Lhe financing of the climate transition is at an impasse. On the one hand, European Union (EU) member states must make the necessary investments to meet their carbon emissions reduction targets and achieve net zero by 2050 – these investments are massive, not necessarily profitable and oscillate around 400 billion euros per year for the entire EU. On the other hand, they are constrained by European budgetary rules, recently tightened, and the economic situation, which limit their debt and financing capacities, without forgetting the new geopolitical risks modifying their priorities.
Caught in this vice, governments have so far preferred to abandon climate ambitions and favor budgetary sustainability, industrial sovereignty and defense. In France, the reduction of 2.1 billion euros on the 2024 credits devoted to ecology as part of the cancellation decree aimed at meeting our budgetary objectives constitutes the most striking illustration of this.
To get out of this impasse, it is urgent to open the discussion on a European budgetary capacity dedicated to accelerating the climate transition. It could take the form of a European climate fund, which would both ensure financing of the transition and share the transition effort between States. This fund, initially estimated at 65 billion euros annually, would answer three main questions.
The first is that of sharing the cost of the transition between European and national scale. This fund could cover expenditure relating to a European common good: today the climate, tomorrow defense or industrial sovereignty. This reflection was initiated with the creation in 2020 of NextGeneration EU, a program of nearly 800 billion euros already intended to finance the fight against climate change, digital technology or more recently aid to Ukraine. In addition to its diluted nature between multiple objectives, it is intended to expire in 2026.
Joint financing
The second is that of financing this bill, and its distribution between European countries. This fund could in fact be financed both by new own resources (like the proposal of the economist Gabriel Zucman to set up a European wealth tax), and by the payment of capital by Member States, which must therefore be distributed. We propose that this fund be financed according to a distribution key weighted by two criteria: budgetary capacities and historical greenhouse gas emissions.
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