15 November 2023

EURACTIV: As EU struggles to finance green investments, French businesses bet on capital markets union

Relaxing state aid rules is a step forward in unlocking new green financing, but “we must move quickly” on the capital markets union (CMU) to reach private investors’ money, French business association Medef’s chief Patrick Martin said.

The CMU, first introduced as a political goal under Jean-Claude Juncker’s European Commission leadership in 2015, looks to create a ‘single market for capital’, facilitate capital flows between member states, and increase the availability of growth capital in Europe.

The CMU, which has struggled to gain traction as it requires tackling barriers in a variety of policy sectors, is coming back to the fore as the EU looks for new cash sources to finance the green economy and support industrial decarbonisation.

“We are not opposed to the EU unlocking new financing,” Martin told journalists as he unveiled Medef’s new ‘EU strategy’ in Brussels on Monday, but he is well aware the absence of any new joint round of EU debt makes fresh cash harder to secure, as French businesses alone need “€40 billion a year to maintain their decarbonisation trajectories”.

A report published in May by French think tank France Stratégie estimates necessary green investment costs to top €66 billion annually up to 2030. Half of it should come from public money while the other half should come from private investors, the report predicts.

But “there is a collateral response [to green financing], it is that we move much faster on the CMU,” Martin said. “That doesn’t cost a penny for the EU”.

Could the implementation of the CMU – which could be felt on hundreds of legislative files that would need amending, and for which nitty-gritty negotiations have not started at all – be done fast enough to respond to the climate crisis?

“Climate urgency is here but it will not be solved tomorrow morning,” the Medef chief said, while “thousands of billions of euros can be mobilised through private sources […] to facilitate financing at the right scale”....

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