Old Europe is more and more risk adverse, shutting the door to progress, jobs and prosperity

Today, I want to talk to you about risk and progress. Progresses can only be obtained at the price of risk taking. And it appears that "Old Europe" is becoming more and more risk adverse, France leading the way. Much more than US, much much more than emerging country, China first. That may lead Europe to further de-industrialization, job losses, welfare system crash, decline and relative poverty. I've also taken the energetic policy as an example to show that the "cautious principle" we've set in our Constitution is leading us into dead-ends as we need to take risks not only to make progress but just to cover our basic needs.

Optimism bias, black swans and Challenger crash

Risk is very difficult to assess if not impossible. If you have a very strong statistical database (with a deep outlook on the past), then you have a chance. But that's not because something never happened that it won't happen. Nicholas Taïeb (or Taleb) described those phenomenons as "black swans". Europeans long thought that swans were all white, that the probability to see a black swan was equal to zero ... until they explored Australia and found black swans. Earthquakes of magnitude 10 had never been measured but one could happen. 9/11 can be seen as a black swan : we (and the CIA) knew terrorists were ready to do anything to harm America, we knew they used to hijack and destroy airplanes. But crashing planes into building ? That was too hard too imagine. This is also about detecting "low-intensity signal" and not being in denial. A plane was hijacked in 1994 between Algeria and France and French Intelligence had some clues that the terrorists intended to crash the jet onto Paris. We also need to avoid denial because sometimes it's just too tempting to discard images too awful to sustain.

The other mechanism at stake is hidden is everyone's mind. It's called the "optimism bias". We all tend to overestimate our chances to win (the lottery for instance) and underestimate our chances to loose (die from a lung cancer when we smoke - which is my case : smoking and underestimating consequences). Some may say it's hell of a flaw we have in our brain ! But some others think this is the very reason we're humans and not apes. If they didn't have overestimated their chances, our ancestors would never have explored continents, domesticated horses, grew wheat or corn, flew over Atlantic oceans or fly to the Moon. And we would still be in the countryside eating fruits from the trees and hoping to catch an animal from time to time.

So taking risk is part of human progress. But we need to domesticate our optimism bias. The US spatial vehicle Challenger had exploded because of a black swan and optimism bias. The O-Ring were meant to keep the booster solid fuel inside its cylinders so Challenger won't explode. Those O-Ring were never tested in cold ambiance because weather is never cold in Florida. Almost never cold. Unfortunately, in the night between Jan, 27th and Jan, 28th 1986, it was freezing at Cap Canaveral. Some engineers noticed that. But the decision was made by NASA to proceed with the launch. That is because the risk was dramatically underestimated. The crash happened on the 25th launch. Field engineers thought the crash probability was somewhere around 1 out of 100, managers 1 out of 1.000 and the investigation found that some upper management members thought it was 1 out of 100.000 (which is totally out of proportion showing not only optimism bias but also a belief rather that a rational estimation and huge dose of denial of reality). Well, anybody know what happen this Jan, 28th. 

The French "cautious principle" : no GMO, no shale gas

But we need to keep the optimism bias alive. Otherwise, we'll stop progressing. This is all about competition too. If we, French people, decide to stop moving on the progress path, then Americans will. Chinese too. And we will keep on losing our industries, our plants, our jobs and our wealth. 

Of course, we had our failures like Challenger. The most recent scandal (which is different because the Challenger case revealed no bad intent like greedy guidance) is "Mediator". This is the drug that was conceived, manufactured and sold by a french lab (Servier). It was filed as a cure for diabetis but the lab advertises it to physicians (prescription drugs ads for population is forbidden in France) as diet pills. Millions of people took it (especially women) for years. It appears now that the lab had cheated on the filing, has hidden some side effects, had lobbied (at least) to avoid the drug being withdrawn from market. It took a French's Erin Brockovich to fight the lab and authorities for years to see the drug go off the pharmacy's shelves. Now, it appears that the drug caused 500 to 2,000 deaths not counting all disabled persons (lung severe problems) and was not really efficient on diabetis (althought it was good diet pills ... but losing 10 pounds weren't worth the side effects) . Well, the case is "under investigation". That kind of case usually takes 10 to 15 years to go to trial and the lab founder & CEO (deeply committed in the drug misfiling and misuse) is 90-something. So he'll die quietly without being convicted. As there's no class actions in France, the pharma company will also easily survive (unless the government use its power to marry it with Sanofi, our national big pharma).

