The Energy Outlook Report of France - Coursework Example

The Energy Outlook Report of France France is one of the most important countries in Europe from both economic as well as political point of view and has known to be the initiator of various reforms for bringing about positive change in European economy. According to the recent statistics available, the gross domestic product of France in the year 2010 stood at $2.56 trillion and is among the top five nations in Europe. The remarkable economic growth achieved by France is due to the large growth and development in the energy sector. France produces almost 25% of the European Union’s electricity and the major source of electric power generation in France is through its large number of nuclear reactors present across the country that produce 75% of the electricity generated in France. Renewable sources of energy are still in the developmental stages in France and steps are being taken to introduce bio-fuels in the energy sector. Hydropower is the major source of renewable energy in the country and policies are being implemented to increase the use of wind, photovoltaic electricity, solar energy for heat and bio-fuels and geothermal energy. An overview of various sources of energy used in France in direct for and in the form of electricity is presented in the following paragraphs. Oil France is one of those countries of Europe which have considerable fossil fuel resources of their own and is believed to have 159 billion barrels of oil reserves according to recent estimates. The industrial growth in France has made it one of the largest consumers of crude oil in the world. The various refineries in the country produced more than 90000 barrels per day of oil in the year 2009. During the year 2010, France imported 35.319 billion dollars worth of oil and the major exporters of oil to France include Saudi Arabia, Russia, Norway, Germany and the United Kingdom. Remarkable developments have been achieved in the field of nuclear power in the past 30 years and this has helped in considerably reducing the oil imports. The Paris and Aquitaine Basins are accounted to contain the major portion of the oil produced by France and the largest field in the country is at the southwest region of Biscarrosse with a production capacity of 2850 bbl/d. The production of oil has diminished over the course of years, mainly because of the promotion of nuclear energy in the country. France does not have substantial oil production of its own, however French oil producing companies are leading producers of refined oil in the world with refineries and production chains operating in various regions of the world, particularly in Africa, Middle East and Europe. In the year 2000 three of the largest oil producing companies of the world; Elf Aquitaine and Total of France and Petrofina of Belgium, merged together to form TotalFinaElf which is commonly known with the brand name of Total and became one of the top 3 oil producing companies of the world. Gonfreville l’Orcher refining facility of Total is the largest oil refinery in France with a refining capacity of 331000 bbl/d and accounts for 55 percent of the total oil refined in France. Along with remarkable advancement in industry, France has also developed its infrastructure and roads with an extensive road transportation network throughout the country. The number of automobiles in France is among the largest in the world and thus most of the petroleum products produced by the oil refineries in France are consumed by road vehicles. Other sectors which are the largest consumers of petroleum products include air transportation and domestic consumption (Chick). Coal Nuclear power and improved refining mechanisms in petroleum industry have drastically affected the coal industry in France and the reliance over coal as a source of energy has considerably decreased over the years. The coal industry in France is almost on the verge of closing down as the state owned coal company Charbonnages de France closed all of its production facilities in 2004. There are two reasons behind this drastic collapse of French coal industry; first being the shifting of most of the power stations towards nuclear fuel and second is the high price involved in mining and refining of coal in France. Investors and industrialist prefer to import cheaper and good quality of coal from other countries rather than buying the local coal which is very expensive owing to the high cost of mining and refining (IBP USA). Currently coal is being used in some steel refineries and in some thermal power stations however the coal being used is imported from other countries which include United States, South Africa and Australia. Recently French government has announced to shut down half of its coal-fired power stations by 2015 as a part of following a plan under which France is set to lower its carbon emissions by 22 percent by the end of year 2020. The alternative to these power stations will be provided by renewable energy resources and gas-fired stations which have comparatively lesser carbon emissions. French Energy Minister Jean-Louis Borloo called it a big step towards energy revolution in France as he said while addressing a press conference, “The energy revolution in France will be through energy savings and the development of renewable energies.” He further explained that France will increase the number of facilities producing electricity from renewable sources of energy which include solar, biomass, geothermal and solar installations. Natural Gas Most of the natural gas being used in France is imported from Algeria, Russia and Norway, however there are natural gas reserves in the country but the gas production in the country is very minute as compared to the demand. Gaz de France was the most notable gas supply company in France and it produced, transported and sold natural gas around the world particularly in United Kingdom, Germany and