Financer la transition énergétique
Over the course of 16 articles signed or co-signed by 18 authors, this edition of the Revue d’économie financière provides a comprehensive overview of the key issue of how to pay for the energy transition. It has three chapters and over to the assessment of needs, the specific natures of the various sectors and the instruments.
In their introduction, Patrice Geoffron and Christian de Perthuis (Université Paris-Dauphine) observe that according to estimates of the International Energy Agency (IEA), world investments in energy are set to stand at 3500 billion dollars in 2013 (+15% on 2023 figures), yet the energy transition and its funding are by no means a long, tranquil river. “The violence of the socio-economic disturbances caused by the conflict [in Ukraine] – and the direct extension of the health crisis – has led to an increased polarisation of public opinion on environmental issues, with the risk of a backlash or, at the very least, great confusion in the transition policies. This is particularly clear in the European Union, with a composition of the new European Parliament that is much less open to the Green Deal, against a backdrop of rising public indebtedness”, the authors explain (our translation throughout). They go on to stress that “Eurostat data on energy precariousness shed light on this tension: one out of every 10 households in the EU is struggling to cover household energy costs (3% more than in 2021, before the start of the energy shock) [and] in some countries, this proportion is nearly 20% (Bulgaria, Cyprus, Greece, etc.)”.
“And yet, changing course or slowing down would be harmful to Europe: the capacity to fund the transition is not only a matter of environmental importance (globally, but also locally with improved air quality, preserving water resources, biodiversity, etc.), but also one of competitiveness, a point made so forcefully by Mario Draghi his work building on the analysis of Enrico Letta”, they stress. And, as Ivan Faucheux, a member of the French energy regulatory committee, points out, the European Commission puts the annual need for investment in transition assets at 642 billion euros, with particular need for “absolutely enormous” investments in transport and building as well as in electricity production and distribution.
Highlighting that the “economic impact of global warming may have been massively underestimated”, Geoffron argues the “urgent need to devise emission attenuation policies, but also, and more importantly, the address the related need to adapt to the effects of climate change”. This adaptation, however, remains long overdue, while the resilience of critical infrastructure (transport of water, energy and telecommunications, etc.) is “vital to ensure the continuity of essential services in the event of disruption, be it natural, accidental or deliberate”. “To pay for these adaptations, a revision of the pricing models is necessary, which could lead to an increase in prices for consumers”, the author concedes, going on to add that “demand for infrastructure services is also affected, with fluctuations caused by the seasons, climate events or a sluggish macroeconomy. This pressure becomes even more problematic because at the same time, infrastructure operators are also constrained by efforts to reduce their carbon footprint (circular economy mechanism, sourcing decarbonised energy, efficiency gains, etc.”. Geoffron goes on to list various sources of financing: public-private partnerships; earmarking a “carbon revenue” to a resilience and adaptation fund; land value tax; bonds (Green bonds, conservation bonds, impact bonds, etc.); concessional financing; insurance-based financing; crowdfunding.
The sociologist Solange Martin (of the French agency for the ecological transition, known by its acronym ADEME) tackles the notion of the challenges of the ‘fair transition’. “There is nothing less fair than no transition at all”, she argues, adding that “injustice can be invoked about one specific transition path out of several options, but nothing justifies climate inaction as such. With this in mind, the notion of ‘fair transition’ allows us to define the transition as a starting point, and therefore the principal objective to which all others are secondary. It also allows us to express the need for solidarity with the most vulnerable, whilst extending this to everyone who loses out on the transition within society and the economy, be they rich or poor, weak and powerful”.
Martin also reminds the reader that “since the Paris Climate Agreement was signed in 2015, 6900 billion dollars has been invested by banks throughout the world in fossil fuels”. “The economic models are slow to change, even though there is progress in communication, particularly by the oil multinationals. It appears, therefore, that the ‘transition risk’ and structural changes in future demand appear to hold little credibility in the eyes of the markets and economic actors”, she writes.
In an article the financing of electricity networks, Michel Derdevet, the chair of Confrontations Europe, argues that the “increasing demand for electricity brought about by the electrification of our habits requires us both to increase transport and distribution network capacities, to reinforce the regulatory mechanisms of the system and to do much more to encourage the development of its flexibility”. Additionally, “price increases caused by investments in the electricity networks could be another factor in increasing bills and thus feed into a general movement that will see average price around 30% higher than current levels for electricity and 50% for gas by the year 2030, curtailing households’ spending power and sending businesses’ electricity bills spiralling”.
The publication contains several other gripping articles, including one by Marie-Claire Aoun (Teréga) on biomethane and hydrogen and one by Anne Rostaing, director-general of the Coopérative Carbone La Rochelle, describing how local carbon cooperatives of this kind work. (Olivier Jehin)
Association Europe Finances Régulations. Financer la transition énergétique (available in French only). Revue d’économie financière. No.155, Q3 2024. ISBN: 978-2-3764-7099-1. 181 pages. €35,00
Emerging technologies
Between protecting our data, the future of free will on the Internet, the dizzying prospects of artificial intelligence (AI), the tech economy and possibilities of international Internet governance, this document of the Fondation Jean Monnet takes stock of the reflections underway on technology and the challenges it poses to democratic societies. In it, Lucie Du Pasquier curates the contributions of eight authors who took part in a workshop held jointly by the Foundation and Digital Watch.
