Publications

Climate action is a rich stew with many ingredients. From transport to agriculture, construction to forestry, every part supports the whole. The stew would be incomplete without one crucial but rare addition: public investment. Chefs d’état in Paris and Brussels are currently scratching their heads on how best to add this ingredient to the pot. Two hurdles face them: how to invest enough, and how to guarantee that investment over the long term.  In this newsletter, we have translated some of I4CE's analysis to better understand what's going on in the French kitchen, complemented with a dash of a European cleantech investment plan.

Time to take stock, 4 years after the first experiments   Report only available in French   A momentum for green budgeting is gaining ground within local authorities: In the space of four years, around a hundred of them have embarked on the green budgeting process or have plans to do so. This includes nearly […]

The EU’s Strategic Technologies for Europe Platform (STEP) is an important boost towards unlocking future cleantech public finance. In this blog, Ciarán Humphreys argues that Member States should get behind a European solution.

Climate change and ecological planning are taking centre stage in this autumn’s budgetary measures. The public finance programming act, which has yet to be discussed with the Senate, now requires the government to set out a multi-year funding strategy for planning. The finance bill for 2024, which will go through Parliament soon, earmarks an additional €7 billion in transition support for households, businesses and local authorities. This €7 billion does not, however, resolve the issue of financing the climate transition, and in this post we provide an overview of the key climate debates that will take place, or ought to take place according to I4CE, during this veritable marathon budget.

The financing strategy, an essential element of ecological planning, has previously been set out annually in the finance bill. From now on, the government will be drawing up a multi-year strategy that will give both the State and the private sector a clear view of the future. This was long overdue.

As stated by the European Commission there is a “lack of preparedness and [a] disproportion between the climate threats and response mechanisms and structures in place”. One of the key factors in speeding up the implementation of adaptation actions will be the definition, in particular by public authorities, of « clear adaptation pathways setting up the process of how to achieve them through the sequence of options and actions ». The cost of these trajectories will also need to be quantified, to ensure that the human and financial resources are available for implementation.  For the time being, this work of defining adaptation trajectories is generally lacking, whatever the sector or scale. And the means to be deployed for adaptation are therefore unknown.

I4CE produit des expertises innovantes afin d’informer les débats sur les politiques publiques pour la transition climatique. Mais nous ne faisons pas qu’écrire des rapports, nous voulons avoir de l’impact. Nous allons au contact des décideurs, des médias, des parties prenantes pour apprendre d’eux et faire que ces politiques progressent, concrètement. Nous vous invitons, en parcourant notre rapport d’activité, à découvrir les débats qui intéressent I4CE, les changements majeurs de politique publique des douze derniers mois et comment nous y avons contribués.

Psychologists sometimes talk about the five stages of grief: denial, anger, bargaining, depression, and acceptance. One year on from the announcement of the US Inflation Reduction Act (IRA), the European response has looked startlingly similar. Public anger in Brussels at perceived American protectionism. Private sector depression at the prospect of Europe falling behind in the global cleantech race. Denial of the gap between the EU and US efforts, by arguing that that all EU and national spending on cleantech amounts to a conservative estimate of what the IRA offers (while not factoring in the full range of US support). 

The European Union (EU) Innovation Fund is Europe’s largest fund for climate innovation. It has a keyrole to play in European climate action, energy security and technological leadership. To unleash the full potential of European cleantech, greater public support is needed to help more companies and projects cross the so-called “valleys of death” that are inherent to cleantech innovation and scale-up. In this endeavour, relying solely on national public funds would create two risks. In countries where governments do not rise to the financing challenge, innovators will fail or flee. Conversely, governments with the fiscal means to spend big on cleantech may create a harmful subsidy race among EU member states, undermining EU solidarity and the integrity of the EU Single Market.

We are coming to the end of this Commission's mandate, time to think about the future of EU climate action. France and Germany called for a EU Green industrial policy last year but since then they have not yet show EU leadership. An EU policy needs to get 3 design elements right: Vision, Funding and Governance. In this OpEd, Stiftung KlimaWirtschaft and I4CE call for France and Germany to come together in leadership and, ahead of the EU elections, call for a European response to the great challenge of the 21st century.