Belgium. The company merged with fellow utility company Suez in 2008 to from GDF Suez. Gaz de France was state owned however GDF Suez is a French multinational energy company operating in various other fields as well which include electricity generation and distribution and promotion of renewable energy. GDF Suez supplies natural gas to domestic consumers, professionals as well as businesses throughout France. Other activities include exploration activities in various countries of the world, supply and storage of Liquid Natural Gas (LNG) and research in the fields of petroleum refining and exploration. GDF Suez is a major contributor towards the French economy. GDF Suez merger was carried out to follow the European Union directives of liberalization of European natural gas markets under which the consumers are entitled to have the right to chose freely between their gas distributors. The French government was first forced to list GDF into the stock market and issue stocks in order to ensure private investment in the utility, later on with the tough competition faced by Total in south the government was forced to carry out the merger, however the government retained 40 percent of the shares making it the major share holder and thus allowed it to control the strategic policy making of the company. The government retained 40 percent of the shares and thus control of the utility because of the increasing pressure from the leftist politicians who criticized government for privatizing one of the most important utilities of the country which could cause remarkable increase in tariffs, according to them. However the merger has so far been proved to be a success (Williams, Berry and Fallon). GDF Suez today operates and maintains the extensive pipeline network which was previously operated by Gaz de France. The total length of the gas pipeline exceeds 19000 miles and the supply capacity is more than 5.9 billion cubic feet per day. All the major cities and industrial bases of the country are connected through this system of pipelines and thus it is of major importance to the economy and social life of the country. The pipeline network also includes the import entry points which include Dunkerque, Montoir de Bretagne, Fos-Cavaou, Cerville-Velaine and Taisnieres thus the natural gas received from sources in other countries also enters this network and is distributed in various cities across the country. GDF Suez has also established gas storage facilities throughout the country which are also connected to this extensive network of pipelines. France has very little natural gas production as compared to its consumption and thus it has to import large amount of natural gas from the neighboring countries, therefore Gaz de France before becoming GDF Suez underwent a number of gas pipeline contracts with the neighboring countries. Franpipe which was completed in 1998 is the largest all the natural gas importing pipelines and connects Drauper platform in Norway to Dunkerque. The length of the pipeline is 834 kilometers with a capacity of 1.4 billion cubic feet per day. France gives an import route to Spain for importing natural gas from Norway through the Trans-Pyrenean natural gas pipeline which links Calahorra in Spain to Lacq. Trans-Pyrenean pipeline was completed in 1993 and has a capacity of 330 million cubic feet per day. The Cerville-Velaine distribution centre in the northeast of France is the entry point of natural gas imported from Russia whereas the natural gas imported from Netherlands enters the country from Taisnieres. Since the implementations of the European Union recommendations companies like Total and GDF Suez are carrying out major projects for increasing the gas transmission across European Union and a number of these pipelines are planned to pass France. The Medgaz pipeline which passes from Algeria to Spain via the Mediterranean Sea is planned to be extended to France and will allow France to import natural gas directly from Algeria. The proposed capacity of the pipeline is 775 million cubic feet per day and is expected to be a remarkable boost to natural gas trade between Europe and Africa (Gofen and Reymann). 25 percent of the natural gas imported by France comes in the form of liquefied natural gas (LNG). Because of the absence of a pipeline between France and the natural gas rich countries of Africa, the gas has to be imported in the form of LNG. The major LNG receiving terminals are located at Fos Cavaou on the Mediterranean coast and Montoir de Bretagne on the Atlantic coast with a combined capacity of almost 2 billion cubic feet per day. Electricity France is one of the largest producers of electricity in the European Union with a generation capacity of 654 billion kilowatt-hour of electricity in the year 2009. The electricity consumption in the year 2009 was 491 billion kilowatt-hours and this has been achieved by remarkable energy reforms introduced by the French government. 78 percent of the electricity generation is carried out through nuclear reactors and the rest is generated by hydropower stations and thermal power stations powered by coal and natural gas. Electricite de France is the major electricity generation and supply company in the country and the French government owns 80 percent of the total shares. France is the largest exporter of electricity in Europe and this is due to the large number of nuclear reactors installed for electricity generation which allows the country to generate cheaper electricity than any other European country. The distribution network in the country is controlled by EdF and all the distribution in the country is carried out through this network. For the sake of exporting electricity to other countries, Edf has extended its network to other countries as well and has acquired stakes in a number of foreign companies in European Union which include German Energie Baden-Wurttemberg AG and London Energy. EdF has also invested in the