Jonathan Maes, a seconded national expert at the European Commission, was asked to comment on how sovereigns could divest from state-owned fossil fuel companies, rather than ‘perpetually engage’ with them.
He said: “This is a big dilemma for sovereigns - it’s a big source of revenue and a big source of employment…But this is why it’s a pillar of the EU Green Deal to leave no place or person behind.
“In the EU green deal, there is also a Just Transition mechanism. [A share of] the NextGenerationEU [Covid-19 recovery] funding … goes to this Just Transition fund, which focusses on the regions and sectors that need to decarbonise. They are receiving a Just Transition, if you will.
“We have very clear targets in the EU. By 2030, we expect a 55% reduction in CO2 emissions and to be completely carbon neutral by 2050. There will also be new climate law.”
Commenting on the impact of the Ukraine crisis on the EU’s transition, Maes said: “If there is a silver lining to the crisis in Ukraine, it is the higher energy prices that are focussing people on getting these renovation measures going. It is getting the Repower EU initiative to really start getting front and centre…and to get an energy transition going.”
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The discussion will carry on at our ESG in Fixed Income Americas conference on 28 September in New York, where Environmental Finance will continue to play a critical role in providing breadth and depth to the sustainable bond market.
For more information, please visit the conference website.