France’s turning pointAccelerating new growth on the path to net zeroOctober 2021

Transformations are always complex. This report shows the economic opportunity of achieving an accelerated but carefully phased decarbonisation path for the European continent.Deloitte Economics Institute

France’s turning point

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Contents

Foreword 4

Key terms 5

An economic turning point 6

The new normal: a climate-damaged economy 8

Decoupling emissions from growth 9

Creating the turning point 12

The cost of missing the turn 14

The high costs of inaction 16

Investing in rapid decarbonisation for France 20

A new economic climate 23

Bold climate plays: From 2021 to 2030 26

Turning point: From 2031 to 2040 27

Accelerate to zero: From 2040 to 2050 28

A low-emission future: Beyond 2050 29

Final words – The need for an ordered and early transition 30

Appendix: Modelling climate change impacts in France 32

Endnotes 34

Limitations of our work 37

Related content 37

Authors 38

Contacts 39

Deloitte Economics Institute 40

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Contents

Foreword

Foreword

We have known for a long time that our choices are harming both the environment and climate. Our lived experience of natural disasters—wildfires, droughts, floods, and record-breaking heat waves—increasingly shows us the worsening impacts of our choices. Climate effects are not just being seen in extreme parts of the world anymore; they are also being seen at our door at increasing rates, and are already affecting our economy.

All of these changes to our physical environment are taking place during a global pandemic when we have seen our systems tested and we have seen some of them fail. We are now waking up to the consequences of our global connectedness, just as we’re appreciating the depth of our mutual dependence. And we are taking stock of what we are personally willing to sacrifice to protect the shared assets on which we rely.

When world leaders soon meet in Glasgow, they—and we—know that the world must choose between two paths: one of insufficient action, and one of bold, rapid investment in decarbonising the global economy, a monumental transformation that needs to be completed at an unprecedented pace.

Using new data from the Deloitte Economics Institute’s D.CLIMATE model, Deloitte’s “Turning Point” report gives us a compelling look at this window of opportunity. The analysis takes into account the cost of climate change and projects the potential economic benefits of adopting an early, and coordinated, transition pathway.

France has what it takes to seize this opportunity. The role our country played during the Industrial Revolution puts us at the forefront of a brighter future. While France has officially recognised the need to mitigate climate effects, and even made some bold moves to achieve carbon neutrality by 2050, we know for sure this will not be enough.

We often hear that the economic costs of doing what it takes are way too high, but what is the reality? As the Deloitte analysis shows, investing in an accelerated, ordered decarbonisation transition timeline now will cost France far less in terms of the economic impact, potential climate damage, and an equitable transition for all French citizens, than if the investments are made later.

Fighting climate change is not just the work of governments, utilities, or financiers, though. It is the job we all must do now, and in a coordinated way. Yet there is a real and measurable economic opportunity here. It is more than a societal imperative. The choices we make over the next decade will have an impact on our future that can only be measured in superlatives. It is time for us all to choose a better way.

Marc Van Caeneghem Managing Partner Risk Advisory

Olivier Jan Partner, Deloitte France Sustainability Services

Olivier Sautel Partner, Economic Advisory

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Key terms

Key terms

The following references and terms are defined for specific purposes in the context of this report.

Climate change: Changes in the regional and global climate brought about by increased greenhouse gas (GHG) concentrations in the atmosphere.

Transition risks: Direct and indirect costs associated with policies that are imposed on firms and households to limit our negative climate impacts.

Physical risks: Includes all the damages incurred by the households and companies of a country due to climate change (i.e., lower labour productivity resulting from more frequent heat stress, lower agricultural productivity, etc.).

Ordered transition: Transition pathway under which policies and the society work in a coordinated way so that there is an early reduction of carbon emissions to meet climate targets with low physical risk.

Disordered transition: Transition pathway under which a sudden and unexpected response to climate change causes, and may be associated with, a state where both physical and transition risks are high.

Turning point: The economic point where the benefits of decarbonisation start to offset the combined costs of ‘locked in’ climate change and the costs to transition the economy to net zero.

Net-zero emissions: A state in which GHG emissions from human activities are balanced by the emissions taken out of the atmosphere. The technical definition of this concept can be found in the Technical Appendix.

Close to 1.5°C world: This pathway describes a net-zero economy by 2050 in which global average warming is limited to well below 2°C and as close to 1.5°C as possible, compared with preindustrial levels.

Around 3°C world: An economic scenario that relates to a pathway of climate inaction, where the implied temperature change is 3°C above preindustrial levels toward the end of the century.

Representative Concentration Pathway (RCP): A greenhouse gas concentration (not emissions) trajectory adopted by the Intergovernmental Panel on Climate Change (IPCC).

Shared Socioeconomic Pathway (SSP): A set of pathways adopted by the IPCC Sixth Assessment that explores how the global economy, society, and demographics might change over the next century.

Key terms

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An economic turning point

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An economic turning point

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The new normal: a climate-damaged economyMost economic thinking has it wrong.

Dominant economic projections do not account for the consequences of climate change, or the world’s efforts to adapt to, or mitigate, the impacts of climate change. When they do consider climate change damage and mitigation policies, it is often in scenario analyses that compare alternative future states to the same incorrect starting point—and against an erroneous “business as usual” trend that assumes unconstrained economic growth via emissions-intensive economic production. This is the economic baseline that informs how most decisions and investments are made, for governments and businesses alike.

And no wonder. Since the Industrial Revolution, economic growth has moved nearly in lockstep with rising GHG emissions. As humanity burned fossil fuels, removed forests, and converted land to intensive agriculture, it enjoyed the “fruits” of those actions: economic growth, rising standards of living, and better quality of life.1 The world economy has expanded almost every year since 1750. While growth has not been constant or even—across regions and individual countries—gross domestic product (GDP) per person growth has, on average since the Industrial Revolution, been around 1.5 percent per year.2

Europe, as the centre of the Industrial Revolution, has benefited from fossil fuel-led growth for the longest period of any region in the world. The continent accounts for slightly more than 30 per cent of cumulative global CO2 emissions since 1751.3 France has been an integral part of Europe’s growth story.

