Local Energy Governance

Opportunities and Challenges for Renewable and Decentralised Energy in France and Japan

Magali Dreyfus, Aki Suwa, Magali Dreyfus, Aki Suwa

• Publisher: Routledge
• Year: 2022
• eBook ISBN: 9781000547443
• Edition: 1
• Topic: Business
• Subtopic: Ecology
• Index: Business

Local Energy Governance: Opportunities and Challenges for Renewable and Decentralised Energy in France and Japan examines the extent of the energy transition taking place at a local level in France and Japan, two countries that share ambitious targets regarding the reduction of GHG emissions, their share of renewable energy and their degree of market liberalization. This book observes local energy policies and initiatives and applies an institutional and legal analysis to help identify barriers but also opportunities in the development of renewable energies in the territories. The book will highlight governance features that incubate energy transition at the local level through interdisciplinary contributions that offer legal, political, sociological and technological perspectives. Overall, the book will draw conclusions that will also be informative for other countries aiming at promoting renewable energies. This book will be of great interest to students and scholars of energy policy and energy governance.

Part I
National Framework of Energy Governance

1 Searching for alternatives to fossil- and fission-based energy sources in France

Guillaume Dezobry and Magali Dreyfus

DOI: 10.4324/9781003025962-3

In the years 2000, the rising of the climate issue as a priority on political agendas has impacted European and national energy policies. One of the most direct consequences is the search for clean energy sources, meaning low carbon, which translates into the promotion of renewable energies. Yet, in France, where electricity mostly comes from nuclear power, considered a low greenhouse gas (GHG) emitting source, the move has been slow. Urged by the European Commission and a binding European Union (EU) regulatory framework, a change is underway. This chapter addresses the question of potential deadlocks regarding energy transition (understood as a change of energy source) in the institutional setting. It recalls how EU law boosts change, but it is faced with a socio-technical giant, namely the nuclear industry, which finds in economics theory a strong legitimacy to pursue its activity. However, current changes in national law open the door to a new governance scheme, focusing on local actors. Its effectiveness is still to be tested.

The European energy and climate institutional framework

To understand the French energy and climate institutional framework, it is key to recall the European regulatory framework, which is binding for French authorities. In fact, since its foundation, the EU has dealt with energy issues.¹ Yet over the years, the different rules became increasingly ambitious in their scope, and technical and intrusive in the EU member states’ legal orders. The recent “Clean Energy for all Europeans Package”, adopted in the aftermath of the 2015 Climate Paris Agreement, is the most recent comprehensive set of reforms enacted by EU institutions. It covers a wide range of topics from the development of the European energy single market to the promotion of renewable energy.² In this section, two points particularly relevant to the topic of that book are detailed: the liberalization of energy markets and the promotion of renewable energy to tackle the issue of climate change.

The liberalization of energy markets

The liberalization of energy markets (basically in the electricity and gas sectors) started in the 1990s with the aim of contributing to the achievement of the European single market and offering cheaper energy to European consumers. The whole process consisted in introducing competition in order to allow new operators to penetrate the market. This clashed with the French model where the main incumbent ‘Electricité de France’ (EDF), a public company largely owned by the state, was in the situation of being a monopoly. Thus, EDF, as a vertically integrated company, managed the whole chain of activities from generation to supply to final users. In the 1990s, the EU adopted various directives³ that started unbundling the energy sector and opened it to competition generation and supply to final users, while transmission and distribution remained regulated in a de facto situation of monopoly.

As shown in Figure 1.1, the French energy market remains dominated by one incumbent, the former EDF, which split into several branches, and where the state is the main stakeholder. More than 20 years after the first liberalization wave, the French energy sector is therefore still quite closed and centralized, with an incumbent where the main activities lie in the nuclear industry.

Figure 1.1 Liberalization of the electricity market in (metropolitan) France.

The promotion of renewable energy and energy transition

Coupled with the security of supply, climate change is a key topic in European politics. Mitigating it and adapting to it have become major issues in European public policies as the EU developed important and very visible diplomacy around this question in the international arena. To a certain extent, this bound it to become exemplary. As a result, its action is oriented toward three main goals: reducing GHG emissions, increasing energy efficiency and raising renewable energy production and consumption. Here we focus on the latter dimension of the EU’s activity.

The promotion of renewable energy started in the 2000s and has led to fostering the development of generation units that supply local consumption areas. Thus, local governments gained renewed attention as key actors of the sector. The major benefits are a better security supply, shorter transmission distances and a reduction of the losses associated with energy transmission. Table 1.1 shows the different ambitious targets that the EU is aiming at, as well as the French ones.

Table 1.1 EU energy transition targets and French energy targets

	EU goals according to the Clean Energy Package for all Europeans	French self-assigned goals to contribute to reach the European goals (Art. L. 100-4 Energy Code)
GHG reduction	Reduction of 40% by 2030 from 1990 levels (binding goal)	Reduce GHG emissions by 40% between 1990 and 2030 (Energy Code as amended by the law on Energy and Climate)
Promotion of renewable energy	Reach 32% of renewable energy sources (RES) in the EU’s energy (gross final consumption) mix by 2030 (binding goal)	Reach 23% of RES in gross final consumption in 2020 and up to 33% by 2030; by 2030, reach a mix of 40% renewables in electricity production, 38% in heat final consumption and 10% of gas consumption
Energy efficiency	Target of 32.5% for energy efficiency for 2030, compared with a baseline scenario established in 2007 (non-binding goal – best efforts obligation)	Reduce by 50% the final energy consumption by 2050 with respect to 2012 By 2030, reduce 2030 the primary fossil fuel energy consumption by 40%
Low carbon economy	Climate-neutral economy by 2050 (European Green Deal adopted in 2019)	By 2050, achieve carbon neutrality throughout the country, without the use of carbon offsetting, by reducing gross emissions by a factor of at least six compared with 1990
Source: the authors.

