Repères : politique, procédure et gestion budgétaires

Green budgeting, generated by AI, Dall E 3

The French Green Budget : a transparency tool to serve the ecological transition

Le 03/06/2024

Since 2020, the preparation of the central government budget has included a green component. Each year, as an annex to the Finance Bill, the government publishes a report, the green budget, listing all expenditure having a favourable or unfavourable impact on the environment.

Why a Green Budget ?

The idea originated from the One Planet Summit of December 2017, where OECD, with French support, launched the "Paris collaborative on Green Budgeting". This project aims to assist States in developing an environmental budgeting approach. The French Parliament made it a legal obligation through the finance law of December 28, 2019, effective for 2020.

France made ambitious climate commitments during the Paris Agreement in 2015. The establishment of a Report on the environmental impact of the central government budget provides a single, comprehensive document accessible to all to verify the fulfilment of these commitments in the state’s budgetary choices.

In 2019, the General Inspectorate of Finance (IGF) and the General Commission for the Environment and Sustainable Development (CGEDD) were tasked with establishing a robust methodology for green budgeting. In September 2020, the first edition was published, attached to the Finance Bill for 2021. France thus became the first country to complete its green budgeting approach. 

A measure based on tagging each expense according to its environmental impact

The Green Budget is designed each year by an inter-ministerial permanent working group led by the Budget Directorate.

The structure of the state budget includes missions containing several programs divided into actions. The working group assesses the environmental impact of each action to cover all state budget expenditures. This means tagging all budget appropriations, tax expenditures and taxes allocated to public bodies with regards to their impact on six environmental objectives that were inspired by the European taxonomy of activities:

  • Fighting climate change 

  • Adapting to climate change and preventing natural risks 

  • Water management

  • Transition to the circular economy, waste management, man-made risk prevention

  • Fighting water, air and soil pollution 

  • Conservation of biodiversity, protection of natural, agricultural and forest areas.

Each action receives an overall tag depending on the total scores for all six objectives :

  • If impacts are favourable, or favourable and neutral for all objectives, the action is tagged "favourable overall"

  • If impacts are neutral for all objectives, the action is tagged "neutral overall"

  • If impacts are unfavourable, or unfavourable and neutral for all objectives, the action is tagged unfavourable.

  • If impacts are simultaneously favourable and unfavourable and even neutral for different objectives, the action is tagged "mixed overall".

A concrete example: the "support for the withdrawal of polluting vehicles" action. This action is tagged as mixed because it has a favourable impact on the fight against climate change and pollution, but leads to an accelerated renewal of the vehicle fleet, which is tagged unfavourably in terms of waste management.

Lastly, certain actions are "untagged" when the working group does not have sufficient information on the destination of the expenditure, as is the case for funds paid to local authorities or the European Union, or when there is no scientific consensus on their environmental impact, such as expenditure linked to digital technology.