Welcome back VisualPolitik fans. These days, the Franco-German axis
continues to lead Europe but now the balance of power has shifted.
Angela Merkel had to deal with four different French presidents. However,
with the German Chancellor bowing out, French positions are gaining strength in Brussels.
The more incisive discourse that the European Union is adopting in foreign policy is an example
of this influence. But above all it is the energy transition that is at the centre of the EU debate.
The energy transition and one key question: How on earth can
we make economies grow while accelerating decarbonisation and reducing CO2 emissions?
And while searching for an answer, the president of France, Emmanuel Macron,
made this announcement that meant nothing less than breaking with the
prevailing political discourse of recent years: (To guarantee France's energy independence,
to guarantee our country's electricity supply and achieve our
objectives, in particular carbon neutrality in 2050, we will, for the first time in
decades, relaunch the construction of nuclear reactors in our country)
The announcement, despite coming at a time of high energy price tensions,
was surprising insofar as the latest nuclear power plants being built by Électricité
de France are causing nothing but problems.
So the question is: Why is Macron betting on nuclear power? Is the new generation of
nuclear power plants the solution to climate change? And more importantly for everyone:
Will this decision have consequences for the rest of the European Union? Today on VisualPolitik
we are going to answer these questions. But first, let's take a look at a bit of history.
(EUROPE'S NUCLEAR POWER)
France's relationship with nuclear energy goes back a long way. The French scientist,
Henri Becquerel, discovered radioactivity and the most significant research into its
properties was carried out by Pierre and Marie Curie.
But we still had to wait several decades to take advantage of nuclear power as a source
of energy. Specifically, it wasn’t until 1954 when the first nuclear
power plant in the world began to produce electricity. It was in the Soviet Union.
At that time nuclear power seemed to be the future.
So these advances were soon adopted by the other economic powers: the United Kingdom,
the United States and, of course, France.
It was already the 1960s and most of the industrialized countries had
built at least one experimental reactor. Little by
little new reactors were being developed and that is how we came to the year 1973.
By then France had 8 nuclear reactors in operation in 5 different plants,
with 5 more reactors under construction.
And then, then came the oil crisis.
During the infamous 1973 crisis, the price of oil multiplied by four after the Arab countries
decided to reduce their production. At that time, most of the electricity in France,
a country with no oil fields of its own, was generated by oil-fired power
stations compared to just over 5% from the first generation of nuclear reactors.
Therefore, the so-called oil crisis was the key to the activation of the Messmer plan.
In March 1974, France presented to the world the plan with which it intended to break its
complete dependence on foreign oil. The goal was to become the largest nuclear power in Europe.
This plan envisaged building 80 nuclear power reactors in
10 years and reaching 170 by the year 2000.
A plan that, if it had been completed, would need a whole edition of Megaprojects.
However VisualPolitik fans, the final execution was more modest:
58 reactors were built on 19 different sites. But, in any case, one goal was achieved: France
is, after the United States, the country that produces the most nuclear energy in the world.
And, of course, for France it is its largest source of electricity generation. Practically
70% of French electricity is of nuclear origin, the highest percentage in the world. What’s more,
given France's standing in the European Union, its 56 operational reactors contribute significantly
to the fact that almost a third of the electricity consumed in the EU is of nuclear origin.
And, of course, as it is an energy that is generated without emitting carbon into the
atmosphere, France wants to promote nuclear energy to fight against global warming.
And yes, I know what many of you are thinking: Well, [host], but renewables
also produce electricity without emitting CO2. But of course, the issue is that, as you know,
wind and solar depend on weather conditions. What happens when the wind doesn't blow?
Well... The answer to that question is something we have seen in 2021
all over Europe, when even the dirtiest energy sources have had to be used.
(Germany: Coal tops wind as primary electricity source – DW)
Well, unlike renewables, nuclear offers a stable electricity production. What’s more,
its price is barely affected by fluctuations in the cost of uranium.
Of course, as you all know, it also has its drawbacks: nuclear waste management is one
of them. And I am not only talking about safety, but also about cost.
