It's summertime, so, with mass departures coming during the holiday season, a good opportunity to look at ongoing transformations in transport. In France, this sector is by far the biggest source of greenhouse gases (GHGs) emissions: 126 million tons of CO2 equivalent or 30% of the total in 2021, i.e. three times as much as the housing sector
The most comprehensive and well-documented assessment to date of the cost of France's ecological transition has just been published by the France Stratégie institute, in a widely commented report. By 2030, meeting our climate commitments - which involve a 55% reduction in greenhouse gas (GHG) emissions compared to 1990 levels - will require almost EUR 70 billion or 2.5 points of GDP in additional annual expenditure.
In an interview with the press in 2021, the President of the European Commission, Ursula Von Der Leyen, stated that "growth and CO2 emissions [were] not necessarily linked", citing the European Union (EU) as an example. Since 1990, the EU has in fact reduced its greenhouse gas emissions by 25% while increasing its gross domestic product (GDP) by 60%. Although this is true at the level of the EU-27, it is hardly transposable on a global scale.
By cutting out Russian hydrocarbons, the EU has accelerated its shift towards renewable energy.
The Gulf countries (GCC) – Saudi Arabia, Bahrain, United Arab Emirates, Kuwait, Oman and Qatar – are experiencing an economic boom. The discipline of the cartel of oil-producing countries and international geopolitical tensions are keeping oil and gas prices high and feed into the fiscal and external accounts of countries still highly dependent on oil revenues. Contrary to previous periods of economic upturn, it seems that most governments are maintaining a degree of fiscal discipline, which, over the medium term, should reduce vulnerability to variations in oil revenues. In the longer term, climate change and the associated energy transition pose an existential challenge for these hydrocarbon-based economies
Since 2005, the emission trading system, also called carbon market, is at the heart of the European strategy to reduce greenhouse gas emissions.This device that covers around 45% of carbon emissions is based on the simple principle of "polluter pays".The entities concerned, mainly the most polluting industrial sites, but also the intra-EU airlines, are given emission allowances by public authorities. These are tons of carbon which they can emit into the atmosphere every year.When they reach the limit, they have to obtain additional rights on the markets or bilaterally. This has a cost. So it is a financial incentive to adopt less polluting production methods based on renewable energies for instance.
Polluting has never been so expensive. Since mid-February 2023, CO2 permits have been trading at more than €100 per ton in the European Union for the first time since the European Union Emissions Trading System (EU ETS) was created in 2005.
From Adam Smith to the present day, nations' wealth has been built on fossil fuels. Coal, oil and gas have become a vital part of our lifestyles. In 2022, they still account for 83% of the world’s primary mix, that is to say what essentially feeds economic activity.
Meeting the European Union’s climate-related and digital ambitions will require a huge additional annual investment effort. In the near term, against a background of slowing growth and the prospect of a recession in 2023, this represents a potential source of resilience. In the medium term, this demand impulse may underpin or even increase inflation, in addition to other factors that could lead to greenflation. This would influence the level of official interest rates as well as long-term interest rates. The latter could also be under upward pressure due to the huge additional financing needs compared to the normal financing flows. The financing mix -banks versus capital markets- plays a key role in this respect.
2022 is not over, but it is likely to set an absolute record for greenhouse gas (GHG) emissions after the 2019 peak. The resumption of air and road traffic, the intensification of the use of coal as a substitute for Russian gas, or simply the fact that the global economy has continued to expand despite a lagging China and the United States, leave little room for doubt. In its latest Global Energy Review, the International Energy Agency (IEA) notes that 2021 already saw CO2 emissions rise sharply in comparison to 2020 (by 6%) due to the post-Covid recovery. Coal, on the other hand, was one of the main drivers of the upturn
At the closing of the COP26 on 13 November, the participating countries renewed their pledge to limit global warming to 1.5°C from pre-industrial times. In the run-up and during the conference, many countries promised to achieve zero carbon emissions by around 2050, although without proposing concrete measures.The International Energy Agency has estimated that, to achieve this goal, investment in global energy systems has to be expanded from an average of USD 2 trillion over the last five years to almost USD 5 trillion annually by 2030 and to USD 4.5 trillion by 2050
The substantial rise in energy costs being seen in European economies undeniably represents a headwind to the economic recovery, notably through its negative impact on household spending. In 2015 – the most recent year for which Eurostat data are available – at the aggregate euro zone level direct energy spending represented between 9% and 10% of total household spending, making it the third largest cost item after food and housing. The weight in total consumption of spending on “electricity, gas and other fuels”, which is defined by France Strategy as ‘pre-committed spending’[1], is negatively correlated with the income level of households
The world is rapidly warming up. Between 2010 and 2020, the average temperature increased by around 0.3°C, taking the global warming up to 1.2°C since the pre-industrial time. At this pace, global warming will exceed the Paris objective of 1.5°C before the end of this decade. The impact of global warming has already been felt in many parts of the world: devastating fires in California and Australia, inundations of coastal areas, and prolonged droughts in already dry places. An annual average of 21.5 million people have been forcibly displaced by weather-related sudden onset hazards – such as floods, storms, wildfires, extreme temperature – each year since 2008 (Source: UNHCR). This number could reach 150 - 200 million by 2050
