Basics on electricity

1. UNFCCC – DIALOGUESecond WorkshopDecember 16, 2006NAIROBIEDF contribution to the dialogue : sharing our experience on climate change, development and policy instrumentsClaude NAHONEDF Senior Vice presidentSustainable Development

2. 1 Basics on electricity

3. Electricity key drivers • Access to electricity, like water and transport • a key driver to ensuring sustainable development • Security of supply in oil/gas/electricity : a major question • increasing interdependence • gradual exhaustion of fossil fuels: • Climate change : the need to control CO2 emissions • Electricity sector an important contributor to the whole GHG emissions • CO2 free technologies available such as renewables, hydro and nuclear • electricity use important vector to generate energy saving in other sectors • Massive need for new investments : an opportunity • renewal of existing facilities in developed countries • growth in developing countries • no silver bullet, no "miracle technologies“ • incl. Gas, the price of which has doubled with regard to the 90s and which emits CO2

4. Two thirds of the world electricity are generated from fossil fuels 40% of greenhouse gas emissions Over the next 30 years: Huge demand Developing countries (China, India...) Europe (700 GW for renewal) USA Ready answer: coal Accessible and affordable But would double volumes of greenhouse gas emissions Necessity to: Improve energy efficiency Improve demand side management Deploy low carbon and carbon-free technologies Accelerate R&D on promising technologies, including carbon sequestration (demonstrators) Nuclear Coal 17% 35% Gas Oil 19% Renewables 19% 10% (up to 92% Hydro) What are the main basics concerning electricity sector ?

5. 2 What does EDF group do ?

6. EDF group strategy • Energy efficiency : • Meeting our obligations in France or in UK • All our sales departments have now energy efficiency targets • Our new promotion campaigns are “energy efficiency oriented” • CO2 free electricity : • Remaining the group with the lowest emission per kWh rate among the main European companies • Investment in Renewables and nuclear • EDF "Energies Nouvelles" n°1 in wind power in France with 20% market share. • EDF Group will invest 3 billions € in new wind farm projects by 2010 (same magnitude as investment in new nuclear plant) • Access to electricity : • Keeping momentum • Promoting our replicable “SSD” model • Through PPPs • R&D : • 1% of our turnover is spent in R&D programs • which include: • New renewables geothermal, photovoltaic • Energy efficiency • Smart metering and network

7. Promoting the concept of “decentralized services companies” in developing countries pilot experiments in rural areas in Mali, Senegal, Morocco and South Africa to ensure access to basic energy services Presently developing the Nam Theun 2 project in Laos– construction is now underway. 1100MW hydroelectric plant 1.4 billion € investment (in partnership with mainly the Laotian government, the World Bank, the Asian Development Bank and Thai investors) 13% of the investment for social and environmental issues (biodiversity, water usage, populations’ movements) rising Laos’s GDP by 30% saving more than 1 million tonnes of CO2 per year Public-private partnerships are an important and appropriate tool for development given the character of the electricity industry need a clear regulatory framework stable in the long term providing the right incentives to investors. need a financial framework that allows the development of replicable and viable financial models Public/Private partnerships – Development/Environment

8. Testing and gaining experience with the CDM process with the e8 group. Bhutan CDM-registered project supplying hydro-electricity to a remote village in Bhutan First e8 project to be officially registered under the CDM Potential CDM projects: Ecuador (Galapagos): Re-powering using wind energy Madagascar: Development of a mini-hydro project and distribution system in a remote area Collaborating in discussions and statements in Eurelectric through the Joint Statement on Future Climate Change Frameworkpresented last year Or working with WBCSD in the Energy and climate focus area in its trilogy : Facts and trends, Pathway 2050 and the last presented yesterday “Policy directions 2050”) In different working groups (electricity utilities, energy efficiency in buildings,… Working within partnerships :e8, Eurelectric, WBCSD, ….

9. 3 Policy Instruments, Markets Oriented Approaches and International Regimes

10. The Emissions Trading Scheme experiment in EU :a Market based approach • We are entering in the third year of the system • a carbon price has emerged and starts to channel behavior changes in day to day operations, but not on the investment side • it is the first time that such a market instrument works at a regional scale with different national entities • The implementation of the ETS system in the electricity sector enables underlying difficulties to surface : • Energy policies at member state level but not at EU level • Strong diversity of the member states’ electricity mix • Subsidiarity in the implementation of some critical ETS rules • Many lessons can be taken on board to make the ETS instrument incentives investment correctly in our sector and possibly pay a larger role • give long term visibility • move to more harmonization between national implementations • articulate markets approach with other policies and measures

11. Routes to follow or to be experimented : we need all ! • Up to 2012, make the Kyoto Protocol work as well and well as possible • realize the full benefits of JI and CDM • learn the lessons of all experiences, including the ETS trading experience • Fuel the ongoing process with appropriate ideas in order that they become shared by all • Have in mind that sectoral approach would help to move to an appropriate international architecture • Find the right balance between UNFCCC framework, Kyoto Protocol framework and local frameworks • Use the market-oriented mechanisms to build progressively linkages between the various approaches : • How are Parties ready to use markets ? • Are Parties ready to sign on targets on the short term ?

12. Thank you for your attention