The amount of Eligible Green Expenditure to be matched by potential Green OAT issuance (OAT 1.75% 25 June 2039) will be €8bn in 2020.
As was announced in the 2020 Indicative State Financing Programme published last month, the Green OAT will be tapped to meet market demand, up to the limit of Eligible Green Expenditure for 2020.
There are several sources of Eligible Green Expenditure for 2020. It mostly represents new fiscal and tax expenditure defined in the 2020 Budget Act and fiscal expenditure for the “Invest for the Future” programme that has not been spent yet. Eligible Green Expenditure for 2020 also corresponds to Eligible Green Expenditure realised last year that was not matched to Green OAT issuance in 2019 and is indeed carried forward to 2020.
The Green OAT 1.75% 25 June 2039, issued three years ago on 24 January 2017, will continue to contribute to the financing programme defined in the 2020 Initial Budget Act, as will the other OAT issues. Outstanding Green OAT debt now stands at €20.7bn.
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 mitigate 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 as well, 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 investors with (i) an annual allocation and output report on the expenditure matched to the issuances of the Green OAT, published for the second time in July 2019 and also (ii) reports on the environmental impact of Eligible Green Expenditure with appropriate frequency, the second of which was published in November 2019 and focused on the subsidy granted to the French Waterways Office (Voies navigables de France, VNF). The reports on the environmental impact of Eligible Green Expenditure are supervised by a Green OAT Evaluation Council, made up of independent experts of international repute.
Agence France Trésor (AFT)
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