Category: Green Finance

EU-China Comprehensive Agreement on Investment: Stakes for a constructive balance of power

By Philippe Coste, Pierre-Noël Giraud, Stéphane Gompertz, Henri de Grossouvre, Fatima Hadj, Brice Lalonde, François Loos, François Quentin, Joël Ruet, Raphaël Schoentgen, Alex Wang, avec Clarisse Comte et Claire Thomas.

After seven years of negotiations, the European Union and China reached an investment agreement on December 30, 2020. While Beijing sees in it the promotion of a “high degree of openness”, the EU aspires through this treaty to establish the long sought after “equality of market conditions”.

To carry out this project, a balance between the strategic interests of each side and common objectives on which to agree remains to be found… just as it remains to find avenues for concrete action.

Find the analysis note in French :2021-03-Issue-Brief-UE-CHINETélécharger

• This treaty provides for the intensification of economic and trade relations between the EU and China. It guarantees EU investors greater access to China and also helps to create more balanced conditions of competition.

• Areas of collaboration are proposed here, in various fileds : political (place of China in international organizations, global governance), legal (international standards, ESG), industrial (mobility, decarbonisation, role of SMEs), economic, environmental, scientific , technological (energy transition, carbon capture, hydrogen, nuclear, new energies), financial (coordinated introduction of carbon prices) and cultural.

• For the EU, it is above all a matter of asserting its strategic interests in a coordinated manner with the member countries during the ratification process.

The long-term issues of technological sovereignty, of competition between blocs, all possible causes of “stop and go” in bilateral relations must be seriously dealt with.

Despite the identified obstacles, maintaining an open but precise dialogue between the EU and China is essential. The European Union must continue its transformation and ensure respect for its increase in diplomatic power both within the EU and in its relationship with China: beyond state-to-state relations, it is up to the EU in as a community to negotiate the terms of a new bilateral relationship with China. It is in this way that it will confirm its status as a “balancing power”.

5 years after the Paris Agreement: companies and levers for climate action in a world in crisis

The Society for Encouraging National Industry, founded in 1801 with the official support of Napoleon, organised a webinar entitled “5 years after the Paris Agreement: companies and levers for climate action in a world in crisis”. This event took place on the 16th of December 2020, for the COP21’s fifth anniversary.

During the plenary session, introduction speeches were made by Olivier Mousson, president of the Society for Encouraging National Industry, Sylvianne Villaudière, vice-president of the Society Jean-Pierre Cordier, president of the Society’s International Commission, and Joël Ruet. 

During his introduction of the “Finance and Climate, which leverage” panel, Joël Ruet argued that key factors in the success of the COP21 summit was the Moroccan commitment to convince African countries and the United Nations’ Group of 77 to sign the Paris Agreement. He highlighted the role of the support of Southern countries for this agreement, especially as it was supposed to support them in their ecological transition. Most of the investments that lead to global growth will soon mostly be directed at Southern countries, and we must ensure that these investments are sustainable and support agriculture, social measures and innovation (notably through technological know-how transfers). Financial products should be developed for middle-sized projects, as they already exist for small and large projects. Europe needs to follow and to be followed by the rest of the world if it wants to achieve its goal efficiently. It is also key that the European Union plays a role in the norms of the analysis of raw data. Southern countries must have access to the same kind of negative interest rates as the ones in the North to be able to develop fairly. 

Among the other keynote speakers were Bertrand Badré, former Managing Director and Chief Financial Officer of the World Bank, Emmanuel Mourey, President of the Banque Postale Asset Management’s board, Christian Brodhag, Lecturer at Les Mines School (Saint-Etienne) and former inter-ministerial delegate for Sustainable Development, Anne Girault, Professor of the ABC Association, and Monica de Virgiliis, president of Chapter Zero France.

T20 handover between Saudi Arabia and Italy

The T20 presidency handover between Saudi Arabia and Italy took place on the 30th of November 2020. The Argentinian, Japanese and Saudi chairs of the former presidencies attended this important event, to highlight the continuity of the works and research of the T20. The Bridge Tank has been a member of the T20 since 2016, and will participate to the Italian presidency’s works in 2021.

