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13 billion euros by 2030: the very steep bill for the energy transition for the State

Public finance alert.

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13 billion euros by 2030: the very steep bill for the energy transition for the State

Public finance alert. The energy transition will cause a loss of no less than 13 billion euros in state revenue by 2030, and up to 30 billion by 2050, estimates the General Directorate of the Treasury. The administration has calculated for the first time the shortfall in fuel taxes in the years to come.

Taxation on fuels brought in 41.5 billion euros to the public accounts in 2022, according to estimates from the Ministry of the Economy, notably through the internal consumption tax on energy products (TICPE) and value added tax (VAT). The exit from fossil fuels implies a reduction in taxes on these energies: with unchanged taxation, they could erode “by 13 billion euros by 2030 and 30 billion euros by 2050”, estimates the Treasury in a report intermediary of the study on “the economic issues of the transition to carbon neutrality” which he will publish in 2024.

This document is published on the occasion of the Bercy Meetings devoted, Tuesday, to the theme “Growth and climate”. These figures are part of the scenario of global warming limited to 1.5°C, for which France and the European Union have made commitments to reduce their net greenhouse gas emissions by 55% in 2030 compared to 1990, and carbon neutrality in 2050.

The report observes that the Scandinavian countries, whose electrification of the vehicle fleet began earlier, are already facing this phenomenon of revenue erosion, and that "several European countries are responding by mobilizing more other sources of revenue within of the road sector” such as urban tolls or the reduction of subsidies for electric vehicles as their purchase price falls. Avenues that could be considered in France to deal with deadweight losses linked to the energy transition.

Furthermore, the report estimates that an additional 110 billion euros per year (gross, compared to 2021) in private and public investments will be necessary for decarbonization projects. It does not yet have an estimate for 2050. At the same time, investments unfavorable to the climate could be reduced, by 37 billion per year in 2030 for example, thanks to the rise in electric vehicles and efforts towards sobriety.

Despite these costs, the Treasury management recalls “that in the long term, the transition will be beneficial to the economy and well-being” compared to the status quo, and it very strongly encourages strong anticipation of the measures to be taken.

The Bercy meetings will bring together several ministers on Tuesday at the Ministry of the Economy and Finance, Bruno Le Maire (Economy), Agnès Pannier-Runacher (Energy Transition) and Christophe Béchu (Ecological Transition) with experts such as Bill Gates, co-president of the Bill and Melinda Gates Foundation, or Jean Pisani-Ferry, co-author of a report in the spring on “the economic impacts of climate action”.

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