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Energy/UK

Published on October 30, 2013
Speech by the French Ambassador to the UK at the Franco-British Energy Conference

London, October 29, 2013

M. le Président de la CCFGB, cher Arnaud Bamberger,

Baroness Blackstone,

Ladies and gentlemen,

I welcome the initiative by the CCFGB which has brought us together today for this top-level conference sponsored by the French Embassy.

In fact, it’s one of a series of major events on the theme of energy:

- there’s a major conference at the British Embassy in Paris on 20 November, organized at the initiative of the Franco-British Council’s French section – and I want to pay tribute to its President, Christian de Boissieu, and Vice-President, Christian Pierret.

- the annual EU Ocean Energy Association meeting today and tomorrow in Edinburgh. This event has received the support of the Westminster and Scottish governments and the French Ministry of Ecology, Sustainable Development and Energy, the Lower Normandy region, the Department of Manche, and five French companies are taking part in it.

- and finally, I’d like to remind you about CCFGB’s excellent trade mission in Scotland, which I carried out with its president, Arnaud Bamberger, and which included a strong focus on energy with our visit to Total’s installations in Aberdeen.

But this conference also comes after the historic announcement by EDF and the British Government about the construction at Hinkley Point of the first of a planned new generation of nuclear power plants. It’s a major development for our two countries and for France’s nuclear power industry. It’s excellent news, too, for jobs in France and the UK, as well as being a success for the economic diplomacy which our President and our Foreign Minister both hold dear.

I/ A challenging strategic and international context

Access to energy is certainly one of the major issues we must collectively face today. In a globalized economy, where the emerging countries are becoming new consumers, we find ourselves up against a scarcity of resources at a time when carbon emissions are having a proven effect on climate change.

According to the International Energy Agency, global energy demand will be 30% higher by 2035, with that for gas up 50%. Europe alone needs to invest €1,000 billion in energy infrastructures to cover its needs between now and 2020.

In the area of climate change, the IPCC report, published a few weeks ago, has once again forced us to face up to our responsibilities. Indeed, energy production generates 60% of global CO2 emissions; and around 40% of energy-related CO2 emissions are caused by electricity production.

Today, 67% of the energy used to produce electricity still comes from fossil fuels. For the first time, China and the United States, non-signatories of the Kyoto Protocol, consider that emissions reduction targets must be pursued. While China is building one new coal-fired power plant once a week, it has now launched a programme to build 50 nuclear power stations, with French companies in the sector playing a major part in it.

Energy is shaping global economic development and international relations. Faced with this new situation, some countries, like France and the UK, have opted to be politically proactive by establishing an ambitious energy policy resolutely focused on a low carbon economy.

This political proactivism is driven by the conviction that nuclear power and renewable energies are complementary.

II/ Both responsible and ambitious, France and the UK are developing a more balanced and near-zero-emission electricity mix

In particular, France and the UK have launched energy reforms. While these are, admittedly, very different because of the structure of our electricity mix and way we organize our respective markets, our medium-term goals are identical.

The figures speak for themselves: in 2012, French energy imports rose to a record €69 billion. Yet France is today investing €37 billion a year in the sector.

To address this problem, in 2012 President Hollande announced the commitment to move towards an ecological and energy transition. On 20 and 21 September this year, at the second environmental conference, he and the Prime Minister set the course.

They aim to achieve a 50% cut in final energy consumption by 2050 by successfully disconnecting economic growth from energy consumption, the only way not to sacrifice progress. This means a 30% cut in fossil fuel use by 2030 and diversification of the electricity mix to bring nuclear energy’s share down from 75 to 50% by 2025.

This energy transition is not only a major industrial project for our country, but a project for our whole society.

It’s against this background that President Hollande voiced his desire for France to host in Paris the 2015 COP 21, the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC), and the 11th session of the meeting of the Parties to the Kyoto Protocol. To make a success of this important event by achieving a both universal and binding agreement, France itself will have to be exemplary.

III/ Energy is also an issue for Europe and our Community policy

Energy is a shared competence between the EU and member states and so subject to the subsidiarity principle, which gives the states sovereignty regarding the choice of their energy mix and technologies.

The European Council of 22 May this year, attended by President Hollande and Prime Minister David Cameron, was principally devoted to energy. Above all, the adopted conclusions established a European roadmap:

to complete the European internal energy market by the end of 2014,

- to take up the colossal challenge of procuring the investment necessary for Europe’s energy transition – and the European Council recognized the need to give private investors a stable framework and long-term certainty,

- and finally, to diversify the EU’s energy supply by promoting renewables and energy efficiency.

Europe, founded on energy in 1951 with the European Coal and Steel Community, is thus today – an irony of history – once again confronting major energy challenges, and there is a need to act together.

IV/ In the face of these challenges, and in the framework of a proactive European policy, the UK is putting in place an attractive framework for French investors

In 2008, through the Climate Change Act, the United Kingdom pledged to cut its CO2 emissions by 80% by 2050. The Energy Bill and electricity market reform which the Cameron government brought in three years ago are models, which the rest of Europe is watching with great interest.

