Which French firms contribute most to CO₂ emissions from French industry, and what are their characteristics? Which CO₂ emission reduction measures apply to them, and under what conditions? What unexpected role might general tax instruments – which, on the face of it, have no environmental objective – play? This paper addresses these three questions in turn and proposes an initial analytical framework for the ex ante evaluation of public policy measures aimed at firms.
CO₂ emissions from French industry and the ‘carbon focus’ of public policy
This note sets out the distribution of carbon intensity across the French industrial sector, as well as the effective carbon prices faced by different types of firms. It also examines the implicit carbon targeting of various tax measures that are not specifically designed to address environmental concerns.
Reference IPP Policy Brief No. 102
Presentation
Key Results
- CO₂ emissions from the industrial sector are extremely concentrated; 10 per cent of value added accounts for 75 per cent of CO₂ emissions.
- This high concentration is largely driven by sector-specific factors; metallurgy, chemicals, metal minerals (such as cement), and paper/cardboard are the most CO2-intensive sectors.
- Two main systems of effective CO₂ pricing coexist within the industry: that for installations subject to the carbon market (EU ETS, 70 per cent of emissions), where the effective price rises over time; and that for installations outside the EU ETS (30 per cent of emissions), which is frozen from 2018 to 2024.
- In 2019, the effective CO₂ price for the highest-emitting firms was lower (€31/tCO₂e) than that for the lowest-emitting firms (€47/tCO₂e). In 2022, it is higher (€84/tCO₂e compared with €60/tCO₂e).
- The allocation of free allowances, which in 2022 accounts for 90 per cent of emissions from the industrial sector, significantly reduces the effective impact of the carbon market on the firms subject to it.
- Through their implicit targeting, tax measures without an environmental objective may have an impact on total industrial emissions.
- In 2019, the level of the territorial economic contribution (the ‘production taxes’, which were significantly reduced under the France Relance plan) is substantially higher for the 10 per cent of firms with the highest CO₂ intensity (3 per cent of value added) than for the 10 per cent with the lowest intensity (1.2 per cent). Abolishing these taxes therefore benefits high-emitting firms to a greater extent.
Partners
The findings presented in this note are based on work carried out as part of the Green Firms research project, supported by Ademe under the TEES call for proposals on ‘Ecological, economic and social transitions’.