Work

A European climate bond

Year: 2024

Type: article

Abstract: Europe faces a large climate investment gap. To fill it, we propose the joint issuance of climate bonds by the European Stability Mechanism. These bonds would be funded by selling greenhouse gas emission allowances via the Emissions Trading System, extended to cover all sectors. Access to the resulting funds would be conditional on countries' performance on the implementation of climate projects. European climate bonds would meet the demand for a safe, liquid and green asset, while accelerating climate investment, and increasing its resilience to sovereign crises, as well as the greening of both investors' portfolios and monetary policy.

Source: Economic Policy

DOI: 10.1093/epolic/eiae065

Authors: Irene Monasterolo, Antonia Pacelli, Marco Pagano, Carmine Russo