However, the “business as usual” trend is not suitable, as the effects of a carbon-intensive economic development can no longer be overlooked. In line with the rest of the world, France has been experiencing climate change these past decades. In 2020, the average temperature has risen by 1.7°C since 1900 in metropolitan France.4

The vulnerability of the French territory has been highlighted by the damages associated with extreme weather events, such as the frequent floods in Var and Alpes-Maritimes,5 the 2017 Irma hurricane,6 the 2017 drought, and even the 2020 Storm Alex.7

Such disasters are expected to be increasingly threatening with climate change. By 2071-2100, heatwaves could become more frequent, as well as droughts and extreme rainfalls.8 Consequently, the damages associated with such phenomena will surge. According to the French weather servicea and the Central Reinsurance Fund,b climate change could widely increase the losses of insured goods by 2050 resulting from droughts, floods, and submersions.9 All regions of France would not be affected evenly. For instance, the Atlantic coast appears to be particularly vulnerable, because of the increased population and the rise in sea levels. Such scenarios are consistent with the ones developed by the IPCC according to which, without adaptation measures, between 775,000 and 5.5 million additional people per year could be affected by coastal flooding in the EU27 in the 2080s.10

An economic turning point

a. Météo-Franceb. Caisse Centrale de Réassurance (CCR)

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Overall, climate change and extreme weather events will affect a wide range of economic sectors. This is the case for agriculture, as high temperatures and droughts have already affected yield of wheat in France.11 In this respect, the wine sector is emblematic. Not only do severe weather events reduce the wine output, as in 2019, but the rise in the average temperature changes the taste of wine. French wine could become more alcoholic and less aromatic, as grapes ripen faster.12 Another example is in the energy sector, as hydropower could decrease in almost all European regions, notably because of a decrease of the mean runoff and earlier snow melt in mountainous areas.13,14

All these expected effects of climate change must be considered in economic baseline scenarios, resulting in a need of a new-normal baseline situation.

Decoupling emissions from growthFrance has undergone rapid industrialisation, growth, and transformation since 1750.15 Most notably, it experienced unprecedented economic growth in the 30-year period post World War II, during which France’s GNPc on average grew by 4.6 percent each year.16 At the peak of this 30-year boom, known as the ‘Trente Glorieuses,’ France’s economy was growing at a rate of 5.8 percentd annually.17

This period of growth has been integral in propelling France’s economy forward, both in terms of economic development and improvements to living standards. However, it has not been without consequences.18 By 1980, France’s CO2 emissions were six times higher than they were at the beginning of the boom.19 While France is now the third largest economy in Europe, it is also the third largest emitter in Europe.20,21

The oil shocks in 1970 marked a transformation in the nation’s energy mix away from imported fossil fuels and toward nuclear energy.22,23 As a result, France’s emissions per capita have been steadily declining since 1970 (Figure 1).24

c. Economic growth as measure by gross national product, GNP.d. Economic growth as measure by gross national product, GNP.

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In more recent history, France has recognised the need to mitigate the impacts of climate change and made bold, legally binding commitments to achieve carbon neutrality by 2050.25 While an early transition has enabled France to begin decoupling its economic and population growth from emission-intensive sources of energy supply, it is still reliant on fossil fuels to produce 47 percent of its total primary energy supply.26,27,28 Thus far, France’s decarbonisation has been driven by its power sector.29 In comparison, the transport sector has the most emission intensive energy mix, where oil accounts for 90 percent of total energy consumption.30

While there is no doubt that France has begun decoupling economic growth from emissions (Figure 1), further mitigation is needed to decarbonise its fossil fuel reliant sectors in the decades to come.

Source: Deloitte Economics Institute analysis of World Bank data and Our World in Data.

Figure 1: Trends in France’s GDP and carbon per capita

Inde

x (1

960

= 10

0)

GDP percapita index

GHG percapita index

-

50

100

150

200

250

300

350

400

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Since 1970, income per capita is 3.5 times larger

Meanwhile, emissions have fallen by 17% per person

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Changing the economic narrative An overwhelming scientific consensus—and increasingly our own lived experiences— is telling us that the current system of economic production is generating untenable changes in the climate.31 These changes put at risk France’s economic growth and prosperity.32

To flourish, the French economy must find a path to balance two kinds of risks associated with climate change. On one hand, transition risks represent all the costs borne by companies and households to reduce emissions. These risks encompass direct costs (such as carbon taxes) and indirect ones (such as the changes in regulations). They are often summarized by economists as aggregate costs given to greenhouse gas emissions. On the other hand, physical risks include all the damages incurred by households and companies of a country due to climate change. These include capital destruction related to extreme weather events, or reduction in labour productivity due to more frequent heat stresses.

Transition and physical risks are interdependent. A bold climate policy would induce large transition costs, but could widely reduce physical risks if the policy succeeds in reducing greenhouse gas emissions. Such policies are all the more necessary, because, unlike transition costs which can be planned and organized, physical risks are often unpredictable.

France is already taking steps to address physical risks. Recognising the need to mitigate the impacts of climate change, France has been on a path of decoupling economic growth from emissions since the 1970s (as measured by emissions intensity of GDP). However, it still has a long way to go.33

In a court ruling, the French Council of State has concluded that the current rate of emissions reduction is insufficient to meet the nation’s Paris Agreement targets by 2030.34,35 Given that France has exceeded its carbon budget limits in recent years, this has potential for legal consequences.36

By changing the economic narrative around emissions reduction, France has the potential to use decarbonisation as a lever to enhance economic growth, and create a sustainable and resilient economy for the future. France already acknowledges that it is worth investing in transition.

Deloitte’s D.CLIMATE model integrates the economic impacts of physical climate change into a baseline economic trajectory. By factoring the costs of climate change into the baseline, this framework reveals the tremendous economic harms of inaction, or inadequate action, as well as the significant opportunities that present themselves in remaking France’s economy.

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Creating the turning pointThe sequencing of the system transformation for a low-emission future in France – and the rest of the world – results in four phases of structural economic change. Each phase represents the economic interaction of the choices, investments, technological and industrial changes that create a new low-emission economy.

Deloitte’s four phases show how rapid decarbonisation will create costs, but timing and sequencing of effort can offset these costs by creating positive returns in the capital and technologies that shift the region’s economy onto a decarbonised pathway.

In this transformation, the goal is about minimising adjustment costs, creating new pockets for jobs and growth, and reaching the turning point – the point where structural adjustment costs to net zero and ‘locked in’ climate change costs are offset by the decarbonisation efforts made.

The turning point is different for every global economy. It depends on the economic structure that creates growth today, and how that is impacted by decarbonisation. It also greatly depends on the exposure to ‘locked in’ climate change impacts as the world warms to at least 1.5°C in the decarbonisation pathway. Economies with higher transition costs and higher ‘locked in’ impacts will typically experience a later turning point. Meanwhile, those economies which are further in their journey to low-emissions, and less exposed to climate change, will have an earlier economic turning point.

What is key is that, no matter the timing of a region’s turning point, the transition is worth it - economically, socially, and environmentally. While every economy’s journey to net zero is different, limiting global average warming to as close to 1.5°C as possible is the collective economic endgame.

Failure from economies to make the mandatory investments in a timely manner and actually seize this opportunity will result in delayed turning points and lower benefits for everyone.

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While every economy’s journey to net zero is different, limiting global average warming to as close to 1.5°C as possible is the collective economic endgame.

An economic turning point

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The cost of missing the turn

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The cost of missing the turn

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Unmitigated climate change has the potential to turn France’s economic story into one of long-term decline. The foundations of its prosperity—its people and natural capital—are at risk, and along with them its standard of living, its prospects for future growth, and the wellbeing of its people.Deloitte’s D.CLIMATE model integrates the economic impacts of physical climate change into a baseline economic trajectory. Such a framework reveals the tremendous economic harms of inaction, or inadequate action, as well as the significant opportunities that emerge from strong climate action.