electricity sector in other countries as well which include Brazil, Argentina and Mexico. The monopoly of EdF in the electricity sector in France was broken by the European Union when it forced the French government to open up its electricity markets to private investors as well. After the liberalization of the electricity market various companies have started investing in the electricity sector in France and can give strong competition to EdF even with a little market share. At the top of the list of competitors is GDF Suez which was formed after the merger of Gaz de France and Suez. GDF Suez works is the major company in the natural gas sector in France and has a number of power generation units operating in various countries of the world and thus it also intends to start power generation of its own in France as well. Another company SNET (Societe Nationale dElectricite et de Thermique) which was formed after the depletion of the coal fired thermal power stations is also interested in investing in electricity sector in France by producing electricity through natural gas fired thermal power stations. The Spanish energy company Endesa holds the major shares of SNET. In addition to these companies, EdF also faces competition from CNR, the public owned hydroelectric company and SHEM. The European Union is stressing on a single energy market for all European countries and for that it has asked all the member countries to give the independent and private investors access to their energy markets. The part privatization of EdF was also carried out following the same policy. Reseau de Transport d’Electricite (RTE) was established by the French government as a distribution network for electricity throughout the country. RTE is the only transmission system operator in France and the overall development along with the maintenance and operation of the high voltage transmission system is carried out by it. The total length of the transmission lines under RTE across the country and in some neighboring countries as well exceeds one hundred thousand kilometers. This is currently the largest electricity distribution network in Europe. All the operations of RTE are based on the strategic policies developed by EdF and the headquarters are in Paris. France is the largest nuclear power producing country in Europe and the second largest in the world after United States with 641 TWh of installed nuclear electricity generation capacity in 2009 which accounts for more than 78% of the total electricity produced by the country. An interesting thing about electricity generated through nuclear reactors is the fact that it always needs a large load factor on the grid because the reactors once started cannot be shut down as easily as other conventional power plants can shut down and that is why a constant threshold load is required on the grid for the safe working of the system. This is the reason France has to export a large amount of surplus electricity to neighboring countries which include Italy, Netherlands, Belgium, Britain and Germany. Large amount of electricity generated by nuclear reactors also allow France to supply electricity at the cheapest rates in Europe. The remarkable success achieved by French economy in recent years also owes its triumph to the contribution of nuclear power towards electricity generation. Nuclear power has supported the French economy and enhanced the living standard of the French people, however due to the inflexibility of nuclear power in load management, the reactors though profitable, are not delivering 100 percent from economic point of view, and at times the nuclear power stations have to be shut down on weekends because of the lack of demand of electricity in the market; better load conditions can generate more profit. Due to the remarkable developments achieved by the country in the field of nuclear electricity generation, the French government combined all the companies in the nuclear sector into one state-owned company, Areva. All the developmental and maintenance responsibilities of the nuclear reactors which include mining of nuclear fuels, construction of new reactors, disposal, treatment and recycling of nuclear wastes and decontamination of the used plants are carried out by Areva whereas EdF carries out the operational responsibilities. Areva is also working in various other countries of the world in the field of nuclear electricity generation and uranium mining and enrichment (Murray). Due to repeated shut down caused by lack of demand of electricity and the costs of waste management and decommissioning, nuclear industry in France is experiencing large cost overruns. Nuclear energy is a matter of great importance in French political scenario as well. Due to the recent Fukushima nuclear reactor accident in Japan, the opposition parties, particularly the socialist party, are questioning the security of nuclear reactors in France and are stressing the government to shut down the old nuclear reactors due to safety risks. Despite recent debates, the French government is keen on building new nuclear capabilities which will be constructed by GdF Suez, Total and Areva and three nuclear reactors are expected to be completed by 2017 adding another 3600 megawatt of electricity to the national grid. Renewable Energy France is the third largest producer of electricity from wind sources after German and United Kingdom. Currently France is generating 5660 megawatt of electricity from wind sources and according to the targets set by government, France is expected to increase the installed capacity of wind power to 25000 megawatt by 2020 which is according to the European Union directive which asks the member countries to make up 23% of their final energy demand from renewable sources of energy by 2020. The geographical location of France is highly suitable for the generation of wind electricity with feasible locations distributed all over the country (US Energy Information