For example, in France itself, the cost of the Cigéo project, a deep geological
repository for radioactive waste, is now estimated at around $45 billion dollars,
a far cry from the $28 billion initially forecast.
A huge investment which, however, is only the tip of the iceberg.
The Messmer plan led to approximately 80% of
France’s nuclear reactors being built between the late 1970s and the 1980s.
With a useful life of 40 years, this means that either we invest now in their renovation
so that their continued operation is guaranteed or we have to face
their decommissioning. Either option would cost France tens of billions of dollars.
Specifically, according to EDF estimates, the decommissioning of the reactors would
cost about $85 billion dollars, while the option of updating and overhauling the
plants in order to continue operating for a few more decades would amount to about
$50 billion. And it is the latter that the French government has finally opted for.
But take note, because for the moment, France has regulated by law that its nuclear capacity
will never exceed 63.2 gigawatts. So, unless there is a legislative change, any new reactor,
which is what the French president has announced, would mean the closure of an old one.
That remains to be defined.
In any case there is another interesting question: the French nuclear industry has had a lot of
problems in recent years. So the question is, is it really ready for the Macron plan?
Listen up. (HARD TIMES)
In order to talk about nuclear energy in France,
we have to look at three letters: EDF, the acronym for Électricité de France.
We are talking about the public company that owns the French nuclear power plants
and supplies electricity to France as if it had a virtual monopoly.
It also owns Framatome, the nuclear reactor business that the company acquired in 2018
from Areva, another state-owned company that was forced to restructure
in the face of the problems the French nuclear industry has undergone over the past decade.
In 2016, France's nuclear regulator ordered 21 reactors,
more than a third of EDF's nuclear fleet, to be shut down after Areva acknowledged
defects in 400 parts manufactured since 1965 and used in the steam generators.
Inspectors were concerned about high levels of carbon found in steel from the Le Creusot
forge, with a risk of steel fractures in the event of a sudden change in temperature.
What happened then was a good illustration of what could happen
if France suddenly gave up its nuclear plants.
Thermal power plants started burning coal at a rate not seen since the 1980s. But wait a minute,
because even before we consider the atmosphere,
the slowdown in atomic generation was felt in the wallets of the French.
The price of electricity shot up by 40%; but take note because it also rose in
many of the European countries to which France exports its generated electricity.
In 2017 things settled back down. But the joke did not come cheap:
the French state-owned company estimated the impact on its
accounts of the closure and repair of the plants at over a billion dollars.
Worst of all, if this incident is already serious in itself,
the big headache that still plagues EDF today is the European pressurized reactor, the EPR;
a third-generation pressurized water reactor that at the beginning of
the century was presented as the star project of the French nuclear industry.
Years have passed and currently there are only 2 EPRs in operation. They are in China
and one has already had to be shut down.
Between 2022 and 2023, other EPRs are scheduled to start operating in Finland and in France,
specifically at the Flamanville nuclear power plant. I could tell you about all
the problems that the Flamanville EPR has had,
but it would be better if the French Minister of Economy, Bruno Le Marie, told you.
As the minister said, all these problems and cost overruns have been a serious
blow to France's reputation in the field of nuclear energy.
Years ago, the United Kingdom was the main interested party in continuing
to invest in nuclear energy and installing the EPRs of the French state-owned company.
Things are different today. Yes, a project has already been approved but,
not surprisingly, the British are losing the desire to place more orders.
The two EPR reactors slated to expand the Hinkley Point nuclear power plant
are several years behind schedule and millions in cost overruns. Their cost has risen to $30.5
billion dollars and they will not enter service until 2026. The approval of two
more EDF EPR reactors for the Sizewell plant is still up in the air. It seems that in the
end they will be inclined to give the green light to the project after 10 years of debate.
Meanwhile the UK and Rolls-Royce have just announced a $528 million
investment to develop and design a new generation of smaller nuclear reactors.
