President François Hollande has made it clear that his government's law on energy transition is “one of the most important of [my] term in office”. Last week it was presented by environment and energy minister Ségolène Royal to the government's weekly ministerial cabinet meeting amid considerable fanfare.
According to a government spokesman the proposed legislation (see below), which aims to cut energy use and oversee the switch from nuclear and fossil fuels to renewable energy, heralds a “new French energy model”. The spokesman continued: “This proposed legislation makes France one of the most committed member states in the European Union when it comes to energy transition and the fight against climate change, at a time when we are discussing the new energy and climate package at a European level. With the approach of the Paris Climate Change Conference in 2015, it puts French ambition into practice in the framework of international negotiations.”
In reality, however, the measures announced last Wednesday are modest in both content and ambition. They are based on proposals first unveiled by Ségolène Royal in mid-June and which were subsequently sent to two state consultative bodies, the Conseil National de la Transition Écologique (CNTE) and the Conseil Économique, Social et Environnemental (CESE), for their opinion and recommendations. Each organisation made suggestions, some of which have been followed by the government. For example, there will now be an annual target for energy consumption savings until 2030, and the definition of a 'clean' vehicle has been broadened beyond just electric or hybrid cars.
But overall many observers remain underwhelmed. “Nothing new under the sun,” was the view of the climate change pressure group Réseau action climat. “Whether on medium term objectives, renovating housing stock, transport or energy production, the proposed legislation makes some modest advances at the margins but doesn't provide the necessary impetus to move towards an energy model that is more restrained, creates jobs, is more local-based and less polluting,” said the group, which called on MPs to flesh out the proposals.
There was also a cautious reaction from the Fondation Nicolas-Hulot, the high-profile foundation set up by French TV personality and environmental campaigner Nicolas Hulot. The group gave its support in principle for the measures, claiming “this bill will be a major achievement of [President Hollande's] term of office, and a way, finally, of entering the 21st century”. However this is on condition that the bill “is given the means to be put in practice, that's to say the level of funding that matches its ambitions, estimated at 20 billion euros a year”.
Here Mediapart highlights the strong and weak points of the minister's proposals.
GOOD POINTS
- Ten billion euros on the tables
Energy minister Ségolène Royal said that around 10 billion euros would be made available for the measures in the planned legislation: 5 billion euros from the state lending body the Caisse des dépôts for 2% loans aimed at local authorities, 1.5 billion euros “to reinforce support for exemplary local initiatives in energy transition and the circular economy”, 1.5 billion euros for tax breaks and also one billion euros for renovating the country's middle schools, plus various forms of loans.
Among the forms of aid announced are zero-interest home loans for individual homeowners, which the government wants to see rise in number from 30,000 a year to 100,000. However, despite the demands of pressure groups, these loans will not be dependent on a high level of energy efficiency in renovation works carried out. Also, households carrying out thermal insulation work before 2015 will be able to get a tax break of up to 30%; nor, says Royal, will they be obliged to have to carry out several different works at once, as has been the case in the past. The level of this tax break is capped at 8,000 euros for an individual and 16,000 euros for a couple.
In addition, so-called 'social rates' for energy charges – in effect lower bills for the least well-off – will be extended to households that use oil or wood to heat their homes. Currently only those who use gas or electricity qualify. However, the total cost of this new energy measure has not yet been established.
Energy mix on the right lines, but still not clear enough
Many consider the question of the energy mix target – what proportion of the country's overall energy need will be met by which energy source - to be a key point, and it features in the proposed legislation. Under the government's plan renewable energy must represent more than 30% of the country's total energy use by 2030 – in fact it specifies 32% - against 13.7% in 2012. Indeed, the government has even added an intermediate step, stating that the renewable part should form 23% of the energy mix by 2020.
The energy transition proposals also restate long-term objectives already announced by François Hollande: the halving of energy consumption between now and 2050 and a 40% reduction in greenhouse gas emissions by 2030. Initially the draft laws did not set any intermediate targets for these goals. However, having listened to the advice of the CNTE and the CESE, the government has added that in relation to cutting energy consumption it will “set the annual rate of reducing energy intensity [editor's note, in other words increasing energy efficiency] at 2.5% between now and 2030”. Nonetheless this incremental approach has not pleased everyone. “It would have been clearer for everyone to have gone for a threshold for the reduction to be attained by 2030,” said Mathieu Orphelin of the Fondation Nicolas Hulot.
