This record is a partial extract of the original cable. The full text of the original cable is not available.

061536Z Feb 06

UNCLAS SECTION 01 OF 03 PARIS 000762 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EUR/WE, OES/GC, ISN, EB/ESC, AND EB/CBA 
USDOC FOR 4212/MAC/EUR/OEURA 
DOE FOR ROBERT PRICE PI-32 AND KP LAU NE-80 
USEU FOR TSMITHAM 
 
E.O. 12958: N/A 
TAGS: ENRG EPET SENV EIND EINV PREL PGOV FR
SUBJECT: FRENCH PROPOSALS FOR AN EU ENERGY POLICY 
 
 
NOT FOR INTERNET DISTRIBUTION 
 
Summary 
------- 
¶1.  (U)  As part of an on-going EU debate on an integrated 
energy policy, France recently presented a memorandum 
highlighting the contribution of nuclear power to the 
security of supply and the fight against climate change. 
France also stressed the importance of energy-saving 
initiatives and greater investment in environment-friendly 
alternative sources such as wind and solar power.  France's 
contribution -- the first one so far -- included a call for 
greater and more resolute research and development in the 
energy field.  End Summary. 
 
Describing familiar problems 
---------------------------- 
¶2.  (U)  Following-up on the European Councils of October 
and December 2005, which particularly "stressed the 
importance of an integrated approach to climate change, 
energy and competitiveness objectives," French Minister of 
Economy, Finance and Industry Thierry Breton presented on 
January 24 his country's contribution to the European 
debate, which will climax in an EU Energy Summit on March 23 
and 24.  In an 18-page document setting out the French 
plans, Breton cites International Energy Agency forecasts 
that global energy consumption would surge by 60 percent by 
2030, with two thirds of this rise being attributable to 
emerging and developing nations.  On the basis of this 
scenario, fossil fuels (oil, gas, and coal) would provide 85 
percent of the world's energy, with greenhouse gas emissions 
rising a further 60% over current levels.  The French text 
also draws on a European Commission report from Spring 2005 
on security of supplies within the European Union, which 
predicts an energy dependency level (meaning dependency on 
imported energy sources) of 70 percent in 2030, compared 
with 50 percent today. 
 
¶3.  (U)  The French paper further raises the specter of 
higher EU electricity costs likely to harm the 
competitiveness of electricity-intensive industries and 
threaten employment.  More specifically, the paper outlines 
three factors, which could lead to higher prices in spite of 
an increasingly deregulated market: 1) a new investment 
burden on utilities as a large number of production 
facilities are replaced in the next twenty years; 2) the 
creation of greenhouse gas emissions trading provided for in 
the October 2003 EU Directive, and 3) the choice by some 
member States to abandon nuclear power in favor of more 
expensive fossil fuel-based production and, to a much lesser 
degree, renewable energies. 
 
A long-term energy plan to ensure security of supply 
--------------------------------------------- ------- 
¶4.  (U)  France believes that all these challenges require 
"a clear and forward-looking framework" in the form of 
medium and long-term forecasts of EU energy consumption, 
production and imports, an assessment of the impact of 
greenhouse gas emissions, and specific measures to improve 
energy efficiency in the residential sector, transportation, 
industry and agriculture.  France offers as an example its 
own energy bill of July 2005, which sets out energy supply 
and demand projections, general goals and associated costs 
as well as various measures for achieving them.  As a 
result, France expects to improve the overall energy 
intensity of its economy by two percent a year until 2015 
and by 2.6 percent a year between 2015 and 2030.  At the 
same time, France is intent on achieving an average yearly 
reduction of three percent in greenhouse gas emissions. 
 
¶5.  (U)  In the power sector, France proposes that the EU 
adopt a system similar to its "balance estimates" which 
calls on the electricity transmission network manager to 
simulate the supply and demand balance for a 10 to 15 year 
period, taking into account production contingencies, 
climate and consumption.  The French paper signals that this 
model enables the Government to include all these 
characteristics a Long-term Investment Program for 
Electricity Production (PPI), thus guaranteeing a certain 
level of security.  France believes that this type of 
modeling could allow member States to discuss the risk of 
acceptable failure, thus leading to a long-term investment 
program for electricity production on a European scale, or 
within the framework of a comparable exercise conducted 
within each member state. 
 