The high costs of inaction

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Climate change will harm the drivers of economic growthTo demonstrate the impact climate change could have on the economy, we incorporated regional climate data into the following economic factors. These factors would suffer climate damages in a 3°C world, which would impact future GDP growth.

Heat stress Lost labour productivity from extreme heat

Human health Increased incidence of disease and mortality

Sea level rise Lost productive land, both agricultural and urban

Tourism loss Disrupted flow of global currency

Damaged capital Stalling productivity and investment

Agriculture loss Reduced agricultural yields from changing climate patterns

Source: Deloitte Economics Institute.

Figure 2: Economic impact associated with climate change

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Note: Numbers may not add up due to roundingSource: Deloitte Economics Institute.

Public and private service sectors

Manufacturing

Retail and tourism

Construction

Transport

Clean energy

Water and utilities

Conventional energy

Natural resources and mining

Agriculture and forestry

-700

-260

-160

-110

-70

-30

-10

-10

-2

1

Industry

Industry loss in GDP to 2070on a path to a 3°C world

GDP impact2020–2070

(€ billion, netpresent value)The sum of

€1.3trillion*lost from France’s

economy by 2070 if warming reaches 3°C

* present value GDP

Climate inaction would come at a significant cost to France, and climate damage is expected to impact certain industries more than others.

Figure 3: Industry loss

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The economic cost of climate change to France In the economic future modelled, France and the rest of the world do not significantly reduce emissions relative to current levels. This future has an emissions pathway that leads to global average warming of more than 3°C by 2070.e

By 2070, climate change-induced economic losses to France total approximately €1.3 trillion in present value terms in the economic future modelled.f In a future of inaction, lost economic potential would amount to 2.2% of GDP in 2070 alone.

For comparison, the economic cost of Storm Alex in 2020, which caused widespread flooding and the loss to thousands of homes and businesses, was €2.6 billion.37,38 The economic cost of unchecked climate change in France would be equivalent to the floods from Storm Alex occurring more than 450 times over the next 50 years.

Losses to France’s economy increase rapidly as temperatures rise. If substantial actions are not taken, the lost economic potential due to climate change would grow to 2.2% of GDP in 2070 alone, an average of 1% each year over the next 50 years. France would still be growing at a positive rate, but at a slower rate than it would have been without climate change.

Not only is the economic loss severe, but the composition and quality of long-term growth is changed. Reduced productivity, a lack of new investment and innovation, and significant losses to standards of living and wellbeing are all headwinds against higher growth rates in a climate-damaged economy.

Unchecked climate change has the potential to increase France’s exposure to climate-related economic damages. Over the next 50 years, the top five most impacted industries in terms of economic activity comprise 88% of the country’s current output. These industries—services (government and private), manufacturing, retail and tourism, transport, and construction—are economic powerhouses and major sources of employment in France. Together, they form the basis of the country’s contemporary economic engine.

A smaller economy also results in fewer job opportunities in the modelled future. Climate inaction would result in a workforce that is 1.2% smaller in 2070. Over the modelled horizon, this means that France’s economy could be, on average, smaller by 370,000 jobs every year.g

France’s service sector would be hit the hardest. Although this sector is not emissions-intensive itself, France’s service sector would bear the brunt of the impact from job losses as a result of climate change. This would largely be driven by overall productivity losses in France’s economy and sluggish growth becoming even more sluggish.

France is severely impacted by the physical impacts of climate change. This could drive a significant loss of employment in France’s manufacturing sector. As a result, its capital stock and labour force would be more vulnerable to extreme weather events, that could result in large losses in productivity in the manufacturing sector. These productivity losses could increase the cost of maintenance and reduce investment into capital, resulting in job losses across this sector.

The retail and tourism sector could experience the third largest impact from climate change in terms of job losses. Tourism is integral to France’s economic fabric. However, climate change is likely to alter weather patterns, increase heat stress, and result in more extreme and severe weather events- together these factors could reduce France’s charm, resulting in severe losses to jobs and productivity in this sector.

In addition to the modelled costs, it is likely that climate inaction will cause more disruptions, for example, in France’s power sector which is already being impacted by climate change. In 2018, several power plants in France had to be shut due to ongoing drought and water scarcity.39 Since both nuclear and hydroelectric power are reliant on secure sources of water supply to generate electricity, increased severity of weather events, such as droughts and heatwaves, have ramifications for France’s energy security.

e. IPCC-adopted emission scenarios vary widely, depending on socioeconomic development and climate mitigation policy settings. SSP2-6.0 is chosen as an intermediate baseline scenario as it includes no specific or significant climate mitigation policy effort, making it an appropriate baseline for reference.

f. Total Net Present Value of deviation loss to GDP in France over the period to 2070 at a 2% discount rate. Refer to Technical Appendix for a discussion on the selection and application of the discount rate.

g. Jobs are measured in full-time equivalent units (FTE).

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Investing in rapid decarbonisation for France

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Investing in rapid decarbonisation for France

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Figure 4: Economic impact of France’s decarbonisation pathway

GDP

devi

atio

n fro

m SS

P2-6

.0 b

asel

ine

France’sturning point

-0.4 %avarage net economic

loss 2021-2030

+1%avarage net economic

gain 2041-2050 +3.5%net economic gain to France ina decarbonised 1.5°C world

by 2070

From 2036 GDPis higher than

under damages

Bold climateplays

Turningpoint

Accelerate tonet-zero

Low-emission future

3.0%

2.5%

4.0%

3.5%

2.0%

1.5%

1.0%

0.5%

0.0%

-0.5%

-1.0%

2030 2040 2050 2070

Source: Deloitte Economics Institute

Source: Deloitte Economics Institute

Industry opportunity

Top five industries that benefit from transition at the end of each phase, in level terms

Bold climate plays 2021 – 2030

Clean electricity sector Construction

Agriculture and forestry

Turning point 2030 – 2040

Clean electricity sector Construction Public and private service sector

Agriculture and forestry Water and utilities

Accelerating to zero 2040 – 2050

Clean electricity Public and private service sector Construction

Retail trade and tourism Water and utilities Agriculture and forestry

Low emissions future 2050 – 2070

Clean electricity Public and private service sector Transport sector Construction

Retail trade and tourism Manufacturing sector Water and utilities

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A new economic climateFrance is at the frontier of a new economic era and has the potential to lead the transition to a new economic climate in Europe and the world. By making strategic choices now, France can not only chart a more prosperous path toward a low emission future, but it can also catalyse efforts in other parts of the world. With the right economic framework, there is a clear path to strong, equitable, and shared growth across France. There is an opportunity to build on recent momentum and take bold action to decouple economic prosperity from emissions. A new economic climate not only emphasises the quantity of economic growth, but also its quality.

