Ecological transition: “France will have to devote 22 billion euros more to it every year than in 2021”

VSHow much should be invested for climate? Experts from different fields tried to answer this important and seemingly simple question. They agree that more investment, both public and private, is needed to reduce carbon emissions. But they differ in the size of the amount, which ranges from 20 to 100 billion euros per year. Should we be concerned about this discrepancy?

The question is important because it prompts two debates. The first concerns the scale of government spending. State and local governments will need to invest in public buildings and infrastructure, but also help households and businesses finance their own investments. The second debate is macroeconomic: if we need to invest more, that means producing more and saving more while consuming less, or turning to foreign capital – which will affect growth, employment and prices.

Every year, for almost ten years, the Institute for Climate Economics (I4CE) compiles an overview of climate investments in France and assesses the needs for the coming years. We estimate that to implement the government’s national low-carbon strategy, France will need to allocate €22 billion more annually to climate investments compared to the level achieved in 2021.

Other experts estimate the needs at 30, 50 or 100 billion euros per year. And the report presented to the Prime Minister by Jean Pisani-Ferri and Selma Mahfouz on Monday, May 22, puts the annual needs at €65 billion.

One might think that the differences between these figures are due to the preference of some experts for nuclear and others for renewable energy, or the amount of work they think is necessary in the building, or the number of electric cars that need to be deployed. But all of these indicators are more or less based on the same targets set out in the current National Low Carbon Strategy, which was published in 2020 and is currently being revised.

Explain the differences

Why are these estimates so different? First, because the reference level (the starting level for measuring “additional” climate investments) can vary. The I4CE estimate refers to the latest known level, which is 2021. We believe that this is the right approach to the budget issue, because each new budget is drawn up taking into account recent expenditures.