French President Emmanuel Macron was wrong to call for a regulatory pause in environmental legislation last month. Benoît Leguet explains why.
Benoît Leguet is the executive director of I4CE, the Institute for Climate Economics. I4CE is a non-profit research organisation that provides independent policy analysis on climate change mitigation and adaptation.
Let’s cut to the chase. Emmanuel Macron was wrong to drop a rhetorical bomb on Thursday, 11 May, when he called for a “regulatory pause” in environmental legislation.
And that was a real shame because shortly after doing so, he said something important that went unnoticed by the analysts: Europe and France risk “being the best performers in terms of regulation, and the worst performers in terms of financing”.
After four years of EU votes and decisions on its Green Deal, Europe can now be regarded as the world’s best-performing political entity in climate regulation. This achievement nevertheless remains insufficient to comply with the Paris Agreement, and several EU negotiations are already underway that must be finalised to provide regulatory visibility and enable public actors – States and local authorities – and private ones – businesses and households – to invest without fear in the transition. However, with a year to go before the EU elections, there will, in fact, be a kind of “regulatory pause”.
Long-term public funding will be needed to support the implementation of these regulations, which aim to radically transform the economy in 25 years and achieve carbon neutrality. And, at the same time, to adapt to changes in the climate that are already underway. Buildings, transport, regional planning, agriculture, industry… we will need to invest in our public infrastructure and provide financial assistance to businesses and households, especially the most vulnerable.
And yes, there is a risk of being the worst performer in terms of financing. The EU has no European investment plan, no European strategy for financing the transition capable of giving visibility to all actors, and there is no organised and systematic response to the actions of other powers, particularly the Inflation Reduction Act of the US.
Essentially, we would have preferred the president to have said: “Due to the incredible regulatory work carried out at the European level over the past four years, we are now the world’s best-performing regulators when it comes to climate protection. And over the next five years, we need to become the best performers by making progress on financing the transition.”
With a speech along these lines, rather than focusing attention on a regulatory pause, discussions on transition financing could have been launched, raising two essential questions:
Firstly, what must France advocate to ensure the EU adopts a climate investment plan? This plan should start in 2024, with the next Commission. What coalitions should we build, with which Member States and which MEPs?
Secondly, what can France do to set the example? In 2022, the president, then a candidate, promised an extra €10 billion annually in the national budget to finance the transition. In the initial Finance Act for 2023, there is only an additional €3.5 billion. For the moment, there is no multi-year visibility for this state funding.
France can lead the way by immediately implementing the transition financing plan outlined during the presidential campaign. And by scheduling the necessary public funding over time.