ENERGY AND PROSPERITY, FINANCING AND EVALUATION OF THE ENERGY TRANSITION

Projet scientifique

The purpose of this initiative is to provide a space for academic research that examines different innovative financial transition channels (financial engineering and regulation), as well as tools for evaluating their performance. 

The work carried out by the Committee of Experts for the National Debate on the Ecological Transition has revealed a number of major issues related to the implementation of the transition. Today we have several transition trajectories (inspired by various scenarios: Negatep, ADEME, Ancre, Negawatt, etc.), which are distinguished by changes in the level of energy demand, by the penetration of new uses (behaviours and technologies), by the nature of the energy mixes envisaged and by the speed of implementation of these changes between now and 2050. 

 

This general theme will be developed around three axes.

Axis 1: Microeconomic foundations of the energy transition
The aim of this research axis is to provide a conceptual framework for integrating the following into microeconomic models of the energy transition: explicit consideration of adjustment costs, experience effects, and the existence of convexity in the investment costs associated with the development of a new technology.

  • Competition and complementarity between new technologies.
  • The most appropriate forms of public intervention and financing (fossil energy taxes on emissions, subsidies, standards, etc.), including consideration of competition policies (cooperation agreements, temporary exclusivity, etc.).
  • Thinking in relation to this axis will be based initially on the analysis of issues in the transport sector. This applies not only to vehicles (electric, hybrid, hydrogen, etc.), but also to tools for controlling the energy consumed by public transport, the modal shift towards public transport and the new shared door-to-door mobility facilitated by digital technology and Big Data.

Axis 2: Macroeconomic and environmental evaluation of the economic transition
The aim of this research axis is to improve the representation of the “growth engine” of macroeconomic energy transition models by integrating the following:

  • The first component focuses on how the content of growth patterns (consumption patterns, technology, location), resource constraints and environmental constraints affect productivity in the long term. The path we propose to follow here is to better articulate the representation of the underlying physical (resource constraints, for example) and technological dimensions (methods of production) with those of the macroeconomic system.
  • The second component focuses on greater integration of financial processes in these macroeconomic models (credit and money creation as tools for accompanying the transition in the short/medium term). The assumption is that taking these macrofinancial mechanisms into account will significantly change the behaviour of the models. It will also allow models to test a wider range of public policy instruments.
  • The third component will focus on the exploration of alternative transition assessment criteria, and will therefore examine the regional and sectoral expression of transition scenarios and their impact at enterprise level. The use of the growth rate of GDP as the sole metric of the progress of an economy is today largely discredited, and there is an abundant literature on alternative criteria. It will involve considering how the physical, economic, social and political dimensions of the different scenarios regarding the future affect “prosperity” which is not limited to income, as well as the way in which the existing models allow – or fail to allow – these various dimensions  to be taken into account.

Axe 3: Innovative financing
The linkage between Axes 1 and 2 will make it possible to explore the cost-effectiveness of transition scenarios. This deepening naturally leads to the question of financing the energy transition, which will be tackled in two parts. The first part will study the feasibility of innovative financing methods associated with different modes of transitions at national, continental (Europe) or global (Green Fund, for example) levels. The second part will be of a prudential and accounting nature, emerging from the following observation: the great difficulty that the banking and insurance sectors have in financing the long-term investments associated with the infrastructure needed for the transition stems also from the prudential and accounting environment in which these sectors have been operating for several years. It is then a matter of examining the reforms (Basel 3, Solvency 2, IFRS, etc.) conducive to the reorientation of available liquidity towards green financing.

Responsables scientifiques

Gaël Giraud
Gaël Giraud
Jean-Pierre Ponssard
Jean-Pierre Ponssard

Partenaires économiques