Facing high oil prices, France plans to invest 10 billion euros to accelerate the transition to green electricity.

The situation in the Middle East is pushing up oil prices. The French government is shifting its energy policy focus from short-term subsidies to long-term electrification investment, planning to increase annual support from 5.5 billion euros to 10 billion euros by 2030 to accelerate the transition to green electricity.

According to Bloomberg, Prime Minister Sébastien Lecornu stated that in response to rising fuel costs fueled by the Middle East situation, the government will direct funds to support families and businesses in transitioning to electric energy, rather than expanding fuel subsidies. This statement marks a clear shift in France's energy response strategy.

Lecornu explicitly rejected rescue measures that are "overly generous, costly, often bring windfall gains or even rent effects, yet fail to address fundamental problems." He emphasized that new support will precisely target the groups most in need, and remain consistent with France's fiscal rectification goals.

Reallocation of Funds, Departmental Energy-Saving—France Refuses a Return to 2022-style Bailouts

According to the plan, the annual support increase of 10 billion euros will mainly come from two sources: reallocation of existing fiscal expenditures and reducing energy consumption within government departments. The funds will be invested in technologies such as electric vehicles and heat pumps, as alternatives to gas equipment, to promote structural energy substitution for families and businesses.

The government regards this approach as prioritizing structural transformation rather than temporary fixes. Lecornu’s statement makes it clear that France will not repeat the mistakes of 2022. During the energy crisis that year, France spent hundreds of billions of euros to buffer consumers from energy price spikes, temporarily becoming the eurozone country with the largest budget deficit. These measures, combined with political unrest, made France’s fiscal recovery process extremely challenging.

Afterwards, borrowing costs continued to rise. Officials warned that bond yields linked to geopolitical tensions could increase debt repayment costs by several billion euros. Against this backdrop, the current government is being more cautious regarding energy assistance.

If Oil Prices Surge Again, Further Assistance Not Ruled Out

Although the overall government stance is restrained, Lecornu has left room for policy adjustment. Previously, the government considered providing additional subsidies to low-income groups reliant on car commuting, but after a temporary oil price drop following the Iran ceasefire agreement, the related plan was temporarily shelved.

Lecornu stated that if oil prices rise again and have a significant impact on vulnerable worker groups, the government may still take further action. This means the current policy framework is not entirely closed, leaving space for dynamic adjustment based on market trends.

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