French-German energy policy rift puts EU’s climate lead at risk - expert
Clean Energy Wire: The energy crisis has exposed deep and pre-existing rifts in the strategic approaches of France and Germany in regards to energy supply security and emissions reduction. Given the pressure to act on each of these challenges, can Germany and France still afford disputes over the classification of nuclear power or e-fuels in combustion engines given the new reality of Russia’s war on Ukraine and the increasing pressure to act on climate change?
Sven Rösner: Different views on nuclear power are nothing new in the French-German partnership, but we’ve now reached a point where Germany has ended nuclear power production, whereas France is trying more hastily than before to bring six new nuclear reactors online. This is making the divide more visible than in the past – and the two countries’ different responses to the energy price crisis only deepened this gulf. From a technical point of view, it would be preferable if there was a uniform response. But we are dealing with two different democracies in which policymakers are held accountable for the success of the programmes they were elected for.
And if climate action is the overarching goal, it can be argued that a technology with no direct CO2-emissions is a viable option. Yet, there’s a risk that the gulf between France and Germany on this matter also weakens the pair’s ability to act as the progressive force in European climate action that it has been in the past ten years.
This sounds like a worrying prospect for the EU’s Green Deal, which is supposed to deliver emissions reduction and ring in a new era of economic success based on sustainable technologies. What could a possible remedy to this Franco-German gridlock look like?
Putting more dogmatic considerations aside, both countries could answer the question of what they actually aim to achieve in energy and climate policy – and explore whether different approaches in national energy policies could even bring some benefits, especially as we’ve seen in 2022 that overreliance on one approach comes with risks. This is true for nuclear power in France and for natural gas in Germany.
But the crisis also showed that there’s a lot of solidarity in energy security and that both countries were willing to make an effort to help each other out. Unfortunately, this encouraging sign has been largely buried by news about disagreements. The idea of ‘sovereignty’ in energy matters has been an important trope throughout the crisis, especially in France. Yet, sovereignty today is only achievable at the European level, not at the national level alone – and there will be no sovereignty without solidarity.
If there’s already a lot of willingness to help each other at a practical level, and if mutual support mechanisms functioned well during the crisis, why does the tone of engagement appear to have become more caustic between the two countries’ governments?
There’s a range of factors at play making the bilateral debate more pointed. One is that the ‘low-hanging fruits’ in climate action have largely been harvested in Europe and that reaching the next stage will require decisions that touch upon more politically delicate matters. Another is the broader geopolitical picture, not only with respect to energy or emissions reduction. Differences in how to help Ukraine withstand Russia’s assault, for example regarding arms deliveries, have thrown a wrench in the works between Paris and Berlin. Moreover, there’s been the 2022 election in France amid the energy crisis, in which inflation mainly caused by high energy prices dominated the debate. This had led the French government to notably emphasise solutions it found for itself, perhaps at the expense of a more closely coordinated European response.
Sovereignty today is only achievable at the European level, not at the national level alone – and there will be no sovereignty without solidarity.
Why is the French solution so different from Germany's? Both countries share a strong public commitment to the climate targets, which date back to at least 2015, when the Paris Agreement was signed. This was long before the energy crisis or the most recent elections.
One cause of these differences predates the Paris Agreement. It is rooted in the aftermath of the 2008 financial crisis, from which France and Germany emerged in dramatically different ways. Germany’s economy came out stronger than before while the French industry was significantly weakened. It lost half of its share in the national economic output and shed a lot of jobs, especially in rural areas, which exacerbated social tensions. For the French government, the energy transition must be an industrial project that creates jobs. In Germany, on the other hand, there’s a lack of workers to fill available jobs. So much so that this labour shortage could become a major impediment to its energy transition. The German government thus takes a narrower view focusing on the transition’s technical climate and energy dimensions. Understanding these differences is a prerequisite for finding common ground in the future.
Doesn’t this present a great opportunity to intensify industrial policy cooperation in energy production, given that one country is looking for employment opportunities while its neighbour has a lot of job vacancies?
There’s definitely a lot of potential for more cooperation in the energy transition between Germany and France! This starts with energy supply itself and how to achieve a stable system that also includes the rest of Europe instead of thinking only in terms of national supply security. A founding principle of the EU has been that forming a bloc is necessary for its relatively small national economies to stand a chance against the big fish of the global economy. We’re now at point where national navel-gazing has become more popular again, a trend that Europe can ill-afford if it wants to make its green transformation work.
