France: The issue of energy transition

Series on the debates of the French presidential campaign – No. 1 This Flash deals with an issue that should be a key topic of debate in the French presidential campaign . The energy transition will pose serious and complex economic policy problems for France. They will appear mainly in three areas. First, the need to invest heavily, partly to replace the capital that will be destroyed by the energy transition. Income distribution between investment and consumption will therefore have to skew in favour of the former and away from the latter, which will be painful and create problems. Second, the inevitable rise in energy prices, both during the transition and in the long term, once the transition has been made. In particular, this will result in a loss of purchasing power for the lowest-income households, which will have to be offset. Third, the energy transition will entail a significant and rapid change in skills needed and in the nature of jobs , the risk being that skills may be too slow to adjust. All this begs the question of how economic policy will respond to these problems and what new economic equilibrium will emerge.