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Market Commentary

June Market Commentary

by Thornbridge

Commentary by Galvanize Climate Solutions LLC – Investment Manager of Galvanize Global Equities, LP

renewable energy (June market commentary article)

Commentary by Galvanize Climate Solutions LLC – Investment Manager of Galvanize Global Equities, LP

The EU Innovation Fund recently announced its third round of awards for large scale projects. The Innovation Fund aims to invest EUR ~40B over the course of this decade to help decarbonize the EU’s industries, deriving revenue from the bloc’s carbon pricing system. Roughly EUR 3.6B was awarded to 41 projects across multiple sectors including solar, hydrogen, and battery production, with all projects expected to begin operations before 2030. Since inception, the Innovation Fund has awarded EUR ~6.5Bn across three large scale project calls, which the EU estimates would cover ~17% of its ~24GW solar panel manufacturing target and ~11% of its~25GW electrolyzer manufacturing target by 2030 under the Net Zero Industry Act (NZIA).

This is in direct response to the Inflation Reduction Act in the USA and is indicative of the industrial policy war that is taking place globally. This situation presents attractive opportunity for corporates to augment returns by winning government awards.

“It’s like a declaration of war,” Robert Habeck, Germany’s vice-chancellor and economics minister recently said. Europe, in particular, has adopted the politics of if you cannot beat them, join them.

Or as Habeck put it last month: “If we don’t keep up, they’ll have the key industries and we won’t. That’s the brutal reality.”

Author: Alex Hackett

Alex is a member of the investment funds team. She is involved in the portfolio construction process, regulatory reporting, trade surveillance and monitoring.

Author: Thornbridge

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