The European Commission has published the 2024 Allocation and Impact Report for NextGenerationEU (NGEU) Green Bonds, which shed light on how the proceeds have been allocated as well as the expected climate benefits of investments under the program. According to the report, NGEU Green Bonds-funded projects are expected to reduce greenhouse gas (GHG) emissions by around 55 million tons annually throughout the European Union, underscoring the EU’s commitment to environmental sustainability and curbing climate change.
To mitigate the economic challenges presented by the COVID-19 pandemic, NextGenerationEU was launched in 2021 as a revolutionary £800 billion recovery plan in support of greening, digitizing, and making Europe stronger. The relevance of sustainability management with regard to this program forms a core approach in terms of the funding as 30% of the budget will come from green bonds. Furthermore, EU Member States must dedicate a minimum of 37% of their expenditure in RRPs towards sustainable investments and reforms related to climate change. These include green infrastructure, renewable energy, and climate adaptation.
The European Commission has sold more than €65 billion worth of the green bonds since the launch of the first NGEU Green Bond in October 2021. The funds were allocated to projects falling within the NGEU Green Bond Framework, which comprises several eligible investment categories. This comprises clean energy and networks; energy efficiency; clean transport and infrastructure; water supply and waste management; climate adaptation; biodiversity protection; and research and innovation activities for the green transition.
The report shows that three key sectors primarily benefit from funding so far under the NGEU Green Bonds. Energy efficiency initiatives have been the largest recipient of funds at 42%, clean transport and infrastructure at 34%, while clean energy and network investments stand at 8.7%. Altogether, these focus areas have been important to the realisation of sustainability goals for the EU in what ought to be low-carbon future foundations.
A significant increase in eligible spending under the NGEU Green Bond program occurred in 2024, as the total pool of qualifying investments expanded from €191 billion to €265 billion. This has driven up the potential climate impact of the program. The Commission now puts the full implementation of the measures funded through NGEU Green Bonds at an annual reduction of 54.7 million tons in GHGs, more than the 44.2 million-ton figure estimated in the last year’s report.
The report further indicates that clean energy and network investments represent the largest impact, reductions of 21.8 million tons annually, while clean transport and infrastructure projects will add another 20.4 million tons in annual emissions cuts. These sectors represent the spine of the EU’s climate strategy, underpinning the transition to renewable energy, sustainable mobility, and resilient infrastructure.
Speaking with press during the launching of the report, Commissioner for Budget and Administration Johannes Hahn underlined that the EU is a global leader in green financing. “The full roll-out of investments financed by NGEU Green Bonds is expected to reduce the EU’s greenhouse gas emissions by 55 million tonnes per year – equivalent to GHG emitted by 15 million EU households,” said Hahn. He also emphasized the attractiveness of NGEU Green Bonds, describing them as “safe, sustainable, and successful.
The NGEU program brought about the pioneering model of green financing, setting a benchmark for sustainable recovery while paving the way to integrate climate-focused investments in large-scale economic initiatives. Coupled with green bonds and a well-developed and targeted framework across those sectors, such as energy efficiency and transport, the EU has proven not only its commitment to the fight against climate change but also to building resilience for economic recovery.
In that sense, the 2024 report should be seen as further proof of the critical potential of green bonds in preventing and countering the effects of climate change. Through investments that will help vital sectors decarbonize and innovation become a grease to green growth, NextGenerationEU now stands as a possible tide turner for Europe toward its ambitious climate goals.