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The European Commission announced today the release of its NextGenerationEU (NGEU) Green Bonds Allocation and Impact Report 2024, with information on the allocation of proceeds from the issuance of NGEU Green Bonds and their estimated realized and expected climate impacts, revealing that investments funded by green bonds under the program are anticipated to reduce greenhouse gas emissions by an estimated 55 million tons per year across the EU.
NextGenerationEU was launched by the Commission in 2021 as an €800 billion recovery program, established in response to the COVID-19 crisis, aimed at supporting the economic recovery through investments geared towards making the EU “greener, more digital and more resilient.”
The program targets having 30% of its budget financed through green bonds, and requires at least 37% of spending in Member States’ Recovery and Resilience Plans (RRPs) to be used for sustainable investments and reforms in areas addressing climate change, such as green infrastructure and renewable energy.
The first green bond issuance under NGEU was completed in October 2021, and to date the EU has issued more than €65 billion of NGEU Green Bonds.
Eligible categories of investments detailed by the NGEU Green Bond Framework include clean energy & network, climate change adaptation, clean transport & infrastructure, digital technologies supporting the green transition, energy efficiency, nature protection, rehabilitation and biodiversity, research and innovation activities supporting the green transition, and water supply & waste management.
To date, the reported expenditures financed by NGEU Green Bonds has been dominated by three main categories, with energy efficiency representing 42%, clean transport & infrastructure at 34%, and clean energy & network at 8.7%.
Over the past year, the pool of NGEU expenditure that can be financed with the proceeds of green bonds has expanded significantly to approximately €265 billion, from €191 billion in 2023. With the increase in eligibility, the estimates that the full implementation in the coming years of all measures that can be funded by NGEU Green Bonds will reduce GHG emissions in the EU by 54.7 million tons, ahead of the 44.2 million ton estimate last year.
The most significant source of emissions reductions are anticipated to come from clean energy and network investments, at 21.8 million tons, and clean transport and infrastructure at 20.4 million tons.
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