France Energy policy : new challenges for 2020 Jean-François Renucci , March , 2009 .

1. FranceEnergy policy: new challenges for 2020Jean-François Renucci,March, 2009.

2. Objectives set in 2005 • 4 areas • To guarantee national energy independence and safety of energy supply; • Environment protection and strengthening the fight against greenhouse effect; • To guarantee the competitive price of energy; • To ensure social and regional coherence by providing access to energy for all.

3. Objectives set in 2005 • Responsibilities of the state • To decrease the final energy intensity at an annual rate of 2% by 2015; • To decrease greenhouse gas emission by 3% per year and to decrease the total emission to 25% by 2050; • To diversify energy sources and to develop renewable energy sources (domestic electricity production from renewable sources should reach the target level of 21% by 31 December 2010).

4. General assumptions to define new perspectives • International context (GDP, population, reserves, etc.) • National economic activity in European comparison: French GDP: +2,1% per year in 2008-2030. • Demographical growth and employment: - 67,2 million population in 2030, i.e. + 0,4% - 31,6 million households in 2030, i.e. +0,9% • 24,3 million jobs in tertiary sector, decline in industrial production • Exchange rate of Euro and US dollar : 1,25$/euro in 2008-2030 • Energy and CO2 prices (2006 constant in euro and dollar): - Brent price: 70$/BL in 2008-2030 - gas price indexed to Brent price: 7$/MBTU 2 in 2008-2030 - coal : 80 $/ton -CO2 quote (EU27) : 22 euro/ton CO2 in 2020 & 24 euro in 2030 by free-of-charge allocation.

5. Sectoral assumptions in relation with energy demand • Industry • Services • Real estate market • Transport • Renewable energy sources • Modelling of electric energy production and use (seasonal increase, development of daily amplitude..)

6. Scenarios • Scenario for basic energy tendency in 2020-2030 - Prepared every four year on request of the International Energy Agency (IEA) to update global scenarios • Multiannualinvestment programmes in the field of electric energy, gas and heat energy dismantle the objectives of the French energy policy. - At present parliamentary reports are under preparation to update the objectives after the adoption of the Energy/Climate package and the First French Environmental Forum (Grenelle 1).

7. In the field of electric energy : priority of energy efficiency • Uncertainties around 2020 : - In the field of supply • Uncertainty regarding the lifetime of nuclear power plants • Fulfilment of the schedule of objectives related to renewable energy production • In the field of demand • Development of new utilisation forms of electric energy • Fulfilment of the schedule of objectives related to energy savings Room for manoeuvring (consisting of CO2 emission-free means of production) is needed in order to guarantee safe energy supply, to cut CO2 emission and to promote competitiveness due to required balance between demand and supply.

8. Electric energy • Intensive development of renewable energy sources : - 25000 MW wind energy in 2020, 19000 MW onland and 6000 MW on sea. - 5400 MW photovoltaic solar energy. - 2300 MW biomass. - 7 TWh/year + 3000 MW peak time in the field of hydro energy • Nuclear energy: - To prolong the present life time of power plants over 40 years; - To put the two EPR power plants (Flamanville, Penly) into operation - To optimise disposability of present power plant park.

9. Electric energy • Heat power stations: to maintain the minimal thermal power plant park - Coal Still important for Francedue to the diversification necessity of heat energy sources. The technology of CO2 capture, transportation and storage will determine investments in this sector. - Gas Several Combined Cycle Gas Turbine (CCG) projects make it possible to compensate for the replacement of the oldest coal-fired power plants and to reduce the related CO2 emission. The CCG park will ensure adjustment to power plant park demands. - Heating oil Oil power plants will ensure the alternative of hydro power plants during peak capacity energy production. - Co-generation The use of biomass will be of outstanding importance in the case of co-generation of electric and thermal energy.

10. Electric energy • There are two vulnerable regions in France: - The PACA region network infrastructure. - The Bretagne region due to inadequate power plant infrastructure. • Two regions to be developed: - All islands not connected with network (Guyana, Martinique, Guadeloupe, Saint-Martin, Saint Barthélémy, Mayotte, Réunion, Saint Pierre and Miquelon). - Corsica.

11. In the field of gas: market under complete changeFrance at the crossroads • Integration and liberalisation of European gas markets: increased competition for EU to obtain new gas resources due to globalisation • Efforts necessary to ensure energy efficiency and development of alternative energies to stabilise European import. - In France, the consumption of natural gas was 530 TWh in 2007. - The consumption of households and the tertiary sector may increase by +10TWh by 2020 (if past tendencies continue) and a 55TWh -85TWh decrease can be planned (in the case of implementation of the decisions of Grenelle Environment Forum, renovations, renewable energies) • Infrastructural development in order to ensure the safety of transport network, GLP terminals and potential underground storage.

12. Gas • Development of production infrastructure: - Four methane capture and conversion investment projects are under way (27 Gm3). - The possibility to enlarge the existing sites (14,75 Gm3) + prolongation of FOS Tonkin. • Development of transportation network: - Several investments planned to develop transport capacity and undisturbed transportation (connection of networks and central network), more than 5000 M euro investment envisaged by 2020. • Development of storage capacity : - + 24,2 TWh volume (+18%) - + 814 GWh per day flow rate ( +32%) - Most investment plans are in the stage of examination of the economic and technical risks, the regulation on the limitation of access to third party storage capacity and the renewal of exploitation concessions. • Development of distribution network: - 9200 connected settlements, i.e. 77%. - Densification of existing networks, development of propane supply networks for isolated settlements.

