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JOHN LICHFIELD

OPINION: France cannot afford to keep shielding consumers from energy price rises

The Ukraine war has combined with Covid delays and long-term problems with France's ageing nuclear power plants to create a perfect storm for French energy supplies this winter, writes John Lichfield.

OPINION: France cannot afford to keep shielding consumers from energy price rises
France's President Emmanuel Macron addresses media following a conference with Germany's Chancellor Olaf Scholz on the energy crisis. Photo by Ludovic MARIN / POOL / AFP

The lights will stay on in France this winter. Probably.

President Emmanuel Macron’s message to the French people on Monday was as much a warning as it was a guarantee.

“We are at war”, he said. Russia is halting its gas supplies to Europe as a “weapon of war” to try to undermine European solidarity with Ukraine.

As a result, he said, there will be huge problems with French, and European, energy supplies this winter but there is no reason (yet) to panic.

We can avoid power cuts and electricity and gas rationing if the nation reduces its power consumption by 10 percent, he said. A government plan for energy “sobriety” will be announced in the next few days.

READ ALSO Will there be energy rationing in France this winter?

All state buildings will be ordered to take part, he said. Households will be urged – but not yet forced – to make savings, such as turning the heating down to 19C.

Macron also warned, without quite saying so, that state-subsidised French electricity and gas bills – currently the envy of Europe – will explode next year. How big that explosion will be is unclear.

The finance ministry is still doing its sums for 2023, trying to balance real threats to public finances with – France being France – possible threats to public order.

Placing a 4 percent cap on electricity bills has already cost the state almost €20bn since February, if you include the enforced losses of the largely state-owned electricity company EDF. The total bill to the state so far, including the freeze on gas prices and subsidies on petrol and diesel, is over €32bn – around 1.3 percent of the country’s annual earnings or GDP.

READ ALSO How to cut your household energy use by 10%

The “real” increase in wholesale electricity prices in France this year is more like 50 to 70 percent.  Such subsidies cannot continue indefinitely, Macron warned (just as it appears that the new UK Prime Minister, Liz Truss, is considering standing on her head and copying the French).

I listened to Macron’s one hour press conference with conflicting thoughts.

The President’s grasp of detail was extraordinary, as ever. But it seemed to me that he was both taking the French people into his confidence and misleading them; warning them of the problems to come while softening the harsh realities.

Just how bad is the energy crisis which France faces this winter? Can it really be solved by turning the central heating dial down to 19C?

Is the crisis all Vladimir Putin’s fault, as Macron implied? Why should the closing of the Nordstream One gas pipeline from Russia to Germany and other EU countries threaten a shortage of electricity as well as gas?

To answer the last question first…. France’s electricity shortage is only partly caused by the Ukraine war. The shortage of gas does affect the production and above all the wholesale price of electricity in what is a fiendishly complicated (and according to Macron dysfunctional) European electricity market.

But France is normally a net exporter of electricity. It could have benefited from the huge jump in wholesale electricity prices this year. It has in fact been importing electricity from neighbouring countries, including Britain.

More than 80 percent of France’s electricity comes from nuclear power stations and more than half of France’s nuclear reactors –  25 out of 56 – are currently closed down. Partly, this is because of routine maintenance; partly, it is because of delayed maintenance because of the Covid lockdowns.

 But there is also another, more disturbing problem. No less than 13 French reactors have suffered emergency closures since January after inspectors discovered corrosion and tiny cracks in their cooling pipes.

In theory, all should be operating again by February. Until then, France’s electricity supplies are fragile.

After speaking to the German Chancellor Olaf Scholz in a video summit yesterday, President Macron announced that France and Germany would be “swapping” surplus energy this winter.

France would sell some of its gas stocks to Germany (which is much more dependant than France on Russian gas). Germany would sell more of its electricity to France (including the energy from the polluting, coal-powered stations which French politicians have until recently liked to mock).

Macron angrily rejected suggestions that the failings in France’s much-vaunted fleet of nuclear power  stations were, somehow, his fault. He blamed bad luck and poor maintenance by EDF.

Right wing politicians blame Macron’s predecessor François Hollande for backing away from nuclear power in 2007-12 and Macron for being too slow to decide to resume a nuclear-building programme.

In truth, no new power stations ordered by Macron at the beginning of his first term could have been operational this summer. A new generation pressurised-water reactor under construction at Flamanville in Normandy has been serially delayed by design faults. It was supposed to open in 2012 but will finally open next year.

In sum, the Covid pandemic and an ageing nuclear power fleet have combined with the Ukraine war to create a serious energy problem in France. The situation has been worsened by the heat and drought this summer which has limited the river water available to cool power stations.

