Financing the transition: how to use public finance smartly

The recent election campaign in France didn’t give priority to the climate and environment. However, taking climate action is still widely supported by the French voters and most decision-makers. But a mandate to act is not enough. To make up for the current shortfall in climate investment, we need a solid consensus on the financial resources to be deployed to the climate transition in the long term. Today, these resources come partly from public budgets. And it is not a secret that the public contribution probably will have to increase in the future.

Ursula Von der Leyen’s competitiveness agenda is grabbing headlines – but the hard work of climate implementation and investment is only just beginning. In this blog, Ciaran Humphreys and Dorthe Nielsen outline the challenges this era of implementation poses, and how to align climate ambition with the President’s economic vision.  Ursula Von der Leyen has been re-elected as Commission President – and by a wider margin than expected. Before the vote, she set out her political priorities for the next EU mandate. Her vision focused on themes of security, economic competitiveness, and enlargement – unsurprisingly so at a time when the EU is increasingly concerned about its place in the world. 

France is facing a climate investment deficit relative to its climate objectives. Today, these investment are already putting a strain on public finances, whether in terms of investing in public facilities or co-financing projects by households and business. Increasing climate investments is therefore a challenge for public finances. But the scale of the challenge varies, depending on future policies. So what room for manoeuvre is there in terms of climate-related public spending needs?