BAD POINTS
Third-party financing remains under the control of the banks
Ségolène Royal has made this one of the principal measures of her proposed law; recognition of the role of third-party funding companies, so-called sociétés d’économie mixte (SEM), which are essentially public limited companies of which a public authority is the main shareholder. They are set up by regional councils to help households afford the cost of renovation work. In practice what happens is that, for example, the owners in a block of flats sign a contract with an operator (a SEM) which coordinates the thermal insulation of the whole building. The SEM pays a part of the costs direct to the builders who do the work. In return the residents pay the SEM the equivalent of the money they save on heating bills. The first SEM dedicated to third-party financing for insulation work on buildings, SEM Energies POSIT'IF, was created in 2013 in the Île-de-France, the region that includes Paris.
However, the banking lobby, which has been closely monitoring developments, has ensured that the SEMs involved must be subject to the same financial and monetary rules as other funding organisations. In other words, they have to become credit institutions. In particular they have to ensure they have enough cash to guarantee the same funding ratio as banks – a tough requirement for small companies and local authorities.
In an earlier version of the draft legislation, dated June 14th, it was explicitly stated that the SEMs would not have to meet these banking fund ratio rules. Since then, however, this gesture towards the SEMs has been dropped. Instead they must now either become a credit institution themselves or have a financial agreement with a bank which will then take charge of the loan offer itself.
Governance of the nuclear industry
The draft proposals do not give the state the power to close a nuclear reactor for political or policy reasons; only the operators, electricity giant EDF, or the nuclear safety watchdog, the Autorité de sûreté nucléaire (ASN), can do this. Yet the government's stated aim is still to reduce the proportion of French energy is that produced by nuclear plants from around 75% currently to 50% by 2025. Though he supports the government's proposals, a senator for the green party EELV, Ronan Dantec, notes that “closing a nuclear reactor remains a taboo”.
Electricity prices – a victory for the industry
The price of electricity is a very sensitive political topic in France, and the country's giant electricity supplier EDF has fared well in this proposed legislation. A key issue is the money that companies get for running the electricity network – these firms are ERDF, a subsidiary of EDF which runs the main lower-voltage part of the grid, and another EDF subsidiary RTE which manages the high-voltage section. The money these firms receive is determined by a fixed rate which is called the tarif d’utilisation des réseaux publics d’électricité or TURPE. This currently brings in around 11.4 billion euros a year, 8.4 billion of which go to ERDF.
However, at the end of 2012 the country's highest administrative court, the Conseil d'État, quashed the TURPE rate that was in operation for the period 2009 to 2013. The court ruled that the rate fixed had overestimated the money due to the grid operators by several hundred million euros, as it covered costs that had been incurred some time ago.
Yet the draft proposals of the energy transition law now propose that “the tariffs for using the public networks that carry and distribute electricity [editor's note, i.e. the TURPE] can include a reasonable margin that, in particular, contributes to the carrying out of necessary investment for the development of the networks”. This means, in effect, that the EDF subsidiaries have the right to include all the costs that they want in their prices.
Blind spot over green transport
The measures in the draft legislation that relate to transport issues are almost solely concerned with electric cars. It makes provisions for seven million recharging points by 2030, 10,000 euros in aid to replace a polluting diesel vehicle with an electric one, and replacing one vehicle in two in public authority fleets with an electric version. Despite requests from the CESE and the CNTE, there is nothing on transport infrastructure and nothing on new transport services.
On the other hand, as recommended by those bodies, the government has broadened its definition of clean vehicles, going beyond just electric or hybrid to include vehicles that emit “a very low level of greenhouse gases and atmospheric pollutants”. However, the new law does not propose abolishing the tax advantages that diesel currently enjoys over petrol in France, despite the recognised impact of the former on public health.
No obligation to have citizen shareholders
In the first draft of the law there was an obligation on businesses to open up investment in new renewable energy projects to local residents and local authorities; in the current proposals this requirement has been removed, even though the idea of citizen shareholders has been retained. Article 27 of the current draft says businesses “can, when putting together their investments, propose a share to inhabitants who usually live close to the project or to local authorities on whose land it it due to be set up”.
What happened to energy-plus buildings?
During her press conference on June 18th, 2014, to discuss the initial drafts of the law, Ségolène Royal sang the praises of so-called energy-plus houses; buildings that produce more energy from renewable sources than they consume. In that initial draft all building work carried out under the aegis of public authorities had to be energy-plus. However, in the current version this obligation has disappeared. It now states: “All new construction works under the aegis of public authorities must show themselves to be exemplary in terms of energy and will, whenever possible, be energy-plus.”
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- The French version of this article can be found here.
English version by Michael Streeter