Executive summary

France has been an early thought leader of the global energy transition. As host of the COP21 and the Paris Agreement, France is widely seen as a frontrunner in the energy transition by the international community.

France benefits from decarbonised electricity and the lowest per capita emissions of advanced economies thanks to the role of nuclear energy, which accounted for 71% of its power mix in 2019, and the role of hydro power (10%).

France’s decarbonisation framework, anchored in the Energy Transition Law of 2015, builds on the National Low-Carbon Strategy for 2050 (Stratégie Nationale Bas-Carbone, SNBC), with targets for the reduction of fossil fuel use and emissions by sectors under three five-year carbon budgets out to 2034. In the energy sector, actions are implemented by two successive five-year energy investment plans (la programmation pluriannuelle de l’énergie, PPE). Building on the SNBC and the PPE, regions are implementing their own climate and energy transition goals under the regional plans for spatial planning, sustainable development and equality. At the local level, municipalities are working on their climate air and energy plans.

In 2021, France is not yet on track to reach its targets for energy efficiency, renewable energy or emissions reductions, that were agreed in 2015. France should be able to catch up in the coming years, if the important reforms which are under way are implemented across the energy sector. As foreseen in the PPE, a significant acceleration in investment in the clean energy transition is needed to achieve France’s energy and climate targets by 2030. Commendably, the government adopted a historic Recovery Plan to fight the COVID‑19 pandemic, which in addition to the PPE funding, offers important green funding dedicated to the energy transition. The next five to ten years are critical and France will need to focus on the implementation of its energy policy priorities towards a sustainable, secure and just transition. 

Since the International Energy Agency’s (IEA) last review of France’s energy policies in 2015, the government has taken significant actions to strengthen domestic climate action on the road the net zero. The 2019 Energy and Climate Law legislated carbon neutrality by 2050 and a tighter emissions reduction pathway (an 85% reduction by 2050 compared to 1990 levels). In 2020, the government updated the SNBC and the PPE towards the goal of carbon neutrality by 2050.

The government has increased awareness of the need for climate action and has worked to strengthen its governance. The High Climate Council was created in 2019. The prime minister was tasked with co-ordinating climate action across government based on sector roadmaps. The Citizens’ Convention provided a range of recommendations for speeding up climate action by 2030, including at the regional and local levels, which are also reflected in the 2021 Climate and Resilience Law. France has made progress in strengthening building codes, labelling and the application of energy audits for enterprises and has enhanced measures to support improved efficiency of the mobility system. A strong focus on renovation, the just transition and clean mobility is emerging with additional funding provided under the historic green funding under the French Recovery Plan from the COVID‑19 pandemic. In October 2021, France announced a EUR 30 bln investment plan for 2030, which targets French industrial development in the energy, automotive and space sectors, including EUR 8 bln dedicated to energy technology investment in the decarbonisation of industry, in hydrogen and small modular reactors; EUR 4 bln for electric and plug-in hybrid vehicles. 

Despite this laudable progress in upgrading its energy transition framework, France is lagging behind with implementation. France has not reached its 2020 targets on energy efficiency and renewable energy. And its 2030 emissions targets, adopted in 2015, remain unchanged; the second carbon budget was revised upwards in 2020, lowering the effort required up to 2023.

In the area of energy efficiency, final energy consumption was 145.5 million tonnes of oil equivalent (Mtoe) in 2019, much above the 2020 target of 130 Mtoe. To put France on a net zero pathway and achieve the targeted decline in final energy consumption to 120.9 Mtoe in 2030, pivotal changes in France’s economic structure and consumer behaviour, alongside greater digitalisation and electrification, are required.

Over the past decade, wind and solar photovoltaic (PV) electricity generation have increased, driving the share of renewables in electricity generation from 14% in 2010 up to 23.4% in 2020. Hydropower represents half of renewable electricity generation. France aims at a share of 23% renewables in gross final energy consumption by 2020, but had 17.2% in 2019 and 19.1% in 2020 (preliminary data). The gap with the 2023 targets under the PPE is massive: France would need to add 6.4 gigawatts (GW) of wind capacity (i.e. 40% of total cumulative capacity to date) and almost double the solar PV capacity in just three years.