But I don't think we have had more failures and cheating than other countries. In 2005, a "cautious principle" had been added to our Constitution with opinion favors. The habit is when politicians want to do something but they know they won't do it, they put it in the Constitution (that's why it's not a booklet but a multi-volumes encyclopedia). Two years ago, a huge debate took place to know if we should add a "golden rule" in the Constitution forbidding more than 3% GDP national deficit. This has been abandoned. This cautious principle says : "« When a damage realization, even uncertain in the scientific state-of-art knowledge, might affect seriously and irreversibly environment, authorities, by applying the "cautious principle", and in their competence domain, will setup evaluation procedures to assess risks and to take provisional and proportional measures to avoid damages realization".

Wrapped-up, it says that we need to be sure beyond reasonable doubt that there's no risk before going on. As a result, all genetically modified (GMO) crop had been banned.

On shale gas, it appears that our soil may be packed with shale gas. But not only extraction had been banned but exploration too ! So it's forbidden to dig a hole trying to see and assess our shale gas potential.  At the desperation of industrial companies CEOs seeing a potential competitive advantage (lower price energy) disappearing. When we have too few of them

France : no energetic resources in our soil but a real cool climate

The nature gave us a disadvantage : we have no energetic resources in our soil. We used to have a lot of coal but we extracted about every ton of it and the few left is way more expensive to extract rather than to import it (from US - 22%, Columbia - 19%, Australia - 17%, Russia - 16% and South Africa - 12%). We never had any petroleum so we bring it from former-USSR countries (36%), Africa (29%), Middle-East (19%) and Northern Europe (14%). We have only one natural gas exploitation site so we're also importing it from Norway (32%), Netherlands (16%), Russia (13%), Algeria (11%). We don't have any uranium so we're bringing it from Mali or Canada. That leads us to import roughly 70 billions dollars a year of energy, roughly our trade balance deficit.

To be fair, nature gave us a huge advantage : a very moderate climate. The number of days with freezing (even 5' during the day) is 32 yearly in Paris, 59 in Lyon. In "coldest" places (except mountain villages), it's 100. The number of days in year where the temperature reaches 85°F is 16 in Lyon and the highest ever is 104°F. Coldest ever is -9°F. In Paris, 13 days of haze yearly (all data after are in Paris). 15 days of snow. 4.5 hours of sun a day as yearly average (more than 7h on the French Riviera). Coldest ever -10°F. Highest ever 105°F. 19 days of thunderstorm. Heaviest rain ? 41 inches a day. 105 mph as the worst wind burst. All of this is average. We don't have a lot of storms, no tornadoes, some flooding but few earthquakes. A good land to live on. In 2003, a wave heat of 3 weeks saw the temperature tops to 100°F in most of the countries. As we're not used, not equipped, not prepared, 11,500 people (mostly elderly) were supposedly died because of this.

Energy mixes and why France is pissed-of about American energetic policy

With this cool climate, we need to consume less energy. In 1985, only 1.5% cars sold in France had air conditioning. It began to be really ordinary in the 2000s and now comes with 90% of new cars. Only 3% of homes in 2012 are air-conditioned equipped. This ratio is the one that used to be in US in the early 50s. The current equipment rate is nowadays 87% in USA. That's one of the explanation of the fact that the energy consumption per capita was 3 (forget about the unit) in France and European Union (EU) in 2004, 4 in Japan and Russia and ... 9 in US ! Not mentioning 1 in China and 0.5 in India. Many other factors explain those numbers : industry (more plants, more energy consumed), efficiency (more plant efficiency, less energy consumed), culture and way of life (it's always surprising for Europeans to have to wear a sweet-shirt inside a restaurant in US when the temperature is 90°F outside).

