France and Germany Urged to Reach Nuclear Agreement as Clock Ticks Down

Time is running out for France and Germany to resolve their dispute over the role of nuclear power in Europe’s energy transition — or risk stalling the region’s green agenda.

(Bloomberg) — Time is running out for France and Germany to resolve their dispute over the role of nuclear power in Europe’s energy transition — or risk stalling the region’s green agenda.

Energy ministers from the European Union’s 27 member states are set to meet in Luxembourg Tuesday to find common ground on the issue, at the heart of an overhaul of the bloc’s electricity market. A deadline to complete the task before next year’s elections is rapidly approaching.

The chances of a deal rest almost exclusively on the EU’s two largest economies, which are still far apart on the matter. Analysts and industry groups say an agreement is needed so that the bloc can move ahead on other aspects of the transition as the continent recovers from last year’s energy crisis.

“It is high time to strike a compromise on this,” said Simone Tagliapietra, an analyst at Bruegel, a Brussels-based think tank. “While Germany and France agree on 80% of EU energy and climate issues, nuclear has long represented a key rift among the two, often engulfing several EU debates in this space.”  

At stake is a key piece of legislation the EU hopes will drive capital into accelerating the rollout of renewable energy, reducing the role natural gas plays in setting the region’s power prices and leaving the bloc less dependent on Russian supplies. Record energy costs last year upended the region’s economy, exposing its vulnerability to power and gas providers. 

Read more: EU Floats New Option to Bridge French-German Divide on Nuclear

The two countries disagree over the extent to which government funds should be allowed to extend the life of nuclear reactors. France is heavily dependent on an aging atomic fleet for its power, while Germany has completely phased out nuclear energy.  

Spain, which holds the EU’s rotating presidency, is seeking a compromise that would allow France to keep the units in service, while easing fears that it could undercut power prices in the rest of Europe.

June Elections

EU elections next June mean that all laws will need to be finalized at least two months prior, and member states still need to negotiate with the European Parliament on electricity market reform — itself an often protracted process.

The electricity industry is also getting impatient with the delay, with the rules having first been proposed in March.

“We see an urgent need for a significant rollout of renewable and low-carbon technologies,” Leonhard Birnbaum, president of Eurelectric, an industry group, said in a letter to energy ministers seen by Bloomberg. “We have no additional time to lose.”

President Emmanuel Macron said that French and German negotiating teams would seek an agreement this month. In theory, Spain could bypass one of the two by winning the support of a majority of member states. In practice, such a move is politically challenging for such an important reform.

There’s still hope for a deal, even if an agreement isn’t reached Tuesday. EU leaders are scheduled to meet later this month, where they would likely try to use more political impetus to break the deadlock. The EU parliament has already agreed its position.

The latest compromise put forward by Spain and seen by Bloomberg omitted existing nuclear power facilities from rules governing the use of so-called contracts for difference — a tool used by governments to help subsidize clean technologies. 

Germany is worried that France would still be able to support facilities run by state-owned Electricite de France SA unilaterally and with fewer restrictions, thereby distorting the continent’s single market.

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