Cutting domestic flight routes will reduce carbon emissions, lawmakers say. EPA
Cutting domestic flight routes will reduce carbon emissions, lawmakers say. EPA
Cutting domestic flight routes will reduce carbon emissions, lawmakers say. EPA
Cutting domestic flight routes will reduce carbon emissions, lawmakers say. EPA

France looks to ban short-haul domestic flights if trains are available

The country's parliament has voted in favour of the carbon-emission-reducing proposal

AFP

April 13, 2021

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The French parliament has voted to cut domestic flight routes where the same destination can be reached by train in under 2.5 hours, in order to reduce carbon emissions.

The measure, approved by MPs over the weekend, is part of a wide-ranging package of measures to fight climate change backed by President Emmanuel Macron.

The bill, which now goes before the Senate before a final vote in parliament, calls for routes between Paris and Nantes, Lyon and Bordeaux to be abandoned, except for connecting flights.

The move falls short of demands by a citizens' climate convention set up by Macron, which had called for flights to be banned if trains could cover the same distance in under four hours.

The government already told Air France it had to cut short-haul flights in return for a public aid package to help it weather a downturn caused by Covid-19 restrictions.

The draft law means that competitors cannot lay a claim to those routes either.

The bill ran into fierce resistance from MPs from south-western France, home to the Airbus aircraft maker and many of its sub-contractors.

Joel Aviragnet, a Socialist lawmaker from the Haute-Garonne region, said the law would lead to job losses and a "disproportionate human cost".

His party colleague, David Habib, said the law would lead to "negative growth" and "unemployment".

But some parliamentarians said the ban did not go far enough, with left-winger Daniele Obono saying that a stricter law could rid the country of some of the most polluting flight routes, such as those between Paris and Nice, Toulouse and Marseille.

According to the draft law, the government will be able to cut further routes by decree.

It also calls for a carbon-offset tax on domestic routes.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”