France urges EU to give reactors green label to help funding

Nov 6, 2019 | Montel

(Montel) The French government is calling on the EU to award its proposed “sustainable finance” label to nuclear energy in order to fund the construction of new reactors and maintain the existing fleet.

“This label will have to include nuclear energy,” said French economy minister Bruno Le Maire.

“We cannot succeed in the energy transition and… achieve our goal in terms of combating global warming without nuclear energy,” he added, quoting experts from the Intergovernmental Panel on Climate Change and the International Energy Agency.

“Integrating nuclear energy into sustainable activities could help attract new investments, especially private ones,” a spokesman for French nuclear operator EDF told Montel.

The French government, which owns 83.7% of the firm, recently urged the company to consider building six new generation reactors in France within the next 15 years, while it wants to build two new generation European pressurised reactors (EPRs) at its Sizewell site in the UK.

But EDF is heavily in debt and its EPR builds at Flamanville and Finland are billions over budget and years behind schedule with its UK Hinkley point project heading the same way.

Ongoing negotiations
Last month, the EU’s council and parliament began negotiations on a classification – called a “taxonomy” – to determine whether an economic activity can be considered environmentally sustainable.

Le Maire said it should be adopted “if possible by the end of 2019” and implemented next year, though the European Council postponed the timetable by two years, with a classification due “by the end of 2021” and its application “by the end of 2022”.

Being able to issue green bonds, or loans, to European standards was vital for the nuclear industry because “some investors will want to make climate-friendly investments”, a European Council source told Montel.

“If nuclear energy is not one of the sectors identified as clean, insurance companies and asset managers will not invest in it,” she said. “This may hinder access to funds for the nuclear industry.”

“The European eco-label is important to finance the extension of the life of power plants and the construction of new nuclear power plants,” said Valérie Faudon, head of French nuclear power lobby SFEN.

“These projects need to have access to the market under good conditions, especially since the cost of financing in new nuclear projects can represent up to 25% to 30% of the total project cost.”

EDF has already issued four green bonds since 2013, for a total amount of EUR 4.5bn, to finance projects in hydro, wind and solar power but not nuclear.

“Additional lever”
Green bonds “could be an additional lever” to finance nuclear power, even in the event of the planned restructure of EDF said Nicolas Goldberg, consulting engineer at Colombus Consulting.

“The question of the financial package is essential because social acceptance is the key to building new EPRs in France or abroad,” he said.

In the UK, EDF plans to sell the power generated by two reactors at Hinkley Point C (3.2 GW) at GBP 92.50/MWh (EUR 107.5/MWh) for 35 years thanks to a contract for difference but “the public does not understand why nuclear… is more expensive than renewable, intermittent energies”, Goldberg added.

But for the Brussel environmental group Transport & Environment, labelling nuclear power as “sustainable” would mark “a regression in Europe in the fight against financial greenwashing”.