PARIS: Adapting to climate change could cause a “temporary and moderate economic slowdown,” costing France nearly 1% of its GDP by 2030, according to a report by the French Directorate General of the Treasury.
The study examines the economic effects of transitioning to carbon neutrality under various scenarios. France has set ambitious targets to cut greenhouse gas emissions by 50% by 2030 compared to 1990 levels, reducing its reliance on fossil fuels.
Nathalie George, Head of Macroeconomic Policy and European Affairs at the directorate, stated, “A coordinated and orderly transition towards carbon neutrality will entail moderate and temporary economic costs.”
The report identifies two major economic impacts: increased carbon taxes and rising costs linked to greenhouse gas emissions. Higher costs for businesses and consumers could lead to reduced purchasing power and increased production expenses, resulting in an estimated 0.9% GDP contraction by 2030. However, these losses are expected to ease to 0.6% by 2050.
To combat climate change, France will need up to €110 billion in public and private investments by 2030. While costly, these investments are far smaller than the economic damages of inaction. The Network for Greening the Financial System warns that without decisive measures, climate change could cost France and the EU about 6% of GDP by 2050, with a global impact of up to 9%.
The report underscores that while the transition to carbon neutrality presents short-term economic challenges, it is crucial to mitigating long-term financial and environmental risks. A well-planned strategy now could safeguard France’s economy and pave the way for a sustainable future.