In May 2025, four ministers urged the French government to implement a second carbon market to boost decarbonization funding, but their proposal was ultimately dismissed.
London, United Kingdom Jul 26, 2026 ALN: When the war in the Middle East erupted in late February, and fuel prices skyrocketed, the government proposed an electrification plan to reduce reliance on fossil fuels for both purchasing power and climate reasons. However, due to a lack of resources, the plan must proceed with constant funding.
About a year ago, four ministers proposed a way to inject an additional €1.2 billion per year into decarbonization, particularly in electrification.
In a letter obtained by , dated May 26, 2025, Eric Lombard (Economy), Amélie de Montchalin (Public Accounts), Agnès Pannier-Runacher (Ecological Transition), and Marc Ferracci (Energy) pressed Emmanuel Macron and François Bayrou to implement the extension of the European carbon market. The explosive reform has, for now, been shelved.
The quartet recommended that the Élysée and Matignon dare to implement the ETS2, the extension of the European carbon market, to road transport and buildings. Despite a deadline set for June 2024, France is one of the few EU countries that has not transposed this directive. Like 18 other states, it has also not submitted its plan for using the Social Climate Fund, intended to assist the less fortunate.
The delay is currently without consequence since the carbon market, expected to apply from January 1, 2027, has been postponed by a year.
It must be said that the reform is highly sensitive. It would increase the cost of filling up at the pump or heating with gas or oil, with the idea being to encourage households to switch to electric. If applied as is, it would raise gasoline prices in France by 12 to 15 cents per liter, according to the ministers' calculations.
Moreover, decided in Brussels, recalling the carbon tax that had driven the Yellow Vests to the roundabouts, the ETS2 has all the ingredients of a politically explosive dossier. The National Rally has not missed the opportunity and is calling for its abolition.
However, in this letter, the four ministers sought to present the ETS2 as an opportunity.
For the reform should generate substantial revenue. Part of it will go directly into the state budget — about €7.3 billion, according to an estimate from the Council of Mandatory Contributions. Another portion will contribute to the European Social Climate Fund. This second envelope has the advantage of being required to be allocated to the transition and available even before the carbon market comes into force, provided all transpositions are completed.
By adopting the directive into French law, the government could have benefited from “€1.2 billion per year in payments from the social climate fund” starting in 2026, the ministers recalled. They suggested that “communication around this fund could politically accompany the transposition.”
This could financially assist households in moving away from fossil fuels, reinforcing the social leasing of electric cars, support for heat pumps, or the energy check. Essentially, this is what the government is currently attempting to do with the electrification plan, but without the funds.
The ministers also put forth other arguments, of a climatic, industrial, and geopolitical nature, warning of the risk of “fragile relations with Germany” and “weakening our position with the Commission.”
To avoid penalizing households and businesses too much, the ministers proposed a pathway.
“The fear stoked by our political opponents is that of an increase in energy costs for the most modest,” they elaborated. But “it is possible to significantly reduce this risk through appropriate measures.”
For motorists, they proposed neutralizing the effect on pump prices by reducing taxes accordingly (which would require regular tax revisions). For buildings, only low-income households would be compensated through an increase in the energy check.
This compensation was deemed insufficient by Valérie Létard, the housing minister at the time. “When are we considered modest or not? We are talking about millions of affected people,” she questioned, when contacted by .
While she does not recall being consulted on this letter, Valérie Létard remembers having raised concerns. “Of course, there is a need for transposition,” but without impacting households that have no other option than to heat with gas, she explained, mentioning tenants, particularly in the social housing sector, who pay the bills without being able to change the boiler. She points out a problem of “timing, between an ETS implemented as early as 2028 and a decarbonization of housing that will stretch until 2050.”
This ministerial offensive led to a meeting among the concerned cabinet directors, according to several government insiders from that time. Several application scenarios considering the most vulnerable were envisaged, but the executive couple ultimately chose to do nothing, as reported last July.
François Bayrou and Emmanuel Macron believed they did not have a parliamentary majority for such transposition and feared giving a stick to the opposition as the presidential election approached. It is difficult to sell the French a similar carbon tax against the promise of using the money for the transition, a senior official concedes today.
Despite European deadlines, there is still no plan to transpose the ETS2. “For now, there is no schedule [due to a lack of] political window,” admitted the cabinet of the Minister of Ecological Transition, Monique Barbut, during an exchange with journalists in June.
Another person familiar with the discussions at the time understands this hesitance, while lamenting a missed opportunity: “Given the state of Parliament, good luck with a transposition; it would be a locust invasion! The ETS can be held hostage by the far right and far left; there are many fears about prices.”
“It’s regrettable,” comments Phuc-Vinh Nguyen, head of the Energy Center at the Jacques-Delors Institute. Transposing the directive “would have the same results [on prices] as the energy crisis, but generating carbon revenues,” he continues.
The hot potato is thus passed to the future occupant of the Élysée, unless it is definitively buried. Several contenders for the position, such as Marine Le Pen or David Lisnard, have already indicated their opposition to the device, while others wish to renegotiate it at the European level so that it does not affect households, like Marine Tondelier.
At the European level, the ETS2 has been postponed by a year due to an offensive from states like Poland and is set to be reformed. For Phuc-Vinh Nguyen, it could be affected by ongoing negotiations to reform the ETS1, the existing carbon market that applies to industry.
Alexandre Léchenet contributed to this article.
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