By Marie Lassegnore, Credit Fund Manager, La Française AM
The spread of Covid-19 brought about an unprecedented health crisis which resulted in dramatic economic consequences. Nevertheless, we also observed unexpectedly fast and positive environmental impacts, such as cleaner air and clearer skies thanks to airborne particulate matter levels dropping in big cities. Indeed, during lockdown, coal consumption has dropped significantly as electricity demand fell, we have seen the largest worldwide decline in coal consumption since World War II1:
This drop in electricity demand is certainly temporary, but how has politics taken over?
In this context, government and supranational institutions recognised the necessity to launch stimulus packages intended to support the economy whilst placing heightened attention to environmental factors.
Next Generation EU
The Eurogroup agreed in July 2020 to the “Next Generation EU” plan which has a budget of EUR 750bn to help member states finance the economic recovery post COVID-19. The member states have decided to divide the plan into EUR 390Bn of non-refundable grants and the rest as loans. It will supplement the Union’s budget for the period 2021-2027, which will
bring the total financial capacity to EUR 1.85tn. The notion of green and digital transition is central to the plan alongside economic resilience, as 30% of the Next Generation EU must align with green objectives. Indeed, the Next Generation EU includes a clear necessity to be aligned with the Green Deal (introduced by the EU in December 2019) as climate neutrality is one of the four priorities set by the EU strategic agenda for 2019-2024.
1 Source: International Energy Agency, 2020