PTo accelerate the energy transition, an excellent way is to increase the cost of fossil fuels relative to their carbon-free substitutes. In other words, to tax CO₂ emissions. Such an increase, however, poses a problem of equity due to the vulnerability of a large part of society. In France, for example, there are more than five million households experiencing energy poverty.
When the carbon tax was implemented in 2014, the experts’ recommendation was to allocate one third of the expected revenue to low-income households, in the form of a lump sum income. Successive governments have not followed this recommendation. In the absence of redistribution of revenue, the carbon tax therefore acted as an anti-redistributor, which led to its freezing in 2018, under the blows of the “yellow vest” movement.
By not putting in place a redistributive instrument countering inequalities in the face of the rising cost of fossil fuels, the public authorities have given up on following the trajectory of increasing the carbon tax even though it is included in the law. They also deprived themselves of an instrument that could have been activated during the rise in the price of fossil energy caused a few years later by international tensions and the war in Ukraine. They then put in place the famous “tariff shields”.
Established at the end of 2021 by the Castex government for gas, the tariff shield was then extended to other energies. It made it possible to limit the loss of purchasing power of French people captive to individual means of transport and methods of heating using fossil energy sources. But, by limiting the price of fossil fuels for everyone, regardless of income or geographic location, the signal sent by the State with the tariff shield has been counterproductive in climate matters. It has sharply increased subsidies for fossil fuels, discouraging behavioral changes to aim for carbon neutrality. We have done social work to the detriment of ecology.
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The system also cost the public treasury around 100 billion euros in two years. It has favored the deterioration of the trade balance – deficit doubled between 2021 and 2022 – due to the increase in the cost of fossil fuel imports. On the macroeconomic level, the tariff shield has certainly made it possible to stabilize household demand, but has had unfortunate implications on public accounts and the balance of payments, at a time when the ecological transition would, on the contrary, involve freeing up additional financing capacities. for investment and industrial and professional reconversions.
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