Driving the Ecological Transition: Exploring Financing and Investment Strategies for Local Authorities at AFL's Annual Event in Paris

On Thursday, June 15, the AFL convened more than 140 members, partners, and counterparts at the Espace Centenaire in Paris for its sixth annual event. The day, led by Jean Dumonteil, revolved around a pressing topic: "Avoiding the unmanageable and managing the inevitable: Do local authorities have the means to lead the necessary ecological transition?" Marie Ducamin, the new Chairwoman of the AFL Board of Directors and Mayor of Saint-Jacques-de-la-Lande, delivered an opening speech, followed by an introduction from Pierre Moscovici, the First President of the French Court of Auditors, who previously served as the Minister of Finance during the passage of the Banking Regulation and Separation Act in July 2013.

Quote: "Every member local authority has equal access to credit, regardless of its size or financing needs, ranging from a few thousand to several tens of millions of euros."

The first panel discussion centered on the financial aspect, was moderated by Thibault Julien and exploredexploring whether France and French local authorities remain attractive to investors. Participants included Philippe Gudin, Chief Economist at Barclays, and Eila Kreivi, Head of Sustainable Finance at the European Investment Bank. Despite some challenges to France's investment attractiveness, the country's position as a core member of the eurozone, along with the expertise of Agence France Trésor in debt management, provides an advantage. There was consensus on the crucial role of local authorities in the ecological transition and the required investments.

The second part of the morning examined investment strategies for ecological transition in local authorities from various perspectives. It began with a video presentation by Christophe Béchu, the French Minister for Ecological Transition, highlighting the AFL's role as a platform for dialogue between finance and local authorities. François Thomazeau, Senior Project Manager at I4CE, presented key figures to illustrate the challenges of the ecological transition, including a temperature increase of 1.5 degrees Celsius, the need for 66 billion euros of investment to achieve carbon neutrality, and the annual investments of 12 billion euros required by local authorities to reach carbon neutrality by 2030.

The morning session concluded with a second panel discussion focused on energy renovation of local authority buildings and its financing. Théo Gal and François le Béhot, a territorial chief engineer and a territorial administrator respectively, presented the findings of their joint study, which aimed to achieve the same emission reduction achieved in the past 32 years within the next eight years. The study serves as a practical guide for local authorities. Two elected representatives, Audrey Linkenheld, vice-president of Lille Metropole, and Michel Maya, mayor of Tramayes in the Saône-et-Loire region, shared their insights and experiences regarding the importance of engineering and inter-actor collaboration in financing renovation projects.

The afternoon session commenced with a counterpoint presentation by Michel Lepetit, vice-president of the Shift Project, focusing on Europe's energy dependence and the significant risks faced by insurance companies due to climate change. He highlighted the need for more concrete action in green finance, praising the AFL as an organization fully dedicated to green investments.

The final highlight of the day was the unveiling of the AFL 2023 Barometer, assessing the financial health of local authorities. Yann Doyen, AFL's Director of Commitments, presented the key findings, indicating a slight improvement in the average score but growing disparities between different types of local authorities. He also noted that inflation was the dominant economic factor during the assessed period.

The testimonies of the elected officials present shed light on the overall situation and experience on the ground. Several of them, including Bertrand Hauchecorne, mayor of Mareau-aux-Prés, emphasized the uncertainty faced by local leaders in terms of visibility. Marie Ducamin, vice-president of Rennes Métropole and president of the AFL Board of Directors, agreed with this, pointing out the wide variety of situations and the unknown nature of local authorities' participation in budget rebalancing. Romain Colas, mayor of Boussy-Saint-Antoine, confirmed these observations by stating that effective management by local authorities does not necessarily reflect the confidence of elected officials in the future. Uncertainty is also a factor highlighted by Katell Parnet, Director General of Finance for the Grand Est Region, particularly regarding tax revenues, as carbon taxes account for a significant proportion of regional income. Finally, Thomas Rougier, Secretary General of OFGL, shifted the focus by emphasizing the unprecedented level of inflation experienced in almost four decades: 80% of the increase in local authority spending in 2022 was attributed to a price effect.