A European climate bond

Irene Monasterolo, Antonia Pacelli, Marco Pagano and Carmine Russo

Economic Policy, 2025, vol. 40, issue 122, 307-339

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.

Keywords: D62; E61; H23; H27; P18; Q51; Q52; Q53; Q54; Q58 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ecpoli:v:40:y:2025:i:122:p:307-339.

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