Reindustrialization of France: Focus on the green industry law
Why a Green Industry Law?
Firstly, two observations:
- France has undergone significant deindustrialization. Over the past fifty years, the country has lost around 2.5 million industrial jobs. The share of industry in GDP has halved, from 22% to 11%.
- Industry accounts for about 18% of the nation’s greenhouse gas emissions, with a high concentration in a few highly emitting sites. The 50 most emitting industrial sites alone represent 55% of the industry’s emissions (around 11% of total emissions in France).
In response to these challenges, and to ensure France’s sovereignty, the government aims to support investment dynamics for a green industrial policy.
-81%
The target reduction for greenhouse gas emissions from industry by 2050 (compared to 2015).
Source: Ministry of the Economy, Finance, and Industry
This French initiative to support the green industry is part of the new European framework known as NZIA (Net Zero Industry Act). It aims to respond to the Inflation Reduction Act (IRA) adopted by the United States in 2022 and China’s five-year plan from late 2021, both designed to stimulate the development of their industrial sectors, particularly in decarbonized technologies.
What is the Green Industry Law for?
The “Green Industry” law was adopted on October 24, 2023, with two major goals:
- The creation of green industries (batteries, hydrogen, carbon capture, etc.).
- The decarbonization of existing industry, particularly at the highest-emission industrial sites.
This is about reindustrializing while decarbonizing the sector—a significant challenge. More concretely, three main priorities have been outlined to achieve these objectives:
- Facilitate, the process by accelerating administrative procedures and cleaning up industrial wastelands.
A key measure from the government is to pre-develop and pre-equip 50 industrial sites, covering about 2,000 hectares. These sites will be cleaned up if they come from polluted industrial wastelands. The Bank of Territories will invest over one billion euros from 2023 to 2027, with around 450 million euros for creating 50 new sites and about 600 million euros for environmental cleanup.
Additionally, the government incorporates an objective for the development of industrial activities at the regional level through the Regional Schemes for Planning, Sustainable Development, and Equality of Territories (SRADDET).
Finally, the government aims to reduce administrative procedure timelines, currently taking 17 months in practice, to a maximum of 6 to 9 months. To further accelerate industrial installations, certain projects can be declared of national interest. For example, decrees have been issued to qualify five industrial projects as “major national interest projects”: a photovoltaic panel production plant (in Bouches-du-Rhône), a photovoltaic cell manufacturing plant (in Moselle), a lithium extraction and processing site (in Allier), a plastic recycling plant (in Seine-Maritime), and a low-carbon iron ore production plant (in Bouches-du-Rhône).
- Financing green technologies and the decarbonization of existing industries.
To this end, a tax credit “Green Industry Investments” (called “C3IV”) will be introduced. This will benefit industrial investments, whether tangible (land, buildings, equipment, machines, etc.) or intangible (patents, licenses, intellectual property rights, etc.). The C3IV can cover between 20% and 45% of the investment. It targets four key sectors: battery production (including components), solar panels, wind turbines, and heat pumps.. Les autres activités restent éligibles aux mécanismes actuels de soutien : appel à projets, etc.
For the decarbonization of existing industrial sites, two aid packages have already been announced:
- €5.6 billion through Ademe for the most emitting sites (which account for about 75% of the industry’s greenhouse gas emissions).
- €2.3 billion per year through BPI France for other sites (which represent the remaining 25% of industrial emissions).
Finally, one of the main innovations introduced by the green industry law is the creation of a specific savings product: the Climate Future Savings Plan (PEAC). Available since July 1 , 2024, the PEAC is exclusively reserved for individuals under 21, allowing them to invest in various assets (stocks, bonds, etc.) up to a limit of €22,950. Unlike regulated savings accounts (like the Livret A), the PEAC’s principal is not guaranteed. However, the gains and capital gains are not subject to income tax or social security contributions. Note that the invested funds are locked for a minimum of 5 years, and the PEAC will be automatically closed when the account holder reaches 30 years old.
In addition, since October 10, 2024, every life insurance provider must offer at least one life insurance product that includes unlisted assets, allowing investments in the green industry.
€5 billion
is the estimated additional annual funding expected through these new dedicated savings products.
Source: Ministry of the Economy, Finance, and Industry
- Supporting virtuous companies with a label, conditioning public aid, and guiding public procurement:
In this area, the public authorities are considering the creation of a new label: Triple E (European Environmental Excellence), which would bring together the best existing environmental practices under this banner.
Furthermore, while public procurement represents over €150 billion per year, less than 20% of public contracts currently incorporate environmental considerations. The government’s goal is to increase this share, although no specific target has been set.
Is there a reindustrialization dynamic in France currently?
To measure the reindustrialization dynamic in France, public authorities have recently implemented the “industrial barometer of the State.” This document records, semi-annually, the openings and closures of industrial sites in France. However, be aware that this barometer also includes reductions and significant expansions of existing sites.
Semi-annual results of the industrial barometer of the State
Source: Ministry of the Economy, Finance, and Industry
It is evident that it is difficult to talk about a reindustrialization dynamic in France at the moment. First, the net balance (including reductions/expansions of sites) is clearly declining: 105 sites in the first half of 2023, 84 in the second half of 2023, and 36 sites in the first half of 2024.
Especially excluding the reductions/expansions of existing sites, the net balance became negative in the first half of 2024 (-8 sites). During the first six months of the year, 59 site closures were recorded, compared to 51 industrial site openings.
However, among these openings, the green industry takes the lion’s share (see the box next to it) with 21 openings versus only 4 site closures.
Within the “green industry” classification, 60% of industrial installations concern decarbonized technologies (batteries, photovoltaic solar, heat pumps, wind, and hydrogen). The balance is contributed by activities related to soft mobility (bicycles and electric vehicles), recycling, and waste reuse.
In contrast, the most energy-consuming sectors are the most affected, such as the automobile industry and plastics manufacturing.
47%
The share of green industry in the net number of industrial site openings in the first half of 2024 (17 out of 36 in total)
Source: Ministry of the Economy, Finance, and Industry
Administrative simplification, creation of new sites, financial support,… public authorities have multiplied initiatives to stimulate the reindustrialization of the country.
But beyond these various measures, the question of energy prices and thus the energy bill of industrialists is a key element of the competitiveness of future projects.
An European initiative on energy prices for the competitiveness of European industry is also expected in 2025.
