Zapatero's green credentials come under nuclear stress

By Paul Betts
Published: June 11 2009 03:00

From the very beginning, José Luis Rodríguez Zapatero has been a diehard supporter of renewable energy such as wind and solar power and an opponent of the nuclear alternative. Under the stewardship of Spain's greener than green socialist prime minister, the country has become one of Europe's leading producers of electricity from wind farms along with Germany and Denmark. These days, wind power accounts for about 15 per cent of Spanish electricity consumption.
Mr Zapatero has also said he planned to shut down eight existing nuclear reactors when they reached the end of their natural life. He is about to have his first opportunity to confirm his anti-nuclear convictions with the country's oldest nuclear plant of Garona in northern Spain coming to the end of its 40-year lifespan.
But the prime minister is having second thoughts. Although the ultimate decision to close down Garona will be a political one, the country's nuclear security council has recommended that the plant should be kept going for another 10 years as long as its systems are updated and modernised. The operator of the facility - a joint venture between Iberdrola and Endesa - is also keen for an extension that would avoid it cutting some 1,000 jobs and shutting down a cost-efficient plant with a good safety record that produces about 1.35 per cent of all Spanish electricity. Spain depends on nuclear energy for about 20 per cent of its electricity production.
Opinion polls suggest that the Spanish public is beginning to warm towards nuclear, even though the majority is still either opposed or indifferent. Apart from Germany, which is still committed to shutting down its nuclear plants when they reach the end of their lifespan, other European countries are increasingly embracing the nuclear option. This is not only the case of the UK, but also of Italy.
Spain, like everybody else, is also under pressure to reduce its carbon emissions to comply with the Kyoto and European energy targets as well as reduce its costly imports of oil and gas. To this end, it has stimulated the development of wind power via generous state price support mechanisms, but there is a limit to how quickly and how much such renewable energy sources can replace the shortfall if the nuclear option was scrapped entirely.
For all these reasons, there is a convincing case for Mr Zapatero to dilute his green ideology and anti-nuclear convictions and adopt a more pragmatic approach to the issue
In the case of Mr Zapatero, there is an even more compelling political reason for such a compromise. His own centre-left party is split on the issue. After suffering badly in the recent European elections, Mr Zapatero can ill afford a damaging fracture in his own party over this issue.
All this suggests there will be a compromise. Mr Zapatero will probably agree to extend the life of the old Garona nuclear plant, but by only five years. This intermediate solution could be an expedient way of protecting his green virginity.
Low-profile rescue
A quiet changing of the guard took place in Milan this week as Matteo Arpe, the former chief executive of Capitalia, was appointed chairman of Banca Profilo, the listed private bank his Sator investment group stepped in to rescue in February.
Sator's timely intervention allowed the Bank of Italy to maintain its clean sheet during the financial crisis with no bank having gone belly-up in Italy to date. In more "sophisticated" countries such as the UK, bank failures have been all too frequent and no less costly.
Indeed the authorities in Italy, often criticised for their sclerotic decision- making and lack of communication among themselves, have on this occasion combined smoothly to ensure a solution that has protected clients and recapitalised the bank while also injecting a new and respected management team to boot.
Sator is apparently the first private equity player in Europe to be allowed by national authorities to rescue a regulated bank. While other funds have picked up distressed institutions, they did so after they had crashed. In Profilo's case, Sator stepped in before its impending failure became public. This is to the credit of all those involved and to their low key but effective approach. Hardly, it has to be said, the norm in Italy.
The handsome paper return that Sator has reaped since its emergence as Profilo's saviour will further burnish Mr Arpe's reputation for astuteness. The fact that taxpayers' pockets remain unpicked and minority shareholders have benefited from an impressive rally in the shares also makes this a doubly rare event in the Italian context - a deal in which those who normally lose out have quietly emerged winners.
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Copyright The Financial Times Limited 2009