In other words, green budgeting is supposed to be another tool for countries to align their national budget with the Paris Agreement objectives. How so? Mostly by assessing the anticipated environmental impacts of existing spending and revenue policies, as well as any new policies or measures being introduced in the budget (direct spending, grants, loans, taxes, resource royalties, other non-tax revenues, tax expenditures, etc.). A few countries are currently working on such methods, more or less in line with the Paris Agreement and the Sustainable Development Goals, including Norway and Mexico. However, in comparison, France, who is committed to reducing its emissions by 27% by 2028 as compared to 2013, and by 75% before 2050, does seem to be a few steps ahead in terms of green budgeting.
France has been working for a long time on an accurate evaluation of its incomes and expenditures, including its projected investments for the years to come (which now includes the recovery plan). The "green budget" unveiled in September is the joint effort between the Inspectorate-General of Finances and the General Council for Environment and Sustainable Development. This is good news, as a collaboration between two bodies that usually only follow distinct paths had been much awaited and needed. This allows for all environmental aspects to be encapsulated in an accurate economic analysis. These two State bodies have elaborated 6 different criteria through which to rate each State expenditure and income. These criteria do not only take into account the impact on climate change, as is often the case; on the contrary, the scope is rather large:
- Fight against climate change,
- Adaptation to climate change and natural risk prevention,
- Water resources management,
- Circular economy, waste and technological risk prevention,
- Fight against all kinds of pollution,
- Protection of biodiversity.
Then, each expenditure or income is stamped either:
- "Green" or "favorable to the environment",
- "Mixed" - it is favorable to the environment according to one of these criteria but unfavorable according to another one,
- "Neutral" - meaning that it does not hinder or improve the current state of the environment,
- "Brown or "unfavorable".
Of the €488,4 billion that were analyzed, €42,8 billion are considered to be "green" (investments in favor of the development of renewables, for instance) and €10 billion are "brown" (fuel tax cuts, spending in favor of air transport for instance). €4,7 billion are considered to be "mixed" (investments in the transport sector mostly).
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