Marine Le Pen’s proposed energy policies have raised major concerns among France’s neighbors and European business leaders, according to Bloomberg.
Bloomberg believes that the French National Rally party’s plans to regain control over energy prices could disrupt the interconnected European electricity market, which could weaken France’s main energy supplier, EDF, and jeopardize the energy security of the entire region.
Disrupting cross-border energy flows
Le Pen’s National Rally party has pledged to recalibrate French energy prices by ending market-based cross-border transactions and replacing them with bilateral or multilateral contracts with neighbouring countries.
Beyond the current European market system where prices determine energy flows, this shift is a major risk, Bloomberg reported.
“France would be shooting itself in the foot with this electricity exit. Exports would not be guaranteed, resulting in a loss of nuclear revenues for EDF,” Nicolas Goldberg, a partner at Columbus Consulting in Paris, told the agency.
potential economic impact
The proposed policy, according to Bloomberg, could significantly reduce energy bills for French households.
Jean-Philippe Tanguy, head of the National Rally’s economy and energy platform, estimates that decoupling French energy prices from neighbouring markets, combined with tax cuts, could cut energy bills by up to 40%.
This proposal is likely to resonate with voters., Especially with the high cost of living.
Although President Emmanuel Macron’s government has spent tens of billions of euros to protect consumers from rising energy prices since the 2022 energy crisis, higher wholesale electricity costs have been gradually passed on to end users, according to the same source.
Finance Minister Bruno Le Maire said market forces were now working in consumers’ favour, expecting household bills to fall by 15% early next year.
France’s neighbors are watching
Germany, which has higher energy prices due to its reliance on fossil fuels after phasing out nuclear power, has expressed concern about Le Pen’s proposals.
“If we divide Europe into nation states again and French products are produced only in France with French money for the French, and we think about it, the same applies to Germany, Poland and the Scandinavian countries, then we will do it,” warned German Economy Minister Robert Habeck. “The loss of prosperity in Europe will become more expensive.”
France in the European energy market
France, through state-owned EDF, is the cornerstone of Europe’s energy market, being the continent’s largest electricity producer with a fleet of 56 nuclear reactors, according to Bloomberg.
These reactors often export excess power, which brings higher prices abroad. The importance of this role was particularly evident in 2022, when technical problems at several reactors and Russia’s war on Ukraine caused an energy crisis.
France’s ability to export electricity has helped stabilize energy prices across Europe.
Catherine MacGregor, CEO of Engen SA, stressed the risks of re-imposing barriers to energy supplies, saying: “Without a European energy market, we will be exposed to more volatile prices and even the risk of power outages.”
Bloomberg notes that France’s energy security has benefited from the integrated European energy market, especially during EDF’s production decline in 2022. A report by France’s energy regulator, the Energy Regulation Commission, highlighted that real-time adjustment of trade flows on the open market reduces costs for European consumers.
