2023-10-29 14:36:51
To finance this energy transition which “is very expensive”, the business world and Europe must take the subject seriously, believes Jean-Laurent Bonnafé, CEO of BNP Paribas since 2011.
Banks are by nature responsible for directing strategic financing according to the context and must therefore engage in forecasting. Recently, the World Bank and JPMorgan described the current period – with the conflicts in Ukraine and Israel – as “dangerous”, even if the prospect of a financial crisis is not really accepted for the moment.
A tense geopolitical and inflationary context
Today it is the turn of BNP Paribas to engage in this exercise in an interview for The Tribune. Its director general Jean-Laurent Bonnafé took the opportunity to analyze the “further rise in global tensions, but also the absence of dialogue and the fragmentation of the world” since the resurgence of tensions in Israel. “It is therefore difficult to design reliable economic forecast scenarios,” he explains. But very significant volumes of raw materials pass through the Near East and the Middle East. Quite considerable consequences on the global economy could materialize if the situation deteriorates further.”
It must be said that beyond this global geopolitical instability, the inflationary context also contributes to weakening the economy. Jean-Laurent Bonnafé makes a general observation: “Europe has slowed down much more than the United States, where activity remains at a very high level. Germany is particularly affected. We should therefore not delay in starting to lower interest rates, so as to preserve the European economic fabric”.
The latter therefore presages new measures taken by the European Central Bank (ECB) in this area, in particular to be able to meet its commitments in terms of financing the energy transition. “All technologies are not yet complete, far from it, as illustrated by the difficulties encountered in the battery sector,” he explains. Changing models is very expensive. Today we are at the border of two worlds.”
A Europe “at a standstill”
Jean-Laurent Bonnafé then takes the opportunity to list the efforts of BNP Paribas to “substitute low-carbon energies for fossil fuels”. The banking group would have “become the world number one in green bonds, green bond issues, while it is only 26th in the world for bond issues in the oil and gas sector”. The latter aims to allocate 80% of its loan portfolio to low-carbon energy production (a figure approaching 60% in 2022). By 2026, this will involve reducing funding for oil exploration and production by 80%.
Mention is then made of efforts to finance the purchase of electric and hybrid cars, as well as the renovation of housing. “Here again, the transition is expensive,” he explains. A recent study shows that financing the purchase of an electric vehicle and the energy renovation of a home represents four years of savings capacity for an average household. Public support therefore remains essential. This is a collective subject: energy renovation remains out of reach for a certain number of households.”
The business world and Europe must therefore take the subject of financing the energy transition head on. Especially since, unlike the United States “with a single and effective tax policy”, “the European response remains to be constructed”. Having a framework that is sometimes “too rigid”, Europe is above all “at a standstill” on the question of a European capital market which is “an essential lever to support and finance the energy transition as a whole, as “economy more generally.”
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