS

SENSITIVE

STATE FOR EUR/WE, OES/GC, ISN, EB/ESC, AND EB/CBA
USDOC FOR 4212/MAC/EUR/OEURA
DOE FOR ROBERT PRICE PI-32 AND KP LAU NE-80
USEU FOR TSMITHAM

E.O. 12958: N/A
TAGS: ENRG EPET SENV EIND EINV PREL PGOV FR
SUBJECT: FRENCH PROPOSALS FOR AN EU ENERGY POLICY


NOT FOR INTERNET DISTRIBUTION

Summary
--------------

1. (U) As part of an on-going EU debate on an integrated
energy policy, France recently presented a memorandum
highlighting the contribution of nuclear power to the
security of supply and the fight against climate change.
France also stressed the importance of energy-saving
initiatives and greater investment in environment-friendly
alternative sources such as wind and solar power. France's
contribution -- the first one so far -- included a call for
greater and more resolute research and development in the
energy field. End Summary.

Describing familiar problems
--------------

2. (U) Following-up on the European Councils of October
and December 2005, which particularly "stressed the
importance of an integrated approach to climate change,
energy and competitiveness objectives," French Minister of
Economy, Finance and Industry Thierry Breton presented on
January 24 his country's contribution to the European
debate, which will climax in an EU Energy Summit on March 23
and 24. In an 18-page document setting out the French
plans, Breton cites International Energy Agency forecasts
that global energy consumption would surge by 60 percent by
2030, with two thirds of this rise being attributable to
emerging and developing nations. On the basis of this
scenario, fossil fuels (oil, gas, and coal) would provide 85
percent of the world's energy, with greenhouse gas emissions
rising a further 60% over current levels. The French text
also draws on a European Commission report from Spring 2005
on security of supplies within the European Union, which
predicts an energy dependency level (meaning dependency on
imported energy sources) of 70 percent in 2030, compared
with 50 percent today.


3. (U) The French paper further raises the specter of
higher EU electricity costs likely to harm the

competitiveness of electricity-intensive industries and
threaten employment. More specifically, the paper outlines
three factors, which could lead to higher prices in spite of
an increasingly deregulated market: 1) a new investment
burden on utilities as a large number of production
facilities are replaced in the next twenty years; 2) the
creation of greenhouse gas emissions trading provided for in
the October 2003 EU Directive, and 3) the choice by some
member States to abandon nuclear power in favor of more
expensive fossil fuel-based production and, to a much lesser
degree, renewable energies.

A long-term energy plan to ensure security of supply
-------------- --------------

4. (U) France believes that all these challenges require
"a clear and forward-looking framework" in the form of
medium and long-term forecasts of EU energy consumption,
production and imports, an assessment of the impact of
greenhouse gas emissions, and specific measures to improve
energy efficiency in the residential sector, transportation,
industry and agriculture. France offers as an example its
own energy bill of July 2005, which sets out energy supply
and demand projections, general goals and associated costs
as well as various measures for achieving them. As a
result, France expects to improve the overall energy
intensity of its economy by two percent a year until 2015
and by 2.6 percent a year between 2015 and 2030. At the
same time, France is intent on achieving an average yearly
reduction of three percent in greenhouse gas emissions.


5. (U) In the power sector, France proposes that the EU
adopt a system similar to its "balance estimates" which
calls on the electricity transmission network manager to
simulate the supply and demand balance for a 10 to 15 year
period, taking into account production contingencies,
climate and consumption. The French paper signals that this
model enables the Government to include all these
characteristics a Long-term Investment Program for
Electricity Production (PPI),thus guaranteeing a certain
level of security. France believes that this type of
modeling could allow member States to discuss the risk of
acceptable failure, thus leading to a long-term investment
program for electricity production on a European scale, or
within the framework of a comparable exercise conducted
within each member state.

Promoting energy savings
--------------

6. (U) While France concurs with the energy saving
measures put forward by the EU Commission and Council, it
also recommends that each member State draw up "energy
saving certificates" which could then be traded on a
European market. France is convinced that such a system
motivates energy suppliers to make energy savings. France
also proposes the establishment of a European guarantee fund
to encourage funding of energy efficiency projects with
funding from the European Investment Bank for the
construction and renovation of very low energy consumption
buildings.