There’s also some ground for optimism. Unlike in Germany, youth unemployment in France is high and the energy sector is probably the only one that could remedy this situation in a short time. Germany and France could try to find an economic model that includes technology transfers, joint research, training, and other measures that show people how they can become part of and benefit from the transition instead of regarding it as a ‘sacrifice’ to be made for climate policy.
The German government coalition has made the economy’s sustainable transformation a trademark of its term in office. And at the end of 2022, together with French economy and finance minister Bruno LeMaire, Germany’s economy and climate action minister Habeck underlined the two economies’ close cooperation on energy and climate. Is this already a sign that closer coordination is in the works?
It's not only about political declarations. In our free market economies, it’s also about business-to-business cooperation and seizing opportunities offered in both countries, which is already happening at a broad scale. The same goes for research collaboration, for which there are many promising examples as well. Even the administrations in each country have learned from each other’s experience and adapt best practice wherever this makes sense and is feasible – a field the Franco-German Office for the Energy Transition is particularly involved in. A lot is already happening, and no one should wait for some sort of a ‘big bang’ where cooperation ‘booster’ is activated. But through targeted European measures, some dimensions could indeed be sped up in a meaningful way, for example collaboration on hydrogen or raw minerals. Many initiatives are under way in these areas, though they’re often given less attention than disputes.
Would you say that cooperation through ‘informal channels’ is going better than the heavily publicised high-level clashes suggest?
As far as our experience at the Franco-German office goes, this definitely is the case. The relevant ministries are in regular correspondence and there’s also a lot of bilateral cooperation going on at the regional level. In fact, there’s a lot of interest in learning from each other’s experiences at many levels below the national governments. The interest is especially strong on the French side, for which Germany often serves as a sort of benchmark on economic questions, whereas Germany rather measures itself against countries and regions like the US, China, the UK or Scandinavia. This imbalance is not very well-known in Germany, which is a failing in my view. If Germany understood better that it is not only seen as a competitor but also as point of reference in many cases — for better or worse — this could help make the relationship with France more productive.
On the European stage, Germany is often criticised for coming across in a know-it-all manner and eager to impose its solutions on others – even though per capita emissions and other indicators do not necessarily paint a good picture for its climate action success. Is it possible that the French side is sometimes reacting with a rejection of ideas like filling French landscapes with German wind turbines and other green technology, which is ultimately seen simply as industrial competition?
This sentiment certainly exists and we see it in our daily work at the energy transition office. However, without a doubt it’s a minority opinion, even if it often gets much airtime in the media. The dominant view, in my opinion, is that there’s a fair degree of respect for many aspects of the German energy transition’s approach, coupled with a comprehension that France was somewhat slow to act on certain green and sustainable technologies and now has some catching-up to do. Germany’s response to the 2008 financial crisis and the ensuing debt crisis in Europe, which was seen by many as hard-nosed and self-centred, certainly left its marks in France as it did elsewhere in Europe. But in general, there’s rather a sense of curiosity about Germany’s economic prowess.
What about the mood at companies active in the sectors that are most affected by the transformation? Do you see a significant difference in how optimistically they view the challenges ahead regarding decarbonisation and energy efficiency in each country?
For a long time in Germany, planning stability has been at the centre of economic policy. This was shaken in recent years by the inconsistencies and fluctuations in support for renewable power sources, expansion targets, auction design, the regulatory framework or grid expansion. And companies in France face similar challenges. What is needed is more long-term planning stability across Europe. You can see what happens in its in the current push for more renewables. There’s a lack of skilled workers, of infrastructure and hardware everywhere, especially since all of the EU plans to scale up renewable power at the same time. Companies in both France and Germany have similar expectations from their governments in terms of providing support and setting the right regulations in a reliable way, so there’s a lot to be learnt in terms of best practices and synergies.
What kind of regulatory framework and energy infrastructure is needed to take this kind of cooperation to a new level?
The essentials are already in place, for example the internal energy market or the trans-European grid. The grid still needs to be developed further of course, but it has shown what it is capable of during the energy crisis and proven to be a bedrock of social and economic stability. A gas shortage in Germany or a blackout in France would have made the winter 2022/2023 very different, which was only avoided thanks to solidarity and cooperation. Sure enough, there will be some difficulties along the way as the national systems are integrated further. But an integrated system still is much more efficient, reliable and also can be decarbonised faster than a system where each member state tries to become self-sufficient.