But time is of the essence. Policy and investment decisions made in the next several years will largely shape the economic and climatic future that the region and the world will inherit. That narrow window makes it even more important that the economics of a warming world are understood and incorporated into decision making that addresses the multiple market failures of climate change.

France has been active in global dialogue on climate action, hosting the 2015 Conference of the Parties which culminated in the adoption of the Paris Agreement on Climate Change.40 Regional cooperation, particularly between the European Union and member states, is seeing the gradual escalation of decarbonisation ambition in France.

The transformation to a low emission economy is already underway in France. France has proposed legislation for a 40% reduction in emissions from 1990 levels by 2030 and a net zero by 2050 target in line with the Paris Agreements. France has also adopted domestic measures that are complementary to a number of European measures, including carbon budgets and emissions reduction targets across major industries, namely the power, transport, building and industrial sector.41

Key policies, such as the Energy Transition for Green Growth Act in 2015 and the National Low-Carbon Strategy (SNBC), underpin France’s roadmap to net zero.42 At the national level, residential and industry-specific carbon emissions are subject to economic

contributions. The first article of the Green Growth Act defines the trajectory level of this carbon component tax at the 2030 horizon. This measure is complementary to the European Union Emissions Trading Scheme (EU-ETS) system under which French energy-intensive sectors (such as steel, cement, paper, aluminium, chemicals, etc.) benefit from emissions allowances and may trade residual emissions or buy additional emissions on a carbon market which defines the carbon market price.

The question of carbon border taxes is also being considered at the community level and will naturally have implications for France. The EU-ETS system, which is subject to subsequent review, will lead to reinforcement of the reduction of targeted levels of emissions associated with decreases in the volume of free allowances of benefitting industries. Such consequences may be at the origin of risks of carbon leakages for European industries (including French ones) along the value chain (upstream and downstream) because of the additional production costs induced by such measures. In order to address those risks, a proposal for a Carbon Border Adjustment Mechanism (CBAM) has been integrated into the European Green Deal and aims to require importers to EU countries to pay a carbon price equivalent to emissions embedded in their products.

Another complementary solution to lowering carbon emissions, especially those contributing to the carbon footprint of France and hence to limiting climate change, has to do with reindustrialisation the French economy. The past two decades have seen the French economy increasing its demand for imports, and the COVID-19 crisis reinforced this observation. A recent study conducted by Deloitte France for UNIDENh has shown that this deindustrialisation movement experienced by French energy-intensive sectors in the 1995-2015 period had substantial economic and climate costs: it lowered economic outcomes (output, GDP and employment), and increased France’s carbon footprint.43 France increased imports of goods it had previously produced domestically with cleaner energy. Deindustrialisation meant that some production moved offshore to regions with more

h. UNIDEN is a union of French energy-intensive industries. UNIDEN stands for ‘Union des industries utilisatrices d’énergie’ in French.

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emissions-intensive processes. The study also shows that steps towards reindustrialisation of the French economy (i.e. re-localising production in France) will, in turn, have significant benefits when it comes to GDP, employment, and carbon footprint in the 2030 horizon. The current French Recovery Plan foresees the reindustrialisation of French sectors, accounting for the necessary path towards decarbonising those industries (sector-specific transition plans, etc.)

Several sectoral regulations have also been introduced in the French context. It is the case, for instance, with the RE2020 regulation on the construction sector. This measure aligns with the net-zero target by aiming at limiting carbon emissions of construction materials (mainly cement, concrete, and wood) in the building sector from 2020 to 2031.

Transition policies have thus contributed to lowering carbon emissions in France. At the aggregate level, emissions in France have been steadily declining since 1970. As a result, France’s current emissions are 24 percent below 2005 levels.44 The share of fossil fuels in France’s energy mix has also steadily declined to 47 percent of its total primary energy supply today.45 France’s early decarbonisation has been underpinned by the power sector, in particular the expansion of nuclear energy.46 In addition to nuclear power, the share of renewables in France’s total primary energy supply has increased by more than 11 percent in the last five years.47 Today, renewable energies account for 9 percent of France’s total primary energy supply.48 France is investing in decarbonising its supply chains by deploying multiple proven and mature technologies at scale. This ambition continues, as France has committed to increase the share of renewable energy to 33 percent by 2030.49

Despite significant progress, emissions in France’s most carbon-intensive industry, the transport sector, continue to increase.50 Although emissions in other major sectors such as building and industry have not increased, both sectors exceeded their carbon budgets in 2020.51 As such, France needs to reduce emissions in these harder to abate sectors to realise its ambition to reach net zero by 2050. France is well

positioned to realise first-mover advantage, acting early and decarbonising its economy; especially in emissions-intensive sectors.

The economic dividend of changeBy contributing to the European and global efforts to keep warming close to 1.5°C, France is investing in its future. Such an investment produces a significant economic dividend.

In 2070, France’s net benefit of transition has grown to 3.5% of GDP. It is €210 billion better off in 2070 in a close to 1.5°C world compared to a 3°C world. By 2070, the economic gain of transition after 50 years is worth €1.5 trillion in net present value terms.

Overcoming the transition costs of the next 15 years to help limit warming to close to 1.5°C will limit the climate damages of an around 3°C world. Growth in new sectors drives a robust and sustainable recovery.

In 2070, there could be almost 1.5 million more jobs within France – or a 1.8 percent larger workforce – compared to a climate-damaged world without action. Furthermore, France could experience one of the largest increases in employment across Europe. This growth in employment would be driven by France’s clean energy and services sector.

In the Deloitte modelled scenario, France’s low-carbon electricity mix sector, comprising both nuclear and renewable energy (primarily wind, solar and hydro) sources,i underpin the transition. An accelerated decarbonisation over the next two decades positions France as a global leader in emissions reduction, reaping benefits for its economic output and employment earlier than its European counterparts over the modelled horizon. In comparison, inaction does not yield employment or economic benefits for France, exposing structural issues in its economic fabric.

To realise this dividend, structural change come with an economic cost – for the next 15 years France’s GDP could be 0.3 percent lower each year in a close to 1.5°C world compared to a 3°C world. This is the value of the effort and investment that France has chosen in leading the world; to ensure it can meet

i. In Deloitte global modelling structure, low-carbon electricity mix has been referenced as ‘clean electricity’.

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emerging global demand, and ensure France’s most emission-intensive industries are appropriately supported. It will mean that some sectors face steeper costs in this transition. It is up to policy and effective coordination across industries to ameliorate these effects.

Decarbonisation means more than generating larger quantities of economic output. It also fundamentally changes the quality of activity, in terms of its sustainability, resilience, and inclusivity. A rapid, coordinated, and effective transition to a climate-neutral economy will generate a diverse range of benefits for France (Figure 4).