On the occasion of this handover, a debate was organised on themes such as the lesson from the past presidencies, the challenges and priorities for the Italian presidency, and the coming challenges for multilateralism. Among the keynote speakers of this debate were Pietro Benaéssi, Sherpa of the G20 for Italy, Fahad M. Alturki, Chair of the T20 for Saudi Arabia, Paolo Magri, Chair of the T20 for Italy, Julia Pomares and Gustavo Martinez, chairs of the T20 for Argentina, Naoyuki Yoshino, chair of the T20 for Japan, and Ettore Greco and Antonio Villafranca, coordinators of the T20 for Italy. This debate was chaired by James McGann, Director of the Think Tanks and Civil Societies Program of the Lauder Institute of the University of Pennsylvania.

2020 Horasis Asia Meeting

During the annual Horasis Asia Meeting, which gathered 400 of the regions and the world’s most senior leaders from business and government, the speakers exchanged about the overcoming of the profound economic, political and social disruptions caused by COVID-19. This event took place on the 30th of November 2020.

Joël Ruet moderated one of the panels, entitled “ESG Investing in Asia Post-COVID”. Among the keynote speakers of this session were Ara Brutian, Director and Head of Digital Innovation for Sustainalytics, Rajiv Lall, managing director and vice-chairman of Infrastructure Development Finance Company, Kai Dai, CEO of Young Sustainable Impact Greater China and Chairman of the Kylin Prime Group, and Arun Sharma, President of Grovepike Associates. It was highlighted during this panel that data structuring and norms were at the centre of the post-COVID investments, and it was also underlined that this COVID crisis had to be considered as an opportunity for investment. The United States’ return to Asia, in terms of investments, was also noted. Voluntary disclosure and engagement was defined to be a key component of the future of finance, especially with the rising generational issues..

Meeting of the Task Force on Fighting global warming in the EU through carbon pricing targeting, coupled with border adjustment mechanism

The Bridge Tank contributed to the Task Force on Carbon Pricing in Europe working group led by former French Minister of the Economy Edmond Alphandéry. With the support of Pascal Canfin, Chairman of the European Parliament’s Committee on the Environment, Public Health and Food Safety, it brought together ministers, members of the European Parliament, representatives of think tanks, academics, members of the business community, as well as European authorities and policy makers from various EU member states.

The enormous challenge to overcome the Covid-19 crisis should not hide the most disturbing phenomenon that awaits us: global warming. At European level, the “European climate law” which aims to achieve climate neutrality by 2050 rightly intends to create a “predictable business environment for industries and investors”. In this regard, this event will examine the introduction of carbon pricing targeting into the European emissions trading scheme. Targeting a predictable price of carbon over time in the ETS would eliminate its current volatility. This stable price environment for energy use decision-making would be a powerful incentive for companies to predictably reduce carbon emissions and thus stimulate investment in the energy transition. As such, this device would go a long way toward achieving the Green Deal’s “net zero greenhouse gas emissions” target. The meeting also explored the economic and social issues linked to the introduction of this measure and focused on the implementation of a carbon adjustment mechanism in the EU.

These proposals met with strong interest from European decision-makers, ranging from Frans Timmermans and Pascal Canfin to ministers from four countries, and personalities such as Pascal Lamy and Laurent Fabius.

At the invitation of Edmond Alphandery, former Minister for the Economy, alongside Pascal Canfin (Chairman of the Committee on the Environment, Public Health and Food Safety of the European Parliament) and the former Minister for Italian finance Siniscalo – today VC at Morgan Stanley, including several European ministers and EU DGs, The Bridge Tank’s Joël Ruet & Bridge Tank Board Member Raphael Schoentgen contributed to the pan-European workshop on carbon prices in the framework of the EU ETS reform and the border adjustment mechanism, vouching for these ideas as a core tool without excluding bridge tools for certain energies being deployed such as hydrogen, and the possibility of transition support funds for technologies maturing or by the time the carbon price reached threshold values.

In a very direct discussion with Frans Timmermans, (Executive Vice-President of the European Commission), and the main economists of the Macron Committee on the Economy, and Pascal Lamy former Director General of the WTO on “The European Green Agreement and the role of carbon pricing”. Mr. Timmermans shared with us his optimism on new energies, on all the green industries that are accelerating today, including hydrogen, and for a tripling of the electrification of European energy and an exit from coal. He also shared his wish for an original European vision on energy voluntarism shared with Africa. A great moment of debate.

