Finding Common Ground: France and Germany Unite to Drive Transition

France and Germany are two economic powerhouses, both positioned to drive the green transition – provided they can reach an agreement on strategic topics.

This article builds upon the 2 previous ones in the series to analyse their collaboration potential and suggest 4 strategic areas with a high collaboration potential for both countries.

#1 The regulatory framework

According to the World Bank's Ease of Doing Business Index, Germany ranks 22nd and France 32nd. This annual report ranks economies based on their regulatory environment and how conducive it is to starting and operating a local firm. This ranking shows that both countries have a strong optimisation potential.

?Both countries can improve their respective rankings and, most importantly, unify their regulatory framework by implementing the following changes.

• Simplify registration procedures

Reducing the number of steps and the time required to register a new green energy business. They could leverage online processes, automate application analysis and harmonise the rules across France and Germany.

• Facilitate access to credit

The green energy space has mainly SMEs who need easier access to private funding and loan conditions. Both countries could reduce collateral requirements and improve the credit information system with automated retrieval of data from official applications. Another important step forward could be a centralised credit registry and an improved legal framework for secured transactions.

• Facilitate construction permits

Both countries are known for long and quite expensive procedures for issuing construction permits, which slows down the process of new integration into the grid. They could create a one-stop shop for construction permits with harmonised procedures across Germany and France, making it easier for an existing German company to build a solar farm in France and for a French project owner to contribute to a wind park in Germany.

• Improve the tax system

The tax burden on businesses and complex tax codes can feel quite overwhelming. To smooth out this hurdle, both countries could offer specific standard tax reductions for green energy businesses, without adding any intermediary step, or they could offer a complete exemption under the condition of a threshold added value for the local area, such as job creation or other support to the local community.

• Smooth out the labour market

The French social atmosphere and rigid work laws can scare investments away. To build trust and attract private and public project owners, France could offer dedicated regulation for the green energy labour market giving the context of urgency to meet our ambitious European deadlines. For example, hiring and firing should be more flexible, and the use of a temporary workforce should be allowed in a brighter scope and cost less.?

The implementation of these measures needs to be discussed at national level with both governments, including the German Federal Ministry for Economic Affairs and Energy (BMWi) and for the Environment, Nature Conservation, and Nuclear Safety (BMU), the French Ministry for the Ecological Transition and of the Economy and Finance.

At European level, the European Committee for Standardisation (CEN) and the European Environmental Bureau (EEB) need to be involved. Of course, the perspective of active companies in the field is key, through the Federation of German Industries (BDI) and France Industrie.

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These measures would reduce market distortions, streamline the legal framework for green energy companies in France and Germany, and improve the efficiency and transparency of its regulations and processes?–?which in turn will foster cross-border and bi-national green energy projects.

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Leverage the Market

Both countries count among the top 5 European countries for total installed renewable energy capacity. Germany's expertise in wind energy is the perfect fit with the French strengths in solar and nuclear power.

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?? With over 1,500 turbines and a cumulative capacity of roughly 8 GW operated in German waters at the end of 2022, Germany could France develop its offshore wind farms. The country could share experience (processes and solutions) and expertise (specialised workforce) to assist in planning, designing, construction and operation, as well as transfer technology and maintenance skills to French soil.

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?? French companies could help build agrivoltaic fields in Germany, for example through joint initiatives like the French consortium “Cultivons Demain!”, which aims to deploy 300 agrivoltaic projects in France by 2025. France also has more field practice in building various microgrids with energy management and storage at local or regional level and could share this experience with the German engineers.

To address their common market and implement these solutions, France and Germany could invest together in major plants, then share the generated power within an interconnected grid to ensure energy security, competitive power prices and scale up hydrogen production or energy storage.

This solution needs a precise regulatory framework with policies targeted at the offshore wind and agrivoltaic industries, investment incentives, streamlined permitting processes, and clear guidelines for environmental impact assessments.

Business guidelines are also necessary, to allow for effective and fair technology and expertise transfer, including transcultural best practices and international workforce training programs.

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Investment could also be facilitated through dedicated agreements with global banking institutions, a feasibility assessment based on future-ready technologies and accelerated upfront payouts of funding.

