A European Climate Bond

Irene Monasterolo, Antonia Pacelli, Marco Pagano and Carmine Russo

No 18988, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

JEL-codes: Q51 Q52 Q53 Q54 Q58 (search for similar items in EconPapers)
Date: 2024-04
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Working Paper: A European Climate Bond (2024)
Working Paper: A European Climate Bond (2024)
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