Promoting energy savings 
------------------------ 
¶6.  (U)  While France concurs with the energy saving 
measures put forward by the EU Commission and Council, it 
also recommends that each member State draw up "energy 
saving certificates" which could then be traded on a 
European market.  France is convinced that such a system 
motivates energy suppliers to make energy savings. France 
also proposes the establishment of a European guarantee fund 
to encourage funding of energy efficiency projects with 
funding from the European Investment Bank for the 
construction and renovation of very low energy consumption 
buildings. 
¶7.  (U)  In the transportation sector, in which energy 
consumption and the resulting emissions are rising fastest, 
France is giving priority to investing in infrastructures 
that complement road transport.  The French memorandum makes 
clear that this is a promising way of reducing the European 
economy's dependence on oil and of reducing CO2 emissions. 
For example, in France, energy consumption by the 
transportation sector fell by 1.1 percent in 2003, despite 
an increase in the number of individual journeys.  For more 
rational use of energy in the field of ground transport, 
France suggests that the EU examine measures such as 
voluntary agreement by European car makers to reach an 
average emissions level for new vehicles of 140 grams of CO2 
per kilometer by 2008. 
 
What energy mix? 
---------------- 
¶8.  (SBU)  While the French memorandum stresses the need for 
each member state to determine its own energy mix and make 
use of its own natural resources, it unsurprisingly makes a 
pitch in favor of nuclear power and renewable energies. 
Nuclear power today generates only 34 percent of European 
electricity, but over 75 percent of French electricity. 
France therefore argues that it is of strategic importance 
to maintain the current contribution of nuclear power to the 
European energy mix and preserve Europe's technological and 
industrial edge in this area.  Given France's importance in 
the European energy market, we can expect nuclear power to 
be revived on a continental scale, also on the basis of 
growing energy needs from Central and Eastern European 
countries.  France has already held informal talks with the 
British Government on developing a common EU approach to 
energy production.  These talks come at a time of apparent 
growing support for nuclear power in Britain. 
 
¶9.  (U)  At the same time, the French memorandum stresses 
the need for the nuclear industry to be closely monitored, 
particularly with regards to nuclear waste, through a 
reinforced EURATOM treaty.  The French paper further notes 
that the EURATOM Treaty should serve as the basis for EU- 
wide nuclear training programs. 
 
¶10. (U)  On renewable energies, France claims considerable 
progress over the past three years.  In terms of volume, 
France is currently Europe's leading producer of renewable 
energy.  In three years, its installed wind power base has 
increased five-fold, while its installed power using 
photovoltaic panels has doubled.  However, given the higher 
cost of renewable energies, France thinks it important that 
Europe increases its research efforts in this field in order 
to improve the competitiveness of the various technologies. 
The French memorandum calls for a thermal renewable energies 
directive to supplement the existing directives on the 
production of electricity from renewable energies and bio- 
fuels. 
 
Oil and Natural Gas 
------------------- 
¶11. (U)  Amid growing concern about dependence on oil and 
gas, the French memorandum makes a number of suggestions 
aimed at reducing tensions.  In particular, France proposes 
joint European action to examine measures to encourage 
replacement of oil in applications suitable for substitution 
(heating and generation of electricity), and to speed up the 
use of bio-fuels, natural gas and LPG in transportation, 
notably for captive fleets.  France is also calling on the 
EU to regularly publish an inventory of European oil and gas 
stocks, as is already done in the United States. 
 
¶12. (U)  Given Europe's increasing dependence on gas, the 
French memorandum outlines both short-term and long-term 
solutions.  In the short term, France urges implementation 
of the April 2004 Directive on the security of natural gas 
supplies in the event of extreme climatic situations or 
partial interruption of supply.  In the longer term, France 
is calling for compliance with the Energy Community South 
East Europe Treaty signed in October 2005 to promote the 
free circulation of gas and the construction of new energy 
transport infrastructures in this region. 
 
Boosting Research 
----------------- 
¶13. (U)  Reflecting its own "innovation and energy science 
strategy" outlined in the 2005 French energy bill, France 
recommends an EU Research and Development policy in the 
field of new energy technologies and energy savings to 
consolidate resources and meet market needs more rapidly. In 
particular, France supports the proposal by Commissioner 
Piebalgs for a strategic European energy-environment 
research plan and proposes that the European Investment Bank 
be called upon to finance European research initiatives.  It 
further suggests that the technological platforms at 
community level, such as those which exist for hydrogen and 
fuel cells, bio-energies, photovoltaic systems, CO2 capture 
and storage, etc., be reinforced in order to stimulate the 
emergence of strategic visions in the field of the new 
energy technologies.  These platforms should enable Europe 
to play a major role in the new international energy 
partnerships, such as the IPHE (International Partnership 
for Hydrogen Economy) or the CSLF (Carbon Sequestration 
Leadership Forum). 
 
Comment 
------- 
¶14. (SBU)  All in all, the French proposals support the EU 
Commission's Green Paper on the security of energy supply as 
well as the EU action plan for energy efficiency.  These EU 
documents have already greatly influenced France's recent 
energy regulations.  The interest of France's contribution 
lies mostly in its suggestion that each member state adopt 
the centralized French supply and demand management system. 
It is also the first individual member state contribution 
and may lead other member states to do the same, thus 
enriching the debate prior to the upcoming March summit. 
End Comment. 
 
Stapleton