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This collaboration at market level will only be possible if public and private institutions work closely together. This needs various international workshops with the European Commission, the European Investment Bank (EIB), the Joint Research Centre (JRC) and the main key players in the industry, such as E.on, RWE, EDF and Engie, as well as Siemens Energy and Orano.

Strengthen the Infrastructure

To achieve their common goal of carbon neutrality by 2050, both countries need strong energy grid infrastructures, with reinforced interconnections and balancing mechanisms.

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Both countries need to support and implement the new electricity market design proposed by the European Commission, thus committing to expanding interconnections as well as to expanding considerably their investments into their respective national grids.

They also need to upgrade their power interconnectors across Europe, especially as they will have to deal with more intermittence from renewables. Both countries could invest some of their unused Resilience and Recovery Facility/RepowerEU funding to deepen the integration of their electricity markets.

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Moreover, France and Germany can agree on a common roadmap for real-time monitored energy storage to accommodate for the intermittency of renewables and balance the grid.

The production of clean hydrogen could rely on both German renewables and French nuclear power. Both governments have already agreed to work together on the production and use of clean hydrogen, but we’re still missing a definite agreement on the admitted energy sources.

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France and Germany could also create a new Franco-German dialogue platform or use existing solutions, such as the Pariser Platz Dialogue or the most recent one on battery charging and hydrogen refuelling infrastructure. These platforms could involve not only decision-makers but also citizens to foster social acceptance and industry players to ensure the pragmatism and feasibility of the suggested solutions. All players could agree on Best practices to promote the sustainability of the bi-national infrastructure and cross-border facilities.

The implementation of these solutions requires the active participation of various European institutions, such as the European Network of Transmission System Operators for Electricity (ENTSO-E), at least 3 ministries in each government and the implementation of most above-mentioned items. Grid operators in both countries, as well as local authorities, NGOs and various green energy companies are also key to this solution.

Energy prices soar in all of Europe. Germany and France share a concern for energy-intensive industries and acknowledge the importance of low energy costs for competitiveness. Infrastructure and storage are a crucial foundation to reach these goals while ensuring a transition to cleaner production processes.

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Fostering Innovation

Both France and Germany invest heavily in R&D, with France spending 2.18% of its GDP and Germany 3.13% in 2021. Collaboration would mean a joint budget of just above €6 billion and taking a diversified field experience into account, both leading to groundbreaking innovations.

Joint research centres and innovation hubs or consortiums backed by government and European incentives will foster the collaboration of scientists. They could also become home to engineering or scientific schools and training centres, helping spread knowledge and skills across both countries.

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Market evolution can be addressed through joint time-sensitive and field-oriented research programs. Research on energy storage solutions and hydrogen production currently has the potential to revolutionise the industry.

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Fundamental research can address long-term and economic challenges, such as ensuring energy security through the supply chain. This means developing new materials, technologies or processes to foster local production capacity for spare parts and components of strategic infrastructures.

These solutions need a new process within existing funding programs where member states can apply jointly as a "public consortium". They also require the creation of a whole new funding process to accommodate these cutting-edge, interdisciplinary, and use-inspired solutions, which are bound to not fit into any of the existing schemes. Of course, regulations should frame the shared intellectual property and value that come with this research.

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The key players in this context include the German Federal Ministry for Economic Affairs and Energy (BMWi), and groups such as the Fraunhofer Institute for Solar Energy Systems (ISE), as well as the French Ministry for the Ecological Transition and Centre national de la recherche scientifique (CNRS). Additionally, certain companies involved in technical research should also be considered, such as Siemens Energy, EDF, or E.On.

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This article has highlighted that, despite some challenges, the potential for collaboration between France and Germany in the green energy sector is huge. By working together, the Franco-German pair can ensure energy security at national level and stabilise the European interconnected grid, boost its economy and optimise its global green ranking.

Both countries have already experienced significant success stories, such as the Franco-German strategic dialogue on the Environment, the preservation of biodiversity, and the strengthening of our cooperation on the Rhine waters. These initiatives will define and promote common resolutions on the European and global stage – and they're just a start.

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The Franco-German duo has always been a driver in EU policies and can remain so – but it's imperative for them to put pragmatism before ideology.

By recognising their differences and addressing them rationally, they can concentrate on their solid common ground and renew the Franco-German partnership in energy policy, not only setting an example for the rest of Europe but also driving the transition to a cleaner future for us all.

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