The path to decarbonisation There is no single transition path to a decarbonised economy. The Deloitte modelled path represents a sequencing of efforts – by government, businesses, and citizens – to collectively move to net-zero emissions by 2050, and limit warming to around 1.5°C. The modelled effort reflects the crucial interplay of systems and decision makers in supporting France’s decoupling of emissions from economic growth. See Technical Appendix for more details on the mechanisms that drive decarbonisation in this scenario.

Source: Deloitte Economics Institute.

€Change is valued• Decabonisation policies and

investments in new technologies accelerate

• The coverage and the value of explicit and implicit carbon prices rise

• Estimates of future economic costs of climate change provide a market signal for action

• Consumer behaviour changes

Fuels switch• The electrification of industries

and households increases

• Energy-producing and energy-consuming sectors more closely integrate value chains

Energy transforms• Renewable and clean electricity

transform Europe’s energy system

• As renewables become cheaper, there is substitution in favour of renewable power

• Economies have cheaper and cleaner energy, and more productive economic output from it

Just transition• Early policy decisions, social

supports and industry investment ensure no place or sector is left behind

• Strategic economic policy meets the challenge and creates demand for disrupted workers

Figure 5: The drivers of economic change from decarbonisation in a ‘close to 1.5°C world’

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Bold climate plays: From 2021 to 2030The next several years set the stage for rapid decarbonisation. The decisions made by the government, regulators, businesses, industry, and consumers reinforce initial progress and create the market conditions to deliver decarbonisation at pace and scale. Accelerating innovation, investment, and R&D in the next decade will deploy the requisite technologies in sectors to achieve reductions after 2030. As the coverage of the European Union’s Emissions Trading Scheme expands, carbon prices rise (making more of these projects attractive to private finance), supply chains transform, and the foundation for a structural shift to limit global average warming to 1.5°C is in place.

France’s energy sector undergoes rapid transformation during this period.j Bold climate plays are characterised by accelerated investment into the development of emerging clean energy technologies, and the deployment of mature renewable energies, such as solar, wind, and hydro. In the short to middle-term, nuclear power from which France is highly benefiting (and which is accounted for in the modelling in the form of low-carbon energy source) provides an important share of the low-carbon energy required by the transition.

The construction sector benefits from this initial uptick in clean energy production. This occurs both due to the infrastructure required to generate the required electricity output, but also the electrification and renovation of the residential and commercial building stock. Temperature control in buildings is a key driver of increasing energy demand.52 Employment in the construction sector increases with output as a result of falling electricity costs, increased renovation effort, and investment in new infrastructure for the clean energy sector.

France’s industries face an uneven transition during this period. France’s transport and industrial sectors, which are relatively more dependent on conventional energy sources, face steeper adjustment costs in this first decade of transition. As France substitutes away from refined petroleum, output and employment in the transport sector

declines. The heavy manufacturing industry faces the steepest decline in output in this decade. Decarbonisation in the manufacturing sector is particularly challenging due to large upfront costs of investment as low carbon technologies and materials are relatively less mature compared to developments in the clean energy sector.53 These initial investments are necessary to deliver economic benefits to these industries later in the century. The age of industrial assets, rather older than in other parts of the world, however eases the transition to new facilities based on low-carbon technologies that will progressively reach commercial maturity in this decade. It generally avoids the industrial sector to face accelerated depreciation of existing assets in a period when it should focus on the assessment, selection, and development of future enabling technologies for a low-carbon future.

Employment in the services sector also declines as a result of overall losses in economic output. Emissions-intensive sectors such as transport, construction, and manufacturing experience employment losses due to the adjustment costs of this transformation. However, rapid growth in the clean electricity sector draws in a large number of new employees and softens the impact of climate transition in the scheme of France’s economic output. This absorbs a number of workers from more fossil fuel reliant industries.

During this decade, the country experiences an average annual reduction in GDP of 0.4%. The overall impact of this first decade of global action on the French economy is marginal. Due to France’s relatively more decarbonised energy mix, it has one of the least disruptive first 10 years of transition, in comparison to its European neighbours.

j. Deloitte Access Economics models the share of clean energy in the total energy mix at the aggregate level. As such, it does not separate the share of nuclear versus renewable energies in the total clean energy mix of the future.

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Turning point: From 2031 to 2040This decade centres on the meeting of interim targets agreed to in the early 2020s. This is a decade where economies, businesses, and industries begin to see the consequences of bold climate plays, with different industries transforming at different paces. As France approaches its turning point towards the end of this decade, the hardest shifts in industrial policy, energy systems, and consumer behaviour are well underway.

This decade is the climatic and economic turning point for France as it not only realises economic dividends from climate action, but also limits economic losses from a higher emissions pathway. During this decade, France enters a new economic era. By 2036, France’s economy is better off after a net zero transition compared to a world without climate action, both in terms of GDP and employment. In comparison to the rest of Europe, France reaches this position early – due to a competitive advantage in many of its industries, particularly its power sector.

By the end of the decade, gains in sectors such as clean energy and construction ease the transition in other sectors, such as transport and manufacturing. France’s largest individual sector, public and private services, reach its turning point by the end of the decade.

As France and the rest of the world decarbonise, clean energy technologies expand, and the cost of low-emissions alternatives decrease. Investment into the clean energy sector from the previous decades pays off as France’s renewable generation capacity expands, providing a boost to output and employment.

This decade outlines the uneven transition path for France’s industries, underpinned by their respective level of dependence on emission intensive fuel sources for inputs. However, it also highlights the benefits from early climate action, even in an emissions-intensive sector like the construction industry.

In addition to reducing emissions from heating, dedicated climate action enables the construction industry to decarbonise harder to abate parts of its supply chain, for example, by retrofitting its more energy-inefficient homes. Given that 40% of France’s total heated floor area was built before 1970, retrofitting and thermal renovations provide key opportunities to reduce energy demand, and consequently, emissions in France’s building sector.54 Notably improving energy efficiency also has the potential to boost employment and support a just transition for France.55,56 As such, employment in the construction industry steadily increases as output remains higher than under a damaged baseline.

Given that the transport sector is France’s most emissions-intensive sector, decarbonisation will mean that output and employment in this sector are lower than under the global inaction scenario. However, as France expands its renewable generation capacity and invests into alternative fuels sources to support electrification, output in the transport sector begins decoupling economic growth from emissions-intensive fuels like refined petroleum.

France is one of the worst affected regions in Europe under a future of inaction on climate change. As a result, it stands to gain the most from this transition in avoiding these impacts. It is one of the earliest European regions to reach its turning point. Its GDP is 0.4% higher in 2040 in a close to 1.5°C world compared to a 3°C world.

Investing in rapid decarbonisation for France

Accelerate to zero: From 2040 to 2050The decarbonisation adjustments in industry are almost made, the cost of new low-emission technologies is decreasing, and net economic gains are shared more widely. With this, global warming remains on a path as close to 1.5°C – and well below 2°C.