We are talking about the SMR, Small Modular Reactor, with a power that does not exceed
300 megawatts compared to more than 1,000 MW of conventional reactors. The interesting thing
is that Rolls-Royce assures that "smaller" will be synonymous with "fewer problems".
SMRs are expected to be cheaper and faster to build than existing reactors. Their cost
is estimated at $2.9 billion, with expectations of a future reduction to $2.38 billion. The SMRs
are designed to be mass-produced from a factory and then transported to their final location.
Their construction, which would take 3-4 years,
promises to be simpler than EPR reactors, which take more than 10 years to complete.
France is also keeping a close eye on SMR developments.
A month before announcing the construction of new reactors, Macron pledged an investment
of over one billion dollars for the development of these SMRs. There has
been some confusion because some media went so far as to link the two announcements.
However, it is far from clear that this is the case. In fact it is very likely
that the Macron plan corresponds more to what was
set out by a report commissioned by his own government that was leaked in 2018.
(Nuclear: a report recommends the construction of six new EPRs – Le Monde)
These six EPRs are expected to cost a third less than the Flamanville EPR and
$56.5 billion dollars is expected to be enough to build them all.
The aim would be to take advantage of economies of scale. EDF claims that its
next EPRs will benefit from cost reductions as more copies of the same design are built,
an advantage that the current projects have not been able to take advantage of.
At least this is the theory. For it to become a reality, technological developments will be
necessary but more importantly France will need to succeed in the battle it is waging in Brussels.
And this is another key point. Welcome to the bureaucracy of the European Community.
(QUID PRO QUO)
The European Union is about to take a vital decision to tackle the fight
against climate change. The matter under discussion is the so-called
taxonomy. I’m sure many of you know that taxonomy in biology
is responsible for classifying animals and plants according to their characteristics.
Well, what the European Commission is trying to do here is to decide which
energy sources are classified as environmentally sustainable.
The idea is that taxonomy of energy sources will become a guiding principle
for the European Union in deciding which industries can be subsidised.
The taxonomy is also intended to guide financial markets in
assessing which energy sources are worth investing in. So the future is at stake:
whether it’s access to subsidies and cheap capital or much more complicated financing if excluded.
As you can imagine, France is fighting with all its might to get nuclear energy into
Brussels' plans. And the most important thing is that they are not alone. Along with France,
Bulgaria, Croatia, Slovakia, Slovenia, Finland, Hungary, Poland, the Czech Republic and Romania
have taken a stand. In addition, these countries were also supported by the Netherlands
and Sweden at the last Council of Energy Ministers. We are talking about 12
of the 27 members of the European Union. But hold on a minute, because
other countries are not ready to roll out the red carpet for nuclear energy.
The opposition group is led by Germany, which in 2022 will complete the nuclear shutdown it
announced after the Fukushima accident. It is joined by Austria, Luxembourg,
Denmark, Portugal and Spain.
And, in fact, what Berlin is doing is fighting for natural gas to be
classified as environmentally sustainable because it emits less CO2 than burning coal,
which is currently one of its main sources of energy.
Now, the ball is in the court of the European Commission, which obtained from the European
institutions a delegated act to define the framework of the taxonomy. And what
does the Commission think? This is what President Ursula Von der Leyen said at the end of October.
This taxonomy proposal will be presented as a delegated act. There are only two
ways for it not to go ahead: either a majority of the European Parliament or
a qualified majority of the European Council will vote against it. This
does not look like an easy task. The question is, will Brussels be prepared to stand up to Berlin?
So everything indicates that we will find ourselves with a Quid pro quo agreement.
In other words, something in exchange for something. You know,
Germany gives in on one side; France gives in on the other. The European Commission will classify
both gas and nuclear as "environmentally sustainable" and everyone will be happy.
"Made in" Brussels diplomacy in its purest form.
But now the question is over to you: Do you think France will finally get Brussels'
blessing for nuclear energy, and would you like your country to implement a plan
to build new nuclear reactors as well? You can leave your answer in the comments.
As always, if you found the video interesting,
please like it and don't forget to subscribe to VisualPolitik. All the best and see you next time.