Category: Green Finance

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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Policy Brief : Soil as Natural Capital: a factor for sustainable diversification

The soil is a living ecosystem that is capable of growth and diversification. It is also a productive capital but the conventional methods and technologies of its exploitation could lead to its destruction. Reversing this paradigm is the basis of a green growth strategy: the soil can become a carbon sink again, and the material and energy it produces can fuel genuinely sustainable industries, especially mobility. As a capital, the soil is not irremediably degraded; Sustainable management of soil capital is hence a priority for sustainable diversification and climate.

Read more in french

T20/G20 Policy Brief : Innovative Green-Technology SMEs as an Opportunity to Promote Financial De-Risking

By Joël Ruet(The Bridge Tank and CNRS-CEPN), Elena Verdolini(FEEM and CMCC), Céline Bak(CIGI and Analytica Advisors),  Anbumozhi Venkatachalam(ERIA)

“We recommend that the G20 target innovative green-technology SMEs as an opportunity to promote financial de-risking while addressing Paris Agreement commitments and UN Sustainable Development Goals. This should be achieved by creating signals for private investors through: (1) a reporting system that can help monitor the scale-up of green-technology SMEs; (2) the use of public funds to signal innovative green-technology SMEs to investors; and (3) the inclusion of SMEs in the design of green finance platforms. By implementing these recommendations, the G20 will ensure that innovative, low- carbon SMEs become attractive, low(er)-risk investment opportunities for the private sector.” Read more …

T20/G20 Policy Brief: GREEN SHIFT TO SUSTAINABILITY: Co-benefits & Impacts of Energy Transformation on Resource Industries, Trade, Growth and Taxes

By R. Andreas Kraemer (lead) – Center for International Governance Innovation (CIGI), Canada,Joël Ruet – The Bridge Tank, France,Barry Carin– Center for International Governance Innovation (CIGI), Canada, Max Gruenig– Ecologic Institute, Germany & United States, Fernando Naves Blumenschein & Renato Flores– Fundação, Getulio Vargas(FGV), Brazil, Akshay Mathur– Gateway House, India, Clara Brandi – German Development Institute (GDI-DIE), Thomas Spencer– Institut du développement durable et des relations internationales (IDDRI), France Sebastian Helgenberger & Sonja Thielges– Institute for Advanced Sustainability Studies (IASS), Germany,  Scott Vaughan– International Institute for Sustainable Development (IISD), Canada,Shelagh Whitley– Overseas Development Institute (ODI), UK, Hermann Ott– Wuppertal Institute, Germany. 

“Energy transformation towards 100% renewable energy is economically inevitable, and socially and environmentally desirable, yet it may produce negative signals in outdated statistics as fossil trade diminishes and the sector shrinks. This paradoxon should be addressed in a joint report by, e.g., IRENA, IMF, OECD, andthe World Bank, and the Task Force on Climate-Related Financial Disclosures.

Fossil fuel extraction and commodity trade will end, and fossil asset values erode. The industry’s role in capital formation, international trade, economic activity (GDP), and government revenue will decline. New energy systems, based on efficiency, renewables, storage, and smart management are cheaper to build, run and maintain. Growth of electricity use stimulates innovation, value creation, and growth in consumer rent, as renewable energy technologies harvest free environmental flows that are not traded and often for self-consumption. Total utility will grow while trade, GDP and the tax base may shrink. Reports should inform G20 Leaders, Ministers of Finance and Central Bank Governors on the true costs and benefits, and alert them to misleading signals.” Read More … 

Policy Brief: Financial Regulation and Climate Emergency – For Greener Prudential and Accounting Standards

Abdeljellil Bouzidi, The Bridge Tank, has co-authored a Brief for the Think Tank Terra-Nova http://tnova.fr/etudes/regulation-financiere-et-urgence-climatique-pour-des-normes-prudentielles-et-comptables-plus-vertesin which the authors state that «It is vital for our economies to quickly reconcile funding methods with climate goals. Both the prudential regulation of European finance and the accounting system are still exclusively focused on the prevention of a systemic crisis, which ignores in its sheer definition the climate dimension.

It is, hence, necessary and urgent to reinvest the prudential field to ensure the financing of the green economy and the fight against global warming by including environmentally macroeconomic criteria. More generally, we must stop thinking of environmental problems as externalities of the productive system.

Read morein french 

The case for sovereign climate bonds How to combat climate change with fiscal policy?

“Investment in a low-carbon future is a key priority for many governments across the developed and developing world, and also for central banks looking to diversify their investment portfolios. One proposal for turning this priority into action is through the creation of climate policy performance bonds – calling them ‘sovereign climate bonds’.”

By Abdeljellil Bouzidi, Board Member of The Bridge Tank.

Read more by clicking on this link.

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