Recovery Plan: Is It a Truly Green Plan for Transportation?

This article was originally published in our newsletter "Mobility Analysis" from October 12, 2020. To receive future articles by email as soon as they are published, Subscribe now.

In early September, Prime Minister Jean Castex presented the post-COVID recovery plan. With the 2021 Finance Bill—which includes this recovery plan—set to be debated starting October 6, what should we make of the plan’s transportation provisions? Shortly before summer, we analyzed the strengths and weaknesses of the initial stimulus measures announced[1], measures that were later clarified and expanded upon by the recovery plan. At that time, we compared the French announcements with the German recovery plan presented on June 3. Does this French recovery plan address the shortcomings identified in those initial announcements? First, in financial terms, the two plans are of similar magnitude: €100 billion for France (including approximately €13 billion for transportation) versus €130 billion for Germany[2]. Of the €100 billion in the French plan, the measures targeting transportation are clearly identified[3]:

• 1.2 billion euros to develop everyday mobility: a cycling plan and public transit projects
• €4.7 billion to implement a support plan for the rail sector
• 550 M€ to accelerate work on transportation infrastructure
• €1.9 billion to support demand for clean vehicles under the automotive plan (eco-bonus, conversion incentive)
• 180 M to make the government's vehicle fleet more environmentally friendly
• €2.6 billion related to support plans for the aerospace and automotive sectors
• 7 billion euros for green hydrogen, nearly a quarter of which is earmarked for transportation applications (see the article by Stéphane Amant of Carbone 4 on this topic[4])

That amounts to more than 11 billion euros (13 billion euros if we include one-quarter of the hydrogen plan’s budget).

On theaviation, the situation remains unchanged from the initial announcements. In France, as with our German partner, the focus is on hydrogen to achieve a “CO2-neutral” aircraft by 2035 (excluding emissions from aircraft manufacturing and hydrogen production, distribution, and storage). This bold new timeline is to be commended: the industry had initially targeted first flights for 2050—15 years later. Nevertheless, for an industry where program development times are very long, it is doubtful that this timeline will be sufficient to enable fleet renewal at the necessary pace, particularly if the sector returns to its pre-COVID growth levels. It is also regrettable that there is no mention whatsoever of the development of synthetic fuels, which are highly promising and have little (if any) impact on current aircraft design.

With regard to the automotive industry and road transportation, The easing of lockdown restrictions was marked by special purchase incentives, which strongly—though not exclusively—favored electric vehicles. Now that the 200,000 one-time conversion incentives have been exhausted, the €1.9 billion earmarked to support the automotive sector is expected to follow the same approach, with the potential for an increase in penalty. The issue of thecharging infrastructure is being taken very seriously on both the German and French sides, with a target of 100,000 charging stations in France by the end of 2021 and €2.5 billion allocated in Germany to infrastructure and the development of electric mobility. Finally, the main change compared to the initial announcements made as lockdown restrictions were lifted likely concerns hydrogen and the significant portion that is expected to be allocated to heavy-duty transportation, particularly heavy-duty trucks.

With regard to rail transportation, The stimulus plan confirmed a level of support that was far from guaranteed back in June. At €4.7 billion, the support for the SNCF is on par with the €5 billion allocated by Germany to Deutsche Bahn. Furthermore, the announcements regarding everyday mobility (€1.2 billion), including public transportation, fill a gap in previous French announcements. Thus, the recovery plan’s guidelines address certain gaps in the French announcements following the end of the lockdown, particularly regarding rail and public transit. This closes a gap that initially placed France at a disadvantage compared to Germany. However, as illustrated by the aid to the aviation sector—which was initially preceded by a massive support plan for Air France with virtually no environmental conditions— these billions of euros—which are welcome in a sector left drained by the COVID crisis—reflect, in some respects, a policy that prioritizes industry over the environment. The two are not incompatible, provided sufficient resources are allocated.

Article written by Clément Mallet (Senior Consultant) Clement.mallet@carbone4.com

Sources: [1] Carbone 4, Mobility Insights [2] Federal Ministry of Finance [3] Government [4] Carbone 4, Mobility Insights