Copenhagen was felt by all Europeans as a failure. Indeed the European point of view, excessively alarming and guilt inducer did not prevail.
In Retrospect, we now wonder if we did not over-caricature the situation, and question if our media were not too unanimous to be credible. In short, were the politically correct too invading to be convincing! We perhaps lacked reason and political realism. We were undoubtedly on an emotional level as opposed to being geared towards scientific rationality.
Conversely, China, India and emergent countries have well understood the stakes and have given themselves ambitious objectives about their energy efficiency’s improvement. But, as Cassandra would say, they did not agree to actual emission reduction targets. But how can one be this naive to think that these countries, which were recently left in poverty, would be willing to give up their growth no matter how undersized they are? Their engagements can be only progressive and the first steps reached in Copenhagen are rather encouraging.
The awareness of this new order (not so new in fact), leads us to formulate some important observations:
- To dramatize or play solo by imposing drastic constraints leading to negative consequences on our industry with no driving effect for other countries is useless. It is true for Europe and it is even truer for France of which we wish that it will not land in the soup regarding the carbon tax which has become one of these administrative headaches of which only we have the secret.
- It is necessary to focus our actions in the fields which will have the best cost/result ratio, for example methane recovery coming from the waste and energy sectors. It is also obvious that, as far as the energy efficiency is concerned, the battle will primarily take place around the development of innovating technologies.
- That there is little chance that we succeed in avoiding a consequent global warming, even if it is necessary to continue trying to limit its escalation. It is thus also crucial to focus on the analysis of the consequences of this global warming and the means to cope with it and adapting to it. We know for example that global warming will result in an increase of the frequency of extreme weather phenomena and that it is thus worthwhile to study the possibilities of adapting the infrastructures and the behaviors accordingly.
- Lastly, it is necessary to intensify the research on the climate and its evolutions. Indeed, we all know that climatology is a recent science (and the polemic of the climategate underlines it once more), that the climate is an extremely complex and even chaotic system (cf. the butterfly effect of Edouard Lorenz) and that our ignorance on the subject is still gargantuan. At the same time, we can recognize that the carbon of the human activity contributes to global warming, but to admit that we really do not know with which degree and with which impact. Thus let the debates develop between scientists while remembering of Galileo; mistrust the excessively simple scientific unanimities.
- It should once again be reaffirmed that the combat for the environment is not limited to hunting the CO2.
At DEMETER our conviction remains whole as for the need for developing essential renewable energies not only to reduce the carbon print but also to develop energy independency and to prepare for the “after oil” era.
Some words now on the 2010 prospects in Private Equity.
DEMETER was one of the rare Private Equity funds (with La Compagnie financière Edmond de Rothschild and Sofinnova) to raise more than € 200M in France in 2009. This performance, gratifying for us, is however the reflection of the difficulty in our profession of finding LPs. Many of our colleagues hope nevertheless to raise new funds in 2010 with the institutional investors.
Unfortunately, in addition to the fact that the LBO situation probably isn’t stabilized, the launching in view of Solvency II darken the landscape because, Solvency II will lead to prohibit the insurance companies, principal funds providers in Private Equity in Europe, investing in securities, listed or unlisted. After the Basel II standards which had particularly penalized the banks in respect to the investments carried out in Private Equity (but not in the sub primes!) the institutional investors will as a result turn their backs on our business. This situation, will be discussed at a later date as it carries heavy consequences, and will reduce the financial resources available for our funds and ultimately for SMEs. Consequently, it will probably lead private equity funds to diversify their sources of financing (particularly by calling upon private savings), while giving those even more responsibilities in the financing of growing SMEs.
But for the moment, all energies of our team (22 people of three nationalities!) are turned towards the investment. A two-day internal seminar organized in Andalusia under rain and floods (ah climatic change!) allowed us to improve our investment strategy particularly in the solar, biomass and electric vehicle fields. Besides, we have just invested in the Spanish company COMARTH which manufactures utility electric vehicles intended for businesses and municipalities and which will establish a factory in France soon…….
Other investments are in due diligence and we will of course hold you as usual regularly informed. So long Olivier DUPONT President of the management board