13. In the field of thermal energy:ambitious, yet attainable objectives • The potentials of all sectors should be exploited (individual wood, biomass, geothermic energies, heat pump, solar energy, biogas) . • Renewable energy plan introduced in November 2008 : renewable thermal energy fund, interest-free eco-loans, measures promoting thermal network, biomass, etc. - Renovation of buildings - Development of solar hot water systems - Extension of thermal network. - Mobilisation of biomass resources respecting the food andenvironment protection priorities.

14. Standpoint of FCE-CFDT • The control over European energetics and politics through strong and democratic regulation is important to meet the challenges posed by demographical changes and the progress of energy demand. • In the fight against climate change, FCE-CFDT endorses the objectives of France to cut the GHG emission to 25% by 2050 and the European objective to reduce energy consumption by 20%-os, to increase the use of renewable energies by 20%, and to reduce GHG emission by20% by 2020.

15. Standpoint of FCE-CFDT • FCE-CFDT assumes the European responsibilities of France which aim to increase the proportion of renewable energy in the electric energy mix. It also means the decrease of the nuclear energy in the electric energy mix (from 80% to 60%). • FCE-CFDT favoursnuclear energy, so it promotes the prolongation of the life cycle of nuclear power plants on condition of the control by the Nuclear Safety Agency (ASN). According to our estimation, the construction of a second EPR power plant in France by 2020 does not meet the energetic demand of our country unless we would like to make France a nuclear island in Europe.

16. Standpoint of FCE-CFDT • According to FCE-CFDT it is the responsibility of the state to ensure the equilibrium of power plants under basic, semi-peak and peak mode, to avoid excess production in certain and deficits in other areas which would lead again to inadequate energy mix. • On a European scale, the exchange of electricity through the interconnection of networks enables to equalize the demand by mutualising the different consumption peaks of the particular countries. The management of network interconnections should be reflected in the plans regarding the utilisation of the advantage of peak times.

17. Standpoint of FCE-CFDT • FCE-CFDT calls for the rapid development of the interconnection of Trans - European electric networks in order to react to the present economic slowdown. • In the field of energetics, FCE-CFDT would like to emphasize the necessity to adjust on the one hand to the dynamics of the Grenelle – Environment Forum and to the dynamics of the European objectives of the Climate Package and on the other hand to stimulate a a realistic R&D policy related to proper coal technology through the capture, transport and sequestration of CO2.

18. Standpoint of FCE-CFDT • Acc. to FCE-CFDT the perspectives of gas demand confirm that several parameters play a decisive role in the evolution of consumption: : implementation of Grenelle – Environment Forum and energy/climate package. The selection or rejection of electric energy production in gas power stations substituting coal and in new installations. Finally, the price parameter and restarting electric energy production in nuclear power plants will also play a primary role • As a result of the efforts taken at the Grenelle Forum on energy efficiency – and to the delight of CFDT – a decrease in the demand can be expected. If the decisions of the Grenelle Forum are completely realised there will be regression in the consumption of households and the tertiary sector(1,5% - 2,5%).

19. Standpoint of FCE-CFDT • Based on the hypotheses presented, it appears that the development of gas can mainly be expected through the production of electricity in CCG. According to FCE-CFDT, the direct use of gas for heating would be more preferable. This way, the constantly increasing electricity consumption will most probablylessen. • According to FCE-CFDT, the opening of markets will generate investments in electricity transport and in CCG related power plants.Reinforced European regulation is required to avoid excess investment and non-optimal investments which are counterproductive from the point of view of the implementation of development trends in energetics. • It is worth examining and controlling the investments on the basis of public interests and not the interests of sectoral operators..

20. Standpoint of FCE-CFDT • According to FCE-CFDT, the climate challenge affecting the planet and the unsustainable global development today also necessitate the rapid and forceful change of production and consumption modes due to the expected exhaustion of hydro carbonates and other raw materials. • We have to reassess both the energy production and consumption modes. It is necessary to optimize all energy sources with low CO2 emission and to develop new technologies.

21. Standpoint of FCE-CFDT • FCE-CFDT promotes the creation of a European adjustment fund for low CO2 emissive production in order to support the transition programmes for employees replaced due to measures related to climate change. • According to FCE-CFDT, the tariff regulation of electric energy should be restored. The objective is to use energy in an intelligent and more efficient way in favour of the community and without reducing the comfort level of French citizens. This is the major stake of social cohesion for France.

22. Standpoint of FCE-CFDT • According to FCE-CFDT, the treatment of energy dependency is one of the conditions of social justice in France.   • In France, just as in Europe there is dangerous increase of energy dependency. Today, it affects nearly 3 million French households. Already in 2006, the energy costs of 20% of the poorest households was 2,5 higher than those of the 20% of therichest households.

23. Standpoint of FCE-CFDT • An effective response to the challenges, according to FCE-CFDT, could be the introduction of a special tariff system: the efficient management of tariff signs would enable the exploitation of energy efficiency in the field of marginal costs (cost of the last kWh produced). • Thus, we propose that the French electric system should be a real « Smart Grid » (intelligent system) contributing to sustainable development.

24. Standpoint of FCE-CFDT • In summary, FCE-CFDT is on the opinion that: • The new challenges of an ambitious energetic policy offer the opportunity to exchange views in the interest of employees of the concerned sectors and European citizens within the framework of the European social dialogue. - Energy policy should contribute to a new industrial dynamics favourable for growth and employment. - The Lisbon Strategy should define new directions of thedevelopment of economic, social, environmental and industrial objectives.