Hollande Calls for Franco-German Energy Alliance

French President Francois Hollande called for the creation of a Franco-German company to help the two nations as they make major shifts in energy policy.

It would be a “beautiful alliance,” Hollande said at a press conference yesterday, without offering details on whether the effort would involve merging existing utilities or take another form. He compared the endeavor to Airbus Group, the European commercial airplane maker with operations in both countries.

France and Germany are trying to transform electricity production in their respective nations in the coming decade. Leaders of both countries have pledged to reduce reliance on nuclear power and are grappling with how to fund subsidies that encourage renewable-power production.

The French state isn’t actively seeking the merger of any French and German companies, government spokeswoman Najat Vallaud-Belkacem said today.

“The president mentioned Airbus but it’s too early to talk about which companies could be involved,” Belkacem told reporters in Paris. “But the ambition is there, and allows us to talk about European differently, to value Europe.”

France and Germany must “coordinate” their energy transitions, Hollande said. “It’s a big challenge for Europe but we must, France and Germany, be examples.”

Fukushima Reaction

After the 2011 Fukushima meltdown in Japan, German Chancellor Angela Merkel announced plans to shut her country’s nine reactors within a decade. Hollande made a campaign pledge to lower France’s reliance on atomic energy to 50 percent of production from about 75 percent by 2025.

Merkel has said her third-term priority is reforming Germany’s clean-energy subsidies after rising wind and solar costs sent power bills soaring. Germany was the world’s biggest market for solar technology in three of the past four years as project owners were paid above-market rates for low-emission power.

France is preparing legislation for this year that will outline a planned shift toward more green power and energy-saving. The nation has also begun reviewing subsidies for green-energy developments, Environment Minister Philippe Martin said in December.

Development of French wind and solar installations slowed last year in part because of a lack of clarity about what will happen to the higher-than-market rates the projects receive for their output.

Former French Environment Minister Delphine Batho and her former German counterpart Peter Altmaier started a project last year to cooperate on renewable-energy development.

Before it's here, it's on the Bloomberg Terminal.