“The transition to carbon neutrality will have positive but relatively modest long-term economic effects”

QWhat impact will the transition to carbon neutrality have on the growth and economic dynamics of our country? Are there several ways to achieve this? To answer these questions, Ademe has simulated the macroeconomic effects of the four “Transition(s) 2050” scenarios it has designed. These combine, in varying proportions, the use of low-carbon energies, sobriety and technical progress, to achieve carbon neutrality by the middle of the century. Several lessons can be drawn from this.

First: financing needs strongly depend on the chosen transition scenarios. Organized sobriety requires significantly less investment than the pursuit of a growth objective for all economic activities, combined with the development of still uncertain carbon capture and storage technologies. The additional investments required for the transition could be relatively modest, as most of them will initially displace “brown” investments. Transition or not, households and businesses will continue to invest to replace their cars, boilers or production equipment.

While the overall amount of investment should remain stable on an annual average by 2050, the share of climate-friendly investments should double to reach 85 billion euros annually by 2050, in the most favorable scenario. sober, and 133 billion in the one that excludes any form of sobriety.

They will first be carried by households (electric vehicles, energy renovation), then by companies (renewable energies, renovation of tertiary buildings, energy efficiency in industry, public transport) and finally by the public sector (insulation of buildings utilities, renewable heating networks, public transport and charging stations, etc.). The transition should therefore not trigger any major stress on the capital markets. However, an accommodating monetary policy is necessary.

Decoupling between GDP and CO2

Second lesson: if the public share of carbon-free investments remains low, the State will necessarily have to pay significant public aid to trigger private investment, from 10 to 15 billion euros per year on average by 2050 depending on the scenarios.

Millions of households do not have the possibility of using bank credit to finance renovation work or buy a new vehicle. Many companies are experiencing problems accessing finance. In the absence of a high carbon price, industry needs subsidies to achieve its decarbonization goals. Public spending will therefore have to increase.

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