Paris — France on Wednesday to re-nationalize state-sponsored power giants to secure national energy sovereignty as Europe faces a worsening energy crisis due to Russia’s war in Ukraine. Said to help.
The move is a swirling storm of problems that has plagued Europe’s largest French nuclear program when President Emmanuel Macron promised to ease the pain of rising living costs by protecting consumers from soaring prices. Energy prices that will give the government more control to fix.
France’s Prime Minister Elizabeth Borne told parliamentarians in her first major speech in parliament Wednesday that a shift is needed to ensure France’s energy self-sufficiency while achieving its key goal of combating climate change. rice field.
“Energy transformation requires nuclear power,” she said.
France derives about 70% of its electricity from nuclear power, which is the largest share of any other country in the world, but Borne said Russia’s oil and gas can no longer be expected.
She said the government needs to secure energy sovereignty by holding 100% of the capital of French Electricity (EDF) from the current 84%. The company is a major electricity producer in France and operates all nuclear power plants.
Government economic interventionism is a strong tradition in France, despite being largely away from the massive nationalization of the 1980s under then-socialist president Francois Mitterrand.
Still, this step was symbolic to President Emmanuel Macron. A former investment banker, he was elected in 2017 on an openly professional business platform that promised to ease regulations and reduce government spending. But it didn’t take long for him to follow in the footsteps of his predecessor.
In 2017, his government nationalized STX France, France’s largest shipyard, to prevent Italian competitors from taking over. Recently, the Covid-19 pandemic and the conflict between Russia and Ukraine have accelerated his pivot from a free market reformer to a defender of state intervention.
Macron now argues that the government should uphold economic and energy sovereignty to achieve climate goals, including strengthening France’s independence and regaining control of major domestic industries. ..
France is less dependent on Russia’s gas and oil than its European neighbors like Germany. But to maintain its relative independence, the aging of the country as the war in Ukraine has soared energy prices, fostered inflation and made living costs one of the biggest concerns for French people. Nuclear power plant upgrades have become important to the government.
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In February, Macron released a € 51.7 billion blueprint to overhaul France’s nuclear program. This included plans for EDF to build the first of up to 14 giant next-generation pressurized water reactors by 2035.
Eli Cohen, Studied The nuclear sector said, “The government has chosen a nuclear-centric energy mix, and EDF is currently forced to build more reactors despite the lack of resources for it.” The solution is nationalization. “
The government had hinted that it was already considering nationalization. Macron said at a press conference during his reelection campaign that he would like to implement a long-term energy plan that involves “regaining capital control of multiple industrial players.”
EDF is one of France’s most prominent industrial giants. Last year, the company employed more than 165,000 people and generated about 85 billion euros, or about $ 86 billion.
However, most of France’s nuclear infrastructure was built in the 1980s and has been plagued by investment shortages. Over the last few months, combined with unexpected maintenance problems, about half of the country’s nuclear reactors (most often in Europe) have been shut down. — And France’s nuclear power has fallen to its lowest level in nearly 30 years.
The problem included a two-year backlog of the required maintenance of dozens of dilapidated reactors that were postponed during the coronavirus blockade. Safety issues such as corrosion of the system used to cool the radioactive core of the reactor and defective weld seals. Rising temperatures in spring and summer made it difficult to cool the reactor.
Cohen, who works for CNRS, the French national research institute, said EDF has faced increasing industrial, financial and economic challenges since its partial privatization in 2005.
Following the competition rules of France and Europe, the company is forced to sell electricity to smaller third-party sellers at prices below actual production costs and market prices.
The plan aimed to provide fair access to nuclear energy and to enable political commitments to protect French homes from rising energy prices, but it could be a penalty for EDF. Proven.
Just recently in January, the government ordered EDF to sell more nuclear power to its competitors in order to limit the rise in electricity prices in France. This is what Finance Minister Bruno Le Mer said will cost up to € 8.4 billion. About $ 8.5 billion.
The government has occasionally ordered EDF to limit prices to keep market prices down, effectively squeezing the company’s profit margins, despite already having a debt of € 43 billion, about $ 45 billion. increase.
“EDF couldn’t behave like a regular company and wanted investment and regular profitability,” Cohen said.
“Under market conditions, we are no longer competitive and have no financial resources,” said Yves Marignac, a nuclear specialist at néga Watt, a research group in Paris.
In this difficult economic situation, EDF will respond to Macron’s ambitious plans for the wave of new-generation reactors, in line with France’s goal of reducing carbon emissions and reducing dependence on foreign energy. Can no longer be done.
“Nationalization simply reflects the fact that EDF is not in a position to invest in the maintenance of existing reactors and the creation of new reactors at the scale of the project announced by the President,” Marignac said.
“It marks the end of the illusion that nuclear power can blend into the private economy,” he added.
France created the EDF in 1946, after World War II, by nationalizing and consolidating more than 1,400 small electricity producers. It remained state-owned until 2005, when the company was partially privatized.
Borne did not specify whether the government would proceed with the nationalization bill or buy a minority shareholder who currently holds a 14% stake in EDF, but her speech suggested the latter. EDF employees own the remaining 1% stake.
“This development will enable EDF to strengthen its ability to carry out ambitious projects that are essential to the future of energy as quickly as possible,” said Borne.
France’s announcement came on the same day that European Union lawmakers voted in favor of considering some gas and nuclear energy projects as “green,” taking advantage of cheap loans and even state subsidies. It is now possible. To withdraw from Russian oil and gas.
Inflation in the euro area has recently risen to a record 8.6% as the collapse of the war in Ukraine and the economic conflict that began between Russia and Western Europe continued to push up energy prices, while inflation in France was 6.5. %is. Relatively lower than other European countries.
Macron’s newly appointed cabinet will submit a bill on Thursday, as French will increase some welfare, limit rent increases, and poor households will buy essential food. It aims to help catch up with inflation by creating subsidies for.
Liz Alderman Contributed to the report from Georgia.