Deep Dive on the Climate Transition for France: Macroeconomic Implications, Fiscal Policies, and Financial Risks

Climate change presents an unprecedented long-term challenge to the French and global economy. While France has made significant progress towards reducing greenhouse gas emissions, important additional policy efforts will be needed to meet key mitigation targets.
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Volume/Issue: Volume 2024 Issue 033
Publication date: August 2024
ISBN: 9798400286964
$15.00
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Topics covered in this book

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Environmental Economics , Environmental Conservation and Protection , Public Policy- Environmental Policy , Climate Transition , Climate fiscal policies , Financial transition risks , policy option , climate transition risk , reform option , EU climate policy , transportation revenue , Greenhouse gas emissions , Global , Europe

Summary

Climate change presents an unprecedented long-term challenge to the French and global economy. While France has made significant progress towards reducing greenhouse gas emissions, important additional policy efforts will be needed to meet key mitigation targets. Decarbonization costs and risks can be significant, highlighting the need to identify efficient and equitable fiscal and regulatory policy options to meet emission goals. To accelerate the green transition and mitigate its costs, France has increasingly relied on green spending measures, which could be complemented by higher carbon pricing and other revenue-neutral schemes. Recycling of revenues via cash transfers could offset the price impact on lower-income households. Over the medium term, new measures for road transportation, such as distance-based charges, could also be considered. Ensuring a timely and orderly climate transition will be critical to mitigate the credit risk impact on banks. French banks should also continue to mitigate climate transition risks by integrating them into their governance, strategy, and risk management processes.