France reaches carbon neutrality before its European neighbours, and is reaping the benefits of this transition. Its industries can now fully capitalise on the opportunities of net-zero as well as benefit from the avoided costs of climate change damage.

As France accelerates its decarbonisation to net-zero, the economic benefits of doing so also accelerate.

Accelerating to net-zero drives further economic benefits in the clean energy sector, as electrification and clean fuels reach initially harder to abate sectors. The €150 billion gain to this industry, relative to the inaction baseline in 2050, forms the foundation of France’s modern, decarbonised economy at the mid-point of the 21st century.

This period sees accelerated growth in output and employment in France’s tertiary sectors; in particular, professional and recreational services such as retail and tourism. Notably, these sectors had the most to lose from climate inaction.

Reducing emissions, early and in a coordinated manner, minimises the impact of climate change on extreme weather events and atmospheric patterns which are a key driver of tourism. As a result, France’s tourism industry thrives in this new economic climate. Its services sector also booms, reflecting France’s overall strong economic position across all its industries in this period.

As economic output recovers, it drives jobs growth across France’s services sectors, as well as in recreational services, such as retail and tourism. In addition to an advancing clean energy sector, some emissions-intensive sectors, such as construction, also begin to reap the benefits of decarbonisation. Although aggregate employment remains below the damaged baseline throughout this decade, it reflects a net effect.

By the end of the decade, GDP is 1.6% higher than it would have been in a 3°C world. After reaching its net-zero target in 2050, growth in decarbonised industry, coupled with avoided climate impacts of an inaction world, France continues to generate net economic benefits from decarbonisation.

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A low-emission future: Beyond 2050The economies of Europe are at net-zero emissions and the economic systems of production now keep global average warming to around 1.5°C by the end of the century. Economic structures have been radically transformed, underpinned by a series of interconnected, low-emission systems spanning energy, mobility, manufacturing, and food and land use.

The energy mix is dominated by low- or zero-emission sources across every market, with clean energy sources and negative emissions solutions, both natural and technological, playing prominent roles. Notably, France is now rapidly gaining economic dividends from global decarbonisation. A low-emission future is benefitting almost all sectors in France and offers the world new sources of economic growth.

Compared to other European countries, France does not experience as severe a transition as others, but it has the most to gain in making this transition. Now, France sees higher output under a net-zero transition in 2070, with GDP 3.5% higher than in a world without climate action.

Its most emissions-intensive industries have now also reached their turning points. Emissions-free, and electrified systems of transport and manufacturing, have economic gains of €20 billion and €13 billion, respectively. Electrification and investments into alternate sources of fuel, like hydrogen and biofuels, in previous decades enable France’s most emissions-intensive sectors to reach their turning point. Harder to abate sectors begin reducing emissions both through electrification, novel zero emissions fuels, investments in business model and organisational change to develop and deploy zero and negative emission technologies.

Overall, the net-zero transition is not as costly on France’s economy as in other parts of the world. By 2070, France is leading Europe in leveraging decarbonisation to bolster its economy.

Investing in rapid decarbonisation for France

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Final words – The need for an ordered and early transition

Final words – The need for an ordered and early transition

This analysis has focused on an ordered transition; where, for instance, investments are made on time, electrification occurs rapidly and the global economy moves in the same direction towards net zero. This state corresponds to the one where there are effective transition policies and the shift in the economy’s composition occurs smoothly (there are new opportunities that show up, and there exists sufficient competencies to take them), leading to the observed long-term gains. It is the idea of ordered transition under which policies and society work in a way that there is an early reduction of carbon emissions to meet climate targets.

In reality, transition may also be disordered and may lead either to targets that are met with high transition risks - whereby there is a sudden and unexpected response to climate change that cause disruptions but responses are sufficient to meet climate targets – or correspond to a “too little too late” state where policies do not act sufficiently early or do not put sufficient effort towards meeting the climate goals. This worse case, disordered transition scenario, is associated with both high physical and high transition risks according to the NGFS and occurs if policies are not introduced until 2030, resulting in high carbon prices. Although these two pathways (disordered, but targets met and disordered “too little too late”) are not modelled in this study, it is worth noting that both are associated with deep sector transformations and transition challenges with the presence of winners and losers from transition that could mitigate the gains associated with the new normal state. Under these scenarios, lack of investments in good technologies, lack of competencies, and low adjustment to the new normal state are at the origin of such phenomena.

Disordered transition would thus rather lead to lowering technological progress and produce crowding out effects on investments which, in turn, would lower productivity. Likewise, if France were to conduct its decarbonisation process, whereas other regions would not make the same level of efforts, the country could face the burden of the transition without benefiting from lower costs related to the global emission reduction. Such pessimistic transition pathways are not accounted for in the modelling as our simulations assume that all regions of the world would make the necessary efforts to reach their own net zero emissions target in an ordered pathway.

Our results should be viewed as a call for an early and ordered transition, strongly supported by global and sectoral policies. Starting from this global outlook, each sector must develop a detailed operational pathway, that take into account the technological constraint, the financial stakes of financing transition, as well as the social impact of transition. Reaching the net-zero target will necessarily involve giving priority to low-carbon solutions, but potential adverse effects of these measures must be taken into consideration in order to ensure sustainability. For instance, the transition to electric vehicles must be based on an effective industrial strategy for the construction of electrical batteries and their life-cycle management. Likewise, fostering social acceptance of new renewable energy infrastructure is key, as particularly demonstrated by onshore wind deployment in France.

To conclude, our modelling demonstrates that the need for an earlier and complete transition is not only an ethical or political choice: it is also an economic one, compared to the climate inaction. A net-zero transition may be a long and risky journey. But it is also the best path to ensure the sustainability of the economic trajectory of the country.

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A net-zero transition may be a long and risky journey. But it is also the best path to ensure the sustainability of the economic trajectory of the country.

31

Final words – The need for an ordered and early transition

Appendix: Modelling climate change impacts in France

1

The model projects economic output (as measured by GDP) with emissions reflecting a combined Shared Socioeconomic Pathway (SSP)-Representative Concentration Pathway (RCP) scenario, SSP2-6.0, to the year 2100.k The socioeconomic pathway, SSP 2, is the ‘Middle of the Road’ among five broad narratives of future socioeconomic development which are conventional in climate change modelling. The climate scenario, RCP 6.0, is an emissions pathway without significant additional mitigation efforts (a baseline scenario).57 This results in a projected emissions-intensive global economy.l

2

Increased atmospheric GHGs cause average global surface temperatures to continue rising above pre-industrial levels. In the SSP2-6.0 baseline scenario, global average temperatures increase more than 3°C above pre-industrial levels by the end of the century according to the Model for the Assessment of Greenhouse Gas Induced Climate Change (MAGICC).m (Note that present-day temperatures have already risen more than 1.0°C above pre-industrial levels.)

Global emissions will continue to rise if no further significant action is taken to mitigate climate change. The outcome would be increasing global average warming towards the end of the century. In this world, inaction on climate change would be the baseline path for the economies of France, and the world. This baseline scenario would negatively impact economic growth when compared to a world without climate change (refer to the Technical Appendix for a detailed discussion).

