Category: New Energies

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.

A loan of 40 million euros has been announced for the development of the H2 Corridor project

Raphaël Schoentgen, member of the Bridge Tank’s board and Founder and CEO of Hydrogen Advisors, took part in the advisory consortium gathering Seiya, Element Energy France, and Hydrogen Advisors that, in support to French Occitanie Region and AdOcc, its economic development agency, and AREC, developed the Corridor H2 Project for heavy road transportation, for which an loan of 40 million euros was announced during the Energaia Forum on the 9th of December 2020. An agreement on this was signed between Carole Delga, President of the French region Occitanie, and Ambroise Fayolle, Vice-President of the European Investment Bank.

The H2 Project is dedicated to the development of high-capacity hydrogen distribution stations on the European road between the North Sea and the Mediterranean Sea, as well as across Occitanie, and to the production of an important number of heavy vehicles to transport goods and passengers. It therefore aims at transforming transportation in these area into a completely carbon-free one, which vehicles and refrigerated trailers relying on hydrogen technology.

Forum on the UN 2030 Sustainable Development Goals

Ban Ki-moon, former UN Secretary-General, Liu Zhenmin, UN Under-Secretary-General, Justin Yifu Lin, honorary Dean of the National School of Development under Peking University and former Senior Vice-President of the World Bank, Yves Leterme, former Belgian Prime Minister, James Kimonyo, Rwanda Ambassador to China, Jeffrey Sachs, Director of the UN Sustainable Development Solutions Network and professor at Columbia University, Zhang Linxiu, Director of the UN Environment Programme-International Ecosystem Management Partnership, and Sandrine Nduwimana, China-Africa Business Council, were among the keynote speakers of the Forum on the UN 2030 Sustainable Development Goals and China’s Poverty Reduction Experience. This event was co-organised by The Bridge Tank and the CGTN Think Tank. It took place on the 17th and 18th of September 2020 online, and gathered over 140 representatives from 39 countries. 

Among the suggestions to reach the poverty eradication goals were the introduction of a temporary basic income for people just below or above the poverty line, deworming programs, as well as investments in children’s health, women’s rights and educational opportunities. Human ethics and management must be at the centre of the building process of a sustainable world without poverty.  

This event was broadcasted on CGTN, CCTV News, People’s Daily, Xinhua and Xinwenlianbo.

The joint launch of the EU Hydrogen and EU energy integration strategies, along the industry’s clean hydrogen alliance, suggest Europe is ready to build a world-class energy transition advantage

EU’s Policy making seldom shows such a great coordination across the Union, member states, regions, across different policies and between policy makers and the industry. The 8th of July of 2020 was a landmark announcement that could face up Asian leadership ambitions. This demonstrates the cohesive strength of the European construction, the next frontier being of course an energy transition that is just, inclusive, and participative in process.

Analysing EU’s Hydrogen strategy

By Joël Ruet & Antoine Goutaland – On 8th July 2020, the European Commission unveiled a 3-phases plan for Hydrogen. This is a landmark announcement for European industry with a common industrial project that could face up Asian leadership ambitions. The 3 phases consist in: (1) Enabling framework conditions for large 100 MW-range electrolyzers, and wind and solar plants dedicated to GW- scale RE H2 production before 2030, (2) Negotiations for ETS phase 4 to target renewable H2 becoming cost-competitive, to fossil fuel sector, (3) Renewable electricity production needs to massively increase as about a quarter of renewable electricity might be used for renewable hydrogen production by 2050.

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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.

Innovation lunch by The Bridge Tank in Davos

The Bridge Tank organized on the sidelines of the World Economic Forum in Davos an international workshop on the theme: “Accelerating the smart city – financing solutions and project governance for emerging markets. “

The bridge tank organised an industry conversation on « accelerating the smart city – financing solutions & project governance for emerging markets », convened by Joel Ruet & our Board Member Pranjal Sharma. The event was the opportunity to exchange on how to Kick-start the Smart cities: How to go from ideas to projects, from projects to returns, from returns to smart cities that work. How can entrepreneurs, companies, investors gear into initiatives that are left free to succeed by the city authorities, for smart cities to no longer mean blueprints but develop and operate as a true industry?

 

Our starting point was that « smart cities » have been on the air for long ; had they picked the magnitude we talked them about, we’d see them everywhere by now. We discussed the evolving funding criteria for smart cities; their ever evolving challenges and meeting them for smart cities funding. 

First of all, contributors reminded the definition issue, ranging from mere energy, food or water conservation to smart and widespread use of data, through new cities, real estate with an ecosystem community including schools for talents, etc. 

The second issue was on governance: how to decide, how to fund them? Which strategies between new cities and modifying existing ones? And how not to forget the smart villages? The Indian rural experience was discussed, on strategies to move from thermal diesel to solar, generalise wifis and digital bank accounts, digital crop data management for fertilizers. 

Some participants from emerging countries were on the position that smartness should be tested in villages and then extended to smart cities; the example of Punjab was mentioned, which started from the district level, then with 3 smart cities in Punjab. IFC’s experience in digitalisation in “Invest in Africa” program was also mentioned as a successful pilot. However, cheap internet through mobile systems isn’t per se making a smart city. The issue of space was mentioned: smartness is not just about digitalization but requires space: in already congested cities this raises serious concerns. 

The issue of public governance and private profitability were mentioned, but we dedicated a large space of our conversation to the issue of enabling citizens: as they become smart, so does the city they live in. “Innovation clusters”, with the Ukrainian example this time, were mentioned in such a spirit of rather looking at what brings people together, not necessarily having to involve the government. 

Last, economic practice were mentioned: not just about introducing technology but also co-living, sharing economy, etc., and, at the end, a more segmented approach for circular economy, between premium / mass segments.

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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