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Session 2 - France - Benjamin Carantino

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Green Budgeting Virtual Meeting - 5 October 2020

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Session 2 - France - Benjamin Carantino

  1. 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. 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. 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. 4. Methodological Contributions
  5. 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. 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. 7. An assessment of the recovery plan
  8. 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. 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. 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. 11. An assessment of the budget bill for 2021
  12. 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. 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. 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. 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. 16. www.tresor.economie.gouv.fr Pour plus d’information : www.tresor.economie.gouv.fr ©BercyPhoto Merci de votre attention !

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