France To Shift Faster To Renewables Through Tax On Nuclear & Fossil Fuels
Originally published on RenewEconomy (image added).
By Sophie Vorrath.
France has unveiled plans to use a levy on nuclear energy, as well as a tax on carbon emissions from fossil fuels, to help finance the country’s billion-dollar “energy transition” to a power mix based on renewables and energy efficiency.
Bloomberg reports that the proposed nuclear levy would be applied to Electricite de France’s 58 atomic reactors – which produce about three-quarters of France’s total power – while the carbon tax would be introduced “progressively” on fossil fuels, to help raise €4 billion ($US5.4 billion) in 2016.
French President Francois Hollande, who vowed during his election campaign to reduce reliance on nuclear to half of total output by about 2025 while also keeping down consumers’ bills, said that the energy transition would cost an estimated €20 billion a year.
“All change is expensive in the short term even if it’s beneficial in the long term,” French Prime Minister Jean-Marc Ayrault said on Sunday in a speech about the environment in Paris. “Our nuclear fleet will be asked to contribute,” he said, adding that the new nuclear levy should contribute to investments in green energy from 2016 onwards, and continue to do so “over the remaining lifetime of our reactors.”
Ayrault didn’t give details of how much EDF, which is 84 per cent government-owned, will have to pay. The utility is already compensated for the higher cost of electricity produced by wind turbines and solar panels it buys through a tax on power bills called the CSPE.
France is the poster-child for the nuclear industry and its supporters. However, there is no a growing realisation within government circles that replacing the nuclear capacity will be extremely expensive.
Energy efficiency measures have been virtually non-existent because demand has been kept high to cater for the needs of nuclear to keep operating. French households consume around 50 per cent more than German households, and it appears that these measure take into account some of the suggestions by a the negaWatt think tank that is growing in influence in Paris.
Wind energy and solar currently play a minor role in France’s energy mix, contributing 4.4 per cent in July.
The carbon tax, or “climate energy contribution,” will be applied to gasoline, diesel, coal, natural gas as well as heavy and heating fuels. It is expected to be “neutral” next year, and generate €2.5 billion in 2015 and €4 billion in 2016. The tax is being imposed because nuclear plants run at a huge profit because the government effectively wrote off the financing required to build them in the 1970s and 1980s.
Hollande said on Saturday that an energy law would be passed by the end of next year capping nuclear-power capacity and granting the state the legal means to shut down reactors. He has not specified whether more nuclear plants will close, beyond the planned shuttering of Fessenheim in eastern France by the end of 2016.
France is also aiming to cut energy use in half by 2050 and fossil fuel use by 30 per cent by 2030; and will introduce energy-saving incentives to spur efficiency in homes, as well as encourage the uptakes of EVs.
Environment minister Philippe Martin will now prepare an energy transition law including the tax and other measures the administration hopes to get voted through.
Image Credit: TheAlieness GiselaGiardino²³ / Foter / CC BY-SA
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“However, there is no[w] a growing realisation within government circles that replacing the nuclear capacity will be extremely expensive.”
Really? I’m glad they plan on dedicating 20 billion a year to RE starting in 2016 but what I don’t understand is why it will be anything other than just the opposite. That is extremely cheap. Either there is some hokey pokey going on with the money or the author’s view is that of a dinosaurs.
How do you get 40 euros per MWh for Wind power? Do you realize that in most countries where the FiT is in use, the FiT about 82 euros per MWh. This would mean that anyone who is investing on wind power would make 50 % profit.
(My guess is that you are talking on american subsidized cost of wind power)
I’m using american subsidized wind power in dollars. Figure in a PTC subsidy of 2c/kWh and it is 6c/kWh unsubsidized. Figure an exchange rate of close to 1.5 for easy mental calculations and it is back down to 4. Or 40 euros per MWh. Then consider these wind companies are all international so the price should not vary despite where they are installed. Hence 40 euros per MWh.
ok, thanks all for the replies!
lol, you got answers for America, Europe, and Australia. Now we need Africa, Asia, South America!
New wind in Australia is about 6 cents a kilowatt-hour:
http://cleantechnica.com/2013/04/15/largest-wind-farm-in-southern-hemisphere-opens-down-under/
So 40 Euros a MWh or 4 Euro cents (5.76 Australian cents) a kilowatt-hour doesn’t seem unlikely if one takes into account Europe’s lower cost of capital. Location might be important though.
