If Saving The Climate Requires Making Energy So Expensive, Why Is French Electricity So Cheap?

Ask almost any economist and she’ll tell you the same thing: if you want to save the planet from runaway climate change, you have to make energy expensive.

“Economics contains one fundamental truth about climate-change policy,” wrote Yale University economist William Nordhaus in 2008, who won the 2018 Nobel Prize for his work.

“For any policy to be effective in solving global warming, it must raise the market price of carbon, which will raise the market prices of fossil fuels and the products of fossil fuels.”

Various policies can be used to make electricity more expensive. For example, you can tax carbon emissions or put in place air pollution regulations.

However, the most popular way to make energy expensive is to do what Germany has done and that is to subsidise solar and wind energies through a surcharge (or tax) on electricity.

But such efforts beg the question: why, if making energy expensive is required to reduce emissions, does France generate less than one-tenth the carbon emissions of Germany at nearly half the cost?

Germany vs France
Few nations have done more to make energy expensive in the name of saving the climate than has Germany.

A new study by the Organisation of Economic Cooperation and Development (OECD) shows how Germany, between 2006 and 2017, increased the cost of electricity for households by 34%.

The report, “The Costs of Decarbonisation,” documents how the German government made electricity expensive by requiring consumers to subsidize solar, wind and other forms of renewable energy.

This reality will surprise many journalists and other advocates of renewables who have noted how, over the exact same period, the cost of solar panels and wind turbines has declined dramatically.

It turns out that those lower costs have not allowed Germans to spend less on renewable energy. In fact, they have had to spend more.

Because solar and wind are inherently unreliable and energy-dilute, Germany has had to spend 27% more on things like transmission lines from distant solar and wind farms spread all throughout the country.

Has expensive German electricity lowered carbon emissions? It has not. The country’s carbon emissions have been flat since 2009. A big part of the reason has been due to the country’s attempt to replace nuclear power plants with solar and wind energies.

In 2018, German carbon emissions declined modestly, but only because of unusually warm weather and – ironically –  higher nuclear output (4.9%) which grew more than renewables did (3.1%).

Promoters of renewable energy subsidies claimed in 2015 that the cost of electricity would peak in 2023, but the new OECD report concludes that electricity prices will increase as long as Germany keeps deploying solar and wind – in other words, indefinitely.

French electricity costs are just 59% of German electricity prices. As such, according to the prevailing economic wisdom, French electricity should be far more carbon intensive than German’s. And yet the opposite is the case. France produces one-tenth the carbon pollution from electricity.

Why? Because France generates 72% of its electricity from nuclear, and just 6% from solar and wind.

Will France Follow Germany?
For years, Germany has been pressuring France, which has a smaller economy, to follow its lead and shut down its nuclear plants and scale up solar and wind.

France has increasingly done what Germany wants. According to the Commision de Regulation de L’Energie, €29 billion (US$33 billion) was used to purchase wind and solar electricity in mainland France between 2009 and 2018.

But the money spent on renewables did not lead to cleaner electricity, according to a new analysis by my Environmental Progress colleagues, Mark Nelson and Madison Czerwinski.

In fact, the carbon-intensity of French electricity has increased. After years of subsidies for solar and wind, France’s 2017 emissions of 68g/CO2 per kWh was higher than any year between 2012 and 2016.

The reason? Record-breaking wind and solar production did not make up for falling nuclear energy output and higher natural gas consumption. And now, the high cost of renewable electricity is showing up in French household electricity bills.

According to Eurostat, although French households pay 41% less than German households, electricity in France has, over the past decade, been increasing in price much faster than electricity in Germany.

“French prices have increased 45% since 2009 as compared to 29% in Germany and 25% in the EU,” Mr Nelson and Ms Czerwinski noted.

This is a problem, they note, because “Expensive electricity acts as a disincentive to electrify transportation, heating, and cooking, which together constitute a larger share of energy, and carbon emissions, than electricity.”

The two arrive at a shocking conclusion: “France could have completely decarbonised its electricity sector had it spent US$32 billion on new nuclear plants rather than on renewables like solar and wind.”

And were France to keep operating Fessenheim, a nuclear plant scheduled to be closed in 2020, start-up a new nuclear plant called Flamanville, build three more reactors the same size, and operate each nuclear plant an average of 85 percent of the year instead of its current average of 70 percent, it could generate sufficient zero-carbon electricity to completely decarbonise its road transportation sector.

But France appears unwilling to do that. Instead, France’s president, Emmanuel Macron, announced recently that he will stick with plans to reduce the nation’s usage of its nuclear plants, increase its output of renewables, and thus – necessarily – increase energy prices.

As such, Mr Macron appears to have learned little from last year’s Yellow Vests protests, which were triggered after he did what economists and Germans alike have long insisted he must do in order to address climate change: raise gasoline and diesel prices by taxing carbon emissions.

Source: Global Energy World