How to finance the ecological and energy transition?

How to finance the ecological and energy transition?

According to Oxfam France, the ecological transition it’s a “Evolution towards a new economic and social model that provides a global and lasting solution to the great environmental challenges of our century and the threats that weigh on our planet”.

More concretely, it is a question of moving from our current mode of production and consumption to a more virtuous model and more attentive to the environment. This inevitably requires investment.

The IPCC bet his latest report the fact that the capital is not properly allocated. Current investment levels (across all sectors) are insufficient. Three to six times less than what would be needed to limit global warming.

How is the ecological transition financed? And what are the existing levers?

The ecological transition can be divided into several fields. To summarize, we can mention:

  • The energy transition (transformation of the energy production and consumption system);
  • The agri-food transition (move from intensive and industrial agriculture to agriculture that is more respectful of the environment and the seasons);
  • The industrial transition (reform the sector to make it less polluting and more local);
  • The conservation of biodiversity;
  • The development of sustainable mobility ;
  • The transition to an urban and territorial model more environmentally friendly.

the third part of the IPCC report, published on April 4, poses an alarming finding. In fact, greenhouse gas emissions have never been higher. The time we have to change models is getting shorter and shorter.

In addition, nearly 32% of the world energy production comes from oil, 27% from coal and 22% from natural gas (source: International Energy Agency). However, these energies are highly polluting, as well as being non-renewable.

Therefore, for the authors of the report, it is therefore essential that art greenhouse gas emissions be reduced by at least one third. This includes in particular stopping the exploitation of fossil fuels and moving towards a more virtuous agricultural model.

The ecological transition is mainly financed through the plan France 2030, launched in October 2021. The aim of this plan is to support the transition of a large number of sectors, including the automotive, digital and energy sectors. Comes with an envelope of 30 billion euros distributed over 5 years, it pursues 10 goals for 2030.

Today eight billion euros are earmarked for the energy sector, a decarbonise the industry and develop hydrogen green. Four billion is spent on transportation (developing the first low-carbon aircraft and producing more electric and hybrid vehicles). The rest is divided between food, health, culture, space and seabed.

What amounts are needed?

According to the Institut Rousseau, a French think tank on ecology, there is currently no overall figure for the public and private investments needed to achieve carbon neutrality. The group still believes it 182 billion a year, distributed between public authorities and the private sector. An investment that represents 2.3% of French GDP in 2021.

In the shorter term, the 2021-2022 recovery plan following the health crisis dedicates € 2 billion to the ecological transition. The goal: to initiate the decarbonisation of industry, to develop hydrogen and the circular economy and to support SMEs engaged in the ecological transition.

On another level, the Sustainable Tourism Fund, supported by the French Agency for Environment and Energy Management (ADEME), aims to support the development of tourism with a positive economic, social and environmental impact of up to 50 million euros.

Will it be enough? Contrary to what one might think, the decarbonisation of our industries requires very heavy investments. We have to completely rethink our production methods. In 2018, the European Court of Auditors proposed the figure of 1.115 billion euros per year to finance the ecological transition, which is much more than what is invested today.

Hence the interest for individuals to act on their own scale.

Did you know thata Frenchman emits on average 11.2 tons of CO2 per year, with his savings ? Actions can be taken to limit your carbon footprint by financing (at your level) the ecological transition.

Here are the most significant:

Invest in SRI funds

Socially responsible investment (better known by its acronym SRI) consists in integrating extra-financial criteria such as respect for the environment or social justice in financial investments. The goal is to combine economic performance with social and environmental impact, both by excluding polluting companies from their portfolios, and by financing those that act in a virtuous manner.

From the Pacte law of 2020, all new multi-support life insurance contracts must offer at least one SRI unit of account, one solidarity unit of account or one Greenfin unit of account (label issued by the Ministry of Ecological and Solidarity Transition ).

Participate in the financing of renewable energies

What if you invest in renewable energy ? Lendopolis allows you to choose a project (construction of a solar plant, a wind farm, an accumulation, etc.) and invest in a few clicks. The potential return depends on the chosen project; it is between 4.5 and 7% gross per year. The advantage: the investment is accessible from just 20 euros.

Take advantage of financial aid to renovate your home and switch to soft mobility

Many aids are available to help people access the energy renovation of their homes. Whether it’s MaPrimeRenov ‘, the zero-interest eco-loan or the Energy Savings Booster, there are financial endowments for all projects.

This site does it complete list. Finally, financial aid is also envisaged to encourage soft mobility (electric vehicles and bicycles, cargo bikes, etc.). These subsidies are distributed on a national, regional and even municipal level.

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