Companies in both France and Germany have similar expectations from their governments in terms of providing support and setting the right regulations, so there’s a lot to be learnt in terms of best practices and synergies.
Germany’s role in EU policy long has been likened to that of a guardsman for the free market, a position that was invigourated by the UK's departure from the bloc. France, on the other hand, is known as the home of ‘dirigism,’ an economic model in which direct state intervention and investments play a much greater role. Given the trend of the past couple of years towards more mandatory quotas for certain technologies, subsidy payments or decreed phase-outs, are we witnessing the EU move away from a laissez-faire approach towards more intervention akin to the French model?
It’s unlikely that we will see a true emulation of the French model across Europe. Last year, France nationalised its biggest energy company EDF to avoid heavy financial difficulties in the energy crisis. The country will likely invest in nuclear power to more or less maintain the current capacity – but the real growth story in France will also be renewables. Auctions are currently the preferred method in most of Europe for securing the investments in wind and solar power. But as this makes price the determining factor, and bears the risk of overemphasising investments in regions that offer the best return on investment.
The ‘visible hand’ of the state, that helps in allocating these investments in a way that favours supply security and decarbonisation, in contrast to the ‘invisible hand’ of the free market that reaches for the most profitable solution, could therefore be strengthened. This does not mean that most EU states will become investors themselves. However, support mechanisms, infrastructure planning and state guarantees are likely to play a growing role across Europe.
Given that private investors in nuclear energy are hard to come by and state investments will likely remain limited to maintaining existing capacity, is French president Emmanuel Macron’s talk about a nuclear ‘renaissance’ overblown? And could a strong nuclear comeback dim the prospects for better cooperation with Germany?
Nuclear power remains a technology where France regards itself as an industry leader and it still employs a large number of people across the country. It also is a vital part of its military infrastructure, which assigns the technology’s civil use a role that goes beyond emissions reduction or energy security. Given the sharp rise in interest rates, raising money to build new nuclear plants is much more expensive than just two years ago and with the notorious delays in reactor construction, it is indeed hard to imagine how a private investor would be able to go through with these plans. But the French government has taken the decision to build new nuclear plants and the main challenge will now be to achieve an agreement with Brussels over funding modalities.
Regarding the differing opinions with Germany on nuclear power, I think it’s regrettable that energy policy between the two countries if often reduced to this dimension. Electricity accounts only for 20 to 25 percent of current energy consumption in both Germany and France, while there are major challenges in decarbonising mobility, industry and heating.
Beyond the constant noise about nuclear power, what are other areas need joint action most urgently? And where do you see potential for more exchange?
The roll-out of electric mobility charging infrastructure throughout Europe is a very important topic that so far receives scant attention. Germany and France form the geographical centre of the EU and both countries have thus far struggled to find a solution that quickly resolves the many conflicting interests and unclear responsibilities at the regional and municipal level and what viable business models could look like. The car industry will sit on the fence until there’s some certainty that the charging infrastructure is put in place and France and Germany could race ahead here by setting common standards for infrastructure, payment modalities and so on. This could boost the market in a way that makes debates about e-fuels and combustion engines truly obsolete.
Another area for greater coordination would be heating. While the transition of the heating sector will often require specific local solutions, there are promising ideas that can be emulated, such as France’s current support programme for heating modernisation. Thanks to its relatively large share of electric heating, France had a greater incentive to modernise heating systems to avoid excessive demand during winter and now can share some valuable experiences in the field.
How does the public debate the energy transition compare in both countries? In Germany, each major step regarding energy policy in the past years has been usually very controversial – be it the nuclear exit, the coal phase-out or the expansion of renewable power sources, often accompanied by major protests. In France, protests are relatively commonplace, but it seems that energy policy does not often lead to public outrage. Is that a correct observation?
In the public debate in France, energy policy has usually occupied a much smaller space than in Germany, not least because there is a widespread belief that, thanks to nuclear power, the target of decarbonising the system has already been met. The problems with the nuclear fleet in 2022 somewhat disrupted this indifference, although debates were largely centred on price rises. In general, there’s very little debate about aspects of nuclear power that Germany argues about so passionately, for example regarding reactor safety or finding a repository for radioactive waste. With respect to renewables expansion, you find reservations similar to those you had in Germany in the past years about wind turbine construction. Garnering broad social support for a massive renewables buildout currently looks challenging, whereas the construction of new nuclear plants is mostly met with indifference even by neighbouring residents.