The delivery gap is mainly due to the lack of administrative staff and lengthy permitting procedures, but a range of remarkable reforms was carried to shorten and streamline them, such as the ESSOC Law, PACTE Law and ASAP Law. Results are expected to manifest themselves in the coming years. The retroactive revision of support mechanisms has been chaotic and their implementation takes too long, like for new solar tariffs. Stop‑go policies, notably the retroactive cuts on incentives for solar plants built in the period 2006‑10, are undermining investors’ confidence and increasing the risks and costs of future investment. Offshore wind is taking off slowly, but France remains significantly behind its neighbours in the implementation of an offshore wind strategy and in the pace of deployment.

Moreover, the electric power fleet is ageing and private investments in large-scale capacity additions are not coming forward, amid the lack of long-term visibility of the electricity mix beyond 2035. The SNBC strongly relies on low-carbon electricity, but does not provide visibility on the sources and technology options for 2035 and beyond. The government postponed the planned reduction in the share of nuclear electricity to 50% from 2025 to 2035. Recommended by the 2015 IEA review, this is a welcome step at the time of climate urgency, which maintains the benefits of low-carbon electricity for France’s energy transition. With the support of France’s transmission system operator RTE, the government is currently reviewing several 2050 decarbonisation scenarios as input to a timely decision on the long-term electricity mix beyond 2035, which is very much needed. Whichever scenario will be followed, both the role of nuclear and renewable energy will have to be secured. A joint study by the IEA and RTE in 2020 has provided analysis regarding the technical requirements for system operation with high shares of variable renewables in 2050.

France is not on track towards its emissions reduction targets for sectors outside the European Union’s (EU) Emissions Trading System (ETS), as transport emissions continue to grow. France has not met its first carbon budget and it remains to be seen if it will meet its second one. In 2020, the IEA expects a 12% reduction in CO2 emissions from 2019 levels for France, due to the COVID-19 pandemic. However, these trends do not reflect actual emissions reductions and a fast rebound is expected with the recovery of the economy.

France has ambitious targets and incentives, such as the bonus/malus system and conversion bonus to support the switch to electric and plug-in hybrid vehicles. The Mobility Strategy and 2019 Law on Mobility Orientation require all sales of new passenger cars to be zero emission in 2040. The Climate and Resilience Law of 2021 also includes a ban of the sale of the most polluting vehicles from 2030 onwards. Many countries already have more ambitious targets (despite having a much less decarbonised power mix). It is welcome that the new Climate and Resilience Law has moved to a 2030 target. This is a critical signal, as France is likely to miss its target for electric vehicle roll-out and charging infrastructure under the PPE, targeting sales of electric and plug-in hybrid vehicles of 1.2 million by 2023 and 4.8 million by 2028, which requires a strong increase, up from about 671 000 in mid-2021. After Norway, Sweden, the Netherlands and Germany, France is now catching up in Europe’s electric mobility market, reaching the level of the United Kingdom, when considering new car registrations.

Over the past five years, the government has revised its Energy and Climate Law twice and set a very high number of targets for fuels and sectors. Local and regional authorities have also adopted targets, but these are not necessarily aligned or in step with net zero goals, technology progress, socio-economic analysis or affordability concerns. While many countries are also struggling with similar challenges, notably as they target net zero emissions by 2050, going forward, a very strong focus on accelerating implementation and execution is critical for France.

To date, the government does not yet assess the results and progress of the renewable tenders or the efficiency improvement by sector. There is no framework to track, assess or guide progress towards the many domestic targets besides the medium-term National Energy and Climate Plan, as many policies and targets remain fragmented across government.

Several steps need to be envisaged to make a step change in the implementation of climate policy. The government needs to focus its policies on implementation and adopt tools to achieve faster progress and track, including the results towards the targets, for instance with an annual update of the SNBC and PPE indicators.

