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A European Climate Bond

Author

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

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.

Suggested Citation

  • Monasterolo, Irene & Pacelli, Antonia & Pagano, Marco & Russo, Carmine, 2024. "A European Climate Bond," CEPR Discussion Papers 18988, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18988
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    Cited by:

    1. is not listed on IDEAS
    2. Papathanassiou, Chryssa & Nieto, María J., 2025. "Different shades of green: EU corporate disclosure rules and their effectiveness in limiting “greenwashing”," Occasional Paper Series 370, European Central Bank.
    3. Mazzocchetti, Andrea & Monasterolo, Irene & Dunz, Nepomuk & Essenfelder, Arthur Hrast, 2025. "Breaking the economy: How climate tail risk and financial conditions can shape loss persistence and economic recovery," Ecological Economics, Elsevier, vol. 237(C).
    4. Broeders, Dirk & Dimitrov, Daniel & Verhoeven, Niek, 2025. "Climate-linked bonds," Working Paper Series 3011, European Central Bank.

    More about this item

    JEL classification:

    • 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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