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27/09/2016

France to axe coal subsidies while EU stalls

Development Policy

France to axe coal subsidies while EU stalls

The cooling towers of a coal-fired power station in South Africa.

[Sarahtz/Flickr]

EXCLUSIVE / The French government intends to end to its support for coal in developing countries. EurActiv has seen a Commission document that shows that the EU has more modest ambitions. EurActiv France reports

France has confirmed its plans to cut all export credits for the construction of coal power stations, but has not indicated when this new policy will come into force.

The French Minister for Ecology, Ségolène Royal and the Prime Minister, Manuel Valls, announced the end of French aid for coal power during the presentation of their environmental roadmap for 2015, ahead of the Paris Climate Conference.

Objective Paris 2015

“France will do everything it can to reach an agreement at the COP 21, which will be held in Paris in December 2015. We will be adapting our export aid in order to set a good example,” said Manuel Valls.

>> Special Report: Climate Change: the Road to Paris

Ségolène Royal said the conditions and the timetable for the withdrawal of this support would be specified “very soon” and in consultation with the businesses that may be affected. First among these is Alstom, a French energy company that has launched numerous projects in the global South with the benefit of government guarantees.

The measure will be written into the energy transition for green growth bill, now up for examination in the French Senate.

€1.2 billion for coal projects

While coal accounts for only a small part of the French energy mix, the country still subsidises coal energy abroad through public guarantees from the French export credit agency, Coface.

The agency has guaranteed over €1.2 billion of coal projects since 2011, and was the fifth largest subsidiser of coal energy exports from the OECD between 2007 and 2013.

The Prime Minister stated that French public funds could no longer be used by coal power stations in developing countries “without CO2 capture and storage” systems.

A foreseeable bump in the road for this new policy is that carbon capture and storage technology (CCS), meant to capture emissions from power stations to reduce their impact on climate change, is still under development. Only a handful of such projects are currently operational.

Carbon capture and storage

For Lucie Pinson, a campaign leader for Friends of the Earth, “we have to know if factories must be equipped with a capture and storage capacity or not, that is to say, a technology that will effectively reduce their CO2 emissions”.

>> Read: EU paper calls for binding CCS targets by 2030

France had already partly committed to ending these subsidies in 2013, when President Hollande promised that the French Development Agency (AFD) would no longer support coal-fired power stations in developing countries. This promise was formalised in the framework law on international development and solidarity in July 2014.

The text specifies that the French Development Bank “does not finance coal-fired power stations, except those which include an operational carbon dioxide capture and storage system”.

Lucie Pinson believes this is an important specification. “Coface has recently provided guarantees for the Medupi power stations in South Africa, which should become operational in June 2015. This station also benefitted from the support of the World Bank on the grounds that it would be equipped with a CCS system,” she said.

But the system is far from ready and the power station is expected to emit 29 million tons of CO2 per year. France emitted 35.1 million tons of CO2 from coal in 2011; a small portion of the 328.3 million tons released by burning fossil fuels in the country each year.

Negotiations at the OECD

The question is also under discussion at the European Union, but progress is slow.

According to a document seen by EurActiv, the European Commission is still pursuing a less ambitious agenda in its negotiations with the OECD, the organisation charged with regulating credit export agencies.

The Commission text, prepared for a meeting in March 2015, suggests only stopping support for the most polluting power stations, and asks the OECD and the IEA to carry out further analysis on the technical constraints of “clean coal”.

The European Commission’s position appears to be very close to that of the energy sector

Positions

"Although this roadmap confirms France's commitment to put an end to its coal subsidies, its conditions and timetable remain vague. It also says nothing about the French companies in which the state owns the majority share and which continue to undertake coal projects abroad," said Morgane Créach, the Director of Climate Action Network.

Michèle Rivasi, a French MEP and President of the French delegation in the Greens/EFA group, said "the roadmap presented this morning by Manuel Valls and Ségolène Royal was supposed to place France on the path towards an exemplary ecological transition ahead of the COP 21. We have to see that we are still a long way from a change of paradigm. Of course, we can be happy with some important advances like the confirmation of the end of export subsidies for all activities linked to coal. Unfortunately, we still do not have a date for when this measure will be enforced".

"France says it wants to end fossil fuel subsidies in Europe, but they must realise that charity begins at home! The government should publish a strategy for ending public support of fossil fuels well in advance of the climate conference in December 2015, in order to have a lever effect on the other countries. The science reminds us that climate action is a race against time. France should recognise its duty to set an example and rise to the challenge," said Florent Compain, the President of Friends of the Earth

Background

The energy transition was a central part of François Hollande's presidential campaign in 2012, and has been long-awaited. France wants to be an example to other countries when it hosts the 2015 United Nations Climate Change Conference in Paris. It is playing a leading role in the European climate debate, thanks in part to its low CO2 Emissions.

France's reliance on nuclear energy means it has much lower CO2 emissions than coal-dependent countries like Denmark or Germany. However, energy efficiency has a bad track-record in France. 

Timeline

mars 2015 : concertation OCDE sur les subventions accordées par les agences de crédit à l'export sur le charbon

Further Reading