Financing the climate transition in France: what room for manoeuvre on public funding needs?

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? In this report, we analyse the options for allocating public and private funding to achieve France's climate investment targets identified in the Landscape of Climate Finance in France, on the basis of the draft national low-carbon strategy (SNBC) currently under review. Private finance cannot be summoned by decree. Today, households and businesses often lack a viable economic model for their climate investments. And what the private sector cannot do, the public sector will have to fund. Thus, in the face of the climate investment deficit and without action to limit spending, the need for additional public spending would reach Euros 71 billion in 2030. However, this funding need can be reduced by deploying a variety of measures: tightening regulations, eliminating certain tax provisions, refocusing aid on the lowest-income beneficiaries, but also increasing energy saving certificates (CEE) or user service charges. Combining all these measures, which shift the burden of financing onto households and businesses, the minimum additional public spending required is Euros 39 billion, of which Euros 18 billion is for the State. At this lower level, the public funding need is restricted to public facilities, such as administrative and school buildings and transport infrastructures