The investment strategy of the Fund aims to make a positive and measurable contribution to achieving the environmental objectives set out in Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 establishing a framework to facilitate sustainable investment and amending Regulation (EU) 2019/2088 ("EU Taxonomy Regulation"). The focus is on climate change mitigation and climate change adaptation.
The Fund’s investment strategy aims to contribute to the long-term mitigation of global warming in line with the objectives of the 2015 Paris Agreement (the United Nations Framework Convention on Climate Change). As part of its investment policy, the Fund will focus on investing in various renewable energy sectors. These investments are intended in particular to support the transformation of the European energy system by increasing or securing the share of renewable energies in the electricity grid and thus making a significant contribution to environmental protection.
A positive and measurable contribution to achieving the environmental objectives in accordance with the EU Taxonomy Regulation can be demonstrated via the so-called CO₂e avoidance (CO₂e avoidance)1. This key figure is calculated annually on the basis of the amount of electricity actually produced and the energy actually consumed.
Due to its low production costs, electricity from renewable energy sources is given priority when fed into the grid. Through this effect, renewable energies across Europe ensure that emissions that would otherwise have arisen from the combustion of fossil fuels are avoided. 2 This avoidance effect is expressed in so-called “avoidance factors” and published country-specifically by the “Technical Working Group of International Financial Institutions” (IFI).3 In Germany, feed-in priority also applies within the framework of the Renewable Energies Act 4, through which electricity from renewable sources is preferentially purchased from the electricity grid (provided grid stability is guaranteed).
The calculation of the avoided CO₂e emissions is based on internationally established standards and is based on the following steps:
- First, the amount of electricity generated by renewable energy plants that was actually fed into the electricity grids retrospectively is recorded. These amounts of electricity are measured in megawatt hours.
- In a second step, the country-specific avoidance factors of the Technical Working Group of the International Financial Institutions (IFI) are obtained. 3 These avoidance factors are based on the Combined Margin Approach of the United Nations Framework Convention on Climate Change (UNFCCC), which is applied in the Clean Development Mechanism of the Kyoto Protocol for the Quantification of Emissions Reduction of Energy Production Projects (ACM0002).5 The UNFCCC framework is regarded as a globally recognised standard for calculating emission avoidance by renewable energy projects.
- The gross CO2e avoidance per year results from multiplying the fed-in electricity in megawatt hours (from step #1) by the avoidance factor (from step #2).
- In the next step, the actual emissions emitted by the plants from operations and the upstream chain are calculated.
- The operation of plants in the area of renewable energies requires the procurement of external electricity. Currently, some of this electricity is still sourced from non-renewable sources (grey electricity). This results in Scope 2 emissions in accordance with the GHG Protocol for the existing investments in tangible assets in the area of renewable energies, in particular for wind turbines and solar parks. A switch to green electricity is planned and will be implemented in stages for the individual investments - where technically possible - in a timely manner. As part of the calculation, the conventionally procured electricity (grey electricity) is multiplied by the respective country-specific electricity emission factor, depending on the location of the tangible asset investment. These VDA factors are reviewed and updated annually.6
- In order to determine the Scope 3 emissions in accordance with the GHG protocol, the emissions from the production of the plants (upstream chain) must also be taken into account. The resulting CO₂e emissions from materials and construction are mapped via technology-specific upstream emission factors. The greenhouse gas emissions caused during production and construction are compared to the amount of electricity fed into the plant in MWh. The respective upstream emission factor is then multiplied by the quantity of electricity fed in. The underlying upstream emission factors of the Federal Environment Agency are also reviewed and updated annually.7
- The final net CO₂e avoidance results from the gross CO₂e avoidance (from step #3) minus the actual emissions emitted by the plants from operation and upstream (from step #4).
The fund reports on the annually calculated CO₂e avoidance in its mandatory publications, such as the annual report. This makes fed-in electricity quantities and the associated CO₂e avoidance transparent and comprehensible for investors.
Important: While fed-in electricity is physically measurable, CO₂e avoidance naturally remains a calculated value that makes assumptions about how electricity generation would have developed without the feed-in of a renewable energy plant and compares this with the scenario of actual feed-in.
