3 December 2018

Will the transition écologique be Macron’s Waterloo?


Les gilets jaunes triompheront,” was the message on the Arc de Triomphe that greeted President Macron on his return from the pointless Buenos Aires G20 summit.

Predictably, his 57-minute address last Tuesday on France’s transition écologique did nothing to quell popular unrest and suggests the French president’s troubles are only going to worsen. In condemning the violence of the gilets jaunes protesters while assuring voters that he heard their concerns about squeezed living standards, Macron did what every politician does. Some of it was tin-eared. Diesel too expensive? There’s public transport and car sharing, was Macron’s Marie-Antoinette response.

But the French president’s problems are more than merely tonal. Claiming he was listening, he showed he hadn’t understood. Macron pledged not to be deflected from his goal of completely decarbonising energy consumption in France by 2050. Conceptually he tried to bind together social and environmental inequalities. It doesn’t wash. Breathing bad air is not caused by 400 parts per million of carbon dioxide.

Political leaders who set themselves big goals succeed when those goals are congruent and mutually supportive. Ronald Reagan’s goal of reviving America’s economy strengthened his other goal of winning the Cold War. Like Reagan, Macron wants to transform France’s economic performance, raise living standards and close its chronic fiscal deficit.

At the same time, he is pushing the transition écologique and the transition énergétique — the terms appear interchangeable. It is not just the hubris of, in his words, building an entirely new economic and social model for France. When a politician has goals that are fundamentally in conflict with each other, failure is assured.

Evidence of this conflict runs like counterpoint through Macron’s speech, deflating any cultural assumption that Anglo-Saxons like to muddle through whereas the technocratic products of France’s École Nationale d’Administration prize logical consistency above all.

At one point, the president of France complains that the French complain that taxes are too high while demanding more schools, creches, and public services. Fair point. This was a failure of pédagogie by the leaders of society, Macron told the assorted elected officials assembled to hear his lecture. But when it comes to the higher fuel taxes that sparked the gilets jaunes protests, all the proceeds – €5bn this year, €7-8bn next – are being used to subsidise wind and solar energy, which in turn means higher energy prices. Higher taxes, higher electricity costs, worsened business competitiveness is Macron’s triple whammy for nil social benefit. It hardly constitutes a voter-friendly pedagogy.

Saying that France hadn’t done enough to address climate change, Macron declared that failure to act would add an environmental debt to the existing economic and social ones to be passed on to future generations. But addressing the environmental debt means increasing the economic one – resources are not costless – and deepening the social one. High energy costs disproportionately hit those on low incomes. Inevitably this creates pressure for more welfare spending and still higher taxation. It’s a pretty safe bet that the rioters will be bought off with higher public spending in one form or another.

Policy contradictions run like deep fissures through the detail of Macron’s energy transition. The president reaffirmed plans to arbitrarily cut nuclear’s contribution to France’s generating mix by one third and make way for a vast expansion of renewable energy, tripling wind capacity and solar fivefold. As Macron says, thanks to nuclear, France has some of the lowest cost electricity in Europe. Its nuclear power stations transmit high value, low cost electricity to France’s neighbours, constituting one of France’s largest net exports, at one point contributing €3bn a year to the French economy.

When it was launched 40 years ago, the French civil nuclear programme represented more than economics. Nuclear power was a grand statement about the future; of France’s independence from OPEC oil shocks and what French technology and the French state could achieve. Begun in the closing months of Georges Pompidou’s presidency, it was enthusiastically adopted by his successor, Valéry Giscard d’Estaing, who saw it presaging a new era of civilization. “With the appearance of nuclear energy, with the development of biochemistry and connected branches, with computer sciences, we are achieving a scientific power of another nature,” Giscard told Paris Match in a 1979 interview.

What hadn’t been foreseen was that France’s nuclear programme would give it a huge advantage in the age of global warming. Nuclear is already zero greenhouse gas emitting. With the sunk costs of existing nuclear power stations, you cannot do better. Anything that moves away from that is likely to see emissions increase, as is happening in Germany.

