Energy Policies of IEA Countries France 2016 Review Energy Policies of IEA Countries France 2016 Review INTERNATIONAL ENERGY AGENCY The International Energy Agency (IEA), an autonomous agency, was established in November 1974. Its primary mandate was – and is – two-fold: to promote energy security amongst its member countries through collective response to physical disruptions in oil supply, and provide authoritative research and analysis on ways to ensure reliable, affordable and clean energy for its 29 member countries and beyond. The IEA carries out a comprehensive programme of energy co-operation among its member countries, each of which is obliged to hold oil stocks equivalent to 90 days of its net imports. The Agency’s aims include the following objectives: n Secure member countries’ access to reliable and ample supplies of all forms of energy; in particular, through maintaining effective emergency response capabilities in case of oil supply disruptions. n Promote sustainable energy policies that spur economic growth and environmental protection in a global context – particularly in terms of reducing greenhouse-gas emissions that contribute to climate change. n Improve transparency of international markets through collection and analysis of energy data. n Support global collaboration on energy technology to secure future energy supplies and mitigate their environmental impact, including through improved energy efficiency and development and deployment of low-carbon technologies. n Find solutions to global energy challenges through engagement and dialogue with non-member countries, industry, international organisations and other stakeholders. IEA member countries: Australia Austria Belgium Canada Czech Republic Denmark Estonia Finland France Germany Secure Greece Sustainable Hungary Together Ireland Italy Japan Korea Luxembourg Netherlands New Zealand Norway Poland Portugal Slovak Republic © OECD/IEA, 2017 Spain International Energy Agency Sweden Website: www.iea.org Switzerland Turkey United Kingdom United States Please note that this publication is subject to specific restrictions The European Commission that limit its use and distribution. The terms and conditions are also participates in available online at www.iea.org/t&c/ the work of the IEA. Table of contents TABLE OF CONTENTS 1. EXECUTIVE SUMMARY AND KEY RECOMMENDATIONS .......................................................................... 9 Progress and challenges ............................................................................................................... 9 Energy system transformation ................................................................................................... 10 Energy security ........................................................................................................................... 12 Key recommendations ............................................................................................................... 13 PART I POLICY ANALYSIS .......................................................................................................15 2. GENERAL ENERGY POLICY...................................................................................................................... 17 Country overview ....................................................................................................................... 17 Supply and demand ................................................................................................................... 18 Institutions ................................................................................................................................. 21 Key policies for the energy transition ........................................................................................ 23 Financing the energy transition ................................................................................................. 25 Assessment ................................................................................................................................ 29 Recommendations ..................................................................................................................... 31 References ................................................................................................................................. 31 3. CLIMATE CHANGE AND AIR QUALITY .................................................................................................... 33 Overview .................................................................................................................................... 33 Energy-related CO emissions .................................................................................................... 34 2 Institutions ................................................................................................................................. 36 Policies and measures ................................................................................................................ 37 Assessment ................................................................................................................................ 46 Recommendations ..................................................................................................................... 48 References ................................................................................................................................. 48 4. ENERGY EFFICIENCY ............................................................................................................................... 51 Final consumption of energy ..................................................................................................... 51 Energy efficiency progress ......................................................................................................... 54 Institutional framework ............................................................................................................. 55 Policies and measures ................................................................................................................ 56 Case study: Electrification of the transport sector .................................................................... 72 Assessment ................................................................................................................................ 78 Recommendations ..................................................................................................................... 81 References ................................................................................................................................. 82 7 1 0 2 A, E D/I C 3 E O © Table of contents PART II SECTOR ANALYS IS.....................................................................................................83 5. NATURAL GAS ........................................................................................................................................ 85 Supply and demand trends ........................................................................................................ 85 Gas regulatory framework ......................................................................................................... 87 Gas infrastructure ...................................................................................................................... 88 Gas market structure ................................................................................................................. 94 Gas prices and taxes ................................................................................................................... 97 Gas security of supply policy ...................................................................................................... 