France to Tax EDF Nuclear Output for Energy Shift to Renewables

France will introduce a levy on nuclear energy as well as a tax on carbon emissions from fossil fuels to raise billions needed to boost renewable power and improve energy efficiency.

“All change is expensive in the short term even if it’s beneficial in the long term,” French Prime Minister Jean-Marc Ayrault said today in a speech about the environment in Paris.

The nuclear levy will be applied to Electricite de France SA’s existing atomic reactors, he said. The carbon tax will be introduced “progressively” on fossil fuels in order to earn 4 billion euros ($5.4 billion) in 2016.

President Francois Hollande, who vowed during his election campaign to reduce reliance on nuclear to half of total output by about 2025 while also keeping down consumers’ bills, hasn’t yet said how he will reconcile those aims. The country gets about three-quarters of the power it produces from EDF’s 58 nuclear reactors, more than any other nation. The energy transition will cost an estimated 20 billion euros a year, Hollande said yesterday.

“Our nuclear fleet will be asked to contribute,” Ayrault said today at the end of a two-day conference on the environment. The tax would apply “over the remaining lifetime of our reactors.”

France’s Green party, which had said it would withdraw support for the Socialist government over the slow pace of policy initiatives, applauded the carbon tax announcement and new incentives towards home renovations for improved energy use.

Ayrault didn’t give details of how much EDF, which is 84 percent owned by the government, will have to pay. The utility is compensated for the higher cost of electricity produced by wind turbines and solar panels it buys through a tax on power bills called the CSPE.

Carbon Tax

The planned carbon tax, to be called a “climate energy contribution,” will be “neutral” next year and generate 2.5 billion euros in 2015 and 4 billion euros in 2016, Ayrault said. It will be applied to gasoline, diesel, coal, natural gas as well as heavy and heating fuels.

Fishing and transport workers will be exempt from the levy while industrial plants that qualify for carbon quotas “will keep their system,” according to Ayrault.

The government’s policy announcements “appear to be pragmatic, with very ambitious targets, some would even say hard-to-reach targets,” said Jean-Pierre Clamadieu, who is chief executive officer of Solvay SA (SOLB) and was speaking for the business lobby Medef. “The state appears to have a vision about what it wants the energy mix to be and is giving itself the means to achieve it.”

Hollande said yesterday the an energy law would be passed by the end of next year capping nuclear-power capacity and granting the state the legal means to shut down reactors.

The president hasn’t said whether more nuclear plants will close, beyond the planned shuttering of Fessenheim in eastern France by the end of 2016.

France will also seek to cut energy use in half by 2050 and fossil fuel use 30 percent by 2030, Hollande announced yesterday. It will implement incentives to spur energy-saving measures in homes and use of electric cars by adding recharging stations.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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