Macroeconomic effects of achieving Carbon Neutrality in France

Abstract

In alignment with the Paris Agreement's objectives and the global commitment to limit global warming to +2 °C, France is committed to achieving Carbon Neutrality by 2050. To pave the way towards this ambitious goal, France has drawn up a roadmap known as the National Low-Carbon Strategy (NLCS). This paper aims to assess the macroeconomic impacts of the NLCS scenario. We use a Computable General Equilibrium model to assess the economic impacts of an energy transition scenario aiming for Carbon Neutrality in France by 2050. Our simulations show that climate change policies to reach carbon neutrality, including carbon taxation with full redistribution, could lead to an economic dividend. We find an increase in investments and jobs creations in green industries that are much higher than job destruction in fossil fuel intensive industries and energy sectors. Despite higher prices, demand increases, and GDP is higher than in the reference scenario. Ultimately, the energy transition induces a 3.4 % increase in GDP and a 2.8 % increase in employment compared to the baseline scenario in 2050.