“The European Union (EU) has emerged as a front-runner in crafting extensive regulations for the digital domain”, observes Feodora Hamza, with particular reference to the General Data Protection Regulation (GDPR) and the law on AI (our translation throughout). “These EU regulations are indicative of a proactive approach to digital governance, reflecting the evolving nature of constitutionalism in the digital age. While not explicitly constituting a digital constitution, these regulations lay the groundwork for digital governance and implicitly influence the development of such a constitution. The EU’s digital strategy demonstrates its clear dedication to upholding fundamental rights, democracy, equity and wealth redistribution while also respecting the rule of law. These moral commitments, along with the legislations that enforce them, collectively constitute what can be termed as Europe’s digital constitution”, she writes.
Hamza goes on to stress the fact that new names are constantly appearing on the list of countries approving the creation of a new governing body for AI and supporting the efforts of the United Nations. “Spain has even offered to host the prospective ‘International Artificial Intelligence Agency’ headquarters. South Korea has committed to supporting the formation of an international entity under the UN by arranging a Global AI Forum. Others have expressed their backing in more general terms, emphasising that no single country can effectively address AI governance alone. French President Emmanuel Macron was among the early advocates for the establishment of an IPCC-like organisation for AI, and European Commission President Ursula von der Leyen has expressed her support as well”, she points out.
She goes on to add that “in its interim report, the UN Advisory Body on AI concluded that the absence of shared standards and benchmarks complicates governance endeavours, worsened by the rapid pace of AI progress, resulting in self-regulation in many areas and highlighting the need for inclusive and public-interest-centred governance structures, learning from established global bodies like the Financial Action Task Force (FATF) and the International Civil Aviation Organisation (ICAO), yet adaptable to the specific challenges posed by AI, guided by principles emphasising inclusivity, public welfare, data management, collaboration among multiple stakeholders, and alignment with international obligations such as the UN Charter and the sustainable development goals. Countries will need to define the new body’s scope and authority. An overly ambitious mandate could impede progress, as demonstrated in discussions regarding lethal autonomous weapons (LAWs) and indicated by UN negotiations on a new cyber-crime treaty. On the other hand, a more cautious approach might render the body ineffectual, but it may have a greater chance of gaining traction. The work carried out by the Council of Europe’s Commission on AI and the G7’s Hiroshima process are positive examples of identifying common ground and building upon it. These regulatory efforts provide positive examples of the identification of common ground which can be built upon. These regulatory efforts reflect a shared global acknowledgement of the imperative for ethical and responsible governance in the rapidly evolving digital age”.
“Technology companies possess significant influence and resources, making their cooperation essential in crafting effective governance measures”, Hamza goes on to stress, making the point that although these companies have taken self-regulation measures, they have also “significantly reduced the size of AI ethics teams, disregarded internal warning signs, abandoned transparency as competition intensifies and attempted to shift responsibility onto end-users and civil society”.
Having described what a digital constitution could include, the author acknowledges that “one of the most significant challenges in realising a global digital constitution is the diversity of cultural, socio-technical, economic and political contexts across the world”.
The compilation also features an interesting article by Fabian Lütz on the challenges and opportunities of algorithms and a call by criminal law lecturer Sylvain Métille for information intermediaries and providers of information services to take more responsibility. (OJ)
Lucie Du Pasquier (editor). Emerging technologies – societal and democratic challenges. Fondation Jean Monnet. Collection Débats et Documents, no. 37, October 2024. ISBN: 977-2-2867-7100-1. 57 pages. This document is available free of charge in French and English on the Foundation’s website: https://aeur.eu/f/ffb
Experimenting for Union Renewal
Mainly intended for use by unions, this book is also of interest to anyone concerned for their future and that of social dialogue. Co-edited by two lecturers at the University of Montréal, Mélanie Laroche and Gregor Murray, it takes stock of major developments – globalisation and de-globalisation, technical developments, the effects of climate crises and the pandemic, demographic and migratory pressure – with an effect on the world of work and the functioning, role and influence of unions. Based on 18 experiments carried out by unions the world over – from Benin to China via Sri Lanka, India, Mexico, Australia, Belgium, Canada, Spain, the United Kingdom and the United States – it offers a broad panorama of the initiatives being taken to renew trade unionism. (OJ)
Mélanie Laroche and Gregor Murray (editors). Experimenting for union renewal: challenges, illustrations and lessons. ETUI. ISBN: 978-2-8745-2717-3. 246 pages. This document may be downloaded free of charge from the website of the European trade unions: https://aeur.eu/f/ffc