7. (U) In the transportation sector, in which energy
consumption and the resulting emissions are rising fastest,
France is giving priority to investing in infrastructures
that complement road transport. The French memorandum makes
clear that this is a promising way of reducing the European
economy's dependence on oil and of reducing CO2 emissions.
For example, in France, energy consumption by the
transportation sector fell by 1.1 percent in 2003, despite
an increase in the number of individual journeys. For more
rational use of energy in the field of ground transport,
France suggests that the EU examine measures such as
voluntary agreement by European car makers to reach an
average emissions level for new vehicles of 140 grams of CO2
per kilometer by 2008.

What energy mix?
--------------

8. (SBU) While the French memorandum stresses the need for
each member state to determine its own energy mix and make
use of its own natural resources, it unsurprisingly makes a
pitch in favor of nuclear power and renewable energies.
Nuclear power today generates only 34 percent of European
electricity, but over 75 percent of French electricity.
France therefore argues that it is of strategic importance
to maintain the current contribution of nuclear power to the
European energy mix and preserve Europe's technological and
industrial edge in this area. Given France's importance in
the European energy market, we can expect nuclear power to
be revived on a continental scale, also on the basis of
growing energy needs from Central and Eastern European
countries. France has already held informal talks with the
British Government on developing a common EU approach to
energy production. These talks come at a time of apparent
growing support for nuclear power in Britain.


9. (U) At the same time, the French memorandum stresses
the need for the nuclear industry to be closely monitored,
particularly with regards to nuclear waste, through a
reinforced EURATOM treaty. The French paper further notes
that the EURATOM Treaty should serve as the basis for EU-
wide nuclear training programs.


10. (U) On renewable energies, France claims considerable
progress over the past three years. In terms of volume,
France is currently Europe's leading producer of renewable
energy. In three years, its installed wind power base has
increased five-fold, while its installed power using
photovoltaic panels has doubled. However, given the higher
cost of renewable energies, France thinks it important that
Europe increases its research efforts in this field in order
to improve the competitiveness of the various technologies.
The French memorandum calls for a thermal renewable energies
directive to supplement the existing directives on the
production of electricity from renewable energies and bio-
fuels.

Oil and Natural Gas
--------------

11. (U) Amid growing concern about dependence on oil and
gas, the French memorandum makes a number of suggestions
aimed at reducing tensions. In particular, France proposes
joint European action to examine measures to encourage
replacement of oil in applications suitable for substitution
(heating and generation of electricity),and to speed up the
use of bio-fuels, natural gas and LPG in transportation,
notably for captive fleets. France is also calling on the
EU to regularly publish an inventory of European oil and gas
stocks, as is already done in the United States.


12. (U) Given Europe's increasing dependence on gas, the
French memorandum outlines both short-term and long-term
solutions. In the short term, France urges implementation
of the April 2004 Directive on the security of natural gas
supplies in the event of extreme climatic situations or
partial interruption of supply. In the longer term, France
is calling for compliance with the Energy Community South
East Europe Treaty signed in October 2005 to promote the
free circulation of gas and the construction of new energy
transport infrastructures in this region.

Boosting Research
--------------

13. (U) Reflecting its own "innovation and energy science
strategy" outlined in the 2005 French energy bill, France
recommends an EU Research and Development policy in the
field of new energy technologies and energy savings to
consolidate resources and meet market needs more rapidly. In
particular, France supports the proposal by Commissioner
Piebalgs for a strategic European energy-environment
research plan and proposes that the European Investment Bank
be called upon to finance European research initiatives. It
further suggests that the technological platforms at
community level, such as those which exist for hydrogen and
fuel cells, bio-energies, photovoltaic systems, CO2 capture
and storage, etc., be reinforced in order to stimulate the
emergence of strategic visions in the field of the new
energy technologies. These platforms should enable Europe
to play a major role in the new international energy
partnerships, such as the IPHE (International Partnership
for Hydrogen Economy) or the CSLF (Carbon Sequestration
Leadership Forum).

Comment
--------------

14. (SBU) All in all, the French proposals support the EU
Commission's Green Paper on the security of energy supply as
well as the EU action plan for energy efficiency. These EU
documents have already greatly influenced France's recent
energy regulations. The interest of France's contribution
lies mostly in its suggestion that each member state adopt
the centralized French supply and demand management system.
It is also the first individual member state contribution
and may lead other member states to do the same, thus
enriching the debate prior to the upcoming March summit.
End Comment.

Stapleton