While emerging economies (EMEs), apart from China, have contributed little to global warming, the future CO2 emissions curve and the resulting additional temperature rise will largely hinge on their ability to conciliate growth and decarbonisation. However, due to limited financial resources, their investments in the "green" transition are low, at around 50 dollars a year per capita, compared to investments which are around seventeen times higher (850 dollars a year per capita) in developed countries. This disparity gave rise to the idea of securing transfers from developed to developing countries at the Copenhagen Conference of the Parties (COP), in 2009.
After Katrina in 2005, Hurricane Helene, which hit the south-east of the United States at the end of September, was one of the most destructive climate events ever seen across the Atlantic (with more than 200 deaths and approximately USD 50 billion in property damage to date). Symbolically, the National Oceanic and Atmospheric Administration (NOAA) was one of the collateral victims of the disaster. As a result, its temperature readings, which are referenced across the world, temporarily stopped being published.
In a previous article, we discussed the major challenge for the European Union (EU): to accelerate its ecological transition while dealing with the consequences of the ageing of its population. It so happens that the stakes have just been clarified in the Draghi report on the future of European competitiveness. In order to preserve their social model or not stall in the face of Chinese and American competition, the EU 27 countries should increase their productive investment by at least EUR 800 billion per year, which entails an unprecedented effort (equivalent to 4.7 GDP points, i.e., at least two Marshall Plans)
In order to achieve its climate targets, the European Union will not only have to green its electricity production, but also increase it. This is a daunting industrial and financial challenge, echoed in the “Draghi” report on the future of European competitiveness, as well as the new Green Deal proposed by the re-elected President of the European Commission, Ursula Von Der Leyen.
In 2019, the European Union (EU) adopted a very ambitious Green Deal, setting a 2050 climate neutrality target for the 27 member states. Since then, the Fit for 55 legislative package (in 2021) has been introduced, followed by the series of REPowerEU directives (in 2023) detailing the process to speed up reducing greenhouse-gas emissions (to at least twice the current pace). The main focus has been on developing renewable energies, whose share is set to double within six years, accounting for 42.5% of end-energy use by 2030.
The Moroccan economy has held up well against the consecutive shocks of recent years. The GDP losses resulting from the Covid crisis were quickly recovered and the 2023 inflationary shock has passed. With inflation dipping below 1% since the beginning of the year, compared to its peak of 10% at the start of 2023, it is no longer a source of major concern. In June, the Bank of Morocco decided to ease its monetary policy. The solid external accounts and the ongoing consolidation of public finances have also reassured the monetary authorities in their decision-making.
Energy and mineral commodities are central to the low carbon transition process. Latin America, which boasts abundant amounts of minerals and key metals for the transition, and GCC[1] countries, which are dependent on revenue from hydrocarbons, are seemingly, on the face of it, taking contrasting paths on the transition journey. However, the macroeconomic consequences cannot easily be determined currently. Gulf countries have some advantages in the oil market, but the pace of the transition could affect revenues more quickly than expected. In Latin America, while the size of critical minerals reserves is brightening the outlook, various national strategies and numerous constraints could curb the scale
The Covid-19 crisis, and even more so the energy crisis triggered by the Russian war in Ukraine, have changed the course of prices in the European Union (EU). Because they buy 90% of their gas and oil from abroad, the EU-27 have paid dearly for their dependence on fossil fuels. In 2022 and 2023, their annual energy bill rose to nearly EUR 700 billion, double that of previous years, while 200 million households saw their cost of living rise by an average of 16%, the same as throughout the whole of the 2010s.
Because it relies on fossil energies, 80% of the energy mix around the world, economic activity produces greenhouse gas, mainly carbon dioxide which contributes to global warming. This phenomenon, theorized two hundred years ago by French mathematician Joseph Fourier, and which the IPCC, the International Panel of experts on Climate Change, has been describing for thirty years to alert us is no longer contested.
Climate has always varied. As the Earth has no fixed orbit or inclination (it is influenced by the other planets in the solar system, such as Jupiter and Saturn), its surface temperature evolves with the quantities of radiative energy that reach it, determining, for example, the great glaciation cycles of the Quaternary. Like a time-machine, paleoclimatology (the analysis of ocean or glacial cores) traces past climate fluctuations with increasing precision, from the appearance of homo sapiens around 300,000 years ago, and well beyond.
Since the adoption of the European Green Deal on 11 December 2019, European climate strategy has stepped up. Far from paralysing its climate action, the health crisis was the backdrop for the adoption of NextGenerationEU. This recovery plan has mobilised considerable resources to meet the European Union’s needs in terms of climate and digital transition, healthcare and education. While its implementation is only halfway through, the first positive effects can already be observed. Other mechanisms (including REPowerEU, the carbon border adjustment mechanism and the Critical Raw Materials Act) have been added to this plan to respond to the new challenges that have arisen since the Covid-19 pandemic and the war in Ukraine (supply security, energy dependence)
For any country, carbon footprint is measured not only by what it produces, but also by what it imports. Of the 9.2 tons of greenhouse gases (GHG) emitted annually by each French person, more than half (5.1 tons) are attributable to goods and services purchased abroad.