98 Assessment ................................................................................................................................ 99 Recommendations ...................................................................................................................101 References ...............................................................................................................................101 6. OIL ........................................................................................................................................................103 Supply and demand trends ......................................................................................................103 Oil infrastructure ......................................................................................................................105 Oil retail market structure .......................................................................................................108 Oil security ...............................................................................................................................108 Oil prices and taxes ..................................................................................................................110 Assessment ..............................................................................................................................111 Recommendations ..................................................................................................................112 References ...............................................................................................................................112 7. COAL ....................................................................................................................................................113 Supply and Demand trends ......................................................................................................113 Coal policies .............................................................................................................................115 Assessment ..............................................................................................................................115 References ...............................................................................................................................116 8. ELECTRICITY .........................................................................................................................................117 Supply and demand .................................................................................................................117 Institutions ...............................................................................................................................121 Industry structure ....................................................................................................................122 Wholesale markets ..................................................................................................................124 Retail Market............................................................................................................................130 Security of electricity supply ....................................................................................................135 Assessment ..............................................................................................................................141 Recommendations ...................................................................................................................146 References ...............................................................................................................................147 7 1 0 2 A, E D/I C 4 E O © Table of contents 9. RENEWABLE ENERGY ...........................................................................................................................149 Supply and demand .................................................................................................................149 Institutions ...............................................................................................................................151 Policies and measures ..............................................................................................................152 Assessment ..............................................................................................................................159 Recommendations ...................................................................................................................161 References ...............................................................................................................................161 10. NUCLEAR ENERGY ..............................................................................................................................163 Overview ..................................................................................................................................163 Institutional framework ...........................................................................................................164 Historical background ..............................................................................................................166 Economic aspects of nuclear electricity in France ...................................................................169 Nuclear safety ..........................................................................................................................172 Fuel cycle activities ..................................................................................................................173 Nuclear waste management and decommissioning ................................................................174 Nuclear fission research and development .............................................................................176 Assessment ..............................................................................................................................177 Recommendations ...................................................................................................................179 References ...............................................................................................................................180 11. ENERGY TECHNOLOGY RESEARCH, DEVELOPMENT AND DEMONSTRATION ...................................181 Overview ..................................................................................................................................181 Institutional framework ...........................................................................................................181 National policy framework for RD&D ......................................................................................183 Programmes and funding .........................................................................................................184 Private sector ...........................................................................................................................185 Priorities ...................................................................................................................................186 International collaboration ......................................................................................................187 Assessment ..............................................................................................................................188 Recommendations ...................................................................................................................190 References ...............................................................................................................................190 PART III ANNEXES ............................................................................................................... 