VIVE LA FRANCE
by Elliott H. Gue
Editor, The Energy Letter
June 1, 2007

France remains a key global leader in the use of nuclear power, garnering more than 80 percent of its electricity from nuclear plants. The recent election of Nicolas Sarkozy as president of France has bullish implications for the future of nuclear power.

The president's main opponent, Socialist candidate S�gol�ne Royal, had voiced a rather ambiguous position on nuclear energy. She had called, at one point, for a major reduction in the nuclear share of the French electric grid from 80 percent closer to the 50 percent level. Even worse, she called for construction of a new advanced reactor--a European Pressurized Reactor (EPR)--in the nation to be stopped or, at least, delayed.

Either of these policies would have been disastrous. Leaving aside the issue of global warming and pollution, eliminating significant nuclear power capacity in France would almost undoubtedly mean a massive increase in the need to import natural gas from Russia.

And it's not just an issue for the French republic. Thanks to France's reliable nuclear plants, the nation is a major exporter of electricity to neighboring countries. France is, in fact, the largest exporter of power in the European Union (EU). Bottom line: What's bad for France's electric grid is also bad for Italy, Spain, Germany and a host of other major EU nations.

Of course, we can't sidestep the global warming issue. Views on warming differ wildly, and as investors, we really have no need to enter this debate. But the global warming issue remains at the center of EU politics, and there's considerable debate over how best to reduce carbon-dioxide emissions.

It's also becoming a more important issue in the US following the recent Supreme Court ruling instructing the Environmental Protection Agency to regulate carbon emissions as a pollutant. This debate has important investment implications, particularly for my recommended nuclear power, alternative energy and biofuels plays.

Some groups have sought to exclude and/or minimize nuclear power's role in Europe's carbon-dioxide reduction schemes. This is particularly problematic when you consider that nuclear power is an even-more-important share of the electric grid in the largest EU countries than it is in the US. France has been a key voice in promoting the recognition of nuclear power as a logical means of reducing carbon emissions.

I've long followed the activities of a group called Environmentalists for Nuclear Energy (EFN). In studying the nuclear power industry, I found many prominent environmental organizations, such as Greenpeace, have long opposed the further expansion of nuclear power. But I've also found several references to a group of highly respected and prominent environmentalists from all over the world who took the opposite view that nuclear power is actually key to saving the environment and reducing pollution.

Many of the most prominent members of the pro-nuclear camp are members of EFN, headed by nuclear physicist Bruno Comby. A few weeks prior to the French election, EFN sent a questionnaire to all French presidential candidates, asking a series of questions about their stance on nuclear power and energy policy in general. Several candidates answered, including President Sarkozy.

His answer to the questionnaire was the most pro-nuclear of any answer received. I think it's far to say that France will remain a key positive voice for nuclear power within the EU.

Comby and EFN have graciously permitted me to re-print President Sarkozy's lengthy written response to the questionnaire.

I encourage all readers to check out the EFN Web site (www.ecolo.org) and consider signing up for its free e-mail list http://www.ecolo.org/list/listen.htm. I've found its periodic e-mails an invaluable way to keep on top of the latest news on nuclear power and environmental policy.

I first saw this letter from President Sarkozy in its original French a week or so before the election. I'd also like to thank EFN for sending around a translated version shortly thereafter; this has saved us all from my attempts to translate it directly with my somewhat rusty French.

Without further introduction, here�s President Nicolas Sarkozy's written response to EFN's survey:

You have called to my attention the goals furthered by your organization in the field of ecology and sustainable development. In particular, you insist on the much needed changes to be undertaken in our energy policy, and you especially underline the environmental benefits of nuclear energy.

I thank you for your interest and for writing to me. The defense of the environment has too often in the past been opposed to hunters, farmers, the industries, etc. I can no longer accept this old-fashioned and conflicted vision of ecology. It is a paradox to oppose hunters and environmentalists (protectors of nature).

There is no ecological logic in thinking that farmers are satisfied with farming pollution, of which they are the first victims. And one really has to hate enterprises to think that they are by nature hostile to environmental protection when, for 20 years, enterprises are perhaps the actors in our society that put forth the greatest number of initiatives to deal with environmental concerns.

