My bookmarks

Pins are saved using cookies. Deleting them from your browser will delete your preferences.

Menu

COVID will have brought some good too!

23 July 2020

Interview with Marie Lassegnore, Credit Fund Manager, La Française AM

COVID will have brought some good too!

Has the coronavirus pandemic had any impact of environmental issues?

While most of the world's population was confined to their homes, we witnessed catastrophic news related to the pandemic. However, we also witnessed the positive impacts of lockdown on the environment: cleaner air and clearer skies due to lower levels of airborne particles in major cities.

According to the International Energy Agency, global demand for energy is expected to fall by 6% in 2020, seven times the drop experienced following the crisis of 2008. Lower demand and global awareness about air pollution (and health implications) are two factors that will inevitably lead to the end of the coal era.

Indeed, during containment, coal consumption dropped because of the decrease in demand for electricity; some countries no longer required back-up power capacity. We are witnessing the most significant fall in demand since World War II (IEA, Global Energy Review, 30/04/2020). The United Kingdom went two months without coal (between 11 April and 15 June); the longest period ever recorded, according to the National GRID ESO. And the United States has used more renewable energy. By way of comparison, 10 years ago in the United States, 50% of electricity was generated by coal (Bloomberg New Energy Finance).

This trend is expected to continue as the operating costs of renewable energy decrease. 


How can government regulation regulate carbon emissions? 

The governments of the world's 50 largest economies have committed over $12 trillion in emergency aid for the health crisis. So far, only $54 billion have been spent on post-carbon economic priorities. A sum which could be considered as moderate, but which nevertheless represents as a positive sign. (Bloomberg New Energy Finance).

In France, for example, the €7 billion in aid granted to Air France is subject to environmental commitments, including a cut in the number of domestic flights, which can be substituted by rail. The development of the aeronautics sector will have to be in line with the growing consumption of alternative fuels in order to achieve carbon neutrality.

Another example is Canada where the government announced the creation of 10,000 jobs in its oil industry to carry out clean-up operations of inactive wells and thus support their environmental objectives. Canada has also put in place funding opportunities for large companies in exchange for energy transition actions. 

In China, the $800 billion stimulus package will largely finance new infrastructure such as electric vehicle charging stations, 5G and rail systems. The package also includes a $1.4 billion plan to promote electric vehicles.

Closer to home, and in response to the COVID crisis, the European Commission has adopted a €750 billion recovery package called "Next Generation EU" in addition to the long-term budget (2021-2027) of more than €1,000 billion. The package includes grants to help the countries and companies most affected by the crisis. Grants will be awarded for specific projects and on condition that the investments do not undermine the climate and environmental objectives set out in the Green Deal. If the plan is ratified by the European Parliament, 30% of the aid, i.e. more than €500 billion, will be allocated to the fight against global warming and the achievement of energy transition objectives. This is a very positive dynamic for the future deployment of green assets in Europe. Currently, the Green Deal accounts for around 25% of the EU budget, enabling the financing of clean transport, the renovation of buildings and the development of renewable energies. 

PROMOTIONAL DOCUMENT. THIS COMMENTARY IS INTENDED FOR NON-PROFESSIONAL INVESTORS WITHIN THE MEANING OF MIFID II. It is provided for informational and educational purposes only and is not intended to serve as a forecast, research product or investment advice and should not be construed as such. It may not constitute investment advice or an offer, invitation or recommendation to invest in particular investments or to adopt any investment strategy. The opinions expressed by the author are based on current market conditions and are subject to change without notice. These opinions may differ from those of other investment professionals. Published by La Française AM Finance Services, head office located at 128 boulevard Raspail, 75006 Paris, France, a company regulated by the Autorité de Contrôle Prudentiel as an investment services provider, no. 18673 X, a subsidiary of La Française. La Française Asset Management was approved by the AMF under no. GP97076 on 1 July 1997.

La Française Group provides access to the expertise of a number of asset management companies around the world. To provide you with the most relevant information, we have developed an interface to present the full range of products available for your investor profile and country of residence.
Please indicate your profile
1
Country
2
Language
3
Profile
Your country of residence
Your language
Your profile
<p class="new-disclaimer__legal-notice">Before consulting this website, for your protection and in your interest, please read the “<a href="en/legal-notice/" target="_blank">disclaimer</a>” and “<a href="en/regulatory-information/" target="_blank">current regulations</a>” carefully. This information explains certain legal and regulatory restrictions which apply to individual and professional investors according to local law. By accessing this site, in my non-professional or professional capacity, I acknowledge that I have read and accept the terms and conditions of use. Pursuant to the application of the European Markets in Financial Instruments Directive (“MiFID”), please state to which category of investor you belong&nbsp;:</p>
<p class="new-disclaimer__legal-notice">Before consulting this website, for your protection and in your interest, please read the “<a href="en/legal-notice/" target="_blank">disclaimer</a>” and “<a href="en/regulatory-information/" target="_blank">current regulations</a>” carefully. This information explains certain legal and regulatory restrictions which apply to individual and professional investors according to local law. By accessing this site, in my non-professional or professional capacity, I acknowledge that I have read and accept the terms and conditions of use. Pursuant to the application of the European Markets in Financial Instruments Directive (“MiFID”), please state to which category of investor you belong&nbsp;:</p>
By continuing browsing on this website, you accept the use of cookies and other tracing devices s as to allow you to receive information suited to your profile, facilitate information sharing on social networks, guarantee the best browsing experience possible and to create statistics. To find out more, we invite you to consult our Privacy and Cookies policy. Find out more.