The massive investments needed for climate transition will slow growth and increase public debt, according to a report published Monday by France Strategy, which plans to tax the financial assets of the wealthiest households. This report, commissioned by Elisabeth Borne from economist Jean Pisani-Ferry, is published as the head of government presents her plan on Monday to accelerate the reduction of greenhouse gas emissions in France by 2030.

The document points out that decarbonization will be 85% based “on capital substitution for fossil fuels”, whether to create networks of charging stations, insulate buildings or build new nuclear power plants, and only around 15% on sobriety efforts, such as lowering the temperature of heated rooms or moving around less.

“To achieve our 2030 objectives” of a 55% reduction in emissions compared to 1990 “and thus aim for neutrality by 2050, we will have to do in ten years what we have struggled to do in 30 years” , underlines the report, according to which “despite recent progress, we are not yet on the trajectory of climate neutrality”. Thus “decarbonization will call for additional investment” of 66 billion euros per year, reports Inspector General of Finance Selma Mahfouz in the document. The coming years are described as a “decade of all difficulties”, with massive needs to finance new mobility, green industry or the insulation of buildings, or even to compensate for the collapse of the French forest carbon sink. However, the investments needed to limit global warming will not make it possible to produce more or more efficiently. On the contrary, they will initially lead to a slowdown in growth.

While “the transition is spontaneously unequal”, its economic cost “will only be politically and socially accepted if it is equitably distributed”. Indeed, “even for the middle classes, renovation of housing and change of the heating vector on the one hand, acquisition of an electric vehicle instead of a thermal vehicle on the other hand call for an investment of the order of a year’s income,” the authors calculated. Today, the additional cost of buying an electric car is not taken into account in national accounts, because it is classified as a new product and different from the car with a thermal engine, they note in passing. To support households and businesses in the face of investment needs and the inflationary effects of the transition, “public finances will be called upon to contribute substantially to the effort”, and therefore to increase the indebtedness of the State. The risk that the energy transition poses to public debt “is around 10 points of GDP in 2030 (i.e. at least 280 billion euros), 15 points in 2035, 25 points in 2040”, according to the report which judges however that it “is useless to delay the efforts in the name of the control of the public debt”. “This debt is legitimate,” said Jean Pisani-Ferry during a presentation to the press.

Delaying investments would only increase the effort that France will have to provide thereafter, to achieve the climate objectives. “An increase in compulsory levies will probably be necessary”, according to the authors who believe that this increase “could be based on the financial assets of the wealthiest households”. While the report considers that the ideas of an individual quota for air travel, popularized by Jean-Marc Jancovici, or of individual carbon accounts “are far from being directly applicable”, it considers that “the question of the fair sharing of sacrifices is also essential than that posed, in its time, by everyone’s participation in the defense of the national territory”. Finally, facing China and the United States, the European Union suffers from a “serious problem of competitiveness” because of the high price of its energy and which will not be solved by the carbon tax at the borders, which remains ” an imperfect device.