Powering the Green Recovery in Europe

Powering the Green Recovery in Europe

Chup Priovashini, Robert Black, Ella Harvey and Rory Sullivan

Chronos Sustainability has worked with the Institutional Investors Group on Climate Change (IIGCC), the Principles for Responsible Investment (PRI), and CDP, under the auspices of The Investor Agenda, to produce a report analysing the EU recovery funds and European Green Deal.

The report, Powering a Green Recovery: How EU recovery funds can support investors and the European Green Deal, provides an overview of the 2021-2027 EU budget and the EU NextGeneration recovery stimulus, showing how these funds are supporting long-term investment in green transition projects and highlighting the opportunity for investors to become involved in the EU’s green transition.

The report supports the 2022 Global Investor Statement to Governments on the Climate Crisis in its recognition that governments’ ability to deliver on their commitments will depend on private capital flows playing a strong and supportive role in mobilising finance at scale.

Takeaways for policymakers

·       The EU funds show it is feasible for policymakers to provide at-scale support for renewable energy and the low carbon transition, in a way that is both fiscally disciplined and that supports energy security goals.

·       Policymakers can create transparent, financially attractive and actionable green projects and can provide policy signals to financial markets about significant investment opportunities provided by the urgently needed green transition.

·       EU policymakers can enhance private investment in the low carbon transition through good policy design and implementation, through actions such as (1) increasing consultation with external stakeholders, (2) improving data on monitoring, implementation, and climate effects, and (3) ensuring private investment is not “crowded out” by public investment.

·       Other governments can implement ambitious, green infrastructure projects that signal their readiness to make significant investments for a green transition, by learning from and adapting features of the EU recovery funds to their own specific contexts.

Takeaways for investors

·       Investors will benefit from an ambitious European Green Deal and Fit for 55 package that represents long-term investment in climate transition projects. There is strong fiscal support and a compelling case for significantly scaling up investments in these areas.

·       EU recovery funds provide a key opportunity to participate in projects that prioritize energy efficiency, boost renewable energy deployment, and incentivize industry innovation.

·       Although risks remain, the unprecedented scale of the funds allocated to climate action under the EU budget, the interaction between Member States, and relatively swift implementation of projects can avoid pitfalls traditionally associated with large public stimulus funds.

About The Investor Agenda: The Investor Agenda is a common leadership agenda on the climate crisis that is focused on accelerating investor action for a net zero emissions economy. Its founding partners are seven major groups working with investors: Asia Investor Group on Climate Change, CDP, Ceres, Investor Group on Climate Change, Institutional Investors Group on Climate Change, Principles for Responsible Investment and UNEP Finance Initiative.