France Taxes Nuclear Power to Boost Renewables

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Thursday, September 26th, 2013
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The French government plans to introduce a tax on nuclear power and fossil fuels in order to provide much needed funding to the renewable energy sector and support efforts to lift the country’s energy efficiency.

The new nuclear tax will apply to the reactors currently being operated by Electricite de France SA (EDF) and will be accompanied by a carbon tax which will be gradually applied to fossil fuels in order to raise a total of 4 billion euros in tax revenues in 2016 (US$5.4 billion).

The funds will be directed toward fulfilling President Francois Hollande’s election promise of reducing France’s dependence upon nuclear power to half of total output by 2025 while simultaneously ensuring that utilities bills for consumers do not become burdensome.

France remains most heavily nuclear power-dependent country in the world, deriving three-quarters of its energy from 58 nuclear reactors operated by EDF.

EDF is the world’s largest producer of electricity, and in 2011 was responsible for meeting 22 per cent of the European Union’s electricity needs. Most of its power is generated using its nuclear fleet, followed by renewables.

The cost of transitioning away from dependence upon atomic energy is estimated to be approximately 20 billion euros a year according to Hollande, and now the nuclear power industry itself will be required to help foot the bill.

“Our nuclear fleet will be asked to contribute, ” French Prime Minister Jean-Marc Ayrault said at the conclusion of a two-day conference on the environment. “All change is expensive in the short term even if it’s beneficial in the long term.”

While Ayrault refrained from providing detailed information on how much EDF will have to pay, he did say¬† the tax would apply “over the remaining lifetime of our reactors.”

EDF, which is 84 per cent state-owned, currently receives compensation from the government for the additional costs incurred by power generation via wind turbines and solar PV in the form of the CSPE tax on power bills.

Ayrault was more forthcoming on details concerning France’s new carbon tax, which he referred to as a “climate energy contribution.”

The tax will generate revenues of 2.5 billion euros in 2015 and 4 billion euros in 2016, and will be applicable to the full gamut of fossil fuels, including gasoline, diesel, coal and natural gas.

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