Publications

Twelve EU Member States have started implementing new budgetary processes to help align their public budgets with climate objectives. Green budget tagging, a prominent tool, can provide a clear picture of the share of a national budget that is aligned, or runs counter, with the national climate strategy. France publishes its annual green budget every year and now, for the first time in 2023, the government intends to use its data for the preparation of the draft budget law.

On 22nd and 23rd of June, the Summit for a new Global Financing Pact, initiated by Emmanuel Macron and Mia Mottley, Prime Minister of Barbados, will take place in Paris. This Summit will be a success for climate if it enables us to spend more on the climate transition, to spend better, and if it influences the ongoing reform of international development financing.

National budgets, as the main driver of public action, need to be ‘greened’ by governments to achieve the transition to low-carbon, climate-resilient, and sustainable economies. That is, budgeting processes need to ensure sufficient funds are directed towards green activities and are directed away from environmentally harmful ones.

This blog-post is conducted by [i4ce] and IDDRI. The international community recognizes that the global development finance architecture is no longer fit for purpose. The World Bank, the IMF, and other institutions of the broader development finance system are today asked to invest more in global goods (specifically to fight against climate change and to preserve biodiversity, but their internal structure and the paradigms on which they ground their decisions have not changed since they were created with development – poverty and macroeconomic stability notably – as their main mandate. In this context, it should be no surprise that the response of these international institutions remains inadequate in terms of volume, structure and accessibility. 

Emmanuel Macron certainly made a mistake in calling for a European “regulatory pause” on the environment. In the same speech, he however expressed a truth that is essential to the debate: “Europe and France risk being the best-in-class in terms of regulation, and the worst-in-class in terms of financing”. It went unnoticed but, as highlighted in this I4CE newsletter, the time has come for a debate on how the EU can better finance the climate transition. And there is no time like the present! In precisely one year, on June 9th 2024, hundreds of millions of Europeans will vote for a new European Parliament, that will in term elect a new European Commission that will negotiate the future EU budget.

How much should France invest in climate action ? Experts from diverse backgrounds have sought to answer this important and seemingly simple question. They agree that France needs to invest more to reduce its greenhouse gas emissions. But they differ on the scale of public and private funding needs, which range from €20 to €100 billion a year. Is this a cause for concern? Not really, because the experts are not counting the same thing. These differences can be explained and should not be used as an excuse for inaction.

How does the government plan to finance the increase in its public spending on climate action? Further to the government’s reactions to the Pisani-Ferry report, which proposes using all options, including debt and tax increases, let us make an assumption: what if the government were to rely solely on budget saving options? I4CE's Damien Demailly reviews the savings options available to the government. Clearly, they are all difficult to implement and some may prove counterproductive. They are nevertheless on the government’s agenda and are worth explaining and discussing, as are all options to finance the transition.

Let’s cut to the chase. Emmanuel Macron was wrong to drop a rhetorical bomb on Thursday, 11 May, when he called for a “regulatory pause” in environmental legislation. And that was a real shame because shortly after doing so, he said something important that went unnoticed by the analysts: Europe and France risk “being the best performers in terms of regulation, and the worst performers in terms of financing”.

Local authorities have a major role to play in achieving France’s 2050 carbon neutrality objectives, as set out in the National Low-Carbon Strategy (Stratégie Nationale Bas Carbone, SNBC). Due to their assets and areas of expertise, local authorities must make numerous climate investments, implement strategies and action plans, and take measures to encourage stakeholders within their territories. This study aims to estimate the cost of such climate action for local authorities. 

Faced with international competition exacerbated by the US Inflation Reduction Act, Team Europe (and longtime team member, France) is preparing its response. The team’s tactics tackle two challenges: greening existing industrial sectors such as steel or cement, and industrialising the production of green goods, particularly those cleantechs that will make the transition a reality, such as heat pumps or electrolysers. To meet the first challenge, the French government has put 5 to 10 billion euros of public money on the table to decarbonise the most polluting production sites, in return for private investment. But has the extent of the industrial investment needs been properly assessed?

