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Balancing Environmental, Fiscal, and Welfare Impacts of Transportation Decarbonization in France

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  • Nate Vernon-Lin

Abstract

France has taken a leadership role in global mitigation and made significant progress towards reducing greenhouse gas emissions, but further efforts will be needed to meet domestic mitigation targets. Accelerating emissions reductions from road transportation will be a key part of this strategy, as they account for nearly one-third of national emissions. At the same time, with the shift to more lightly taxed electric vehicles over the next decade, fiscal revenue from the sector is projected to decline and externalities, such as congestion, to worsen. Building on existing policies, a comprehensive reform that combines revenue-neutral continuous feebate schemes with a gradual introduction of road user and congestion charges could support mitigation targets, while maintaining revenue and regulating externalities. This paper discusses administratively feasible options to introduce such policies as well as key welfare and distributional considerations.

Suggested Citation

  • Nate Vernon-Lin, 2024. "Balancing Environmental, Fiscal, and Welfare Impacts of Transportation Decarbonization in France," IMF Working Papers 2024/145, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2024/145
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