“France will have to devote 22 billion euros more to it each year than in 2021”

2023-05-26 11:30:09

Cow much should be invested for the climate? Experts from various backgrounds have sought to answer this important and seemingly quite simple question. They agree that, both public and private, more investment is needed to reduce carbon emissions. But they differ on the magnitude of the amount, which ranges from 20 to 100 billion euros per year. Should we be worried about this discrepancy?

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The question is important because it fuels two debates. The first concerns the scale of public expenditure. The State and local authorities will have 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, this implies producing more and saving more while consuming less, or resorting to foreign capital – which will affect growth, employment and the level prices.

Every year for almost ten years, the Institute of Climate Economics (I4CE) has drawn up an overview of climate investments in France, and assesses needs for the years to come. We estimate that, to implement the government’s national low-carbon strategy, France will have to devote 22 billion euros more each year to climate investments compared to the level reached in 2021.

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

One might think that what distinguishes these figures is the preference of some experts for nuclear, others for renewables, or the extent of the work they consider necessary to carry out in the building, or the number of electric vehicles that they consider necessary to deploy. But all these figures are based, more or less, on the same objectives, those of the current National Low Carbon Strategy, published in 2020 and currently being revised.

Explain the differences

So why are these estimates so different? First, because the reference level (the starting level for measuring “additional” climate investments) may differ. The I4CE estimate refers to the most recent known level, which is the year 2021. We believe this is the right approach to approach the budgetary question, as each new budget is drawn up on the basis of recent expenditure.

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