The government needs to boost its achievement focus and policy certainty to increase investors’ confidence and accelerate affordable private investment at the pace necessary to meet the 2020 and 2030 targets for renewables and sectorial as well as interim sub-targets under the PPE. Any contradicting signals increasing uncertainty, risk and cost of investment should be carefully avoided. Any retroactive measures are particularly harmful in this respect. In the area of energy efficiency and renewables, the public support schemes remain complex, multiple and fragmented and do not yet support large-scale investment. They need to be further simplified for consumers, building on recent examples, like MaPrimeRénov’, energy vouchers and solar PV.

To steer implementation in all sectors, the government, led by the prime minister, should ensure the co-ordination, implementation and tracking of progress across all levels of government, alongside an increase in the capacity of the ministries to monitor, guide and deliver policies on the ground. The prime minister should present concrete proposals to speed up and streamline procedures for licensing of renewable energy projects, and strengthen energy taxation (with a focus to phase out remaining indirect fossil fuel subsidies). The government needs to increase its expertise and resource capacity for leveraging higher private investment. This requires transparency, communication and engagement with all stakeholders.

To improve implementation and ensure a just transition, the government should also strengthen its capacity to work with the regions. The regionalisation of the PPE is a welcome step in this regard, provided it is well co-ordinated and utilised with the aim of accelerating implementation.

A regular review of progress is fundamental: the High Council on Climate’s annual report and the government’s report on the PPE, carried out every two years, are good starting points. To respond to the High Council on Climate, the government should carry out a more systematic annual review of progress. Clear identification and communication of the gaps between policy provisions and real actions are critical for the transparency and accountability of France’s clean energy transition. 

Among G7 members, France has the lowest value of CO2 emission per capita in absolute terms. It has the least stringent goal in relative terms with a target of a 40% reduction of greenhouse gas emissions by 2030. However, the target has not been strengthened since 2015 and progress will not be made without new policy action. France plans to revise its National Low-Carbon Strategy and the energy plan. This is an opportunity to align with the EU’s target of reducing emissions by 55% by 2030 and respond to the EU Green Deal and the related Fit-for-55% package. In doing so, the government should improve the clarity and stability of its targets (reflecting updated energy technology costs and socio-economic analysis), alongside stronger policy consistency, gap analysis and robust implementation tracking.

Moving towards net zero will require that transport, buildings and industry are put on cost‑effective pathways towards climate neutrality while maintaining a low-carbon electricity supply. A clean energy technology roadmap underpinning a revised national energy research strategy should accompany the new SNBC/PPE under preparation for 2024 to identify pathways and technology choices, job creation opportunities, and inform investment decisions and track progress. Based on a robust evaluation of clean energy technology pathways for 2030, 2040 and 2050, the PPE will need to be strengthened and identify broad clean energy technology options in annual green budgets under the PPE, including for energy efficiency.

In this context, the government needs to revisit the expected contributions of biomass; carbon capture, utilisation and storage; and decarbonised gases, notably hydrogen, based on the latest technology progress, when updating the SNBC. The PPE, the Programming Plan on Jobs and Competences (PPEC), and the revised National Strategy for Energy Research (SNRE) will need to be aligned. 

Robust policies are needed for clean energy investments in modern energy markets in support of a strong energy industry. This includes stable and clear market-based support schemes, which lower risks and support technology scale-up and accelerate deployment. This should be complemented by procedures that deliver the permit as a default and grants and loans that expand green recovery funding. The MaPrimeRénov’ is already a very good step towards this delivery-focused design of policies that could quickly reach scale. 

Since the IEA’s last review in 2015, energy markets in France have seen a rise in competition – in the gas sector thanks to unbundling and the phase-out of regulated prices; and in electricity, with the entry of new suppliers at both the wholesale and the retail level thanks to European wholesale electricity market reforms.

A more competitive electricity retail market is slowly emerging, with a large number of electricity suppliers offering market deals to French consumers, some below regulated tariffs. France maintains regulated tariffs which are offered by Électricité de France (EDF), the incumbent supplier of more than 70% of French residential consumers. The government does not have plans to phase out regulated tariffs for residential consumers and continues seeing benefits of those, as reflected in the assessments made by the French Competition Authority and the Council of State in 2021. However, the government needs to ensure a level playing field among all actors, EDF and new entrants, based on unbundling and fair rules for all market participants. However, the government has said it will review the purpose and use of regulated electricity prices.

