2023-11-04 14:00:16
Lhe energy transition, water management, maintaining biodiversity require renewable energy production equipment, thermal renovation of buildings and housing, decarbonization of industry and transport, more economical management of water consumption, developments and devices to protect or preserve a sufficient number of living, plant and animal species.
We roughly know the amount of additional investment needs linked to this triple objective. With regard to the energy transition, the estimates of Selma Mahfouz and Jean Pisani-Ferry lead to the assumption of an additional net investment need of 2.5 points of GDP per year (2,500 billion dollars, i.e. 2,350 billion euros, per year on a global scale). According to available studies, investments in water amount to $350 billion per year (or 0.35% of global GDP).
The global agreement on biodiversity (Kunming-Montreal agreement, 2022) provided for 200 billion dollars per year in national and international financing, but, according to the Paulson Institute, it would be necessary to increase to 800 billion dollars in annual investments ( instead of the current 140 billion). Finally, we must add to these amounts public expenditure linked to the preservation of the purchasing power of the poorest households which will be strongly affected by the increase in the price of energy and water.
If we devote 0.5% of GDP to this support, investment spending linked to the ecological transition should represent around four points of GDP per year for at least twenty years, shared between public and private investments, from businesses and households. . How, in the case of France, can we finance this?
The first possibility is to increase external debt. But France already has a current account deficit of 2% of gross domestic product (GDP), meaning it borrows 2% of GDP per year due to insufficient domestic savings. to cover its investment needs. It would therefore be necessary to increase it to 6% of GDP to cover the entire additional investment necessary for the transition through external debt. This external deficit would be extremely difficult to finance: it might trigger a financial crisis of the type that hit the southern countries of the euro zone from 2010.
Reduce consumption
Furthermore, all countries, also faced with the need to invest in the transition, will have a need for increased investment: this means that there will be a “war” for access to savings, and therefore a lot of competition to attract foreign capital. It is not certain that France is sufficiently attractive to attract a large additional amount of foreign capital in a world where savings have become rare. It therefore does not seem possible to finance additional investments through external debt.
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