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29/09/2016

French energy transition falls back on Juncker Plan for funding

Sustainable Dev.

French energy transition falls back on Juncker Plan for funding

France has reduced investment in renewables, despite its commitment to a clean energy transition.

[Isamiga 76/Flickr]

A lack of national funding has held back the French energy transition. But the Juncker Plan has stepped in to plug the investment gap, according to the French General Commissioner for Investment. EurActiv France reports

The lion’s share of investment in French higher education and research, as well as innovation, comes through the national Investments for the Future Programme (PIA).

These two areas consume 50% and 20% respectively of the €47 billion of credits allocated to PIA projects, an inter-ministerial facility headed by the French General Commissioner for Investment Louis Schweitzer since 2010.

But as Schweitzer told French MPs on Wednesday (10 February), only 15% of the credits are allocated to sustainable development projects, slightly ahead of digital projects, which receive 12%. Yet a steady drop in investment in renewables has left the French energy transition in uncertain territory, and France is now further behind on its objectives than almost any other EU country, according to the European Commission.

>>Read: 2020 targets look out of reach as France cuts investment in renewables

At a hearing on the state of France’s public investment mechanisms with the French parliament’s economic affairs, sustainable development and finance committees, the Commissioner stressed the fact that France is the leading public investor in Europe. “We are two GDP points ahead of Germany,” he said.

>>Read: Juncker Plan cleared for take-off

Energy transition

Despite this impressive overall performance, a number of MPs singled out the weakness of investments in sustainable development. “Sustainable development is one of the major targets of the Juncker investment plan, but it only accounts for 15% of the PIA. How do you explain this gap?” Green MP Michèle Bonneton asked.

>>Read: EU’s larger economies are Juncker Plan’s biggest winners

“Why have funds been reallocated away from the energy transition? We overestimated the costs of innovation compared to the costs of delivery,” the Commissioner explained. “Thankfully the Juncker Plan has filled the gaps left by the PIA on the delivery side,” he added.

Long delays at the French Environment and Energy Management Agency (ADEME) have also “discouraged certain candidates” from applying for investment, according to Schweitzer, which in turn has further reduced the efficiency of the French system.

A Juncker Plan priority

In the Juncker Plan, on the other hand, the European Commission highlighted sustainable development as a top priority.

>>Read: Rifkin: Juncker plan not enough to lift Europe’s struggling economy

“The natural pipeline of projects we envisage is linked to sustainable development and to a lesser extent to industrial developments,” said Laurent Ménard, the French Director-General of Investment Strategy and European Financing.

17 French projects have so far received support from the Juncker Plan. These are largely to do with energy renovation and infrastructure or support for SMEs. The government plans to extend financing to production sites and factory modernisation projects.

Centralisation of applications

Overall, France has done rather well out if the Juncker Plan. Launched in 2015, the European Commission’s investment initiative, which aimed to mobilise €315 billion, has so far led to operations in 22 of the 28 member states.

“We were charged with centralising and putting forward the French applications to the Juncker Plan,” said Schweitzer.

>>Read: Regions warn Juncker Plan could overlook small-scale infrastructure

“There is no quota per country: the countries with the best projects are chosen, and the good news is that France, along with Italy, has gained the most financing under the Juncker Plan,” he said.

The United Kingdom has also received funding for several large-scale projects, while Germany, the European Union’s economic powerhouse, has been conspicuously absent from the list. 

Background

On 25 November 2014, the European Commission revealed the details of its €315 billion investment plan.

In a gesture of solidarity, the money from this plan will largely be used in the Southern Europe, in the countries worst affected by the crisis.

>>Read: Juncker's €315bn investment plan unveiled: fifteenfold leverage and solidarity for the south

The idea is to create a new European Fund for Strategic Investments (EFSI), with €5 billion coming from the European Investment Bank and an €8 billion guarantee from existing EU funds designed to secure a contribution of €16 billion in total from the institutions.

The €8 billion guarantee will come over a three-year period from the Connecting Europe Facility (€3.3 billion); Europe’s research programme Horizon 2020 (€2.7 billion) and so-called “budget margin”, or unused funds, worth €2 billion.

The resulting EFSI fund totalling €21 billion is expected to generate €240 billion for long-term investments and €75 billion for SMEs and mid-cap firms over the period 2015-2017.

The plan drew questions over the lack of new cash, with some Members of the European Parliament calling it "recycling and re-labelling" of existing programmes.

>>Read: Juncker investment plan draws questions over lack of new cash