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Audun Wickstrand Iversen

Audun Wickstrand Iversen

Isabelle Juillard Thompsen

Isabelle Juillard Thompsen

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In the beginning of this decade, on December 12 of 2019, the EU presented its green vision and growth strategy. The climate goal of zero emissions by 2050 is now legislated, and the EU aims for a 55% cut by 2030. Is it possible? How do we get there? Is it just political rhetoric? We will get answers to some of these questions soon.

On July 14, the European Commission will present a package of measures, "Fit for 55", which contains several bills and amendments aiming to cut emissions by 55% by the year of 2030. The details are still unclear, but the package contains priorities on at least four key topics.

1. Roll-out of renewable energy projects to increase the share of renewable energy to 38-40% of gross energy consumption by 2030. The revision of the Renewable Energy Directive will be the most important legislative mechanism, with several policy measures being considered, including the use of renewable energy in buildings, increased targets for low carbon transport (from 14% to 26%) and cross-border cooperation on offshore renewable energy (e.g., wind).

2. Increase in CO2 taxes for carbon intensive sectors through revisions of the EU quota system, changes in the Energy Taxation Directive and the EU's carbon limit adjustment for aluminium, cement, electrical energy, fertilizers, and steel.

3. The decarbonisation of the maritime and aviation sectors using biofuels, CO2 taxes (EU ETS and fuel taxes) and incentives for sustainable alternative fuels. We expect that a significant increase in the decarbonisation of these sectors is likely to occur in the longer term, given the lack of infrastructure, high costs and the current low availability of sustainable alternatives.

4. Energy efficiency through renovation of existing buildings, even though the extent is still unknown. A higher energy efficiency target of 36-39% (vs. 32.5%) is needed to make the climate target for 2030 achievable. Today, the EU is not on track to reach its previous goal. If this target is to be achieved, renovation will be an important tool, and significant investments will be required.

The expected changes in the EU regulation will be presented on July 14. These will drive structural changes in many industries and create attractive investment opportunities. We see that several companies are well positioned to take advantage of the green transition, given their exposure to renewable energy (Vestas, Siemens Gamesa, NKT, Cadler, OHT, IWS), green mobility (Aptiv, Nvidia), renovation (Sika, Schneider Electric), sustainable fuels (Wartsila, Plugpower, Bloom), infrastructure (Rexel, Eaton, Quanta, Landis) and green minerals (Boliden, Ivanhoe).

For some, the transition to a greener economy is about bans and boycotts. For DNB Future Waves, the green shift is about influencing and investing side by side with the companies that is creating a transition towards a low-emission society. We are neither claiming it to be easy nor that we cannot be wrong. We are just saying that we must try.

Disclaimer: The information in this document is not binding. Statements in this document should not be understood as an offer, recommendation or solicitation to invest in or sell UCITS funds, hedge funds, securities or other products offered by DNB Asset Management or any other company within DNB Group or any other financial institution.

All information reflects the current assessment of DNB Asset Management, which is subject to change without notice. DNB Asset Management does not guarantee the accuracy and completeness of the information. This information does not take into account the individual investment objectives, personal financial situation or specific requirements of an investor. DNB Asset Management does not accept any responsibility for losses incurred on investments made on the basis of this information. Our general terms and conditions can be found on our website www.dnbam.com.

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