This report documents and analyses the impact of decarbonisation grants across three areas: the targeting and uptake of grants under the France Relance plan, the economic and environmental effects of previous rounds of decarbonisation support, in particular the Fonds Chaleur administered by Ademe; and the initial retrospective economic impacts of the decarbonisation support measures under the France Relance plan.
Évaluation des aides à la décarbonation du plan France Relance
Reference IPP Report No. 50
Presentation
Key Results
- Firms applying for decarbonisation calls for proposals are, compared with the rest of French industry, more than seven times more carbon-intensive, when their direct emissions are measured against their value added. For a given sector and company size, the CO₂ eq. intensity of the added value of applicant firms is still significantly higher than that of the rest of the French industrial firm population.
- Among the applicants, the successful firms are also more GHG-intensive. The median intensity in tCO₂ eq. relative to value added for beneficiary firms is thus 0.8 kgCO₂ eq./euro, compared with 0.4 for non-beneficiary applicant firms. Thus, the targeting of aid is highly concentrated according to the criterion of CO₂ intensity.
- The net present value of investments in low-carbon heating is highly sensitive to the underlying energy price assumptions. An energy crisis such as the one experienced by France and Europe since 2022 can suddenly make a very large number of decarbonisation projects profitable – in the sense of having a positive net present value – to such an extent that they would be profitable even in the absence of public aid. Conversely, a fall in fossil fuel prices may render the subsidies granted insufficient to guarantee the private profitability of the proposed investments.
- The abandonment rate over the lifetime of the BCIAT call for projects – even among firms that received funding in the 2010s – is very high, at around 45 per cent. One possible explanation for at least some of these dropouts could be the fall in the relative price of fossil fuels, and in particular natural gas, which became cheaper in the mid-2010s.
- This observation, and the sensitivity of the cost-benefit analysis of the investments to energy price scenarios, raises questions about the appropriateness of alternative support mechanisms, the amount of which would be, precisely, adjusted in line with changes in these relative prices, so as to mitigate the uncertainty surrounding the profitability of decarbonisation investments.
- Historically, this support granted under the BCIAT scheme has indeed resulted, for firms that received it and did not abandon their projects, in an increase in the firm’s capital expenditure. It is difficult to quantify this effect precisely; however, during the three years following an application for BCIAT grants, the probability that a firm will invest at least 50 per cent of the amount specified in its BCIAT application increases significantly.
- Two to three years after applying for the grants, biomass consumption increases significantly, whilst natural gas consumption decreases. All in all, the benefit of BCIAT funding does indeed result, in the long term, in a reduction in total CO₂ eq. emissions from the industrial site of around -15,000 [-3,729, -26,179] tCO₂ eq. per year, which broadly corresponds to the emission reductions forecast by the establishments concerned in their projects (-16,000 tCO₂ eq.). However, the small sample sizes and the imprecision of the estimated coefficients call for caution when interpreting the results.
- The study’s funding is evaluated here in relation to the emissions of each firm or facility, rather than against an overall carbon target; whether this be the national target set out in the National Low-Carbon Strategy, or a European target. However, 38 per cent of BCIAT projects from 2009 to 2019, and 58 per cent of projects under the BCIAT, DECARBIND and INDUSEE calls for proposals from 2020 to 2021, relate to installations subject to the European carbon market. The impact of emission reductions by installations receiving aid on national and European CO₂ emissions depends on the use by other stakeholders of the carbon allowances saved by these participating and beneficiary installations. It is this second-order effect that determines the overall impact of the aid on French and European CO₂ emissions, and therefore the cost to the public authorities associated with reducing CO₂ emissions through decarbonisation aid.
