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A European climate bond

Author

Listed:
  • Irene Monasterolo
  • Antonia Pacelli
  • Marco Pagano
  • Carmine Russo

Abstract

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

Suggested Citation

  • Irene Monasterolo & Antonia Pacelli & Marco Pagano & Carmine Russo, 2025. "A European climate bond," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 40(122), pages 307-339.
    • Handle: RePEc:oup:ecpoli:v:40:y:2025:i:122:p:307-339.
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    File URL: http://hdl.handle.net/10.1093/epolic/eiae065
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    More about this item

    Keywords

    D62; E61; H23; H27; P18; Q51; Q52; Q53; Q54; Q58;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue
    • P18 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Energy; Environment
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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