The amount of Eligible Green Expenditure to be matched by potential Green OAT issuance (OAT 1.75% 25 June 2039) will be €8bn in 2019.
As was announced in the 2019 Indicative State Financing Programme published last month, the Green OAT will be tapped to meet investor demand and ensure a liquid market, within the limits of Eligible Green Expenditure.
There are several sources of Eligible Green Expenditure for 2019. It mostly represents new fiscal and tax expenditure defined in the 2019 Budget Act and tax expenditure for the “Invest for the Future” programme that has not been spent. Eligible Green Expenditure for 2019 also corresponds to Eligible Green Expenditure defined in the 2018 Budget Act that was not matched to Green OAT issuance in 2018 and is indeed deferred in 2019.
The Green OAT 1.75% 25 June 2039, issued two years ago today, will continue to contribute to the financing programme defined in the 2019 Initial Budget Act, as will the other OAT issues. Outstanding Green OAT debt now stands at €14.8bn.
Framework for Eligible Green Expenditures
In keeping with the commitments that France made in its Energy Transition and Green Growth Act and through the Paris Climate Agreement, the proceeds of France's Green OAT will be matched to central government budget expenditure and expenditure under the “Invest for the Future” programme to fight climate change, adapt to climate change, protect biodiversity and fight pollution.
The criteria for selecting Eligible Green Expenditure were defined before the first Green OAT issue. Samples of eligible projects were made public, and provided to investors in a framework document published on 10 January 2017, which can be found on the AFT website.
The projects that represent Eligible Green Expenditure are identified beforehand each year by an interministerial steering committee that works under the aegis of the Prime Minister.
On the occasion of the first issue, the French government committed to providing for investors (i) an annual allocation and output report on the expenditure matched to the issuances of the Green OAT, published for the first time in June 2018 and also (ii) an ex post report on the environmental impact of Eligible Green Expenditure with appropriate frequency, the first edition of which was published in November 2018 and focused on the energy transition tax credit. The ex post report on the environmental impact of Eligible Green Expenditure is supervised by a Green OAT Evaluation Council, made up of independent scientists and economists of international repute and inaugurated on 11 December 2017.
Agence France Trésor (AFT)
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