Seven miles from Paris’s city center, where I’m sitting right now, lies Le Bourget, a little hamlet of barely 13,000 residents. Until recently, it was best known as the location of the French Air and Space Museum.
But at the end of last year, this area became famous for something quite different.
On December 12, 2015, representatives from 195 countries gathered in Le Bourget to negotiate and sign the Paris Climate Agreement, which covers greenhouse gas emissions, changes in energy structures, and energy finance.
As of the EU’s acceptance this month, over 190 members of the United Nations Framework Convention on Climate Change (UNFCCC) have signed – and 81 have ratified – the agreement. That’s enough for the treaty to enter into force on November 4.
Now, regardless of what you might think of climate change, the Paris agreement is here, and it’s about to become legally binding. Whether we like it or not, we have to prepare for it.
And there’s no better place to find out what the deal means than Paris, the home of the International Energy Agency (IEA) and numerous financial institutions playing the energy game. But the consensus on the accord, here in Paris, took me by surprise.
On the one hand, there was near-unanimous agreement with one half of the climate deal. But almost no one liked the other half.
With Nuclear Power, France Has a Head Start
I’ve found much more support for the agreement among my energy contacts here in Paris that I expected – at least when it came to the effort to reduce reliance on hydrocarbons like oil, natural gas, and coal.
Officially, last year’s Paris summit was the 21st session of the UNFCCC membership, and the conference had been working towards this deal for more than 20 years. As Article 2 of the Paris agreement states, its objectives are three-fold:
“(a) Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change;
(b) Increasing the ability to adapt to the adverse impacts of climate change and foster climate resilience and low greenhouse gas emissions development, in a manner that does not threaten food production;
(c) Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.
Signatory countries also aim to reach “global peaking of greenhouse gas emissions as soon as possible.”
At least, that’s the idea.
As my colleagues here are quick to point out, both France as a whole and Paris in particular, had already embraced the fuel concerns addressed by last year’s climate accord. France already leads the world in generating electricity from nuclear plants. About 75% of the country’s power comes from that source, although there are moves to reduce it to 50% by 2025 and the introduction of more renewable power.
This commitment to nuclear power is quite remarkable. It has made France more energy self-sufficient than any other member of the EU, contributing to a rather secure ongoing policy of energy security.
But that’s not the only benefit to France’s nuclear strategy…
Nuclear Power and Expertise is a Key French Export
According to a July 2016 World Nuclear Association (WNA) report, France exports more electricity than any other country on the planet. That is largely a result of how cheap nuclear power is to produce, resulting in more than €3 billion ($3.3 billion) a year in export revenues, and the best domestic tariff regimen on the continent.
The nuclear sector also provides another active export market. Reactor technology along with processed fuel and related services provide opportunities for exports to broader markets. Third, as the WNA report noted, about 17% of all French electricity comes from recycled nuclear fuel.
Not everything on the French nuclear front is positive, however. Despite being a nice contributor to any initiative (like the Paris Climate Agreement) intended to lower the carbon footprint, public support for nuclear power is declining.
Some of this results from increasing fears of accidents, even though the French have a spotless record here. Supporters of solar and wind power also criticize the reliance on nuclear reactors. But most criticism comes for the high costs of maintaining the nuclear infrastructure, and the heavy bills coming due for refurbishing aging nuclear power plants.
Similar concerns are slowing down the adoption of nuclear power elsewhere (apart from Asia). But the Paris Climate Agreement will affect much more than just nuclear power…
Little Hope for Fracking in Europe
Here in France, there remains a consensus against developing shale gas deposits. The fracking debate was a very visible issue a few years back and the public rejected it. The primary shale reserves at the time were in the north of the country, close to population centers not that far from Paris. That hardly helped.
This debate will return as the new energy balance, and the Paris Climate Agreement, create a need for new, cleaner energy sources. But shale will still be a tough sell.
In Paris itself, there are also moves already underway to curb car pollution. In a landmark decision, by July 1 of this year all cars produced earlier than 1997 and all motorcycles built before 2000 have been restricted from all city streets during the week.
All diesel-powered vehicles will be prohibited in 2020. And it’s not just Paris – similar moves are being considered in London, have been passed in Frankfurt, and will be on the agenda throughout the rest of Europe.
But there’s one aspect of the Paris Climate Agreement that energy experts here in France are quite unhappy with…
No One Knows Who’s Going to Pay for It All
Support for the Paris Climate Agreement disappears when the conversation turns to the financing side, especially how that relates to energy infrastructure. On this subject, I’m on very familiar ground.
Many acquaintances in Paris have read my writings on the energy infrastructure crisis that’s emerging globally. You’ve seen some of these points here in Oil & Energy Investor before.
The short of it is that at current rates of investment, the world will not meet new energy demand, and in some cases will not even be able to sustain current supply by replacing huge swaths of the existing energy production, generation, transmission, and distribution network.
As I have said before, at least $48 trillion is required to meet, by 2035, the so-called “New Policies Scenario”advanced by the combined efforts of the Paris-based International Energy Agency and the EU in Brussels.
That, we all agreed, was not likely to happen.
But the problem is complicated even further by the Paris Climate Agreement’s goal of keeping global warming below 2°C. That target is from the EU’s “450 Scenario,”first advanced several years back, and it will raise the infrastructure price tag to at least $53 trillion – and probably more.
Here in Paris, few of my (now) early morning drinking partners believe that is possible. Some are not even convinced it is desirable, given the assets that would have to be redirected from other essential needs.
In short, one year out, the Paris Climate Agreement remains an attractive prospect in theory for energy leaders here in Paris.
But how to achieve its targets in practice is anybody’s guess.
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