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A European Climate Bond

Author

Listed:
  • Irene Monasterolo

    (Universiteit Utrecht / Utrecht University [Utrecht], CEPR - Center for Economic Policy Research)

  • Antonia Pacelli

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Marco Pagano

    (Universiteit Utrecht / Utrecht University [Utrecht], CEPR - Center for Economic Policy Research)

  • Carmine Russo

    (Universiteit Utrecht / Utrecht University [Utrecht], CEPR - Center for Economic Policy Research)

Abstract

Europe faces a large climate investment gap. To fill it, we propose the joint issuance of European climate bonds. 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

  • Irene Monasterolo & Antonia Pacelli & Marco Pagano & Carmine Russo, 2025. "A European Climate Bond," Post-Print hal-04940440, HAL.
    • Handle: RePEc:hal:journl:hal-04940440
    DOI: 10.1093/epolic/eiae065
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    References listed on IDEAS

    as
    1. Arvind Krishnamurthy & Annette Vissing-Jorgensen, 2012. "The Aggregate Demand for Treasury Debt," Journal of Political Economy, University of Chicago Press, vol. 120(2), pages 233-267.
    2. Fuest, Clemens & Meier, Volker, 2023. "Sustainable finance and climate change: Wasteful but a political commitment device?," Journal of Environmental Economics and Management, Elsevier, vol. 118(C).
    3. Grégory Claeys & Conor McCaffrey & Lennard Welslau, 2023. "The rising cost of European Union borrowing and what to do about it," Bruegel Policy Brief node_9089, Bruegel.
    4. Monika Grzegorczyk & Guntram B. Wolff, 2022. "Greeniums in sovereign bond markets," Bruegel Working Papers node_8334, Bruegel.
    5. Suraje Dessai & Mike Hulme, 2004. "Does climate adaptation policy need probabilities?," Climate Policy, Taylor & Francis Journals, vol. 4(2), pages 107-128, June.
    6. Elmar Kriegler & Massimo Tavoni & Tino Aboumahboub & Gunnar Luderer & Katherine Calvin & Gauthier Demaere & Volker Krey & Keywan Riahi & Hilke Rösler & Michiel Schaeffer & Detlef P. Van Vuuren, 2013. "What Does The 2°C Target Imply For A Global Climate Agreement In 2020? The Limits Study On Durban Platform Scenarios," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 4(04), pages 1-30.
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    Cited by:

    1. 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.
    2. Broeders, Dirk & Dimitrov, Daniel & Verhoeven, Niek, 2025. "Climate-linked bonds," Working Paper Series 3011, European Central Bank.

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    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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