Ihe debate on the financing of climate action is now underway. It only relates secondarily to the amounts at stake. What is in question are first of all the drivers of the coming transformation, the nature of the public support and the conditions for financing the public expenditure that will be devoted to the climate transition.
No one doubts anymore that the greening of the economy will have the character of an industrial revolution. But, unlike those of the past, this revolution will be guided by public policies. It does not matter, in fact, whether these come through carbon pricing, subsidies or regulation.
Initially, in any case, the event triggering the investments will be a public intervention. Eventually, the green economy will perhaps prove more effective than the brown economy and will end up, in certain areas, imposing itself in the absence of any public policy. This is even what we must aim for: decarbonization will only be irreversible when it is no longer dependent on public support.
But we are not there yet: even if renewable electricity is becoming less expensive than fossil electricity, this is still not true if we reason in full cost, taking into account the need , to compensate for intermittency, to double renewable capacity with fossil capacity. As long as this handicap has not been eliminated, public action will remain indispensable.
Compatibility issues
This action can, of course, take several forms. As confirmed by a conference of the Peterson Institute in Washington on June 5 and 6, the approaches differ considerably between Europe, which relies on carbon regulation and pricing, and the United States, which plays mainly on subsidies. This also poses formidable problems of compatibility between these strategies.
The European case is also distinguished by the pace of the transformation undertaken: to achieve carbon neutrality by 2050, France and the other EU countries have set themselves the objectives of eliminating fuel-based heating, accelerating the exit gas, to renovate thermal sieves, to hasten the transition to renewables, to push the electrification of the car fleet and to decarbonize the manufacturing industry. Such vigorous action is inconceivable without significant budgetary support.
The French Minister of the Economy, Bruno Le Maire, plans to direct savings towards the financing of the transition. This is an excellent idea: wherever a financial initiative can replace the budgetary effort, it should be used. But the Livret A rate is now 3%, compared to 2.7% for new mortgages, according to the last digits of the Bank of France. It is an expensive resource. Unless there are very substantial bonuses (and therefore a high budgetary cost), the reorientation of savings will not be enough to trigger the required investments.
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