Brazil´s latest wind energy auction contracted 1.5GW at R$110/mwh, equivalent to $46 US or 4.6 cents per kwh.
“Wind energy and solar currently play a minor role in France’s energy mix, contributing 4.4 per cent in July.”
Isn’t that what the total wind and solar contribute to America’s energy mix? I would not say it is minor. Though minor compared to say China’s use of wind and solar.
France built their nuclear in the 70s and 80s (with government backing). So ones built in 73 are turning 40 this year. Soon those plants will be retiring. France is in for some costly work on power no matter if they build RE, fossil, or nuclear. When you compare the cost of new plants, then RE looks a lot better.
I believe the author is referring to enormous expense of decommissioning existing plants in addition to the expense of replacing these huge base load energy producing nuclear plants with more variable and much smaller wind turbines… existing nuclear is very cheap to operate (extremely expensive to build new nuclear), it operates at very high capacity factors 80%+ (wind ~30%), and produces massive amounts of energy. To replace this with wind you must build a very large amount of wind turbines and then also address the problem of the intermittent power that they produce… often times this means complementing with peak gas/coal plants. A quick google search on the subject yielded a very pragmatic discussion on the topic that I recommend everyone read (http://carboncounter.wordpress.com/2013/02/27/fact-check-comparing-wind-and-nuclear-power/). If the goal is to move out of nuclear, a more gradual approach is needed whereby existing plants are phased out when they reach the end of their lives and not shut early.
A good case study to look at is how Germany is managing this same goal (to move from nuclear + fossil fuels to more renewables) and the difficulties that they have encountered (extremely high cost and actually increasing carbon emissions due to new coal coming online to replace nuclear).
While I fully support the goal of moving from fossil fuels to renewables as quickly as possible, I believe we have failed to have the right educated debates among the science/energy, economic, political, and public communities. More education is needed across the board on this topic and I would love to hear everyone’s thoughts on how to achieve this.
Some errors in your comment, Andrew.
First, capacity factor is unimportant. The important metric is the cost of electricity produced.
Second, all generation has to be backed up. Nothing operates 24/365. France is having a problem with some of its reactors shutting down during heat spells. Nuclear is not 100% reliable.
Then, Germany is not building coal plants to replace nuclear. The coal plants they are building are replacements for old, less efficient plants they are closing. Construction on those plants began long before Fukushima melted down.
By 2020, 18.5 gigawatts of coal power capacity will be decommissioned, whereas only 11.3 gigawatts will be newly installed.
Furthermore those plants will be more efficient, releasing less CO2 per unit electricity produced than are the ones they are replacing. And the new coal plants are partially load-following.
Finally, how do we move quickest to eliminate fossil fuels from our grids? Via efficiency and accelerating the installation of renewables. This is very well discussed and very well understood.
What would help would be for fossil fuel and nuclear interests to cease muddying the water with their disinformation campaigns. But I suspect we will have to put up with their activity. They’re fighting a battle to delay their extinction as long as possible. Stuck pigs squealing, and all that….
Thanks for your feedback Bob. You’ve made some very good points. Here are my thoughts on your response:
1. I’m not sure I understand why capacity factor is unimportant. My point was because of the significantly higher capacity factors of nuclear, you cannot replace 1GW of nuclear with 1GW of wind. It would in fact require much more that 1GW of nameplate wind capacity, which was discussed in the link I posted above.
2. Point understood, nuclear is not 100% reliable… it is 80%+ reliable as the capacity factor indicates. Thus, nuclear would have to be “backed up” much less than wind to ensure electricity is constantly produced for the grid.
3. You are definitely correct that the building of new coal in Germany began before Fukushima. However, the closing of nuclear plants has accelerated the need for new base load energy which Germany is meeting by both increasing the amount of renewables and also increasing the amount of coal power which has resulted in an increase in CO2 emissions (http://www.bloomberg.com/news/2013-02-27/germany-to-add-most-coal-fired-plants-in-two-decades-iwr-says.html)
4. I agree with you that new coal is significantly cleaner than the old coal plants it is replacing. If replacing with a fossil fuel, I would much rather see coal replaced by cleaner gas but the price of gas in Europe is more expensive than in the US and gas plants are therefore less competitive.