During the last session of this fantastic working group on the price of carbon set up by Edmond Alphandery, former Minister of the Economy, Jochen Flasbarth, Secretary of State for the Environment, for Nature Conservation, construction and nuclear safety at the German Federal Ministry, Leonore Gewessler, Austrian Federal Minister for Climate Action, the Environment, Energy, Mobility, Innovation and Technology, Hugo Morán, Spanish Secretary of State for the Environment, Brune Poirson, Secretary of State to the French Minister for the Ecological Transition, agreed that the EU should consider a carbon adjustment mechanism at the border, not as protectionist measure, but so as to foster economic modernisation and contribution to a local public good. Brune Poirson added the dimension of climate finance and social acceptance – France and Germany are aligned on this point.

Joël Ruet recalled the need to take into account the energy transformation opportunities in Southern Europe, a theme validated by Mr. Flasbarth and Ms. Gewessler, and discuss these matters in confidence with China and India, a key point of attention of The Bridge Tank.

Former Prime Minister Laurent Fabius assessed the Paris Climate Agreement and the contribution that the new “EU team” can make to it: in a framework that must remain compatible with the WTO, ideas on carbon pricing and the adjustment of carbon prices at the borders are progressing. Mr. Fabius also pleaded for consultation or at least information with our partners, including India and China, a subject to which The Bridge Tank is attentive.

T20 Web Conference: Policy Recommendations for a Post-COVID-19 World

Joel Ruet presented the views of the Bridge Tank-convened working group on Promoting Southern actors’ direct access to the Green Climate Fund to de-risk projects and raise additional climate finance flows, written by Joël Ruet, Alessia Ameghini, Adel Ben Youssef, Ban Le, Celine Bak, Alexandre Borde, Paolo Giudici, Axel Michaelowa, Kang Rongping, Aman Srivastava, Leena Srivastava, Anbumozhi Venkatachalam.

Both the 2020-horizon USD 100 billion mobilization for climate and 2025 renewed target remain elusive. Climate negotiations are heading for a deadlock. The largest among multi-lateral climate funds, the Green Climate Fund, targets “greater paradigm-shifting mitigation and adaptation impact”. Structuring and scaling up climate financing implies to focus on differentiating between various risk appetites.

To encourage private additional flows, the G20 should support the GCF’s strategy of efficiently accrediting more Southern actors, becoming a facilitator of blended North-South-South public-private finance and an “educated risk-taking” Fund. This would defuse the climate negotiations crisis and accompany structuring climate finance.

In conversation – better sharing the dividends of growth

At G20 / T20, Saudi Deputy Minister of Finance said multilateral organizations have succeeded in ensuring efficiency but have failed in distribution – they “have focused on creating growth rather than sharing the fruits “

He planned pledges for multilateral stimulation to promote the national and common interests of the population – illustrating demographic transitions and employment in the South.

This is in this spirit ou Policy Brief wants to give ways for financial actors of the South directly accessing the Green Climate Fund.

The Bridge Tank participated in the G20 / Think20 kick-off meeting in Riyadh

At this meeting we presented our ideas and plans for a policy brief to G20 leaders on increasing the financial envelope of the Green Climate Fund. The Brief will be directed by The Bridge Tank and involves contributors from Tunisia, China, India, Indonesia, Germany, Italy and France.

Over the past 5 years, we have contributed to the Task Force on “Climate change and finance” of the T20, and seen the exercise progress and deepen. When G20 leaders decide to unite, solutions are ready through engagement groups like the T20.

We received a warm welcome from the Saudi Arabian G20 presidency and the global T20 teams.

In the Plenary, HRH Prince Turki al Faycal bin Saud, long time head of Saudi intelligence, gave a keynote to Think20/G20 experts, encouraging us for innovative funding solutions, in line with our policy proposals on Green Climate Fund: fast direct access to southern countries, funds and NGOs.

Unlocking Finance: The Key Factor for Investment on Green Projects in Africa

A significant change in how investors approach green projects is underway. The fight against climate change requires and will require increases in the amount of capital being devoted to green projects. This underlines the importance of mobilizing financial actors from the private sector. Their awareness of this need and on the opportunities these investment give into re-defining the business, is already, for some of them, becoming a reality.

We now have the opportunity to move towards a “decarbonization“ of investment portfolios. For investment to match climate change mitigation goals, we will need concrete moves towards decarbonizing portfolios. The good news is that certain tools exist that can help make green projects more attractive to investors. This policy brief argues for renewed emphasis and action on these points to significantly boost investment. In other words, Africa is open for business.

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