Industry: relocation and decarbonisation at the heart of the debate. The recent succession of crises (health, energy, geopolitical) and increased international competition have prompted France to look for ways to strengthen its industrial and energy sovereignty. It faces this challenge in addition to the challenge of decarbonising its industry. In this context, France and Europe are developing industrial policies with two objectives – relocation and decarbonisation – and with new tools such as the France 2030 plan and the Net Zero Industry Act at the European level. These policies target both ‘historical’ industries, such as steel and cement, and new clean technologies, from solar to batteries.

As the world enters a new era of cleantech competition, policymakers must confront two key policy questions - regulation and investment. The Net Zero Industry Act is Europe’s response to the former. Yet key concerns around permitting, sectoral targets and the scope of the Act will need to be addressed if it is to be effective, argue Thomas Pellerin-Carlin and Ciarán Humphreys in this blog post.

This is it. In a few days, thousands of people from around the world will be gathering in Washington to look back on the latest achievements and discuss the future of the World Bank and the International Monetary Fund – the two institutions that structure international cooperation for development. But this isn’t just one of a series of biannual get-togethers. These Spring Meetings will be the last for future ex-President of the World Bank David Malpass, who is leaving at what might be a turning point for the institution’s history. The expectations are high: this is the moment where the World Bank’s shareholders will confirm their vision and ambition for the institution by officially including climate in its global mission

After years of waiting, the World Bank finally approved and released its alignment approach with the mitigation and adaptation goals of the Paris Agreement. Presented by the World Bank as “the most comprehensive institutional undertaking ever done by the Bank Group to reconcile development and climate”, this alignment approach is an important step towards the reform of the World Bank currently under discussion. But this approach won’t be sufficient, argue Alice Pauthier and Sarah Bendahou in this blog post. It could be more ambitious.  

The “abatement cost” has emerged as a key tool to steer the decarbonisation of the economy, to reduce its cost, and to assess the efficiency of a technology, an investment or a public policy. This tool nevertheless has numerous limitations, and must therefore be used with caution. Find out more in this I4CE interview with Stéphane Hallegatte, Senior Climate Change Advisor at the World Bank, who has published several academic articles on this subject.

Elections of the European Parliament are coming up in June 2024 and will be followed by the renewal of the Commission. Hence, there are only a few months left to finalize the implementation of the renewed sustainable finance strategy adopted in 2021. This strategy aims, among other things, to increase the contribution of the financial sector to sustainability. It seems too early to already draw conclusions on how the Commission delivered on its objectives as some key legislative and supervisory processes are still under way. This newsletter focusses on some of these ongoing processes that receive quite some attention in the public debate

Since their introduction, climate stress tests have taken a lot of space in the public debate. Put in the spotlight by supervisors and the NGFS, their primary objective is to encourage banks to integrate climate-related risks into their activities and to carry out an initial assessment of the banks' capacity to deal with these risks.

Negotiations are under way on the Corporate Sustainability Due Diligence Directive, commonly known as the "CSDDD". Regarding climate, an obligation of climate transition plan for companies is discussed. But let’s keep careful on this point. Europe is in the process of developing climate transition plan requirements in two other directives on corporate sustainability reporting (CSRD) and on prudential requirements for banks (CRD). We must therefore ensure that the discussions result in a final version of the CSDDD that is consistent with these other texts and at the same time complementary.

This week, for the International Day of Forests, I4CE offers you an overview of the forestry issues that are being debated in France and in Brussels. In our newsletter, you will discover a new blog post by Julia Grimault on European carbon certification and our latest analyses on the adaptation of French forests to climate change, the French carbon sink and the wood industry. 

The future European carbon certification framework is under intense debate. The first meeting of the expert group in charge of supporting the Commission has raised criticisms on the composition and mandate of this group, and the discussions have taken an unexpected turn by achieving the feat of bringing NGOs and CO2 Capture and Storage (CCS) industrialists to an agreement against natural carbon sinks, those of our forests or our agricultural soils. Where does this unlikely alliance come from?