Monsieur Hollande's Opus: Sustainable Finance and a Socialist France
A Socialist in the Élysée Palace. What does that mean for sustainable finance?
In defeating Nicholas Sarkozy in the French presidential election, Francois Hollande has become the first left-wing president since Francois Mitterrand left office in 1995. Proponents of sustainable finance should be saying, "Très bien!"
Hollande has made some commitments that have pleased the Green Party members as well as the renewable energy sector. For one, he promised that, if elected, he would "preserve the independence of France by diversifying our sources of energy," including "a reduction in the share of nuclear in the production of electricity from 75% to 50% by 2025" and an "increase in the power of renewable energies." He also said that France would "respect its international engagements to reduce greenhouse gas emissions." Pas mal!
PAS DE NUKES, PLUS DE RENEWABLES
Sarkozy had been a strong supporter of France's nuclear energy industry, which represents three quarters of the nation's energy portfolio, saying he would have increased nuclear plant longevity from 40 to 60 years. Hollande, on the other hand, and like German chancellor Angela Merkel, is cool on nuclear power.
The Socialist leader promised he would close plants and cut France's nuclear dependence in half by 2025. This stance, writes Christopher Coats on Forbes.com, "will likely give ammunition to local companies willing to fill that energy gap and help France reach EU-backed sustainability goals of 20 percent by 2020."
BACK TO THE NEGOTIATING TABLE: EURO FISCAL PACT
Hollande has also argued for the renegotiation of the European fiscal pact that was signed in December 2011, telling a group of European Socialist politicians in March, "This treaty is an illusion and it poses a risk...It creates the conditions for a lasting economic crisis which would only create budgetary imbalances once again."
"He wants the pact to authorize the issue of common European bonds," writes Patrick Smith in the Fiscal Times, "not to pay down bank debt but to finance growth via investment in such sectors as renewable energy, education, and urban development." Because the European austerity has been a drag on the U.S. economy, Smith argued that "Americans should applaud" an Hollande victory at the polls.
EUROPEAN INVESTORS: GET READY FOR THE TOBIN TAX
Hollande also told the group of Socialist pols that he wanted to institute some version of the so-called "Tobin tax," a financial transactions tax named after the American Nobel laureate James Tobin who first suggested the need for a tax on all spot conversions from one currency into another to penalize speculation and short-termism. Hollande said the tax should be applicable to all financial instruments across the euro zone, including derivatives.
Most notably, at least in the immediate future, is the fact that Hollande will try to roll back the extreme austerity policies that many economists have criticized as counterproductive and anti-growth, and which have transformed worries about deficits into worries about recessions—and even depressions. Hollande led his campaign on growth, not austerity.
GOODBYE "MERKOZY," HELLO "MERKHOLLANDE"
In terms of renegotiating the fiscal pact, Hollande said he wanted it to go beyond simple fiscal discipline and have a "growth dimension."
Because Sarkozy and Merkel have been the chief proponents of European austerity, their alliance had been called "Merkozy." Hollande will have to build his own bridge to Berlin and convince his German counterpart to ease up on her strict austerity stance. If that happens, perhaps the anti-austerity rallies that have jammed many streets across the euro zone will dwindle and "Merkhollande" will be born.
Jones, Philippa. What will the French elections mean for renewables?. European Wind Energy Association. April 23, 2012. Accessed May 4, 2012.
Coats, Christopher. Could A Sarkozy Loss Could Be A Green Energy Gain?. Forbes. May 3, 2012. Accessed May 4, 2012.
Flynn, Daniel. French Socialist urges Tobin tax, eurobonds for growth. Reuters. March 17, 2012. Accessed May 4, 2012.
Smith, Patrick. What a Socialist France Would Mean for America. Fiscal Times. April 30, 2012. Accessed May 3, 2012.
Rooney, Ben. French vote to test Europe's stance on austerity. CNN Money. May 4, 2012. Accessed May 4, 2012.
image: Francois Hollande speaking at a press conference, April 23, 2007. (credit: Philippe Grangeaud, Parti socialist, Flickr Creative Commons)