Member states are free to determine how to reach these goals and as a principle, the EU does not intervene in the internal administrative organization of its member states. It only has an economic approach of the different players in public policies. It means that it deals with public actors, such as local authorities, only as market actors. However, by creating legal categories for the energy market, the EU extends the scope of intervention of local governments and civil society.

Acknowledgment and promotion of new actors in the European local energy governance

Lately, European energy law, following a trend in different member states, has acknowledged and started promoting new local actors to foster an energy transition to more renewable sources. In the Clean Energy Package, Directive 2019/944⁴ provides that final customers should be allowed to sell on the market their own production of electricity. In addition, Directive 2018/2001⁵ from the same package recognizes the right to self-consumption of electricity, individually or collectively. As regards, collective self-consumption, European law created two legal categories, namely “Citizen Energy Communities” (CECs) (Dir. 2019/944) and “Renewable Energy Communities” (RECs) (Dir. 2018/2011), which still have to show their operationality (Lowitzsch, Hoicka and van Tulder, 2021; Heldeweg and Saintier, 2020). According to art. 2 (11) Dir. 2019/944:

“citizen energy community” means a legal entity that: (a) is based on voluntary and open participation and is effectively controlled by members or shareholders that are natural persons, local authorities, including municipalities, or small enterprises; (b) has for its primary purpose to provide environmental, economic or social community benefits to its members or shareholders or to the local areas where it operates rather than to generate financial profits; and (c) may engage in generation, including from renewable sources, distribution, supply, consumption, aggregation, energy storage, energy efficiency services or charging services for electric vehicles or provide other energy services to its members or shareholders.

Art. 2 (16) of Dir. 2019/944 provides that “renewable energy community” means

a legal entity: (a) which, in accordance with the applicable national law, is based on open and voluntary participation, is autonomous, and is effectively controlled by shareholders or members that are located in the proximity of the renewable energy projects that are owned and developed by that legal entity; (b) the shareholders or members of which are natural persons, SMEs or local authorities, including municipalities; (c) the primary purpose of which is to provide environmental, economic or social community benefits for its shareholders or members or for the local areas where it operates, rather than financial profits.

CECs and RECs are therefore non-commercial market actors, who are entitled to have non-discriminatory access to energy infrastructures. Their activities range from production to consumption, storage and selling. Only CECs though can develop their activity in distribution. Interestingly enough, the primary purpose of these actors is not profit-making, but the benefits to local communities from a social, economic, or environmental point-of-view. The promotion of that kind of actors by the EU, therefore, awards a political dimension to the energy transition process, backing the idea that local management is an ideal scale of operation.

European law with which French energy law has to comply with, has therefore constrained to open electricity markets to new entrants in France. At first, this aimed at allowing commercial actors to penetrate the markets, but lately, this also relates to local non-commercial actors such as local public authorities or even citizens on an individual or collective basis. This highlights the close link between renewable energy and their local settlements, allowing consideration of the benefits for the territories, which are not merely economic or environmental, but also social. This opening is not easy in a country such as France where the main incumbent has very close institutional ties with the French state’s authorities and continues to be predominant in the market with its associated energy source, nuclear power.

An institutional framework designed for centralized governance and nuclear hegemony in the French energy mix

This section focuses on the economic regulatory framework of the incumbent French nuclear power plants. There are 58 nuclear reactors spread across 19 power plants located throughout (metropolitan) France. With an installed capacity of roughly 63 GW and an average annual production of nearly 400 TWh, the French nuclear reactors – the second highest in the world – can generate over 70% of the electricity fed into the grid.

The competitiveness of the French nuclear industry results from a combination of three factors:

1. Standardization of reactors: the 58 reactors are pressurized water reactors (PWRs). Developed in successive stages, the reactors are nonetheless very homogeneous in design and were built under very similar industrial circumstances. This standardization has made it possible to reap significant learning and pooling effects at every phase of a plant’s life cycle.
2. Creation of the reactors within a short period: the French government’s nuclear program was rolled out in just 20 years (from the mid-1970s to the mid-1990s). Initially designed to operate for 40 years, the nuclear plants are thus expected to reach the end of their average longevity in 2025.⁶
3. Unified management of the fleet: France’s nuclear plants are run only by their incumbent operator. This choice, which was based in part on safety concerns, further enhances the economies of scale and competitiveness of this production facility.

In the context of a liberalized market, the incumbent operator’s exclusive ownership of French nuclear plants was perceived, by the European authorities in particular, as an obstacle to the development of competition and as possibly constituting a “market failure”,⁷ particularly insofar as concerns the development of a competitive electricity supply market. The European Commission thus noted that

In view of the scale and uniqueness of the competitive advantages conferred in the past and still conferred on this undertaking by the operation of its nuclear power capacity […], it would have been pointless to hope that competition alone by new en...

Table of contents

• Cover
• Half-Title
• Series
• Title
• Copyright
• Contents
• List of figures
• List of tables
• List of contributors
• Acknowledgments
• Introduction
• PART I National Framework of Energy Governance
• PART II Local government powers in the energy sector
• PART III Local partnerships for the development of renewable energy at the local level: citizens, communities and companies
• PART IV Territories with 100% renewable energy
• PART V Technological issues in energy transition: market, grids and smart cities
• Index