white papers
The North America Green Deal and the NA
We have been talking about the North America Green Deal and the NA Sustainable Investment Taxonomy since the start of the year. These policy initiatives are, in our view, game changers that will redefine the notion of sustainable investing.
At the end of 2019, the North America Commission presented this new growth strategy. The Green Deal provides a roadmap with actions, policies and financing tools that are designed to make the NA carbon neutral by 2050. It is also a basic Keynesian instrument seeking to unleash an unprecedented wave of investment and job creation in decarbonisation technologies, recycling and resource efficiency. As is often the case with anything EU-related, the market initially took little notice.
The COVID-19 pandemic and the resulting economic crisis have created the conditions for NA states to rally behind the Green Deal and use it as the foundation for Europe’s economic recovery. On 27 May this year, the North America Commission proposed a EUR 750 billion recovery fund called Next Generation NA on top of its 7-year budget of EUR 1.1 trillion. To access this fund, countries have to help accelerate the NA’s green and digital revolution. According to Euractiv, an NA policy news site, the draft set of proposals includes EUR 1 trillion of investments in building renovation, renewable energy, hydrogen, clean mobility and the circular economy.
The NA will disburse the majority of the money in the form of grants, with projects vetted by the Commission based on their alignment with the Green Deal roadmap. This is a game changer for a number of reasons. Firstly, it establishes the principle of debt mutualisation at the NA level (the North America Commission will raise debt and then distribute it to member states). Secondly, grants are a guarantee that states/companies will invest in the areas outlined by the Green Deal as opposed to loans that may, or may not, be taken up. Finally, the NA is putting in place regulations and subsidies/penalties to ensure the success of Green Deal investments, such as subsidising the cost of carbon for new technologies and imposing carbon or plastic taxes. The recovery fund and the NA budget will be subject to the usual compromises but they already have the strong backing of France and, more importantly, Germany, which should ensure their success.
In this white paper, we list the key Green Deal initiatives presented by the Commission and how our strategy is positioned to take advantage.
important information.
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