Macron describes the rise of wind and solar as “ineluctable” and at the heart of his government’s programme. One thing it won’t do is make the planet great again. None of the near 9,000 words of Macron’s speech explain or justify why it makes any commercial, economic or environmental sense to raise taxes to subsidise renewable energy. Instead it smacks of craven appeasement of a destructive green ideology that has always been hostile to nuclear, especially the variety emanating from its larger neighbour across the Rhine.

The fact is nuclear has the smallest environmental footprint of any energy source. By contrast, wind and solar are a giant step backwards because of the inherent drawbacks of weather-dependent generation, brilliantly described recently by Peter Foster in the Canadian Financial Post:

“The term Variable Renewable Energy, VRE, could more accurately be described as Unreliable Renewable Energy, URE, due to the terribly obvious fact that the sun doesn’t shine at night, and sometimes not during the day either, while the wind doesn’t always blow. Thus the more that wind and solar are part of your system, the more technical contortions they demand from backup power and the structure of the grid. The efficient part of the system has to twist itself into a technical pretzel to accommodate the inefficient part.”

At present, France is the efficient part of the European electricity market and Germany the inefficient part. At a cost of hundreds of billions of euros, Germany’s Energiewende has seen Germany turn into Europe’s largest energy exporter, dumping its low grade, surplus electricity on its neighbours, sometimes even paying them to take it when too much wind and sun turn wholesale prices negative. In ten years, German electricity exports more than doubled from 20 Terrawatt hours in 2006 to over 50 TWh in 2016 compared to some 37TWh of French electricity exports.

A study by two green think tanks in Germany and France argued that France can’t accommodate the growth of wind and solar unless it shrunk its nuclear fleet, a vivid demonstration of the Pretzel Effect. Macron alluded to this in his speech. In talking of developing interconnections so that France and its neighbours can benefit from the lowest cost electricity, Macron committed the fundamental economic fallacy of confusing cost and value. The value of electricity depends on when it’s demanded. If lots of electricity is produced when it’s not wanted, its value plunges along with the price it fetches.

Tuesday’s speech sounds the death knell of France’s nuclear programme. Macron’s announced the closure of 14 nuclear reactors between now and 2035. New nuclear power stations after the troubled Flamanville project would have to be price competitive. The problem, as shown by the premature closure of nuclear plants in the US, is having large amounts wind and solar destroy the economics of nuclear – transferring the inefficiency of wind and solar makes nuclear less efficient, raising the price at which it can break even. Nuclear doesn’t make for a good pretzel.

At the same time as France is committed to running down its nuclear industry, Britain wants a nuclear power revival. So here’s a modest proposal. Instead of running the risk of repeating Britain’s disastrous experience with nuclear – the late economist David Henderson condemned Britain’s Advanced Gas Cooled Reactor as the most wasteful such project ever undertaken – Britain should offer to pay for the refurbishment and life-extension of the reactors Macron wants to close in return for 100 per cent of their output.

Unlike Michel Barnier’s win-lose Brexit deal, this win-win would enable France to keep its nuclear expertise and its high value electricity exports and Britain to meet its decarbonisation targets without risking a re-run of its costly home-grown nuclear power fiasco. And perhaps it would go some way to restoring Franco-British comity after France’s brutal treatment of Britain during the Brexit negotiations.

Meanwhile, Macron has instructed his prime minister, Édouard Philippe, to come up with some policies to solve the problems he has created and save his presidency. Fifty years ago in May 1968, the Fifth Republic tottered in the face of student riots and widespread strikes. De Gaulle and his wife, clutching a box of jewels, fled the Élysée. The prime minister, Georges Pompidou, was in Tehran. Returning to Paris, Pompidou quickly took control, cut a deal with the unions and restored industrial peace. De Gaulle’s authority never recovered. A year later, de Gaulle had resigned and Pompidou elected to succeed him.

Rupert Darwall is the author of Green Tyranny: Exposing the totalitarian roots of the Climate Industrial Complex.