To achieve its climate goals, the European Union (EU) should cut by 90% its greenhouse gas emissions by 2040 (compared to 1990 levels), according to a recent recommendation by the European Commission. This means rapidly increasing investment in renewable energies, electricity grids, transport infrastructure and thermal renovation of buildings. The result is a substantial financial burden (estimated at between 58 and 66 billion euros per year in France), but also a heightened quest for technological and human resources. For its ecological transition, the Old Continent is looking for computer scientists, civil engineers, electromechanics, building and public works managers, plasterers, electricians, roofers and more.
BNP Paribas Economic Research wishes you all the best for 2024. On the macroeconomic front, the highlight of 2023 was the peak in official rates in the United States and the eurozone, but what is in store for 2024?In this video, you can discover the topics and points of attention that will be monitored throughout 2024 for each team: Banking Economy, OECD and Country Risk.
It's official: with an average of 15 degrees Celsius, 2023 will have been the hottest year ever experienced on Earth, not only since temperature readings began, but perhaps also for the entire Holocene, which is the planet's current interglacial period, which began approximately 10,000 years ago.
Whether one likes it or not, China has a key role in the “green” industrial revolution that will take economy to climate neutrality. In the transition to all-electric, particularly as it is happening in Europe, it is even strengthening its positions. The planned ban on the sale of new petrol and diesel cars will bring the end of a technological barrier that has thus far allowed European manufacturers to excel, whilst keeping Chinese-made vehicles away from their markets.
Faced with the urgency of climate change, many countries have begun their ecological transition, with the war in Ukraine only accelerating the movement. After soaring in 2022, investment in “clean” energies is set to reach a new record in 2023: around USD 1,800 billion worldwide, or 1.7 points of GDP, according to estimates by the International Energy Agency (IEA). Although the search for new fossil fuels has not yet come to a halt, it is now mobilizing less capital (around USD 1,200 billion).
Since its publication last May by France Stratégie, the "Pisani-Mahfouz" report on the cost of ecological transition in France has been the subject of numerous, sometimes imprecise comments. For example, the main quoted figure of EUR 66 billion does not refer to the investment required for decarbonization, but to a net additional financing requirement. Explanation.
Last week, African heads of state and private sector representatives gathered in Nairobi, Kenya for the first-ever African climate summit. This meeting, organised ahead of COP 28, ended with the signing of the Nairobi Declaration, through which Africa has taken on continent-wide ambitions in the fight against climate change.
The COVID-19 pandemic and the war in Ukraine have prompted many advanced countries to rethink and relocate their supply chains in order to secure strategic production and to create a framework that will help to promote the energy and environmental transition.
Whether it comes from the European agency Copernicus or the American NOAA, the conclusion is the same: in July 2023, average temperatures measured on the surface of the globe broke an absolute record, both on land and at sea. Scientific data confirm, if confirmation were still needed, that climate change is here, that its effects are becoming more pronounced, and that it is sparing no one.
Record temperatures in China and the United States, unprecedented forest fires in Canada, historic droughts in Spain and Morocco...: summer 2023, which looks to be the hottest ever recorded, confirms, as if it were still necessary, that climate change is here, that its effects are increasing, and that it is not sparing anyone. Its origin lies in a phenomenon that has been known for a long time, since it was first identified in 1824 by the French mathematician Joseph Fourier: the greenhouse effect, caused by human activities releasing a quantity of gas of the same name into the atmosphere.This is a cumulative process which, unless we want to risk intolerable global warming, will have to stop
Greenflation most often refers to inflation linked to public and private policies implemented as part of the green transition. Adapting production methods to low-carbon technologies, which emit fewer greenhouse gases, will require, on the one hand, massive and costly investments which will increase the marginal cost of each unit produced in the short term and, on the other hand, the use of rarer and therefore more expensive materials. This will create upward pressure on prices. The ecological transition will also require putting the “price signal” into play: increase the price of fossil fuels through taxation (carbon tax) and emission allowance markets (explicit price) as well as regulations (implicit price)
Climate-related migration (internal displacements and cross-border flows) have increased significantly in recent years across Central America. Natural disasters and environmental changes (increasing temperatures, changing precipitation patterns, increasing intensity of storms) affect human mobility through their impact on agriculture (soil degradation, crop failure, declining agricultural yields), access to water resources, destruction of infrastructure and land losses (coastal erosion / flooding, landslides).
The Caribbean has contributed little to global CO2 emission at less than 1%. Yet the region is amongst the most vulnerable to the impact of climate change. Currently, many economies’ adaptations plans suffer from financing shortfalls amidst high debt ratios, weak growth profiles and insufficient support from official creditors. New forms of financing are however offering promising solutions to help bolster the region’s climate and financial resilience.
