From january 5, 2020 to january 1, 2022
16.11.2020 | Group
Scientific consensus is clear: to meet the climate objectives set by the Paris Agreement, we must be more efficient in managing energy and leave most fossil fuel reserves in the ground. The energy transition necessary to achieve this requires heightened energy efficiency and a switch from high greenhouse-gas-emitting energies to decarbonated ones. We believe that a responsible recovery involves accelerating the energy transition. The banking sector has a role to play here and can rely on three channels to influence change.
“Being able to produce clean and affordable energy”: the7th UN Sustainable Development Goall is dedicated to the energy transition. It is based on short-term objectives: by 2030, the international mobilisation will make energy, in its most sustainable form, accessible to all. As such, the energy transition is more than ever, at the heart of a responsible and sustainable global economy.
Each country is responsible for framing this objective with suitable mechanisms and legislation, and for their economic agents to anticipate or implement them. Citizens also contribute by changing their habits.
In France, the environmental transition for green growth law has set objectives that include:
These engagements have since been renewed. The French Strategy for Energy and the Climate, which lays out the framework to make France a decarbonated country by 2050, was adopted in 2020.
In line with regulatory changes, BNP Paribas implemented a proactive policy in favour of the energy transition all countries in which it is located as early as 2010.
“In this race against time, the banking and finance sector must be at the forefront of the establishment of a low-carbon economy. Situated at the intersection between individuals, businesses and investors the Bank is a motor of the economy and can influence change. Using financial and investment levers, it can strongly encourage its clients to engage in responding to the urgency of the situation.”
Renewable energies are energies that are renewed by nature more rapidly than they are consumed by people -, unlike fossil fuels, such as coal and oil - whereas clean energies have a low-carbon impact. Wind power (both onshore and offshore), hydropower, solar, biomass and geothermal are the five main renewable, or green, energies. To limit climate risks, use of these energy sources must be expanded. A responsible recovery will therefore mean promoting their use, while making them, and their financing, more accessible.
How can a bank such as BNP Paribas influence the acceleration of renewable energies to increase their proportion in the global energy mix?
Examples of initiatives include:
Companies, especially financial firms, can assist this collective push by adjusting their offerings to energy transition goals. Demand from users, along with the products and services that are offered to them, have an impact on the economy and society. It is up to each economic agent to take on this responsibility based on its means and its line of business.
At BNP Paribas, we have designed new financing tools dedicated to the energy transition for our customers in various sectors who seek both environmental utility and cost-effectiveness.
Three major financial tools are now available for renewable energies:
1. The BNP Paribas Energy Transition line of green investment funds and socially responsible investments in general.
2. Green bonds or Green corporate bonds: between January 2019 and June 2020, our clients mandated us for over 64.5 billion* euros-worth of green bonds issuances, thus making us the world leader in the market to support corporate and sovereign needs in their ecological transformation. *Source: Dealogic
3. Sustainability-linked loans (SLL) are an innovative product in which BNP Paribas is both a pioneer and a leader, with more than 7% global market share.
BNP Paribas custom-designs SLLs, while adjusting them to their customers’ needs worldwide.
YPF Luz, Argentina’s fifth-largest power producer, has pledged to raise its wind power production from 123 megawatts in 2020 to 297 megawatts in 2021, an increase of more than 240%. This is a major investment that has required significant financing needs, despite the prevailing economic instability in Argentina.
This financing was provided through several international sources having an interest in renewable energies, including a 95 million dollar loan granted by BNP Paribas Fortis.
Photos credits : Jordi Huisman (header), zhu difeng, @scharfsinn86, Getty Images & Shutterstock