The reform for a new global financing pact - as it was ambitiously designated by the French President Emmanuel Macron - allows little time for rest, combining several agendas that collectively seek to rethink how the Global South can finance its low-emission development pathways, with support from the Global North. The sequence of international events that starts this week with the Finance in common Summit, the African climate summit, G20 and followed by World Bank Group and International Monetary Fund’s Annual Meetings will be key to see if the multiple resolutions to reshape development finance outlined during the first semester of 2023 were merely wishful thinking or if they can be seen as the first bricks of a new international financial architecture. 

Sustainable development and climate change are two pressing and interconnected issues that countries have committed to address at the international level. The 2030 Agenda for Sustainable Development, with the 17 Sustainable Development Goals (SDGs) including climate action, at its core was adopted by the United Nations (UN) in 2015. The same year, the Paris Agreement was adopted by Parties of the UN Framework Convention on Climate Change. Both instruments have clear global and national targets in the medium- and long-term that are still far from being met.

The French decision to define a reference warming trajectory for adaptation to climate change (TRACC) is good news. There is an urgent need for public and private actors to examine the resilience of their investments and activities in a changing climate, including if the target of limiting global warming to below +2°C – a target that must remain a priority – is not met. Going beyond its inclusion in the PNACC (French national climate change adaptation plan) will nevertheless be essential to ensure actors rapidly take up this trajectory and to prevent a single euro more being spent on assets that are not adapted to climate change. The cross-cutting and normative scope of the TRACC now needs to be guaranteed by making it an inter-ministerial issue and putting it into legislation, then progressively tailoring the implementation requirements to the different actors and sectors concerned.

Twelve EU Member States have started implementing new budgetary processes to help align their public budgets with climate objectives. Green budget tagging, a prominent tool, can provide a clear picture of the share of a national budget that is aligned, or runs counter, with the national climate strategy. France publishes its annual green budget every year and now, for the first time in 2023, the government intends to use its data for the preparation of the draft budget law.

On 22nd and 23rd of June, the Summit for a new Global Financing Pact, initiated by Emmanuel Macron and Mia Mottley, Prime Minister of Barbados, will take place in Paris. This Summit will be a success for climate if it enables us to spend more on the climate transition, to spend better, and if it influences the ongoing reform of international development financing.

National budgets, as the main driver of public action, need to be ‘greened’ by governments to achieve the transition to low-carbon, climate-resilient, and sustainable economies. That is, budgeting processes need to ensure sufficient funds are directed towards green activities and are directed away from environmentally harmful ones.

This blog-post is conducted by [i4ce] and IDDRI. The international community recognizes that the global development finance architecture is no longer fit for purpose. The World Bank, the IMF, and other institutions of the broader development finance system are today asked to invest more in global goods (specifically to fight against climate change and to preserve biodiversity, but their internal structure and the paradigms on which they ground their decisions have not changed since they were created with development – poverty and macroeconomic stability notably – as their main mandate. In this context, it should be no surprise that the response of these international institutions remains inadequate in terms of volume, structure and accessibility. 

Emmanuel Macron certainly made a mistake in calling for a European “regulatory pause” on the environment. In the same speech, he however expressed a truth that is essential to the debate: “Europe and France risk being the best-in-class in terms of regulation, and the worst-in-class in terms of financing”. It went unnoticed but, as highlighted in this I4CE newsletter, the time has come for a debate on how the EU can better finance the climate transition. And there is no time like the present! In precisely one year, on June 9th 2024, hundreds of millions of Europeans will vote for a new European Parliament, that will in term elect a new European Commission that will negotiate the future EU budget.

How much should France invest in climate action ? Experts from diverse backgrounds have sought to answer this important and seemingly simple question. They agree that France needs to invest more to reduce its greenhouse gas emissions. But they differ on the scale of public and private funding needs, which range from €20 to €100 billion a year. Is this a cause for concern? Not really, because the experts are not counting the same thing. These differences can be explained and should not be used as an excuse for inaction.

How does the government plan to finance the increase in its public spending on climate action? Further to the government’s reactions to the Pisani-Ferry report, which proposes using all options, including debt and tax increases, let us make an assumption: what if the government were to rely solely on budget saving options? I4CE's Damien Demailly reviews the savings options available to the government. Clearly, they are all difficult to implement and some may prove counterproductive. They are nevertheless on the government’s agenda and are worth explaining and discussing, as are all options to finance the transition.