Banks to help drive Italy's green economy: S&P report

Source: Xinhua| 2018-08-04 02:35:25|Editor: yan
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By Stefania Fumo

ROME, Aug. 3 (Xinhua) -- Banks are likely to play a prominent role in propelling Italy's green economy, S&P Global Ratings said in a recent report.

Green bank loans are likely to rise as the country's small and midsize enterprises (SMEs) seek financing for their green projects and greater lending for green buildings, according to the report released on Thursday titled "Will The Momentum Build For Green Finance In Italy?"

The country's SMEs are the backbone of Italy's private sector, which according to 2014 numbers issued by Istat national statistics agency was made up of 4.4 million companies employing 16.2 million people.

At least 42 percent of Italian businesses are "green-oriented", according to a November 2017 report by Italy's Foundation for Sustainable Development.

"The sectors with the highest density of companies making environmentalism a competitive factor are industry and agriculture," said the Foundation report, which examined companies that produce environmental goods or services (known as "core green") and those that adopt green management models ("go green").

Core green businesses make up 27 percent of Italian companies, and go green businesses make up 14.5 percent of the total.

The Foundation for Sustainable Development report was presented by the National Green Economy Council, which represents 66 business organizations and works in cooperation with Italy's environment and industry ministries, at a national conference on the green economy during the previous centre-left government.

Italy's new rightwing-populist coalition government is expected to continue the development of a green economy in line with the 2015 Paris Climate Agreement, according to S&P analysts.

Specifically, the country aims to reduce emissions by at least 80 percent from its 1990 levels by 2030 in keeping with the EU's long-term Paris agreement target, the S&P report said.

"Banks, which are a chief source of SME financing... have already been expanding their green financing activities, specifically in renewable energy," said S&P Global Ratings credit analyst Corinne Bendersky.

According to a survey conducted by the Italian Banking Association's Observatory on Banks and Green Economy, major banks financed over 27 billion euros (31.3 billion U.S. dollars) of renewable energy capacity between 2007 and 2014.

"Indeed, renewables represent around 37 percent of installed generating capacity and in 2017 alone 767 MW of renewable energy capacity was added to the Italian grid," the S&P report said. "We expect further expansion to meet the 28 percent target for renewable energy penetration in total energy consumption by 2030."

Installed generating capacity is the maximum electric output a generator can produce. Total energy consumption is all the energy necessary to satisfy a country's domestic consumption, including fuels used to produce, process, and transport energy sources.

Banks are also exploring the financing of green building and energy efficiency that would enable the country to reduce the carbon intensity of its building stock which, on average, is among the oldest in Europe.

However, S&P analysts pointed to "deep-seated obstacles" to the greening of the Italian economy, including political tensions, high public debt, weak growth, and unequal income and wealth distribution across the country.

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