Policy Paper - Financing the Energy and Ecological Transition - By Christian de Boissieu
25 May 2023
The goal is to keep the increase in the average temperature of the planet below 2°C compared to pre-industrial levels by the end of this century, and to do everything possible to keep the increase to 1.5°C. [...] With the increase, not yet completed, of the whole range of interest rates (short and long-term rates), states must face the increase in public debt rates, the inevitable extension of defense and security expenditures given the geopolitical context (the war in Ukraine, but not only that), the required coverage of education and health expenditures, and the financing of the EET. [...] 7 Policy Center for the New South Financing the Energy and Ecological Transition 4) The Link Between Micro and Macroeconomics At the microeconomic level, the rise of environment, social, governance (ESG) criteria, especially the E criterion, throughout the world and whatever the degree of development of the country in question, is both irresistible and irrepressible. [...] A priori, the greater the share of EET financing directly borne by public budgets, the less developed the country: this is a way of compensating for the weakness of private financing, discouraged by an unattractive risk/return ratio, and of compensating for the almost general absence of sufficiently active and liquid financial markets in the countries of the South. [...] The preceding reasoning suggests that the terms of this trade-off are not and will not be the same, depending on the level of financial development of the country in question.