Budget Bill 2024 : 4th edition of the Green Budget
As a forerunner in the field of green budgeting, France has published the 4th edition of the Report on the Environmental impact of the Central Government Budget, Green Budget, as an annex to the 2024 Budget Bill.
The Green Budget assesses the environmental impact of the State budget by identifying budgetary and tax expenditures that are favourable and unfavourable to the environment. Starting from this edition onwards, it additionally reports on the budgetary aspects of ecological planning. The 2024 Green Budget mirrors the unprecedented rise in resources allocated to ecological planning, with a €7 billion increase in payment appropriations, corresponding to €10 billion in commitments. The State's green budget is an essential tool in ensuring that France is on the path towards ecological transition.
In the 2024 Finance Bill, out of the total budgetary and fiscal expenditures in the State budget (€569.7bn), €39.7bn is considered to have a favourable impact on the environment (€38.6bn excluding the recovery plan), €3.1bn to have a mixed impact and €13.1bn to have an unfavourable impact. Expenditure with no significant impact on the environment amounts to €425.5bn, while 'untagged' expenditure (due to insufficient information on the end use of the funds or lack of scientific consensus on the environmental impact) accounts for €88.2bn.
Green and mixed spending thus significantly surpasses the environmental revenues allocated to the State budget, projected to amount to €26.4 billion in 2024.
Expenditures related to the levers of ecological planning are set to increase by €7bn in payment appropriations from 2023 to 2024. These expenses primarily encompass items deemed environmentally favourable within the Green Budget, alongside mixed expenditures (notably the construction of new transport infrastructure) or those beyond the scope of the State budget. This €7bn increase covers all sectors of activity to support the main drivers of ecological planning.
Buildings: €0.8bn in payment appropriations and an additional €2.1bn in commitments will be allocated to the retrofitting of buildings and housing. In all, nearly €5bn in commitments are planned for 2024 to help French citizens renovate their housing, and €0.7bn dedicated to energy-efficient renovation of public buildings.
Transport: A shift to low-carbon transportation remains a key priority in ecological planning. An additional €1.4bn in payment appropriations and €1.6bn in commitments will be mobilised to fund the Future of Transport Plan outlined by the Prime Minister on 24 February 2023. A total of €9.3bn is earmarked for the transport sector in 2024, with a particular focus on expanding the rail network and promoting greener vehicle fleets (cars, HGVs, bicycles, charging stations).
Natural resources: Additional funding will be allocated to the preservation of natural resources, with an increase of €1.2bn in payment appropriations and €2.1bn in commitments. This increase will focus on several areas, including the protection of biodiversity, as part of the National Biodiversity strategy, support for agricultural transition, particularly through the deployment of alternatives to phytopharmaceutical products (‘Ecophyto 2030 Plan’) and support for carbon diagnostics. Finally, funding will be directed towards forest protection and enhancing quantitative and qualitative water management with the ‘water plan’ implemented by the Water Agencies.
Energy: The energy transition will also receive additional resources, with an increase of €1.1bn in payment appropriations and €1.8bn in commitments. This funding will be primarily directed towards supporting the injection of biomethane and facilitating the energy transition in the French overseas territories.
Green competitiveness: +€1.7bn in payment appropriations and +€1.8bn in additional commitments will be devoted to green competitiveness initiatives. This includes +€1.5bn in green investments as part of the investment plan “France 2030”, and a further €0.3bn in increased commitments from the French Agency for Ecological Transition (ADEME) to finance the heat fund, which totals €0.8bn in 2024.
Local and regional authorities: Additional funding of €0.8bn will be allocated to local and regional authorities to empower them to actively promote the ecological transition. Payment appropriations for the Green Fund will rise by €0.6bn to €1.1bn, with commitments reaching €2.5bn. Furthermore, green targets will be established for local investment support grants. For instance, by 2024, 20% of the rural amenities grant (€0.2bn, out of a total of €0.9bn) will have to be directed towards environmentally-friendly projects. These supplementary resources will be used to finance the renovation of local buildings, modernise street lighting and prevent flooding.
Details and changes to expenditures that are favourable, mixed and unfavourable for the environment in 2022 outturn, the 2023 Initial Budget Act and the 2024 Budget Bill, excluding the Recovery Plan and exceptional energy crisis support measures (€bn)
The graph above summarises the results of the Green Budget, excluding exceptional measures (recovery plan and support in response to rising energy prices). Excluding these exceptional measures, favourable expenditure on at least one environmental priority increased by €7bn between the initial Finance Bill for 2023 and the Finance Bill for 2024. This amounts to €41.7bn, of which €38.6bn is favourable expenditure and €3.1bn is mixed expenditure. This growth in "green" spending is driven by ecological planning measures for energy-efficient renovation of buildings, preservation of natural resources and financing of low-carbon transport. Unfavourable expenditure, excluding these exceptional measures, remains stable between 2023 and 2024, amounting to €1bn.
The Green Budget database is available on data.gouv and the Budget Directorate website (https://www.budget.gouv.fr/documentation/fid-download/67221).
Tagging justification
The taggings are established on the basis of a comprehensive analysis of the content of each expenditure - particularly using the annual performance projects published as appendices to the Budget Bills - and through research from academic sources or administrative reports enabling the environmental impact of each item of expenditure to be assessed. The taggings are reviewed annually. They may change as a result of new information on the composition of the expenditure or new publications.
Each budgetary or tax expenditure with an impact on the environment receives a rating on each of the 6 environmental objectives (climate mitigation, climate adaptation, water, waste, pollution, biodiversity). These justifications are then used to determine the overall tagging of the expenditure (favourable, mixed, unfavourable). Each score is assigned by comparison with a reference scenario, which is defined as no expenditure or reduced expenditure.
Scores and coloured dots attributed to expenditures according to their impact on each environmental objective
For instance, support for energy-efficient home renovation is rated +3 (favourable direct impact, which is the main objective of the expenditure) on the "climate change mitigation" axis, because this type of work improves the energy performance of homes and reduces their energy consumption, thus decreasing the associated CO2 emissions. Some thermal renovations also yield co-benefits in terms of better adaptation to climate change (improved thermal inertia, resulting in reduced vulnerability to extreme heat or cold, which climate change could make more frequent). Hence, an indirect favourable rating (+2) is chosen for adaptation to climate change. The environmental impact on the other axes is estimated to be neutral (no significant impact on the environment). Finally, the overall tagging assigned to this measure is favourable.
