lOne of the main topics of COP29, which will be held from November 11 to 22 in Baku, will be the issue of financial support for developing countries. But global public debt has tripled since the mid-1970s, and this is particularly the case in developed countries, where it reached a record level of 140% of GDP during the pandemic. How can we, in a constrained budgetary context, allocate sufficient global financing to the transition, when Europe is already struggling to finance the €800 billion a year needed to increase its “existential challenges” is it in Mario Draghi’s report?
Examining a wide range of studies on the financing of major historical transformations, in Europe and elsewhere, allows us to draw an essential conclusion for the financing of the ecological transition: even in a restricted budgetary context, if we broaden the conception of In the role of the State, there is indeed room for maneuver (“The toolbox to finance the ecological transition”, Institut Avant-garde, 2024). In Europe we tend to focus mainly on the idea that the State must go into debt to finance investments neglected by the private sector. This discussion about the different roles that the State can play in the transition and its financing should be at the center of the COP29 discussions. Five main avenues can be explored.
The first is to increase the sustainability of public debt despite high debt/GDP ratios. Not only are traditional debt reduction factors unlikely to work in our favor in the coming years (“Living with High Public Debt”, Serkan Arslanalp and Barry Eichengreen, August 2023), but even debts are expected to increase. debt ratios. For example, the impact of the transition on public debt French would be 25 points of GDP by 2040 (“The economic impacts of climate action”, Selma Mahfouz and Jean Pisani-Ferry, 2023). In this context, we must further optimize the management of our debt by acting on its parameters: maturity, indexation to inflation, types of holder, debt in local or foreign currency, etc. ; so many properties that influence its sustainability.
The State can then invest together with the private sector to guide it towards transition investments, and also benefit from the performance of some of them. For example, public venture capital could be further developed. An example of this type of measure is the Israeli Yozma program, established in 1993, which allowed the country to develop its technology sector.
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