To quantify this conclusion, Deloitte modelled the economic impacts of a changing climate on long-term economic growth in France, using the following stepped process:

k. IPCC-adopted emission scenarios vary widely, depending on socioeconomic development and climate mitigation policy settings. SSP2-6.0 is chosen as one of the most frequently used ‘baseline’ scenarios in the literature. It describes an intermediate baseline scenario as it carries historical social, economic and technological trends forward and includes no specific or significant climate mitigation policy effort, making it an appropriate baseline for reference. For more detailed description of SSP2-6.0 and rationale for its adoption, see Technical Appendix.

l. Pre-industrial is defined in IPCC assessments as the multi-century period before the onset of large-scale industrial activity around 1750.

m. The associated climate data (like annual temperature increases and atmospheric concentrations) are estimated using MAGICC as described in Meinshausen et al. (2011) and Meinshausen et al. (2020), and configured by Nicholls et al (2021). See the Technical Appendix for further detail.

Appendix: Modelling climate change impacts in France

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3

Warming causes the climate to change and results in physical damage to the factors of production. The Deloitte model includes six types of economic damage, regionalised to the climate, industry, and workforce structure of each defined geography in Europe.

4

The damage to the factors of production is distributed across the economy, impacting GDP. Any change in emissions (and, correspondingly, temperatures) over time results in a change to these impacts and their interactions. The economy impacts the climate, and the climate impacts the economy.

5

The key variables of time, global average temperatures, and the nature of economic output across industry structures combine to offer alternative baseline views of economic growth. Specific scenario analysis is then conducted, referencing a baseline that includes climate change damage. Scenarios can also include policy actions that either reduce or increase emissions and global average temperatures relative to the current SSP2-6.0 baseline view.

This modelling framework involves significant research on region-specific climate and economic impacts across France, which are used as inputs for Deloitte’s D.CLIMATE model (refer to the Technical Appendix for more detail).

Appendix: Modelling climate change impacts in France

33

Endnotes

1 Economic growth as measured by GDP, and improved standards of living as measured by increasing GDP per person.

2 Bank of England. (2019). How has GDP growth changed over time?

3 Cumulative share since 1751 based on 525 Gt CO2 and 1,652 Gt CO2 emitted by Europe and the world, respectively. For more details, see: Ritchie and Roser. (2021) “CO2 and Greenhouse Gas Emissions”. Our World in Data.

4 Météo France (2020) ‘Le changement climatique en France’. Link available.

5 Radio France International (RFI). (2019) ‘Four dead, property devastated in floods in southern France’. Link available.

6 BBC. (2017) ‘Hurricane Irma damage considerable – Macron’. Link available.

7 BBC. (2020) ‘Storm Alex: Deadly flash floods hit France and Italy’. Link available.

8 Direction générale de l’énergie et du climat. (2014). ‘Le climat de la France au XXIème siècle’, volume 2, 2014, J.Jouzel. Link available.

9 CCR, Météo France (2018). ‘Conséquences du changement climatique sur le coût des catastrophes naturelles en France à horizon 2050’. Link available.

10 IPCC, 2014: Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part B: Regional Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, pp. 688. Chap 23, p 1280. Link available.

11 Ibid.

12 Time. (2020) ‘The Taste of Bordeaux Is Going to Change.’ Under Threat From Climate Change and Coronavirus, French Winemakers Try Experimenting’. Link available.

13 IPCC, 2014: ‘Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part B: Regional Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change’. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, pp. 688. Chap 23, p 1271. Link available.

14 F.Hendrickx & E. Sauquet. (2012) Impact of warming climate on water management for the Ariège River basin (France)’. Link available.

15 Ritchie, H. and Roser, M. (2020) ‘CO2 and Greenhouse Gas Emissions’, Our World in Data. Link available.

16 Richard Viven, ‘Trente Glorieuse. In France, 1934-1970’ (1996) European Studies Series 111.

17 Ibid.

18 Ibid.

19 Ritchie, H. and Roser, M. (2020) ‘CO2 and Greenhouse Gas Emissions’, Our World in Data. Link available.

20 Eurostat. (2018) ‘Which Member States have the largest share of EU’s GDP?’, Eurostat (11 May 2018). Link available.

21 Johannes Friedrich et al. (2020) ‘This interactive chart shows changes in the World’s top 10 emitters’, World Resource Institute. 10 December. Link available.

22 Centre on Regulation in Europe. (2015) ‘The energy transition in Europe: initial lessons from Germany, the UK and France’. 6 October. Link available.

23 Ibid.

24 Ritchie, H. and Roser, M. (2020) ‘CO2 and Greenhouse Gas Emissions’, Our World in Data. Link available.

25 European Commission, ‘Integrated national energy and climate plan for France’ (March 2020).

26 Climate Transparency. (2020). Comparing G20 climate action and responses to the COVID-19 crisis . Link available.

Endnotes

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27 Teresa Ribers and Andreas Rudinger, ‘The energy transition in France: A shift towards a new energy model’ (2014) Intereconomics (5) 252.

28 Ministère de la Transition Ecologique. (2020) ‘Chiffres clés de l’énergie’, Edition septembre 2020. Link available.

29 International Energy Agency, Energy Policies of IEA Countries: France 2016 review (2017) Link available.

30 European Commission, ‘Integrated national energy and climate plan for France’ (March 2020).

31 IPCC. (2021) Climate Change 2021: The Physical Science Basis. Contribution of Working Group I to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [Masson-Delmotte, V., P. Zhai, A. Pirani, S. L. Connors, C. Péan, S. Berger, N. Caud, Y. Chen, L. Goldfarb, M. I. Gomis, M. Huang, K. Leitzell, E. Lonnoy, J. B. R. Matthews, T. K. Maycock, T. Waterfield, O. Yelekçi, R. Yu and B. Zhou (eds.)]. Cambridge University Press. In Press.

32 Ibid.

33 European Commission, ‘Integrated national energy and climate plan for France’ (March 2020).

34 Ibid.

35 Conseil d’etat, Press release: Greenhouse Gas emissions: The Government must justify within 3 months that the reduction path to 2030 can be achieved (19th November 2020).

36 European Commission, ‘Integrated national energy and climate plan for France’ (March 2020).

37 Aon. (2020). Weather, Climate & Catastrophe Insight.

38 BBC. (2020) ‘Storm Alex: Deadly flash floods hit France and Italy’. Online, 5 October. Link available.

39 Eckstein, D. Kuenzel, V. Schaefer, L. and Winges, M. (2020). ‘Global Climate Risk Index 2020: Who Suffers Most from Extreme Weather Events? Weather-Related Loss Events in 2018 and 1999 to 2018’. Breifing paper. Link available.

