France should create €1bn energy transition fund to leverage €10bn investor capital: report

France should form a specialist energy transition team from its numerous public investment bodies and task it with creating public-private risk sharing instruments endowed with €1bn in public money and a goal of leveraging an additional €10bn of private money within three years to enable the country to start meeting its low carbon transition goals. The recommendation for the ‘France Transition’ group comes in a new report produced for the government by Pascal Canfin, CEO of WWF in France, and Philippe Zaouati, CEO of Mirova, the French sustainable fund manager and President of Finance for Tomorrow, the lobby group for Paris as a sustainable financial centre.
The report aims to show how institutional investors could play a more constructive role in working with public bodies to finance the climate/energy transition and creating the kinds of investments that would suit their long-term financing goals. It suggests that this could come through loan guarantees, improved debt financing or equity funds whose risk/return profiles could be boosted by policy action such as tighter regulation or tax breaks.
It recommends that the France Transition body could also optimise its projects by co-ordinating them with the Invest EU initiative, which itself aims to finance €11.5bn of green infrastructure as well as nurture capacity building and guarantees to support investment and access to finance in the EU.The report recognises that renewables sectors such as solar and wind have seen significant financial inflows in France in recent years. But it notes that there is significant under investment – somewhere between €10-30bn per annum, based on reports – in crucial sectors such as energy efficient buildings, low carbon vehicles or the production of biogas. The report particularly examines how to unlock financing in these sectors. One problem, it says, is that financiers say there are a lack of viable green infrastructure products, while project developers point to a lack of suitable finance. The report says there are multiple factors for this understanding ‘gap’, including uncertainty and excessive risk perception, viability in comparison to existing market projects, lack of consensus on green supporting/brown penalising factors, and asymmetry of information between investors and project developers.
Zaouati recently published a new book, titled “Paris, the Kilometer Zero of Green Finance” in which he argues that France can play a key role in promoting public/private partnerships for the future energy transition: Link
The summary of the new report (in French only currently) can be found here