I was particularly glad to read your open and pragmatic letter. I have often mentioned that our action against global warming ought to be one of the priorities of the government's program. And in fact, all environmentalists share this view. Nevertheless, for purely ideological reasons, these same environmentalists want to close down our nuclear industry, with the consequences we can imagine on climate change.

I am perfectly aware of the fact that renewable energies, in their present state of development, cannot seriously hope to replace nuclear energy. To replace one single nuclear reactor, one would have to install about a thousand wind turbines. [Comment from EFN: This is true for equal installed capacity, but to produce the same number of kilowatts, one would need about 5,000 wind turbines, not just 1,000.] And even then, the production would be irregular. We should obviously continue to support the development of renewable energies; but at least for the medium term, they will be nothing more than a rather small contribution to our energy.

I cannot accept the idea of replacing nuclear power stations by coal or gas. Let me repeat that my priority is to counter climate change.

More exact, you are asking me the orientations of the energy policy that I would like to see implemented. Let me give you a precise answer.

You know that nuclear energy provides 80 percent of the electricity in France. That largely explains why France emits 18 percent less greenhouse gas per inhabitant than the average of the European Union countries. If our nuclear power plants were to be replaced tomorrow by coal plants, our greenhouse gas emissions would rise by 25 percent.

Renewable energies are one solution, but they would not be able to satisfy the entire energy needs of France. We must keep all our options open for replacing our present fleet of nuclear power plants starting about 2015, beginning with the construction of the EPR to come on line in 2012. In terms of safety (prevention of accidents) and for the protection of the environment against waste, it is my position that the EPR reactor represents a great step forward.

It is clear that we must at the same time reassure all our citizens who expect to be better informed about the disposal of nuclear waste and more closely associated with decisions concerning nuclear waste. I propose, therefore, to create an independent agency that would guarantee that nuclear energy is properly dealt with. This agency would have a freedom of information and mission, sorting out those documents which can be communicated to the citizens from those which cannot, for obvious reasons of national security.

In any event, taking in consideration the many benefits of this source of energy, I do not contemplate any rapid abandonment of nuclear power. I cannot forget that nuclear energy contributes in a decisive manner to the three objectives of our energy policy as defined in the French law: to guarantee national independence in energy and the security of supply; to take action against the greenhouse effect; and to make sure that the price of electricity remains competitive and stable.

Now to answer your questions about the development of civilian nuclear power world-wide, I am favorable to this development, with the obvious rule that we collaborate only with democratic governments and under strictly administered conditions. This kind of partnership backed by the strength of the French nuclear industry implies to maintain the leadership in this domain of our French nuclear constructor (AREVA) and our French nuclear utility (EDF). The construction of the first EPR reactor will help us keep our leadership.

Concerning your questions about renewable energies, let me assure you that we will accelerate the efforts already underway and to which France is already engaged to achieve the European objective of 20 percent renewables. I contemplate investments aimed at biomass, wind power and solar energy while continuing to encourage geothermal energy.

I would like priority to be given to making (these) clean energies available to our fellow citizens. I propose notably that all such clean installations be made more accessible by being subject to reduced VAT rate on both material and on installation. [Comment from EFN: The VAT rate in France is 19.6 percent; the current situation for encouraging the installation of renewable energies is a tax credit of 50 percent on the cost of material only, not installation. It's not clear if this new, reduced VAT rate would be additional support added to the existing tax credit or if it would replace it.]

Aside from renewable energies (water power, solar, wind, biomass, etc.) for which we should aim for a world leadership comparable to our leadership in nuclear, virtuous individual behavior and better insulation of old buildings will allow us to make great progress in reducing greenhouse gas emissions in the residential and tertiary sectors.

The figures which you give in this respect are especially revealing. I would repeat that the cleanest energy is that which is not consumed. That's why I propose to go ahead with improved insulation for old housing by creating an environmental income tax credit for such work, and by creating a system of loans at zero interest for that purpose. In the same vein, I promise that our citizens who have such energy work done shall be able to recover their upfront cost by the savings on their energy bills.

© 2007 Elliott H. Gue

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