40 International Energy Agency, Energy Policies of IEA Countries: France 2016 review (2017) Link available.

41 European Commission, ‘Integrated national energy and climate plan for France’ (March 2020).

42 Ibid.

43 Deloitte Economic Advisory – Uniden. (2021) ‘ Le redéploiement industriel, un enjeu social, économique et un instrument de maîtrise de notre empreinte carbone’. Link available.

44 European Commission, ‘Integrated national energy and climate plan for France’ (March 2020).

45 Climate Transparency. (2020). Comparing G20 climate action and responses to the COVID-19 crisis. Link available.

46 International Energy Agency, Energy Policies of IEA Countries: France 2016 review (2017) Link available.

47 Ibid.

48 Climate Transparency. (2020). Comparing G20 climate action and responses to the COVID-19 crisis . Link available.

49 Teresa Ribers and Andreas Rudinger, ‘The energy transition in France: A shift towards a new energy model’ (2014) Intereconomics (5) 252.

50 European Commission, ‘Integrated national energy and climate plan for France’ (March 2020).

51 Ibid.

52 Haut Conseil pour le Climat. (2020). ‘Renovating better: lessons from Europe’. Link available.

53 C Bataille, ‘Low and zero emissions in the steel and cement industries: Barriers, technologies and policies’, (2020) 02 OECD Green Growth Papers.

54 European Union. (2018). Building Market Brief: France. Link available.

Endnotes

35

55 Haut Conseil pour le Climat. (2020). ‘Renovating better: lessons from Europe’. Link available.

56 C Bataille, ‘Low and zero emissions in the steel and cement industries: Barriers, technologies and policies’, (2020) 02 OECD Green Growth Papers.

57 Intergovernmental Panel on Climate Change (2017), Annex II: Climate System Scenario Tables. Link available.

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Germany’s turning pointAccelerating new growth on the path to net zeroOctober 2021

Turning pointTechnical appendixOctober 2021

Visit www.deloitte.com/europe-turningpoint to access the individual geography reports.

Limitations of our work

General use restriction

This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively the “Deloitte Network”) is, by means of this publication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this publication.

Limitations of our work

Limitations of our work

37

Authors

Dr. Pradeep Philip Partner, Deloitte Economics Institute

pphilip@deloitte.com.au

The following economists and specialists crafted and created the insights in this report:

Claire IbrahimLead Director, Deloitte Economics Institute

cibrahim@deloitte.com.au

Cedric Hodges Lead Director, Deloitte Economics Institute

cehodges@deloitte.com.au

Sustainability LeadersNicolas De Jenlis, Partner, Sustainability Leader, Deloitte Central Europe

Sandra Heuts, Partner, Sustainability Leader, Deloitte North and South Europe

Olivier Jan, Partner, Sustainability Services, France

Julien Rivals, Partner, Sustainability Services, France

Thomas Schlaak, Partner, Sustainability Services Lead, Germany

Franco Amelio, Partner, Sustainability Leader, Italy

Tim Archer, Partner, Sustainability Leader, UK

Hannah Routh, Partner, Sustainability Leader, UK

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Contacts

The following Deloitte leaders provided invaluable guidance, local insights, and unique perspectives for this report:

Contacts

Marc Van CaeneghemManaging Partner Risk Advisory

mvancaeneghem@deloitte.fr

Marc Van Caeneghem joined Deloitte France in 1996. With a career spanning over two decades, Marc brings a wide range of experience to Risk Management and Advisory, mostly serving clients in financial services to design and implement operating models that improve risk management practices. Within the firm, he has been in charge of strategy and innovation. In this role, he led the launch of Deloitte France’s Greenhouse and supported the French firm’s various digital transformation initiatives. Marc has led Deloitte France’s Risk Advisory activities since 2017 and is a member of the Executive Committee. He is now global head of the Climate and Sustainability teams.

Olivier JanPartner, Deloitte France Sustainability Services

ojan@deloitte.fr

Olivier is Deloitte Central Europe Sustainability Lead Partner. This practice provides advice and guidance to corporate and public entities in all of their sustainability and social challenges. Olivier began his career in a consulting firm specializing in life cycle analysis, and over the years has gained significant experience serving clients on procurement transformation, supply chain and operations practices. He joined BIO Intelligence Services in 2008 before it was acquired by Deloitte in 2013. Olivier manages projects and advises corporations to design their sustainability strategy and improve their environmental performance.

Olivier SautelPartner, Economic Advisory

osautel@deloitte.fr

Olivier is a partner in the Economic Advisory department. He worked as a senior competition economist at Microeconomix since 2007, before Microeconomix joined Deloitte in 2016. He is in charge of impact studies and socio-economic analyses within the team. He holds a PhD in industrial economics (University of Nice Sophia Antipolis-CNRS) and has 15 years of experience in economic expertise applied to regulatory and public policy issues. At the same time, Olivier regularly publishes in specialized magazines and teaches in various Master programs (Universities of Versailles, Nanterre, Paris XIII).

Contacts

39

Deloitte Economics Institute

The pace and scale of global economic, social, environmental, and digital disruption is rapid, and we all now operate in a world that we no longer readily recognise. This creates a need to understand how structural economic change will continue to impact economies and the businesses in them, and the livelihoods of the world’s citizens.In pursuit of economic prosperity, progressive organisations need future-focused, trusted advisors to help them navigate complexity and deliver positive impact. The Deloitte Economics Institute (the “Institute”) combines foresight with sophisticated analysis to shape and unlock economic, environmental, financial, and social value. Connecting leading global insight and local knowledge with an independent perspective, the Institute illuminates future opportunities and drives progress.

The Institute’s economic rigor comes from its cutting-edge analytic tools; experience working with businesses and governments; and the expertise of Deloitte firm practitioners who help shape public policy, deliver business insights, and inform investment strategy. The Institute shares practical policy, industry know-how, and evidence-based insights to help businesses and governments tackle the most complex economic, financial, and social challenges.

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The Institute prides itself on rigorous qualitative and quantitative analysis, and is supported by proprietary and specialist models refined over many years. The Institute’s highly qualified economists and practitioners practicing in Deloitte firms have a strong reputation for objectivity and integrity. All client services offered by the Deloitte Economics Institute are performed by practitioners at Deloitte firms.

For more information on the Deloitte Economics Institute, please visit the website: www.deloitte.com/deloitte-economics-institute

A special thanks to the following individuals who provided the support to make this report possible:Josh Appleton Miles

Mairead Davis

David O’Callaghan

Adam Davey

Hom Pant

Djauhari Pambudi

Morgan Richards

Lucy Mraz

Aneesha Singh

Karli Jeffery

Sam Marginson

Hugo Bailly

Rokhaya Dieye

Edoardo Palombo

Jack Buckley

Sylvia Yoon Chang

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Elizabeth Payes

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Rupesh Bhat

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Emma Downey

France’s turning point

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General use restrictionThis publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively the “Deloitte Network”) is, by means of this publication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional advisor. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this publication.

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