191 ANNEX A: Organisation of the review .....................................................................................................193 ANNEX B: Energy balances and key statistical data ................................................................................197 ANNEX C: International Energy Agency “Shared Goals” .........................................................................203 ANNEX D: Glossary and list of abbreviations ..........................................................................................205 7 1 0 2 A, E D/I C 5 E O © Table of contents LIST OF FIGURES, TABLES and BOXES FIGURES 2.1 Map of France ................................................................................................................... 16 2.2 TPES, 1973-2015 ................................................................................................................ 19 2.3 Breakdown of TPES in IEA member countries, 2015 ......................................................... 19 2.4 Energy production by source, 1973-2015 ......................................................................... 20 2.5 TFC by sector, 1973-2014 .................................................................................................. 21 2.6 The administrative regions of France as of 1 January 2016 .............................................. 22 3.1 CO emissions and main drivers in France, 1990-2014 ..................................................... 34 2 3.2 CO emissions by sector, 1973-2014 ................................................................................. 35 2 3.3 CO emissions by fuel, 1973-2014 ..................................................................................... 35 2 3.4 Energy-related CO emissions per unit of GDP in France 2 and in other selected IEA member countries, 1973-2014 ................................................ 36 3.5 Emissions of air pollutants, 2000-14 ................................................................................. 42 3.6 Concentrations of air pollutants, 2000-14 ........................................................................ 42 4.1 TFC by sector with GDP and TFC growth rate, 1990–2014 ............................................... 51 4.2 TFC by sector and by source, 1973-2014 .......................................................................... 52 4.3 Energy intensity in France and in other selected IEA member countries, 1973-2015 ...... 53 4.4 TPES per capita in IEA member countries, 2015 ............................................................... 54 4.5 Changes in TFC broken down by activity, structure and efficiency effects, 1990-2014 ... 55 4.6 Savings in TFC from energy efficiency improvements by sector, 2014 ............................. 55 4.7 Changes in TFC in the residential sector broken down by activity, structure and efficiency effects, 1990-2014 ..................................................................... 59 4.8 Energy consumption in households 1990-2013 ................................................................ 60 4.9 Energy intensities in the residential sector, index for 1990 (100%), 2008 and 2013........ 60 4.10 Energy intensities in the commercial sector, index for 1990 (100%), 2008 and 2013 ..... 61 4.11 Building codes for existing buildings and renovation work in France .............................. 63 4.12 Annual unit energy consumption of large appliances, index for 2005, 2010 and 2013 ... 65 4.13 Industry sector (excluding non-energy use) changes in TFC broken down by activity, structure and efficiency effects, 1990-2014* ................................................................... 66 4.14 TFC in industry, by fuel and GDP (EUR), 2003 vs.2013 ..................................................... 67 4.15 Energy intensities in selected industries, 1990 (index 100%) and 2013 ........................... 67 4.16 Transport energy by subsector and mode/vehicle type, 2013 ......................................... 69 4.17 Changes in TFC in passenger transport broken down by activity, structure and efficiency effects, 1990-2014 .................................................................... 69 4.18 Changes in TFC in freight transport broken down by activity, structure and efficiency effects, 1990-2014 .................................................................... 70 4.19 Global electric vehicle fleet per country, 2005-15 ............................................................ 73 4.20 Electric charging point network ........................................................................................ 75 5.1 France’s natural gas imports by country, 1990-2015 ........................................................ 86 5.2 Natural gas demand by sector, 1973-2014 ....................................................................... 87 5.3 Map of high-pressure natural gas infrastructure .............................................................. 91 5.4 Trends in quarterly wholesale gas and oil prices, 2009-16 ............................................... 94 5.5 Gas market opening in France, 2015 ................................................................................. 96 7 1 0 2 A, E D/I C 6 E O © Table of contents 5.6 Gas prices in IEA member countries, 2015 ....................................................................... 97 5.7 Gas prices in France and in selected IEA member countries, 1980-2015 ........................ 98 6.1 Crude oil imports by source, 1974-2015 ........................................................................104 6.2 Oil demand (in terms of TPES) by consuming sector, 1973-2014 ..................................105 6.3 Oil consumption by product, 2014 .................................................................................105 6.4 Map of oil infrastructure in France, 2014 ......................................................................107 6.5 Fuel prices in IEA member countries, first quarter 2016 ...............................................110 7.1 Hard coal imports by country source, 1990-2015 ..........................................................114 7.2 Coal demand by sector, 1973-2014 ................................................................................114 8.1 Electricity generation in France by source, 1973-2015 ..................................................118 8.2 Electricity generation by source in IEA member countries, 2015 ..................................118 8.3 Electricity consumption by sector, 1973-2014 ...............................................................120 8.4 Electricity peak demand, 2001-12 ..................................................................................120 8.5 Net electricity imports to and exports from France, 1990-2015 ...................................121 8.6 France’s electricity transmission network ......................................................................123 8.7 Comparison of annual wholesale electricity prices on European exchanges, 2005-2015 ...............................................................................127 8.8 The functioning of the French capacity market ..............................................................128 8.9 Market share of alternative and historic suppliers (31 March 2016) .............................131 8.10 Electricity prices in France and in other selected IEA member countries, 1980-2015 ...133 8.11 Electricity prices in IEA member countries, 2015 ...........................................................133 8.12 Winter capacity margins 2015 versus 2016 ....................................................................139 9.1 Renewable energy as a percentage