Administration). Out of the targeted 25000 megawatt by 2020, the French government plans to install 6000 megawatt worth of facilities in offshore areas and the tendering process for the projects has already been initiated by the French government. Out of the planned 6000 megawatt, wind turbines with generation capacity of 3000 megawatts are expected to be installed and operational by 2017. Despite various steps taken by the French government for the promotion of wind electricity, the continuous changes in the legislations and the regulatory laws are hindering the pace of the wind energy development in France. The most prominent hindrances are the environmental and visual concerns and because of these the set target of 25000 megawatt by 2020 does not seem reachable at the moment. However the continuous reforms introduced by the French government in the energy sector and the exploration of new sites by EdF for wind energy are the two signs which can be deemed as positive towards the achievement of set targets (Gipe). Along with wind power, the French government is also promoting solar power in both residential and commercial buildings. The government plans to install 5 million solar thermal units in buildings by 2020 of which 80 percent will be used in residential buildings. The photovoltaic solar power systems are also increasing in the country and the installed capacity increased by 150 percent in the year 2006. Two of the largest photovoltaic power system facilities are producing 1.4 MW and 1.18 MW of power at Pays de Loire and Languedoc Rousillon. Another photovoltaic power station is in completion stages at Narbonne and has the installed capacity of 9 MW which will supply electricity for public buildings and street lightings. More than 40 percent of all the domestic heating systems in France are being powered by the use of wood as fuel and the incentives introduced by government for using biomass are increasing the number of users on daily basis. Another important renewable source of energy which is being promoted in France is geothermal energy and according to estimates, if provided with proper infrastructure for harnessing this energy, geothermal energy in the rocks under the cities of France is sufficient enough to meet the electricity requirements of domestic users. Geothermal Energy utilizes the heat accumulated in the rocks under the surface of the Earth. The thermal energy in low lying rocks is transferred to the water present in the pores and spaces between these rocks and the temperature of this water varies from 70 degrees Celsius to 150 degrees Celsius. The geothermal energy stored in the Earth can be either used directly for heating purposes, or water can be pumped down into the Earth which comes up as steam and is used for running the turbines for the generation of electricity (Gupta and Roy). According to recent surveys conducted by CPCU, a local energy company in Paris, the water under the outskirts of Paris in the rocks lying 18 meters below the ground level has temperature up to 74 degrees Celsius and can provide sufficient energy for meeting the heating requirement of Paris. Currently 61 geothermal power stations are working in France and are contributing considerably towards the domestic needs of cities in the country. In addition to the promotion of renewable sources of energy, the French government has also introduced various reforms for cutting down the carbon footprint of the country. As a part of this policy, the government has started conducting awareness campaigns for the public to make them aware of the advantages of saving energy and cutting down the energy requirements of the country, which will ultimately lead to lower carbon footprint. The government is incentivizing the use of energy efficient techniques in construction in order to employ the principles of passive solar heating and passive cooling in buildings for cutting down the energy demands. The use of insulation materials in buildings have been made mandatory. The awareness campaign has been a success and the overall energy demand of the country is going down. Proper legislation is also being done for promoting energy efficient techniques in construction. Many new commercial buildings in urban areas of France are being constructed on the basis of the concept of net zero building in order to ensure energy efficiency. The energy sector of France is an amalgamation of various sources of energy, nuclear power being the major contributor. Most of the organizations in the energy sector of France were state owned but the French government was forced by the European Union to open up its energy sector for private investment as well. The French government is highly concerned about reducing its carbon footprint and therefore a number of strategic policies are being formulated for promoting the use of renewable sources of energy. Works Cited Chick, Martin. Electricity and energy policy in Britain, France and the United States since 1945. N.p.: Edward Elgar Publishing, 2007. Print. Gipe, Paul. Wind power: renewable energy for home, farm, and business. N.p.: Chelsea Green Publishing, 2004. Print. Gofen, Ethel, and Blandine Reymann. France. N.p.: Marshall Cavendish, 2003. Print. Gupta, Harsh, and Sukanta Roy. Geothermal energy: an alternative resource for the 21st century. N.p.: Elsevier, n.d. Print. IBP USA Staff. France Energy Policy, Laws and Regulation Handbook. N.p.: International Business Publications, 2008. Print. Murray, Raymond. Nuclear energy: an introduction to the concepts, systems, and applications of nuclear processes. N.p.: Butterworth Heinmann, 2009. Print. OECD. OECD Factbook 2010: Economic, Environmental and Social Statistics. N.p.: OECD Publishing, n.d. Print. US Energy Information Administration. International Energy Outlook, 2010. N.p.: Government Publishing Office, 2010. Print. Williams, Nicola, Oliver Berry, and Steve Fallon. France. N.p.: Lonely Planet, 2009. Print. Read More