French Election 2022: transport infrastructure & EVs

In the first of our three-part series on the French presidential election, inspiratia examines the policy implications of the leading candidates for transport infrastructure and electric vehicles (EV)

The 2022 French presidential election holds significant interest for the infrastructure and renewables industries, with high stakes for both sectors depending on the outcome due to the widely divergent policy positions of the leading candidates. While incumbent president Emmanuel Macron, of the centrist En Marche party, is favourite to win his second term in office, opposition candidate Marine Le Pen of the far-right Rassemblement National is mounting a strong challenge.

With the second round of the election between Marcon and Le Pen due to be held on 24 April, inspiratia will dive into the potential policy implications of both candidates for France's transport infrastructure and electric vehicles, renewable power, and wider energy policy including nuclear and hydrogen, in a three-part analysis series.

In this article, we will focus on transport infrastructure and EVs, two areas where the candidates have widely varying positions which could shape the direction of the sectors for years to come. In particular, we will discuss the potential impacts of proposals to renationalise France's extensive highway concessions, and assess what the future will hold for EVs and associated charging infrastructure.

Highway nationalisation plans spell trouble for transport infrastructure     

France's highway system is currently largely managed through concessions which generate revenue through a toll system, following a privatisation process which began in 2005. The network is divided into a number of regional operators, including AREA, ASF, Sanef and SAPN, which in turn are largely owned by major construction contractors including Vinci, Eiffage, Hochtief and Bouygues. Under this system, the government hands control of highway operations, maintenance and expansion to the concessionaire for a time-limited period, in return for income generated by toll collection.

However, this arrangement has come under criticism from Le Pen for levying charges which are too expensive for ordinary drivers. Le Pen has made tackling the rising cost of living a major pillar of her campaign, and as part of this she has proposed the renationalisation of the highways. This policy would bring highway operations back under government control, which Le Pen claims would enable the reduction of charges for road users by 10-15% while also redirecting substantial toll revenue to bolster public finances.

The consequences of this decision for France's infrastructure sector would be significant and largely negative. The current government has estimated that the cost of bringing highway concessions back under direct government control would be in the region of €50 billion (£41.7bn US$54.4bn), placing a huge burden on public finances which toll revenues would take several years to replace. The renationalisation would also require the government to invest directly in highway maintenance and expansion, which had previously been the responsibility of the private operators, further increasing public spending and detracting from investment in other infrastructure projects.

The cost of highway nationalisation would presumably include reimbursing the current concessionaires, which would otherwise likely pursue their claims through the courts. The resulting lengthy legal battles would severely undermine the French business environment and deter private investment in the country's infrastructure assets. Even if the concessionaires are properly reimbursed, the precedent set by the nationalisation would already be a damaging one, likely scaring off investors in France's infrastructure, raising the cost of financing and insurance, and making it harder to hire contractors for major projects.

Renationalisation could also damage some of the leading French construction firms, including Vinci and Eiffage, which together account for the majority of the highway operations contracts. Despite the privatisation programme starting over 15 years ago, many of the concessions are only set to become profitable in 2022, with a report by the French Senate estimating that dividends would reach €40 billion (£33.4bn US$43.5bn) this year, including €32 billion (£26.7bn US$34.8bn) for Vinci and Eiffage. The consequent revenue losses from nationalisation would throw the financial projections of these firms into disarray and potentially threaten their involvement in other infrastructure projects.

On the whole, the renationalisation of France's highways would be a highly damaging policy for France's transport infrastructure sector, public finances, and business environment. Whether Le Pen would be able to follow through on this policy given the financial and legal difficulties involved is questionable, but the potential implementation will nonetheless spook investors and highway concession operators. In contrast, were Macron to win the presidency it is highly likely that the existing concession programme would remain in place, which would be a far better outcome for France's infrastructure sector.

Divergent policies place EVs at a crossroads

Starkly opposing polices also characterise the two candidate's approach to EVs and charging infrastructure. Le Pen has made clear that she views EVs as a transitional technology that will ultimately be swept away by hydrogen powered cars. One of the rationales behind this policy is Le Pen's belief that a reliance on EVs will also mean a reliance on Asian markets for batteries, whereas with hydrogen, France can depend on its own resources. Consequently, although she has not stated so directly, one has to assume that Le Pen will either reduce or cut entirely the generous subsidy programme that entices drivers in France to switch to electric, given that she has promised to end all subsidies for renewables. Consequently, a Le Pen presidency would likely be a net negative for the French EVs sector.

Macron, on the other hand, has been supportive of EVs and the roll out of charging facilities throughout his time in office. Most recently, on the campaign trail, the French president announced a new EV leasing programme, for example, which would make EVs more affordable for low-income families. While in office, the president has committed to offering individuals €6,000 (£5,006 US$6,526)  towards an EV purchase and business customers €4,000 (£3,337 US$4,351). The transport ministry is also in the process of investing up to €100 million (£90m US$122m) to install EV chargers across France. Macron has overseen the installation of thousands of EV chargers since he came into office in 2017, with the installation of around 100,000 units last year alone. This strong support for EVs would be carried forward if Macron wins a second term.

Of the original set of candidates that were running for the presidency it was perhaps Anne Hidalgo, the current mayor of Paris, who was one of the stronger supporters of EVs. The socialist mayor, who notched up a meagre 1.7 percent in the first-round vote, wants to remove all non-electric vehicles from the streets of Paris by 2030. The end of the decade represents something of a compromise, as Hidalgo had originally envisioned Paris becoming diesel free by the opening ceremony of the Paris Summer Olympic Games, which are due to open in 2024. Despite failing in her bid for the presidency, Hidalgo's favourable policy towards EVs will continue to be implemented in the French capital over coming years.

Other areas of transport infrastructure have featured much less prominently in the election. Left-wing candidate Jean-Luc Mélenchon, who came in third place during the first round of voting, had the most extensive plans for transport infrastructure. Like Le Pen, this included renationalisation of the highways, as well as cancelling the construction of the Lyon-Turin railway. On the more positive side, Mélenchon pledged to develop local public transport options and regenerate the railway network, proposals that were echoed by rival candidates across the political spectrum. While none of these candidates made it into the second round, it is quite possible that either of the remaining presidential hopefuls may adopt these policies in an attempt to attract votes.