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POWER: France Budget Draft Update on Energy Sector

POWER
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The French government published its 2025 budget plan on Thursday, with plans to increase spending in decarbonisation, while cutting support for EV purchases and increasing taxes on certain combustion engine vehicles.   

  • Renewables/Energy Sector – France is planning to increase spending for renewables and other energy projects by €4.6bn next year.
  • France must avoid making fossil-fuel based energy solutions cheaper than decarbonised energy, which means the government needs to address existing advantages to fossil-fuel energy, Energy Minister Agnes Pannier-Runacher said.
  • Automobile sector - France is reducing the assistance for the purchase of EVs by one third to €1bn in 2025.
  • The budget also demands penalties for 5g/CO2/km vehicles in 2025, and then 7g/CO2/km in 2026 and in 2027. To target the most emitting vehicles, the maximum rate will be increased by 10,000€/yr until 2027. The higher tax is expected to generate an additional €300mn.
  • Households – France is planning to increase its power tax, which is expected to generate €3bn in additional tax revenue. The government argues this won’t result in higher household bills due to falling power prices.
  • France also aims to cut subsidies for home renovations, district heating and other clean energy projects by €1.4bn.
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The French government published its 2025 budget plan on Thursday, with plans to increase spending in decarbonisation, while cutting support for EV purchases and increasing taxes on certain combustion engine vehicles.   

  • Renewables/Energy Sector – France is planning to increase spending for renewables and other energy projects by €4.6bn next year.
  • France must avoid making fossil-fuel based energy solutions cheaper than decarbonised energy, which means the government needs to address existing advantages to fossil-fuel energy, Energy Minister Agnes Pannier-Runacher said.
  • Automobile sector - France is reducing the assistance for the purchase of EVs by one third to €1bn in 2025.
  • The budget also demands penalties for 5g/CO2/km vehicles in 2025, and then 7g/CO2/km in 2026 and in 2027. To target the most emitting vehicles, the maximum rate will be increased by 10,000€/yr until 2027. The higher tax is expected to generate an additional €300mn.
  • Households – France is planning to increase its power tax, which is expected to generate €3bn in additional tax revenue. The government argues this won’t result in higher household bills due to falling power prices.
  • France also aims to cut subsidies for home renovations, district heating and other clean energy projects by €1.4bn.