Hydrogen fuel cell specialist Ceres Power Holdings PLC (AIM:CWR, OTC:CPWHF), Smurfit Kappa Group plc (LSE:SKG) and DS Smith PLC were highlighted by Credit Suisse as it saw around €550bn of European state aid funding could be unlocked by the 'Green Deal' plan .
The European Commission proposed its Green Deal Industrial Plan in response to US President Joe Biden's US$700bn Inflation Reduction Act, which was signed into law last summer and includes US$369bn of investment in climate programs.
Companies and policymakers in the European Union and the UK have been warning in recent weeks that the US subsidy package was pulling investment out of Europe and into projects across the Atlantic.
Credit Suisse predicted the Green Deal suggested the size of the likely funding could range from €419bn to €755bn.
This amount of state aid is "small in comparison" to the IEA's projected US$5trn annual investment needed to decarbonise the global energy system, including of which US$1tn for the EU, but "it could be instrumental to unlocking private capital and changing public perceptions," said analyst Amy Wong in a note.
With energy efficiency, renewables and circular economy the top three themes, accounting for 50% of aid, Wong and more than 20 analyst colleagues identified nine "key focusses" for EU green funding with the package forecast to impact strategy, earnings, and cashflow across different sectors.
Stocks with 'outperform' rating stocks with the "most material exposure" were Ceres in hydrogen, NKT in transmission & distribution, Alstom in sustainable mobility, Acciona in renewables, packaging groups Smurfit Kappa and DS Smith in circular economy and companies exposed to multiple themes including Schneider Electric, Vestas, De Nora and E.ON.
There will be an industrial policy review at the next EC meeting on 23-24 March, while in the summer a proposal is expected for a European Sovereignty Fund.