5. I agree 100% that a focus needs to be made on efficiency and renewables to replace fossil fuels. The viewership of this website is infinitely more educated on this topic than the general public and perhaps I wasn’t clear in my last point…
I think the public (and policy makers if we’re being honest here) needs to be better educated with regard to the energy debate and what our options are, so they can better influence policy makers to make decisions that push us in the right direction. Without proper education, we run the risk of making policies without fully understanding their impact on the environment and the economy.
1. Of course you can’t replace 1 GW of nuclear nameplate capacity with 1 GW of wind nameplate capacity.
What you do is replace 1 GW of nuclear output capacity (capacity factor) with 1 GW of wind output capacity.
And since the 1 GW of wind output capacity is much cheaper than 1 GW of new nuclear output capacity you save a lot of money.
2. You have to have the standby capacity to replace a nuclear reactor when it goes off line. When wind goes offline, because multiple wind farms spread over area, output doesn’t suddenly disappear as happens with nuclear (or coal). Plus changes in wind farm output are more predictable than unscheduled nuclear and coal disruptions.
This makes it much easier to integrate wind (and solar) on to grids. It makes integration costs almost nothing.
3. Yes, Germany’s decision to speed the closure of nuclear plants, along with a cold winter, increased their burning of coal a bit and caused a small increase in CO2 emissions. That’s a temporary blip.
Few people expect everything to run as smoothly as plans might make it seem. Especially when new factors are added.
4. NG is not only more expensive in Germany, but it puts Germany in the position of being more under Russia’s influence.
5. I totally agree that the general public and even more importantly lawmakers need to be better informed. The quality of some of the individuals we are sending to Congress is abysmal. We have gerrymandered our way into giving influence to pockets of ignorance.
Great response Bob, thanks for the educated debate!
Not arguing for new nuclear here though due to high cost as you pointed out. I’d argue that we should not accelerate the decommissioning of nuclear, but rather let them live out their remaining lives. The enormous cost of nuclear is at construction and decommissioning. Why not allow them to continue producing low emission cheap electricity and push back decommissioning as far back as is safe? It seems that focusing our resources on getting off fossil fuels first would be most beneficial in terms of the environment and the economy.
I would love to see the enormous amount energy spent arguing to close nuclear plants refocused on closing the much dirtier fossil fuel plants asap. Interested to hear everyone’s thoughts.
No one in the US is accelerating the decommissioning of nuclear. The five reactors that are closing early and the canceled builds and upgrades are simply due to the fact that the electricity produced is too expensive for today’s market.
I somewhat agree with you that we should allow the reactors we have continue to operate but I think we need to look at the condition of each, its track record, and the cost that we would incur were each to melt down.
We need to weigh the cost of installing replacement and closing early against the probable cost of a disaster. Take Indian Point, for example. If that reactor were to go sour an immense amount of infrastructure would be turned unusable and we have no ability to evacuate all the people in the danger zone in time.
If we can assure ourselves that a given reactor continues to be safe to operate and that we can bear the cost of a meltdown, then use them for a while longer. But we should be very honest with ourselves.
When built it was expected that these reactors would operate for 40 years. Now we are extending their lifetimes and increasing their output. Pushing an old piece of equipment is riskier than running it at its designed level or even cutting back a bit to reduce stresses.
You might decide that you’re willing to risk driving your old car with 150,000 miles on it, but it’s not necessarily a good thing to take it on the Autobahn and see if you can keep up with the late model Beemers.
If US reactors had to pay the full cost of insuring them they would all be closed down pretty much straight away. The US public is on the hook for tens of trillions of dollars of damage that could result from a serious nuclear accident. (Just look at the example of Fukishima and now imagine what would have happened if the wind had been blowing towards Tokyo.) If that cost of insurance was passed from the public onto power companies they would drop nuclear like a radioactive potato. Once the potential cost of accidents are included shutting down reactors in Germany makes extreme economic sense. Although the US is less crowded than Germany, I doubt any reactors in the US make economic sense, even with a very high carbon price.
Very French. The answer is tax-and-spend not a bonfire of the red tape holding back solar. France has solar FITs close to German rates, an dmore sun, but instalaltion rates are actually going down.
I’m sure the costs you’re quoting are not fully-burdened AKA true costs. Does anyone have numbers for the fully-burdened costs? I.e., the total cost from digging the ore through buying the erection site to maintenance and eventual recycling?