Green Budgeting Virtual Meeting - 5 October 2020

1. Green Budgeting in France
October 2020
Benjamin Carantino
Directorate General of the Treasury
Under-directorate of sectorial policies
Ministry of Economy, Finance and Recovery

2. • France committed to ambitious climate and environmental goals
 National commitments :
- carbon neutrality by 2050 in the 2019 Energy Climate Law
- carbon budgets to reach – 30% emissions in 2030 in the
Stratégie Nationale Bas Carbone
 European Union objectives :
- carbon neutrality in 2050 by European Council of December 2019
- proposal to raise the 2030 target at -55% through the EU Climate Law
 Biodiversity : UN Convention on Biological Diversity (CBD) – calls for an ambitious global
post 2020 framework
 International, European and national commitments on circular economy, water
management, pollution reduction, ecosystems preservation
 Is fiscal policy consistent with these goals ?
October 2020
Is fiscal policy consistent with climate commitments ?

3. • Commitment in December 2017
• France engages into Paris Collaborative on Green Budgeting
• First steps in 2019
• April : the Climate Cabinet launches joint methodological works by audit bodies of Finance and Ecological
Transition ministries
• June : Energy and Climate Law requests a report to Parliament on the positive and negative incidence of
the budget bill on climate change
• Prototype in September 2019 : issue of a public methodological report
• Classification of government expenses with respect to their alignment with six environmental objective
• A preliminary report on the budget bill for 2019 implementing this method, on a subset of the budget bill
• Inter-departmental works on a comprehensive Green Budget
• The methodology is submitted to a consultation with academics and civil society
• All government expenses in the 2021 draft budget bill to be assessed
• Treasury, Budget, Directorate of Fiscal Legislation and Ministry for Ecological Transition working together
 October 2020 : the first comprehensive Green Budget
October 2020
Steps towards a green budget

4. Methodological Contributions

5. • Assess whether an expense is favourable or unfavourable to the environment
• Assess both investment and operation expenditures
Along the six objectives of the European taxonomy regulation
A novel methodology
Climate
Change
mitigation
Climate
Change
Adaptation
Water
resources
management
Circular
economy and
risk
prevention
Pollution
abatement
Biodiversity
and
sustainable
land use
October 2020

6. Scoring government expenses for each objective
Very favourable : environmentally targeted expenses
Favourable : no explicit environmental target, but indirect positive impact
Favourable but controversial : short term favourable effects but presence
of a long term technology lock-in risk
Neutral : no significant impact or no information
Unfavourable : environmentally harmful expenses
3
2
1
0
-1
October 2020
FAVOURABLE

7. An assessment
of the recovery plan

8. October 2020
How green budgeting can support a green recovery ?
• Green budgeting has been part of the recovery plan decision process
• An efficient tool for decision-making on environmental and climate policy
• As soon as the global macroeconomic design was decided, a first draft classification
of planned expenses has been carried out
• Allows a precise management of environment-compatible expenses
• French recovery plan has a objective of € 30 bn dedicated toward the transition
• Allows to identify harmful expenditures
• Useful tool to get other ministries take into account the ecological constraint

9. November 2019
32€bn in favour of the green recovery
27%
5%
0%
68%
Green expenses in the recovery plan
Dépenses favorables
Dépenses favorables ayant un impact
défavorable par ailleurs
Dépenses défavorables
Dépenses neutres
• 32€bn are favourable to
at least one of the 6
objectives
• 30€bn exhibit cobenefits
on many objectives
• 5€bn have ambiguous
effects depending on the
objectives
• Majority is green
• E.g. rail infrastructure

10. November 2019
An effort on housing renewal, transport and innovation
• 7€bn are directed towards thermal renewal
• Favourable on climate objectives
• Structuring an industry for thermal renewal
• 8.5€bn are invested in green mobility
• Rail investments: positive on climate axis,
negative on biodiversity
• Car renewal : positive on pollution axis
• 9,6€bn in green innovation
• Hydrogen development
• Lead markets in ecological transition

11. An assessment
of the budget bill for 2021

12. A preliminary assessment of favourable
and unfavourable expenses
Multidimensional monitoring
• Objective-specific totals
• At least once favourable
expenses
• Once favourable without
harming other objectives
• At least once unfavourable
expenses
• Unfavourable without being
favourable to other
objectives
29,4 Md€
10,9 Md€
4,6 Md€
485,5 Md€
Favorable
Défavorable
Mixte
Neutre

13. November 2019
The importance of harmul tax rebates
0
5
10
15
20
25
30
Favorable Mixte Défavorable
Milliards
Budgetary expenses
0
1
2
3
4
5
6
7
8
Favorable Mixte Défavorable
Milliards
Tax rebates

14. • The sole analysis of the budget bill is not sufficient to evaluate the compliance
of national policy with international climate and environment commitments
• Environmental regulations are not included in the scope of the budget bill
• To fulfil the ecological transition, not only government expenses, but also local
authorities and the private sector expenses must be made compatible with
environmental and climate commitments
• The green budget does not evaluate the efficiency of environmental expenses, only
their expected impacts
• International comparison may not be feasible
• Counterfactual scenarii are very technology-dependant
• Scoring must be regularly revised with impact evaluation progresses
• Expenses granularity in the Budget Bill can vary across countries
November 2019
Limits of this approach

15. • It constitutes
• A novel methodological contribution
• A commitment to transparency on climate and environmental action
• A way of mainstreaming climate action in national budget and planning processes
In the longer term, this work will contribute to an internationally benchmarked
method through the OECD’s Paris Collaborative on Green Budgeting
November 2019
Conclusion

16. www.tresor.economie.gouv.fr
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