Re-Energized

Sunday, Nov. 06, 2005 By PETER GUMBEL / PARIS

POWER PLAY: After decades in disfavor, nukes are coming back; Areva head Lauvergeon wants to keep her firm in front

JACQUES BRINON / AP

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Big obstacles remain, primarily the still-hostile public opinion in some countries and the unresolved problem of how to dispose of nuclear waste. Lars G. Josefsson, chief executive of the big Swedish utility Vattenfall, believes nuclear is on its way back, but cautions: "It will continue to be a very difficult question, especially in Europe, as many governments have taken very strong decisions in the past against nuclear."

Areva is well placed to capitalize on any comeback because it is a one-stop shop for nuclear energy, with revenues last year of $13.5 billion and almost a one-third share of the market. Unlike its key competitors, Westinghouse and General Electric, Areva spans all aspects of the business. It mines and enriches uranium ore to make nuclear fuel; it designs and constructs reactors and helps operate them; and it recycles the spent fuel and packages the remaining waste.

An engineer by training, Lauvergeon worked as an aide to the late French President François Mitterrand before joining the Lazard investment bank. In the late 1990s, the government asked her to take over Cogema, a state-owned nuclear reprocessing company. Convinced that nuclear had a big future, she orchestrated a merger with the other state-owned nuclear company, Framatome, which built plants and mined uranium, to create the French colossus. She has sought to create a positive image for the firm, and for nuclear energy in general, by sponsoring the French yacht in the America's Cup race and by launching a worldwide corporate-branding campaign that uses animated figures set to the 1980 disco hit Funkytown. The intended message, company officials say: nukes are cool.

Claude Mandil, executive director of the Paris-based International Energy Agency, says that public-opinion considerations were never as high in France as elsewhere. And after 30 years of living with nuclear energy, the French have grown used to the idea — and enjoy stable electricity prices, especially at a time when oil and gas prices are shooting up. "The French are fond of their nukes," Mandil says. But even in France, nuclear is not free from controversy. Still, two other towns besides Flamanville actively lobbied to be the site of the new French reactor.

Opinion surveys commissioned by Areva for internal use show that nuclear's reputation has been improving. As recently as 2002, more people stressed the drawbacks of nuclear power rather than its advantages, according to the surveys. But that trend has reversed, and a clear majority now cites the pros rather than the cons. Critically, the surveys show that most respondents say concern about greenhouse gases and climate change are the key reasons for their views.

Just how big could nukes become? Jean-Jacques Gautrot, who heads Areva's international division, does a quick calculation. Taking into account the world's growing energy needs, and the fact that many existing plants will be coming to the end of their lives, he reckons at least 800 new reactors will be built over the next 25 to 35 years. If nukes were to double their share of the world's electricity generation, to 30% of the total, the number of new nukes would be somewhere between 1,200 and 1,500. That may be wishful thinking, but for now Areva is convinced it's in the right place at the right time — regardless of whether Lauvergeon wins her battle to privatize the firm.