France to tax nuclear, fossil fuels to boost shift to renewables

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.