France Promotes Low-Carbon Electricity Mix as FDI Magnet

France has lauded the decarbonised nature of the country’s electricity mix as a significant asset in attracting foreign investment. However, experts suggest that while this aspect is indeed attractive, several challenges persist, shaping the investment landscape in more nuanced ways.

French President Emmanuel Macron recently hosted the Choose France event, where a substantial portion of the record €15 billion of foreign investment announced was directed towards decarbonization-related projects. Notably, tech giant Microsoft pledged €4 billion for new data centres in France, citing the country’s decarbonized electricity as a primary factor in its decision-making process.

Minister Delegate for Energy and Industry, Roland Lescure, emphasised the importance of France’s decarbonized electricity mix in attracting investments, echoing sentiments from President Macron’s staff.

However, experts caution that while the low-carbon mix is advantageous, other factors such as electricity prices and grid reliability also significantly influence investment decisions. Jérémie Haddad, an energy analyst at EY, underscores that France’s low-carbon mix is just one aspect considered by investors, alongside various other criteria.

Price remains a crucial determinant for electricity-intensive industries, where the cost of electricity constitutes a substantial portion of production expenses. Cyrille Mounier from Aluminium France highlights that while a low-carbon mix is advantageous, it is not the sole factor driving investment decisions, especially for industries where price considerations outweigh environmental factors.

François Lévêque, an economist at Mines Paris PSL engineering school, suggests that France’s competitiveness stems from a combination of factors, including regulatory stability, infrastructure quality, and workforce skills, in addition to the low-carbon electricity mix.

While France’s decarbonisation efforts are commendable, experts believe that reinvesting in nuclear power could further enhance the country’s competitiveness. Nuclear power offers controllable, low-cost, and low-carbon electricity, contributing to France’s energy security and economic resilience.

As the French government navigates these challenges, the focus remains on fostering an investment-friendly environment while leveraging the strengths of its electricity mix to attract sustainable foreign investment. However, achieving economic competitiveness requires a holistic approach, addressing various factors beyond decarbonisation alone.