Well, even if we don't need that much energy, we need some in France. And we also need to ensure your "energetic independence". Being dependent of other countries for our energy is no good because you'll have to bend your diplomatic choices to ensure your supply. And, in wartime, it'a drama. Fortunately, during WWI and WWII, we were relying on our colonies with gas and petroleum in their soils.

Where does all this energy comes from ? Worldwide, 2004 data, 35% petroleum, 25% coal, 21% gas, 10% biomass (burning wood) and 9% electricity. This electricity comes from 39% coal, 21% gas, 16% nuclear power plants, petroleum 7% and 16% renewable (solar panel, wind turbine and mostly dams). So, all in all, nuclear power plants are providing 1.4% of the world energy. To ensure our energetic independence, lower the electricity price for consumers and improve the trade balance, a huge nuke program was launched in France in the 70s. We're now world leaders (in percentage) with 75% to 80% of our electricity being produced this way. We also fully exploited our hydroelectric capacities which provides 10% of our electricity. Rest is mainly burning some fuel and some coal. We now have a cost-efficient electricity with few CO2 emissions.

US made radically different choices. Three Mile Island incident in 1979 froze the nuclear program. Therefore, in 2009, nuke was representing only 20% of the US electricity production and most of it is burning fossil resources with a lot of greenhouse gas (GHG) emission. And this is really pissing French people off ("Americans don't care about the Planet !").






Basically, in France, our energy comes :

• 52% from petroleum
• 20% gas
• 16% nuke
• 3% coal
• 2% dams
• 7% others (including an experimental plant to get the tides energy started in 1967)

In USA :

• 37% from petroleum
• 27% gas
• 8% nuke
• 23% coal
• 3% dams
• 2% others

More fossil energy (87% vs 77%) in US - especially coal, more nuke in France. 

The main reproach the French politicians and medias address to United States is : "you're burning too much energy, especially in residential and agriculture (because you're eating too much meat), you're using too much fossil resources, you're emitting too much GHG". French usually also ignore regional differences in US. A Texas resident will use twice more electricity than a San Francisco or Chicago resident and 3 times more than a NYC resident.

French energetic policy : no (more) nuke, no shale gas, no petroleum, no more coal

Now, once that said, what do we really do ? The ecologists ("greens") electoral score is within 2 to 15% but the average is 5/7%. Not a strong political power. But they're smart and managed to have some seats (2) at the current government table (french greens are on leftist side). They obtained the nuclear power plant program to be stalled and that the % of nuke in electricity production will be decreased from 75 to 50% (in 10 to 25 year, very unclear). We also don't want to burn anymore coal and want to reduce the petroleum usage. We cannot build any more dams. We have forbidden any shale gas exploration.

So what's the solution ? Trying to decrease the energy consumption by a better energy use efficiency or a better building isolation. Fine but it'll take a long time (and need investments with money we don't have at hand). Trying to develop "alternative energies" like solar, wind, geothermal but we're in stop & start policies. There were huge subventions for solar panel until the government find out most of them were manufactured in China and stopped the subventions. Wind turbine setup is blocked by the NIMBY (Not In My BackYard) effect (we're a densely populated country). Fact is we have no solutions other than trying to do a little better, step by step, and find a better balance.

So we're at the leading edge of ecology in the major conferences (Kyoto, Durban, Doha recently), giving lessons to the world (one of our favorite activity) but we haven't found our way. And our "cautious principle" won't help us find smart solution to fight global warming or to feed to world without killing the climate. Not having found our way is not abnormal because it's utterly hard. French citizen are making some small efforts, like US people do (the density of Toyota Prius on 101 or 405 south of San Francisco is amazing) but we like being fresh in our car, like big motors (well, me at least), like to be warm in our houses in winter, like to travel, prefer our individual car to buses or train. I don't think we're saints. No more than evil. Maybe Americans have had "easier energy" in the past so they have more room today to smooth their consumption without too much restriction. So let's US citizen find their very own way and improve, without giving any lessons.

Nicolas QUINT

Some say that's progress
I say that's cruel

Midnight Oil "Progress"