Anger as France slashes green transition budget by €1.4 billion

Environmental groups were quick to criticise the French government’s plans to cut the green transition budget by €1.4 billion, including for energy-efficient home renovations, while others called the move “pragmatic”.

Faced with the war in Ukraine, the economic slowdown in China and a recession in Germany, the government lowered its economic growth forecast for 2024 from 1.4% to 1%.

As a result, the government is seeking an extra €10 billion in savings compared to the initial budget adopted for 2024, explained the cabinet of Economy Minister Bruno Le Maire.

The cuts include €1 billion from the MaPrimeRénov’ housing renovation scheme and €400 million from the Green Fund allocated to local authorities.

Overall, the 2024 budget for the energy transition now amounts to €8.6 billion instead of the initially announced €10 billion.

On the Green side, the reaction was swift.

“Out of touch,” said Green senator Guillaume Gontard, rapporteur for a Senate committee on energy renovation that presented its conclusions last July.

A “disastrous signal”

As for MaPrimeRénov, the government’s flagship programme to finance climate-friendly home renovation, the budget increase has been reduced to €3 billion instead of €4 billion.

But according to Gontard, this sends a “disastrous signal”, as cutting on energy efficiency investments will lead to “much higher public spending in the years to come”.

“The €1 billion cut in the MaPrimeRénov’ energy renovation subsidy has slowed down the necessary efforts,” said the CLER energy transition network, which runs several France Rénov’ advice centres to support renovations.

CLER is now calling for a consultation “to ensure that the voices of those working on the ground are heard”.

In addition, this budget cut would coincide with last week’s announcement of a reduction in the criteria for defining energy-guzzling homes, primarily due to high heating consumption or poor insulation, which would remove more than 140,000 homes from the definition.

“It’s mind-boggling. Last week, they arbitrarily removed 140,000 energy flats from categories F and G,” said Dan Lert, deputy mayor of Paris in charge of the energy transition.

“Today, they are justifying the €1 billion reduction in the budget allocated to MaPrimeRenov’ because there are fewer homes to renovate,” he continued.

Simplifying is key

For others, such as the French Confederation of Craft and Small Construction Companies (Capeb), the government is reacting “with pragmatism”.

According to Capeb, an “immediate review of the system” is needed so that the industry has “the means to use up the allocated budget” in 2024.

Concerns about not spending all the money allocated to the scheme are real, especially as Le Maire’s office pointed to an unspent amount of €300 million in 2023.

The scheme is too complex and “needs to be simplified,” the Economy Ministry said.

Consequently, the budget cuts are part of “a more general review being carried out by the Ministry of Housing on the link between MaPrimeRénov, energy performance diagnostics and several other schemes that are being reviewed,” Thomas Cazenave, minister delegate for public accounts, told a press conference on Monday (19 February).

Small increase for the green fund

The government also decided to reduce the initial increase of €500 million for the Green Fund, which it confirmed would only increase by €100 million.

The scheme is designed to support local projects, which shows that “it is not only the state that has to ‘make an effort’,” the Climate Action Network pointed out.

“How can we ask local authorities to invest more and more in the ecological transition and at the same time not allow them to have confidence in the resources granted by the state, which, once voted for in December, can be withdrawn in February?”.

Le Maire also took the opportunity to underline the urgency of completing the EU’s capital markets union launched in 2015 after the eurozone debt crisis.

“Europe will never be able to face this [climate] challenge without a capital markets union; never, never, never,” Le Maire said. “I would, therefore, like all European countries to recognise the absolute necessity of speeding up the implementation of a capital markets union,” he stressed.

Cover photo: The government is seeking to "cool the machine", as Le Maire's cabinet put it, by saving €10 billion compared with the initial budget adopted for 2024. EPA-EFE/CHRISTOPHE PETIT TESSON [EPA-EFE/CHRISTOPHE PETIT TESSON]