Thus far, French families and most French businesses have been shielded from these difficulties by the 4 percent ceiling on electricity bills. As Macron warned on Monday, that protection will be weakened next year. State subsidies would continue, he said, but would mostly take the form of help to the lower paid. In other words, bills for many households and businesses will increase hugely.

The Ukraine war has worsened this problem; it has also served to disguise some of the causes. President Macron was right to say yesterday that France and Europe are “at war”. He is right to call – as he did last month – for French people to be ready to make “sacrifices” to continue their support for Ukraine.

But French power cuts this winter, if they happen, will not be wholly, or even largely, the fault of Vladimir Putin.

Member comments

  1. Great article.
    Another added problem is the low HE production caused by low water levels in rivers.
    I hope the coming winter won’t be too cold but windy so that wind turbines keep producing electricity.

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POLITICS

Macron restarts reform drive as opponents prepare for battle

French President Emmanuel Macron will get a taste of public resistance to his second-term reform agenda this week during the first nationwide strike called since his re-election in April.

Macron restarts reform drive as opponents prepare for battle

The 44-year-old head of state has pledged to push ahead with raising the retirement age having backed away from the explosive issue during his first five years in power.

But having lost his parliamentary majority in June, the pro-business centrist faces severe difficulties passing legislation, while galloping inflation is souring the national mood.

Despite warnings from allies about the risk of failure, Macron has tasked his government with hiking the retirement age to 64 or 65 from 62 currently, with changes to start taking effect next year.

“I’m not pre-empting what the government and the parliament will do, but I’m convinced it’s a necessity,” Macron told the BFM news channel last Thursday.

With deficits spiralling and public debt at historic highs, the former investment banker argues that raising the retirement age and getting more people into jobs are the only ways the state can raise revenue without
increasing taxes.

On Thursday, France’s far-left CGT union, backed by left-wing political parties, has organised a national day of strikes, the opening shot in what is expected to be a months-long tussle.

Though the protests were originally planned to demand wage increases, they are now intended to signal broad opposition to the government’s plans.

“We’re against the raising of the retirement age,” Philippe Martinez, the head of the CGT, told the LCI broadcaster last week. “The government’s arguments don’t stack up.”   

Unpopular

Public opinion towards pension reform and the strikes is likely to be decisive in determining whether Macron succeeds with a reform he called off in 2020 in the face of protests and Covid-19.

An opinion poll last week from the Odoxa group found that 55 percent of respondents did not want the reform and 67 percent said they were ready to support protests against it.

But a separate survey from the Elabe group gave a more nuanced picture. It also found that only a minority, 21 percent, wanted the retirement age increased, but a total of 56 percent thought the current system no longer worked and 60 percent thought it was financially unsustainable.

“I don’t know anyone who wants to work for longer, but I don’t know anyone who thinks they are not going to work for longer,” a minister close to Macron told AFP last week on condition of anonymity.

“Maybe I’m mistaken but I’m not sure that the turnout will be as large as the unions and LFI are hoping for,” he said, referring to the hard-left France Unbowed (LFI) political party that has backed the strikes.

The second decisive factor will be how the government introduces the reform in parliament where Macron’s allies are around 40 seats short of a majority.

Some favour slipping it into a social security budget bill that will be voted on in October — a stealthy move that will be denounced as under-handed by critics.

Others think more time should be taken for consultations with trade unions and opposition parties, even though they have all ruled out working with the government.

Macron prefers the quicker option, one senior MP told AFP on condition of anonymity.

In both scenarios, observers expect the government to resort to a controversial constitutional mechanism called “article 49.3” that allows the executive to ram legislation through the national assembly without a vote.

If opposition parties unite against the measure or call a no-confidence motion in the government, they could trigger new elections.

The reform was “ballsy but dangerous,” one ally told French media last week.

Macron II

Success with the pension reform and separate changes to the unemployment benefits system will help the president re-launch his image as a reformer, experts say.

Since winning a historic second term in April, he has been caught up in the Ukraine war crisis amid reports the parliamentary election setback in June left him disoriented and even depressed.

“We’ve slightly lost the narrative of Macronism,” political scientist Bruno Cautres, a researcher at Sciences Po university in Paris, told AFP recently.

The challenge was giving the second term a “direction” and showing “how it builds on the results of the first”, he said.

“The essence of Macronism, which does not have a long history, is the leader and the programme,” added Benjamin Morel from Paris II university.

Since being elected as France’s youngest-ever president in 2017, Macron has made overhauling social security and workplace regulation part of his political DNA.

“Emmanuel Macron can’t easily back away from a reform because burying a reform, it’s like disavowing himself,” Morel said.

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