Prudence Dato (IREGE/ Savoie Mont Blanc
University)
As a follow-up to the economic analysis
of the French law on energy transition, we devote this third note to the
financing mechanisms of energy transition. The scenes in the act III draw
attention to the limits of current public policies and to the role of financial
sectors in the transition to a low-carbon economy.
Act III; scene
1: Current policies are not doing the job.
The public
funds that are directed to support the energy transition comprise both public
budget and fiscal policies. Public budget is used to subsidy low-income
households: it concerns energy subsidies and social electricity tariffs, for instance.
Fiscal policies take the form of tax
credit and eco-loans that are supposed to motivate renovation of buildings and
adoption of energy-efficient equipment. Are these measures efficient in a long
term? Unfortunately, Tyszler et al. (2013) finds that they do not provide a
long term solution for lifting a household out of fuel poverty.[1] One reason is that their
implementation is complex because of administrative issues, lack of bank’s
expertise in evaluating home renovations, etc. Also, they reduce the borrowing capacity of the household
to face non-energy issues. So, what could be the solution? Promoting
“collective eco-loan” for residents living in the same building or imposing
home renovations during private residential property transactions for instance, could serve as solutions.
This is now the time when the financial sector appears on stage…
Act III; scene
2: Trying to go beyond a green image.
Although there
has been a growing awareness of the role of the financial sector in the
transition to a green economy, most of the banks and insurers are mainly
concerned with their image instead of structured strategies.[2] Is “green image” the
solution? Their strategies should be beyond communication on the green projects
they have financed or on their direct environmental impact. Why not consider the indirect environmental
impact of the business activities they have financed (coal mining businesses
and coal-fired power plants, for instance)?
Consequently, banks and insurers would account for the potential impact
of climate change on financial stability. As stated by Carney (2015), “an
abrupt resolution of the tragedy of horizons is in itself a financial stability
risk”.[3] This is now the time when
central banks appear on stage to help finance the energy transition…
Act III; scene
3: Are the central banks the happy ending?
Central banks are
bound by their financial stability macroprudential mandates that refrain them
from driving the transition to a low-carbon economy. But the good news is that,
given the large commitment of countries for the Paris Agreement, we can now
start believing that governments will adapt the mandate of central banks to the
risks of climate change. For instance, Green Quantitative Easing (GQE) programs
could drive green bonds deployment…
[1] Tyszler, J., Bordier, C., & Leseur, A. (2013). Combating Fuel Poverty: Policies in France
and the United Kingdom. CDC Climat Research, CDC Climate Report (41).
[2] http://www.novethic.fr/fileadmin/user_upload/tx_ausynovethicetudes/pdf_complets/Green-financing-are-european-banks-and-insurers-contributing.pdf
[3] Carney, M. (2015).
Breaking the tragedy of the horizon—climate change and financial stability.
Speech given at Lloyd’s of London, September, 29.
Aucun commentaire:
Enregistrer un commentaire