Can France Reach the Factor 4 Objective? An Assessment Based on a Stylised Energy-Economy Model

We build, calibrate and simulate a stylised energy-economy model designed to evaluate the level of carbon tax that would allow the French economy to reduce its CO2 emissions by a factor of four over a forty-year horizon. We estimate the substitution possibilities between fossil energy and other factors for households and firms. We show that if energy-saving technical progress continues at its recent historical pace, the initial level of the carbon tax recommended by the Quinet report is totally inadequate.