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MBAs in Berlin and Paris On The Future Of Nuclear Power

Will Germany become a trailblazer in renewable energy? Will France ever decommission its 16 nuclear plants? MBAs at HEC Paris and ESMT give their view.

In May the German government announced its decision to close all the country’s nuclear power plants by 2022. Was it an enlightened decision or a knee-jerk reaction to the Fukushima disaster in Japan?

“In my opinion, Germany’s decision was significantly influenced by what had happened in Japan”, says Tomer Sabag, MBA student at the European School of Management and Technology (ESMT) in Berlin. “Just few months ago, Chancellor Merkel had decided to extend the duration of Germany’s nuclear power plants. At the same time, I think the Merkel government took this decision only after a deep analysis of the situation”.

Even though Merkel has said this decision can make Germany a trailblazer in the production of renewable energy, many have argued that for the moment it will only create an energy shortage, thus damaging the national industry.

Tomer thinks that Germany could set an example for other countries: “In the short term, many companies will be affected and Germany will have to think about putting in place some compensation for the companies that had invested in nuclear energy. There will be a shortage of energy supplies as well, because 22% of Germany’s power comes from nuclear plants.

“However in the long run, this change in Germany’s nuclear policy will encourage new renewable energy companies. If this happens, Germany will enjoy first mover advantage, and gain dominance in the renewable energy market”.

But will Germany really benefit from a gradual nuclear phase-out, considering that France, Poland, Lithuania, Latvia and Estonia – all countries geographically close to Germany – already have or intend to build nuclear power plants?

“For the moment”, says Tomer, “it won’t change anything for Germany in terms of security, though after the Fukushima crisis, the safety issue has become important for every country that has nuclear power plants. But Germany has just announced its decision, and can prove that it’s the right one, thus encouraging other countries to follow its example”.

A country that will certainly benefit from Merkel’s decision, at least in the near future, is France, from where Germany will have to import some energy to cover its temporarily shortage. We asked Jean-Baptiste Rabiller, MBA candidate at HEC Paris, if he thinks France will ever vote to phase out nuclear power.

“I don’t think so”, he says. “50 years after France decided to invest in nuclear energy, we can still see the benefits: French electricity bills are among the cheapest in Europe because 80% of our electricity is supplied by nuclear power plants.

Jean-Baptiste points out that replacing nuclear power plants as the main source of energy production would be very costly, and that there are few alternatives available.

“Coal is a declining industry because in a few years the environmental constraints will be so
important in terms of carbon emissions that I think that most of the coal-fired power plants will close”, he explains, “EDF has already announced that it will close many of its coal-fired power plants before 2030.

“Gas would require significant investment, and the problem with renewable energy is that supply is intermittent and we haven’t yet managed to build adequate storage capacity.
“Besides,” he continues, “Decommissioning all sixteen French nuclear plants would present a huge financial cost. Even though the French population is afraid of nuclear energy… I’m not sure it’s ready to accept an increase in electricity costs”.

But how did public opinion in France react to the Fukushima’s crisis? “The first reaction was a support to Japanese population and the people going through this disaster”, says Jean-Baptiste, “The French government and companies sent experts to Japan to try to find solutions to the problem”.

He describes a general feeling of suspicion toward nuclear power plants, but says that the government’s decision to review the safety standards in French nuclear power plants has abated it.

After Chancellor Merkel announced Germany’s nuclear phase-out, polls showed that about 60% of the French population looked with favour at Germany’s decision. “However, I’m pretty sure that the majority of people wouldn’t like to pay more in electricity bills”, he explains.

“In the last couple of years French people were asked to pay a small amount of money on top of their electricity bill to subsidize the development of renewable energy and the reaction to that was really negative.

“It’s a problem that is impossible to solve”, Jean-Baptiste summarizes, “Are people ready to give up nuclear energy? Yes. Do they want to pay for it? No.”

What do you think about the future of nuclear energy and Germany’s decision? Let us know in the comments section!

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