2021, acceleration of the climate transition
10/02/2021 - Emmanuel Martinez, Chief Economist Environment
The political orientations of recent months and the involvement of economic actors seem to support the idea that the economy will take a stance against climate change. The road will be long before the Paris Climate Agreement ambitions are a reality, but we could see an acceleration in 2021.
Governments are committed to climate change and a sustainable economic recovery…
In 2020, China, Japan, South Korea and the EU-27 announced their commitment to no longer produce net greenhouse gas (GHG) emissions by 2060 for China and 2050 for the other countries, thereby creating positive momentum on the climate. The return to the Paris Agreement of the United States and the statement by the new US president J. Biden to also reach zero net GHG emissions by 2050 has reinforced this momentum. These five - China, Japan, South Korea, USA and the EU-27 - account for half of global emissions. They should, by setting an example and through their economic and diplomatic influence, be able to play a driving role on the international stage. The Climate Conference in Glasgow in November 2021 will mark this change. This meeting is essential to finalise the rules for implementing the Paris Agreement and setting out the new ambitions of States in order to meet the goal of limiting global warming to below 2°C by 2100 and, if possible, 1.5°C (currently warming is +1.1°C compared to the beginning of the industrial era).
Governments are implementing climate plans to meet their commitments and transform their economies. The EU-27 sets an example through the Green Pact adopted in December 2019. It aims to review all EU policies to adopt a growth strategy focused on decarbonising the European economy. It covers all sectors of activity, including environmental and social justice issues. In addition, the €750 billion stimulus package adopted in 2020 for 2021-2024 aims to accelerate the digital and energy transition. In addition, China will present its 14th five-year plan based on its climate ambitions in March 2021, and J. Biden will soon announce a major climate plan.
… in synergy with the private sector
Despite a difficult economic environment, companies share the view that climate matters are a real source of opportunities, which is also reflected in the choices made by consumers who increasingly integrate the environmental aspect into their consumer decisions (decrease in meat consumption, use of recycled products, etc.). Companies, for their part, adopt transformation strategies to adapt to a decarbonised economy with the desire to make their value chain robust and meet new consumer demands. This is especially true as technological and organisational innovations are now available and play a major role. The energy sector is often taken as an example of the energy transition, but other sectors are also highlighted, such as transport, real estate or agriculture. Ultimately, this transformation will affect almost all sectors.
Finance is also structured to support companies and households in their transformation to a decarbonised world and to control its own climate risks. It offers new financial products to its customers and has introduced environmental requirements in the granting of financing.
This transformation was driven by all economic actors (governments institutions, companies, households) and has been accelerated by the Covid-19 crisis which offers real opportunities for investment and sustainable economic growth.