Tailwinds for Our Portfolio Companies!

The latest EU recovery plan is a "green" one. Fairly grandiose in nature, many areas should provide significant tailwinds for many of our portfolio companies. We go into depth on these tailwinds and discuss, which specific themes are covered by our approach and where we see key opportunities for investors.

Huge Renovation Wave for Buildings

The recovery plan intends to fund a EUR 90bn renovation facility, which is intented to help finance a EUR 350bn investment programme to improve building renovation rates and take them from below 1% currently to 3%. Well targeted, considering that buildings through heating, cooling and lighting are responsible for 30-40% of emissions. The investment programme will involve significant investments into building insulation, construction, HVAC, roof-top solar, battery storage, EV charging and water. An initial focus will be on public buildings including schools and hospitals as well as social housing. A green mortgage programme in the size of EUR 5bn is intended to mobilise a further EUR 50bn of borrowing.

We are invested in several companies that are positioned uniquely well to take advantage of the shift in demand coming from this investment program. Our portfolio companies produce technologies and products that help renovators achieve the new targets, save costs and reduce the strain their buildings have on the environment.

A Renewable Grid

The programme's focus on renewable energies looks to significantly increase expenditure on the grid at the transmission and distribution level. In addition to this the programme will also announce 15GW of renewable tendering over 2 years with the intention to offset reduced tendering at the state level. The total figure of investment could reach EUR 35bn.

Green Hydrogen

Hydrogen made from renewable power is set to replace hydrogen made grom natural gas. The EU's recovery investment programme seeks to bridge the cost gap between the two through a carbon contract for difference scheme. This is expected to cost around EUR 5-30bn. To facilitate this there will also be EUR 10bn p.a. spent on a green infrastructure fund.

Future Mobility

A recovery plan of this magnitude would not be complete if it did not contain measures to improve and increase the efficiency of transportation. In this sense the EU's recovery plan contains EUR 20bn purchasing incentives for EVs, further EUR 40-60bn on an electric vehicle drive-train investment fund, the intention to install 2 million EV chargers and cutting tax on new electric vehicles. Rail infrastructure does not fall short with an allocation of EUR 40bn to rail infrastructure and rolling stock. Urban mobility is addressed through the set up of a EUR 20bn fund.

Circular Economy

A significant component of the recovery plan is the move from a linear economy towards a circular one. For this the plan sets aside EUR 20bn for investments into waste collection and recycling to close the funding gap. The government would also like to play the role of the disruptor when it comes to the way we farm. With EUR 130bn invested into high speed rural broadband to allow for the use of digital agricultural technologies. Further EUR 35bn are intended for the development of satellite and other digital technologies for digital agri-food. Biogas is to be incentivised in order to capture and use methane with EUR 4bn.

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