VZCZCXRO3415
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHFR #7604/01 3350514
ZNR UUUUU ZZH
R 010514Z DEC 06
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 3470
INFO RUCPDOC/USDOC WASHDC
RHEBAAA/USDOE WASHDC
RUCNMEM/EU MEMBER STATES
RUEANFA/NRC WASHDC

UNCLAS SECTION 01 OF 02 PARIS 007604 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/WE; OES; EB/ESC, AND EB/CBA 
USDOC FOR 4212/MAC/EUR/OEURA 
DOE FOR ROBERT PRICE PI-32, KP LAU NE-80, KIM BALLOU 
 
E.O. 12958: N/A 
TAGS: ENRG EPET FR
SUBJECT: France Energy Policy Maker on energy independence, energy 
trends, and France's new energy law 
 
 
NOT FOR INTERNET DISTRIBUTION 
 
¶1. (SBU) Summary:  Ministry of Economy, Finance, and Industry Energy 
Director General Dominique Maillard told us that France has 
diversified its energy sources so that it is not dependent on any 
one overseas market.  A large proportion of its energy comes from 
nuclear energy, and no more than one-third of its gas needs comes 
from any single market.  The EU has focused on deregulation, rather 
than diversification of supply.  He believed that EU countries 
needed to invest in more electricity production and cross-border 
infrastructure to prevent blackouts similar to the November 4 
blackout that struck much of South Western Europe.  Maillard was 
confident that France's new energy law, which implements the 2003 
European Union (EU) electricity and gas directives, would survive 
scrutiny from both France's constitutional court and the European 
Commission.  End summary. 
 
What the General Directorate for Energy Does 
-------------------------------------------- 
 
¶2. (U) On November 15, econoff met with Ministry of Economy, 
Finance, and Industry Energy Director General Dominique Maillard 
(Under Secretary-level) to discuss French and European energy policy 
and the GOF's newly passed energy law.  Maillard explained that the 
General Directorate for Energy and Raw Materials formulates and 
implements France's energy policy.  It seeks to maintain open 
markets for energy, track key energy and raw material sectors, and 
supervise energy-related companies.  His division drafts 
energy-related laws and regulations, and implements EU energy 
directives.  It also participates in EU and International Energy 
Agency (IEA) discussions on energy. 
 
France Has Diversified its Energy Supplies 
------------------------------------------ 
 
¶3. (SBU) France has taken great care to diversify its energy 
sources, Maillard noted.  Its nuclear program provides 80 percent of 
its electricity and 40 percent of its overall energy needs.  France 
obtains most of its natural gas from the North Sea, Russia, and 
Algeria, but no one of these suppliers accounts for more than a 
third of France's consumption.  Germany, he believes, has been 
unwise to depend on Russia for such a large portion of its gas 
supplies.   He said that the UK, with dwindling energy supplies from 
the North Sea, was prudent to consider reinvigorating its nuclear 
energy program.  The North Sea provided the largest source of oil to 
France, with France importing 17 percent of its needs from Norway, 
followed by 12 percent from Russia.  Countries importing more than 
50-60 percent of their energy needs from Russia had a "dangerous" 
dependency. 
 
¶4. (SBU) Maillard continued that his ministry aimed to contribute to 
France's goal of reducing greenhouse gas emissions by 75 percent by 
2050 and will use technical, technological, economic, and social 
means to accomplish this aim.  In working toward this aim, France 
intends to coordinate within the EU, but realizes that other 
European countries are not prepared to replace present sources of 
energy with nuclear power to the extent necessary to reach this goal 
across the EU. 
 
EU Energy Policy Emphasizes Deregulation over Diversity of Supply 
--------------------------------------------- ---------- 
 
¶5. (SBU) EU policy, Maillard continued, differed from France's in 
that it emphasized deregulation of energy markets, rather than 
diversity of supply.  Maillard and his staff meet periodically with 
their EU counterparts to coordinate on energy and energy security 
issues.  Maillard saw a number of trends across the EU.  European 
dependency on fossil fuels will continue to increase at a time when 
there is little hope of finding new reserves of oil, gas, and coal 
in the EU.  Since Russia is close, new pipelines from Russia will be 
built.  Russia sells 90 percent of its gas to Europe and this 
dependency on the European market will continue.  One important 
reason is that Russia can obtain better prices for its gas in Europe 
than it would likely obtain in alternative markets, such as China. 
However, Russia wants to develop its liquefied natural gas (LNG) 
production capability so that it can diversify its client base. 
While Europe obtains 50 to 60 percent of its natural gas from 
Russia, it  should develop new routes to exploit gas reserves in 
Azerbaijan and elsewhere, Maillard said. 
 
More Interconnection between Energy Grids Needed 
--------------------------------------------- --- 
 
¶6. (SBU) According to Maillard, a power outage that affected 10 
 
PARIS 00007604  002 OF 002 
 
 
percent of France's population and much of Southern Europe on 
November 4 demonstrated that European power grids needed more 
interconnection.  While Maillard's staff was still investigating all 
the aspects of the blackout, the apparent reason was German utility 
E.On's decision to switch off a high-voltage power line in Lower 
Saxony, setting off the worst electricity outage in France since 
¶1978.   With greater interconnectivity switching off one power line 
would not have caused such a large power outage.  Investment in 
cross-border power lines would help.  Additionally, European 
countries would have to invest in power-generation capacity. 
France was able to reconnect all clients affected by the power 
outage within forty minutes because its significant hydropower 
reserves allowed it to compensate for the loss of the electricity 
from Germany. 
 
France's New Energy Law 
----------------------- 
 
¶7. (SBU) On November 30, the Constitutional Court will rule on 
whether the newly passed energy law, which allows the GOF to 
decrease its stake in Gaz de France (GDF) from 70 percent to 
one-third, is constitutional.  (Note:  The actual GOF share of GDF 
is 80.2 percent.  End note.)  Assuming it is upheld, the law would 
enter into force two weeks afterwards.  Although much attention has 
been placed on the merger between energy group Suez and GDF, the 
most important aspect of this law is that it will deregulate 
France's energy market by July 1, 2007, consistent with the 2003 EU 
electricity and gas directives.  By that date, consumers will be 
able to switch suppliers, if they so choose. 
 
¶8. (SBU) Maillard said the energy bill contained a clause that would 
maintain current tariffs for two years after deregulation.  He noted 
this addition to the law was politically necessary since the GOF 
gained public and legislative support for the law only by arguing 
that more competition would decrease prices.  The legislature added 
this clause "to ensure this condition is fulfilled."  He expects 
that the European Commission will send France a questionnaire on the 
continued regulated tariffs, which are contrary to the EU Energy 
Directive.  Maillard said his staff would diligently reply to the EU 
questions and he did not anticipate further EU intervention. 
 
STAPLETON