of TPES, 1973-2015 ................................................149 9.2 Renewable energy as a percentage of TPES in France and in IEA member countries, 2015 .......................................................................................151 9.3 Electricity generation from renewable sources as a percentage of all generation in France and in IEA member countries, 2015 ................................................................151 9.4 Contribution to electricity public service 2003-15 (2016-25 projected increase) ..........153 9.5 Reform of the financing of renewable energy (ENR) and the energy transition ............155 9.6 The new renewable support scheme (direct marketing with market premium) in France ..........................................................................................................................156 10.1 Share of nuclear power in electricity generation in France, 1973-2015 .........................167 10.2 History of commissioning PWRs in France, 1977-99 .......................................................167 10.3 Historic CO emissions per kWh among IEA member countries .....................................168 2 11.1 Programme for Investment in the Future: breakdown of the energy budget (in million EUR) .........................................................184 11.2 Government energy RD&D spending as a ratio of GDP in IEA member countries, 2014 .......................................................................................185 11.3 Government energy RD&D spending, including demonstration, in France, 2004-14 ....185 11.4 Funding streams and institutions for public RD&D .........................................................187 11.5 Participation in IEA Technology Collaboration Programmes (TCPs) ...............................188 7 1 0 2 A, E D/I C 7 E O © Table of contents TABLES 2.1 Domestic taxes on energy products (in eurocents) .......................................................... 27 3.1 Low-carbon strategy and sector-specific GHG targets: Policies and measures ................ 39 4.1 Expected sectoral distribution of total final energy consumption (TFC) in 2020 and 2030 .............................................................................................................. 56 4.2 Tax incentives for the promotion of energy efficiency ..................................................... 58 4.3 Summary of benefits and barriers for EV market development ....................................... 73 4.4 IEA 25 energy efficiency recommendations ...................................................................... 76 5.1 LNG terminals in France, 2015 .......................................................................................... 90 5.2 Storage facilities in France ................................................................................................ 93 6.1 National oil products storage capacities .........................................................................106 8.1 Electricity generating capacity by source, 2010-14 (MW) ..............................................119 8.2 Security of supply adequacy assessment (baseline scenario) with and without interconnections .............................................................................................................138 9.1 Renewable electricity generating capacity, 2000-14 (MW) ............................................150 9.2 Expansion plans for cumulative renewable energy installed capacity by technology (in GW) ....................................................................................................155 9.3 Overview of the investments of the Heat Fund (2009-14) .............................................157 11.1 Global ranking of France’s energy sector R&D spending, 2013 ......................................186 BOXES 3.1 The Paris Agreement ......................................................................................................... 38 3.2 Addressing air pollution in Paris ........................................................................................ 43 4.1 White certificates .............................................................................................................. 57 4.2 The bonus-malus scheme .................................................................................................. 71 8.1 Hydropower concessions in France .................................................................................125 8.2 Security of electricity supply in the winter 2016-17 .......................................................140 7 1 0 2 A, E D/I C 8 E O © 1. Excecutive Summary and key recommendations 1. EXECUTIVE SUMMARY AND KEY RECOMMENDATIONS PROGRESS AND CHALLENGES During the seven years since the last International Energy Agency (IEA) in-depth review, the French government has set in motion significant reforms towards more secure, affordable and sustainable energy supplies and the green growth of its economy. France has witnessed the full decoupling of its energy consumption and carbon dioxide (CO ) 2 emissions from economic and population growth. Total energy supply and consumption as well as CO emissions from fuel combustion have declined sharply over the past 2 decade. The carbon intensity of the French economy is half the IEA average and has decreased by almost 30% below its level in 2004 (versus an IEA average decline of -20% during the same period). Outside transport, CO emissions from fuel combustion have 2 been falling fast. Since 2012, 3.3 gigawatts (GW) of coal-fired capacity was closed, and the remaining oil-fired power plants are planned to be phased out. Energy savings in residential and industrial demand and reduced fossil fuel combustion have contributed to reduced energy supply and consumption in France. A top priority for France has been to address climate change concerns. As host of the United Nations’ 21st Conference of the Parties (COP21) in December 2015, France demonstrated its domestic and international leadership in guiding societal dialogue towards climate change mitigation. At home, France has developed an ambitious and integrated energy and climate policy framework for the energy transition towards 2030 and has adopted significant new policies, including carbon budget/pricing instruments, tax incentives and considerable public funding towards implementing it. The energy system transformation that France is undertaking entails significant structural changes for the energy sector through greater energy efficiency, larger contributions from renewable energies while ensuring the continuous low-carbon nature and security of its electricity supply and the safe operation of France’s ageing nuclear fleet. The state, energy markets, industry and consumers will need to finance the investments required for the energy transition. Électricité de France (EDF)’s so-called Grand Carénage is a refurbishment and safety upgrades programme required for the long-term operation of its fleet. Its cost (capital expenditures [CAPEX]) was updated in 2015 by EDF to EUR 47.5 billion over the period 2014-25 (in constant euros of 2015). The electricity industry is undergoing considerable financial challenges, but the restructuring and recapitalisation by the state should ensure that resources and capabilities are available to also finance the energy transition. While the energy system transformation will strengthen energy security, green growth and affordability in the longer term, this transformation has implications for maintaining energy security in the short to medium term given the ageing of the nuclear fleet. It is therefore welcome that France is encouraging demand response and will be starting a capacity market in 2017 with a view to ensuring power system adequacy at peak demand and integrating larger shares of 7 1 0 2 A, E D/I C 9 E O ©