A key element in this context are the conditions under which other suppliers can have access to electricity from existing nuclear power plants. A new market regulation for the French electricity market is needed by 2025 with the end of regulated access tariff (ARENH) mechanism, closely integrated with its European neighbours. A timely decision on how the government plans to finance the modernisation of existing generation capacity and new nuclear investment is urgently needed. 

New network tariffs were adopted in 2021 and electricity network tariff regulation increasingly empowers prosumers, renewable energy communities and electricity distribution companies to drive the energy transition.

Carbon price signals remain important for clean energy investments. The EU Green Deal and its Fit-for-55% package are expected to strengthen the carbon price signal under the EU ETS and non-ETS sectors. In the transport and buildings sectors, France already levies a carbon tax as part of its energy taxation at EUR 44 per tonne of CO2.

However, carbon pricing cannot be done without policies for a just transition, which needs to be a continuous priority for the government. Social acceptance of additional taxes reached a limit, as shown by prolonged protests during 2018-19, when excise taxes on motor fuels and the related carbon component both increased during a period of high oil prices. France has increasingly narrowed the gap between the taxation of diesel and gasoline, which now better reflect the relative carbon footprints of these fuels. Moreover, France is the first country to implement a green budgeting approach, which offers lessons for many EU countries at the time of the energy transition.

There is little room for further tax increases without a new approach to managing the cost of the transition, e.g. by supporting reskilling, employment, and the transition of communities and workers. Any further reform of carbon taxes should be part of a broader energy tax reform. French environmental taxes need to better reflect environmental and social costs. Phasing out fossil fuel subsidies in the form of energy tax exemptions will reduce consumption and emissions and increase efficiency, notably in the transport sector.

France has a highly skilled energy industry, which can be a backbone for a resilient economic recovery. While nuclear and the oil and gas sectors account for the majority of employment today, the renewables sector, notably wind and solar, has seen dynamic growth in jobs and investments. Under the SNBC, this is projected to accelerate with the creation of 300 000-500 000 new jobs by 2030 and 800 000 by 2050, boosted by investments in transport, buildings and energy.

France’s Recovery Plan is a historic plan for accelerating the implementation of energy and climate targets and supporting a people-centred transition. Leading global efforts, France has adopted a very large and also green recovery plan, dedicating more than EUR 30 billion (bln), out of a total of EUR 100 bln, of the funding under the French Recovery Plan to sustainable recovery objectives: to support transport (EUR 20 bln), the renovation of buildings (EUR 6 bln), technology innovation in nuclear (EUR 470 million) and France’s hydrogen strategy (EUR 7 bln). This funding comes in addition to the support schemes for renewable energies included in the PPE in 2020 as well. Important innovative investment schemes include the MaPrimeRénov’, which supports energy efficiency in buildings across all income classes (and replaces the energy transition tax credit), increases subsidies for the private purchase of electric vehicles and provides additional tax credits for the installation of electric vehicle chargers at home.

To implement the plan successfully and ensure that taxpayers’ money is spent wisely, policies for net zero, as outlined above, can leverage projects and catalyse private investments, including in electric mobility, low-carbon residential heating, hydrogen and batteries.

Maintaining a high level of security of supply during the clean energy transition needs to be a priority for the government and an integral part of the country’s decarbonisation plans.

The Minister of the Ecological Transition needs to strengthen the oversight on security of the energy transition and bring together the stakeholders necessary for managing possible crises across the energy supply chains and infrastructure. Key questions relate to the short- and medium-term electricity adequacy and the medium-term transition of France’s oil and gas infrastructure and related security risks. Besides, the government also needs to increase preparedness to address new threats, stemming from more frequent extreme weather events or cybersecurity risks, but also the availability of critical minerals and metals indispensable for clean energy transitions. The new analysis of critical minerals presented by the government is welcome and should trigger domestic and global actions.