Last week, the Secretary of State for Energy, Ed Davey, whom we’ll have the honour of welcoming here this morning, stressed that the reform aims to satisfy the need to replace 60% of Britain’s electricity generating capacity in the next 10 years. All in all, £110 billion of investment will be necessary.

This energy reform is to establish a stable regulatory framework through the Contracts for Difference, in which the generator is offered a fixed price for electricity produced with the aid of low-carbon technologies. Indeed, long-term certainty is essential in the energy sector. In the automobile industry, eight to ten years’ certainty is enough, while for building a gas-fired power station you need 20 years. For a nuclear power plant it’s over 40 years, as demonstrated by the Hinkley Point agreement, in which we are contractually bound until 2058. The United Kingdom has had the courage to opt for this stability.

Today all the major French energy companies are operating in the UK and have proven expertise in all the technologies as well as in managing the complete industrial process from production to distribution: EDF Energy, GDF Suez, Total, Areva, and Alstom, among others. They are also active members of the French Chamber of Commerce in Great Britain.

These past years have seen our companies’ investments in this sector run into billions of pounds, seen them create around 30 to 40 000 jobs, and cover the whole UK, from Scotland to the Channel Islands. They permeate the whole of the UK’s economic fabric and my recent visits showed the extent of the ties between our countries in the field of energy:

Let me give you a just a few examples: our companies are heavily engaged in renewables in Scotland, where GDF Suez has just been awarded a contract on Europe’s largest tidal power site in Pentland Firth. Secondly, on the interconnection front, France, with EDF, is directly supplying Jersey and Guernsey; and other projects for cables to the two islands are under consideration. Lastly, when the Channel Tunnel is mentioned, most of us think of Eurostar, but it’s going to have an important new use: a high voltage power cable is to be laid in the tunnel to transmit surplus energy between our two countries and allow us to exchange electricity.

V/ French projects, which are shaping this country’s industrial history

Credit where credit is due, cher Vincent de Rivaz: EDF Energy already employs 15,000 people in the UK, produces 20% of the country’s electricity and has 5.5 million customers. Hinkley Point today paves the way for one of the largest industrial investments in Britain since the post-war period, that is, £16 billion to build and operate the first two new-generation reactors of Britain’s new nuclear programme. Hinkley Point, which is doubtless the first in a series of power plants, will produce 7% of the country’s electricity and confirm, over the long term, EDF’s importance as the UK’s number one electricity supplier. Nearly 60 years after Her Majesty The Queen’s inauguration of the first nuclear power station, France is especially proud to see one of its finest industry icons at the forefront of this rebirth.

On their own, TOTAL and GDF Suez cover the entire gas and oil industry process, from exploration, through production to refining and storage. TOTAL – as Patrice de Viviès will no doubt remind us – has been here for 50 years and is one of the highest contributors to the British Exchequer – indeed £1 billion a year is no mean sum! In 2010, the company decided to invest £2.5 billion in the development of the Laggan and Tormore gas fields. GDF Suez holds an interest in 50 exploration licences in the North Sea and in August 2012 signed an agreement to participate in a £1.4 billion investment to develop the Cygnus gas field. GDF is thus consolidating its activities in the United Kingdom; it will soon have a workforce of 15,000 and account for 5% of the country’s gas production. Areva is involved in Hinkley Point, decommissioning the Sellafield site and spent nuclear fuel processing. Alstom employs 5,000 people on this side of the Channel, and since 2010 has built four of the UK’s six new gas-fired power plants. So there you have what’s being done by the biggest companies, not to mention all the others – including a number of SMEs often associated with these big groups – which are present in the UK renewable energy sectors, be it onshore and offshore wind power, tidal power, marine current power etc.

Ladies and gentlemen,

As our Foreign Trade Minister, Nicole Bricq, said during her recent visit to London, France’s export contracts and attractiveness are closely linked. The investments in the United Kingdom promote French technologies and directly contribute to employment in France, with, if I may say so, energy the most shining example. And let me stress that our major groups’ projects always have a knock-on effect for our SMEs through their supply chains.

Hinkley Point is our flagship, and we can be very proud of it. It is a model, generating international cooperation with China as well and showing the way forward, since the opportunities the UK offers are vast and not, I repeat, just in the nuclear sector, but also in renewable energies. So we have to be in the vanguard in development of the energy model for the future, which is at stake here.

This is why energy will be a key issue at the next Franco-British bilateral summit to be held in the United Kingdom early in 2014 – just as it was a key issue at the last summit in Paris in February 2012 – so that we can strengthen still further our industrial relations in this field.

I hope this conference – which couldn’t have been better timed, coming immediately after the historic Hinkley Point agreement – helps highlight the closeness of the links between the energy futures of France and the United Kingdom, and also what a major role our companies are called on to play in this area in the decades to come.

Thank you./.

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