"We have come to Paris to send a clear signal to the markets". John Kerry is radiant: the United Nations has just approved the Paris Agreement, in fact the first universal charter for the reduction of greenhouse emissions that warm the planet. Yet, during the press conference in the middle of the night, the US secretary of state does not speak of climate change, desertification, or melting glaciers. He talks about markets. The signal sent from Paris to the markets, "is that the time has come to change direction, as regards our collective dependence on fossil fuels", underlines Kerry. Indeed, between the lines of the agreement it is envisaged that it will be precisely the markets that will give the pace and measure to the transformation underway.
By making a commitment to voluntarily reduce carbon dioxide emissions generated by the combustion of coal, oil and gas, the 195 countries that have signed up to the agreement need the energy market, the technology market and the finance market to maintain the step of a revolution that promises to be unprecedented.
While oil is at a low and coal is even questioned (companies like Peabody Energy or Arch Coal have lost more than 90% of their value on Wall Street in the last year), it is impossible to predict what will happen in the long run with a even more massive adoption of renewable energies. The European emissions market, the so-called ETS, is also at its lowest point, mostly due to too many certificates issued in the past by the European Union. But China is preparing to equip itself with a similar mechanism within two years, as some American states and some Canadian provinces are already doing: in the long run it is highly plausible that the cost of a certificate to emit a ton of carbon dioxide will rise, helping to make investments in solar and wind energy are even cheaper. French President François Hollande, in blessing the masterpiece of his diplomacy, said that France is studying the possible adoption of a carbon tax. It's easy to imagine that others will, if they want to disincentivise fossil fuels as promised in the “historic” Paris climate conference.
Just to give an idea, the London company Carbon Tracker has calculated that numerous oil companies are already having to deal with their "stranded assets": long-term investments in fossil energies which - in this new political context - could end by not producing the desired returns. Then there's technology, which is also a market. Competition on photovoltaic panels, for example, has already produced an increase in efficiency over the last five years and therefore a 60% drop in prices, with installations growing by 700%. If the oil multinationals find themselves facing an uncertain and even uphill road, large and small companies that operate in renewables and energy efficiency have a highway of opportunities ahead of them.
Not to mention those who are working on the batteries of the future, the real missing link: we still don't have a truly efficient technology to use the energy generated by solar and wind energy during the day at night.
Which, brings us to the finance. Today the listed companies of the fossil world - according to estimates by Bloomberg New Energy Finance - they capitalize a total of 5 thousand billion dollars, against the 300 billion of those of clean energies. How long will it take to tip these weights on the scale? Perhaps not the five years until the formal entry into force of the Agreement. But in ten or fifteen this revolution within a revolution – certainly unthinkable until yesterday – will happen. "The message is: hey, you better take note of this," said the usual Kerry during another conference. “Companies like Walmart, Ge, Apple and Google and many others have come here to Paris: they all want to ensure that their products come from a virtuous energy cycle. All this, will have an impact on the market. Wall Street analysts will begin to distinguish between those who follow these standards and those who don't."
According to State Department estimates, banks, not just American ones, have already allocated 650 billion dollars to invest in clean energy. The transition from fossil fuels to renewable energy began well before the Paris Agreement, but this is obviously a long-term goal. According to scientists' calculations, the maximum peak of emissions should arrive by 2020. It is likely that it will take a few more years. But by 2050, science always says, coal, oil and gas will have to remain underground, if we want to achieve the ideal objective of the new international treaty: to keep the increase in the average planetary temperature "well below 2 degrees Celsius compared to pre-industrial levels and pursue efforts to limit it to 1,5” (for the uninitiated, we just passed the one-degree mark). However, there is little to do: this energy revolution, largely based on the "invisible hand" of the markets, has officially begun.