Electricity security will be at the heart of the clean energy transition. It cannot be excluded that ensuring adequacy and reliability may require adjustments in the pacing of the anticipated policy measures, including the schedule of closing nuclear reactors. In the 2019 Energy and Climate Law, France committed to closing its remaining coal-fired power plants in 2022, and depending on the evolution of electricity demand, 14 nuclear reactors, to reach a share of 50% of nuclear in its power mix by 2035, while almost tripling renewable electricity generation.

If the deployment of renewables and related flexibility needs is not ramped up quickly enough through prioritising execution and implementation, the objective of closing 14 nuclear reactors may be difficult to achieve while preserving capacity margins. France has taken leadership in developing demand response across the electricity markets and benefits from a well-interconnected power grid. However, neighbouring countries are also going through deep energy transitions, indirectly also affecting France.

France’s aging nuclear fleet will need to be modernised for long-term operation, provided safety is guaranteed, to support a secure and affordable energy transition. Major uncertainty remains around the future of nuclear new build and its long-term contribution to France’s emissions reduction objectives. As in all countries entering a transition of the electricity system with the development of higher shares of renewables, power system operations will also require an incremental need for flexibility and diversity during the period of 2021-25, over which adequacy imbalances may occur. RTE will, in particular, need to ensure that sufficient flexibility is available during winter peaks, which should be reflected in the PPE, which already includes targets for demand response. Electricity security will need to be carefully monitored and the flexibility portfolio enlarged, notably by completing the legal framework for energy storage, including hydro, and boosting smart grids and dynamic pricing.

France is making hydrogen a top priority with its national hydrogen strategy that focuses on industry and heavy-duty transport, underpinned by EUR 7 bln in public funding. The government focuses on developing an industry and French expertise in a new technology. The government should use the opportunities from regional hydrogen hubs across Europe to keep up the important momentum for the development of the technology in France and boost the potential to utilise hydrogen as a new energy carrier and provider of long-term energy storage in the energy system.

France has strengthened gas security with the merger of the gas exchanges in 2018 and the latest reform of gas storage. Maintaining oil and gas security remains a major challenge, as the transition accelerates. France’s industry is already investing in biorefining and low-carbon fuel supply chains, based on ambitious targets for biomethane, biogas, hydrogen and second-generation biofuels. The government should accompany the capacity of the industry to adapt and support the affordability of the transition, including by making the best use of existing infrastructures. The planned strategy on oil and gas in the transition is a welcome step. In this context, the government should carefully monitor the impacts of a rapid shift in oil products consumption on the security of supply, including the future of the service station network, notably in rural areas of France. 

The government of France should:

  • Increase implementation focus and policy certainty to accelerate private investment to meet energy and climate targets, avoiding any contradicting signals. Adopt regular progress review points for all measures and strengthen implementation capacity across government, co-ordinated by the prime minister.
  • Ensure consistency of 2030 targets with the updated National Low-Carbon Strategy and multiannual energy plan, underpinned by new EU ambitions, socio-economic analysis and technology/innovation roadmaps. Introduce clean energy technology budgets to leverage higher private investments.
  • Align national and regional targets, policies and regulations; reduce administrative barriers and streamline procedures; and provide for additional action critical to closing delivery gaps and achieving a sustainable, secure and affordable energy mix.
  • Building on the green budget approach, scale up the mainstreaming of climate objectives into taxation, government expenditures and regulations across government to improve the cost-effectiveness of the energy transition.
  • Clarify the ambitions for the closure and long-term operation of existing and the construction of new nuclear reactors in France, including financing mechanisms to mitigate uncertainties on the path towards net zero to support an affordable, sustainable and secure electricity mix.
  • Introduce an energy-system approach across key energy carriers (electricity, decarbonised gases, heat) and networks, including interconnections to neighbouring countries. Facilitate close co-operation between the gas and electricity system operators, industry stakeholders, and regulators. In this context, leverage the national hydrogen strategy for developing a new energy carrier and provider of long-term energy storage.