While opening the conference COP22 in Marrakech, the consensus among economic commentators begs the initiative of the decarbonization of economies and its impact on financial assets. The price of oil is approaching $ 50 per barrel, double the low point reached in mid-February, and defiance overcapacity. Financial assets clustered around passive managements replicating commercial indexes, heavily weighted energy companies. The consensus of forecasters expects for 2017, the continued rise in oil prices, translating into a rise in inflation and the return of the economy to its previous growth model. The solvency of shale gas operators improves market of speculative credit. Do these developments augur the failure of international agreements to instill an environmental transition?
Several weak signals suggest, however, that the transition is already implemented. The Norwegian sovereign fund undertakes a rotation of its investments to less sensitive to fossil energy assets. Saudi Arabia is preparing the IPO of Saudi Aramco, and launched the largest bond issue by an emerging country. During the presentation to potential investors, the Saudi government is focusing its outlook on economic and social reforms and begs to provide forecasts oil prices to ward off excessive dependency of the economic model of the country on fossil fuels.
The economic debate on energy transition are mortgaged by deflation fears induced by the depreciation of investments in fossil fuels. These concerns underlie the environmental transition will not create prosperity and jeopardize the banking system by debt granted to the energy sector. The current economic outlook underestimate energy efficiency, notably resulting from the “Smart Grid” (intelligent electricity network) and the emergence of electric transport. Already, China improves its energy efficiency by 2.5% annually. However, the financial consensus merges speculating about the overvaluation of Chinese growth, based on consumption of raw materials and imports of fossil fuels.
Finally, the outlook for the fourth industrial revolution is clouded by excessive fears of totalitarianism and decommissioning of the middle class by the disappearance of jobs. Estimates of Oxford University and Massachusetts Institute of Technology of automation from 47% to 52% of human activities are diverted to strengthen vis-à-vis cynicism of the technological revolution. They increase the ranks of demagogues and populist movements that promise conservatism to fight against changes misdeeds. The fear of increased surveillance by connected objects mortgage prospects for a better use of natural resources and new jobs created by connecting objects to the internet.
The convergence of technological and environmental initiatives foretell the mutation decommissioning fears of deflation or decrease, in hope of a new prosperity reflection of a planet and a pacified humanity.
The hullabaloo financial commentators on negative interest rates, unconventional monetary policies and financing of technological and innovative companies eclipse the de-carbonization, the technological revolution and the disintermediation of the economy. It is urgent to rebalance the debate financial market to make asset turnover engine financing of environmental transition.