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France PM - 7 days ago

Multiannual Energy Programme: what are its aims?

28 November 2018Multiannual Energy Programme: what are its aims? On 27 November 2018, the Government presented the Multiannual Energy Programme (PPE). This is not a piece of legislation, but presents the trajectory to be followed over the next ten years in terms of energy policy and, therefore, ecological transition. TweeterPartagerEnvoyer The Multiannual Energy Programme (PPE) has two main, inseparable objectives: Reduce our fossil fuel consu Ensure clear, fair and sustainable transition for all. Why is the PPE so important? The PPE is crucial in the current context, as there are major challenges to be tackled. We must fight climate change: 70% of greenhouse gas emissions come from fossil fuel consumption, and today we are behind on our trajectory for lowering emissions. We must improve the air quality in our cities, which is a public health issue: there are 48,000 premature deaths each year due to air pollution, more than those caused by all road accidents, suicides, murders, drownings and accidents in the home put together. It is also a question of purchasing power: so that we are no longer dependent on fluctuations in the price of oil. Finally, it is an issue of sovereignty: it is about significantly reducing our dependence on oil and gas producing countries. Reduce our fossil fuel consumption and support transition A more ambitious fossil fuel reduction target: 40% less consumption by 2030 (compared to 2012), in order to fulfil our commitments to reduce greenhouse gases, and move towards carbon neutrality by 2050.

The building and transport sectors will be the main levers for lowering our fossil fuel consumption. They account for more than half of energy consumption and greenhouse gas emissions. The Government will continue to invest in the energy refurbishment of buildings through the actions set out in the Big Investment Plan (which has been in place since the beginning of the five-year term) for public buildings and social landlords (more than €7 billion worth of funding). With the ELAN Law, an energy saving requirement for tertiary sector buildings (a 40% reduction target by 2030) has been implemented. In order to reduce consumption, all French people need to take action and make changes in their everyday lives. The Government is taking steps to help them, by: Developing new forms of mobility (car-pooling, soft transport, electric mobility, driverless cars).
Investing to replace all our everyday items which use too much fossil energy. For boilers, a conversion bonus of up to €3,000 will lead to the replacement of one million oil-fired boilers over the five-year term, with the aim of phasing out oil heating in the next ten years. For cars, the conversion bonus will be revised upwards, with one million recipients over the five-year term and a super-bonus for French people on lower incomes or those who have to travel long distances to get to work.
Improving the energy efficiency of homes, so that they consume less, by improving access to financial assistance for all households, especially the poorest households, once simple works have been completed. To achieve this, the CITE (Energy Transition Tax Credit) will be extended to include landlords from 2020. For low-income households, this will be paid as a bonus, enabling work to be carried out more easily. Those households will receive a higher rate of assistance. In addition, the interest-free eco-loan will be available as soon as only one type of work has been undertaken (for example, boiler replacement or new insulation), compared with two currently, to help fund any remaining costs. The system will also be simplified. Finally, energy audits will be fully funded for low-income homeowners living in poorly insulated thermal sieves (F and G rated properties) from 2020. The Government will also protect the poorest French people by means of the energy voucher , which will be increased by €50 for current recipients, amounting to €200 on average, and which will be extended to include more than two million new recipients by 2019, each of whom will receive €60 on average. This means nearly six million households will receive help to pay their heating bills. Keep electricity prices among the most competitive in Europe to ensure ecological transition is sustainable for all The Government will develop the most competitive renewable energy sources (onshore wind and solar power), and will be demanding on professionals to reduce costs.

Nuclear power contributes to competitive electricity prices in France and as such the Government has chosen not to close too many reactors too quickly.

Interconnections between France and other European countries will be more strongly developed in order to stabilise prices and reduce French people’s energy bills. Energy mix: a credible plan consistent with objectives Coal plants will be shut down by 2022. The many workers impacted by this will receive support across the four affected territories.

The Government is showing unprecedented ambition in the field of renewable energies, with the development of a new offshore wind energy sector, the tripling of onshore wind energy and a fivefold increase in photovoltaic energy by 2030. This represents major investment, particularly in rural areas, a firm commitment by the Government which is achievable through the practical application of fuel taxation to fund energy transition. Annual expenditure will increase from €5 billion to €8 billion by the end of the PPE (2028), amounting to €71 billion in total to support renewable energies (electricity, biogas, renewable heat) over the next ten years, including €20 billion towards new, more competitive projects.

In the nuclear sector, the Government is keeping to its objective to diversify the energy mix and reduce nuclear energy to 50% by 2035. 14 reactors will be shut down by 2035, which is a quarter of reactors currently in operation. Apart from Fessenheim, which will see the closure of its two reactors in the first half of 2020, the reactors will be shut down between 2029 and 2035 at the latest. Between four and six of them will be shut down before 2030, depending on developments in electricity markets and the electricity systems of our neighbours. With the exception of Fessenheim, no nuclear sites will be fully closed down in order to limit the social and economic impact on the territories.

Reducing the share of nuclear power in electricity production to 50% does not mean nuclear power is being phased out. The Government will work with the nuclear industry to draw up a clear plan for mid-2021, which should allow a decision to be made on starting the construction of new reactors (model, site, costs, funding arrangements, etc.), after alternatives have been considered. Develop EDF to imprelement the guidelines set out in the PPE In order to fully implement the guidelines defined by the PPE, the Government has asked EDF’s management to propose ways in which the Group can develop in order to meet the challenges the business is facing in the areas of nuclear power, renewable energies, energy services and networks.

The development proposals must safeguard the integrity of the Group and ensure that adequate funds and resources are available for each activity. For its part, the State will initiale discussions on increasing equity stake in the company according to the issues and risks associated with nuclear activity. Regarding the President of the Republic’s announcement on fuel tax The trajectory of the carbon component is confirmed, since it is necessary if France is to meet its climate targets as set out in the Paris Agreement.

The convergence of tax on diesel and petrol is confirmed, since in a country where fine particles are responsible for 48,000 premature deaths each year, the diesel bonus must be gradually phased out. However, since the price of a barrel of oil can sometimes fluctuate considerably, this is something which must be taken into account when setting the rate of taxation. The Government would like a gradual and steady increase in prices, but does not see any benefit, even from an environmental point of view, in sharp, rapid prices rises such as those seen in 2018, with a peak being reached in October. The timetable for raising fuel taxes will take greater account of fluctuations in the price of oil.

In the event of further price slippage, the law will provide that the rate of domestic tax on the consumption of energy products (TICPE) may be lowered, by way of regulation, in order to suspend or reduce the tax increase seen at the beginning of the year, to avoid unnecessarily exacerbating the already sharp price rises at the pump. In practice, while this is justified by the price level or by price developments, for each quarter, the TICPE rate on all or some fuels returns to the level it was at the previous year. Under no circumstances can this adjustment result in a lowering of the TICPE below the level it was at the previous year.

The objective by the end of the five-year term remains the same: for the value of a tonne of CO2 to reach €86 by 2022. In the meantime, the annual tax increases required to achieve this will remain the same. Every year there will be an increase and there will be no going back. However, the exact timetable for the increase will be adjusted on a quarterly basis and it may be decided, during the course of the year, to put the increase on hold for one or two quarters if the price per barrel rises sharply. It is not a case of ecological denial. What is vital it that the price signal is clear.

This is not a floating domestic tax on petroleum products (TIPP): our goal is a continued increase in price, but we would like it to be gradual, hence the idea of temporarily suspending the annual increase in the TICPE when the price of oil rises drastically. This measure will be adopted in the 2019 French Finance Bill (PLF) at its second reading at the National Assembly.

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