Public climate investment: there is no “magic” money but there is room for manoeuvre
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.
By how much exactly? We answer this question with an exploratory study of the renovation, transport and energy production sectors in France up to 2030. Without action to limit public spending and faced with a climate investment deficit, French public spending needs is due to reach €71 billion above 2024 levels. But this need can be reduced to €39 billion by combining various reforms.
There is considerable room for manoeuvre in managing the need for public spending. But the reforms needed to achieve this will not bring in any “magic” money: they will shift part of the financial effort linked to climate investments onto businesses and households. The recent French elections, and our work on the accessibility of the transition, show that for the middle and working classes, these efforts are discouraging unless accompanied by public support.
The new Assembly in France will have to decide on the resources to be devoted to the climate in the state budget for 2025 and in the multi-year strategy for financing the transition expected this autumn. Postponing an open debate on the financing of the transition will de facto put France on a trajectory that risks placing a heavy burden on public finances.
Whilst this new study focusses on France, the work can inspire the important debates about financing options and policy choices in other European countries and at the EU level, at the very start of a new political mandate.
