Financing the low-carbon transition in Europe

Olimpia Carradori, Margherita Giuzio, Sujit Kapadia, Dilyara Salakhova and Katia Vozian

No 2813, Working Paper Series from European Central Bank

Abstract: Using evidence from the EU emissions trading system, we collect verified emissions of close to 4000 highly polluting and mostly non-listed firms responsible for 26% of EU’s emissions. Over the period 2013 - 2019, we find a non-linear relationship between leverage and emissions. A firm with higher leverage has lower emissions in subsequent years. However, when leverage exceeds 50%, a further increase is associated with higher emissions. Our difference-in-differences approach sheds light on the existence of a group of firms that are too indebted to successfully accomplish the low-carbon transition, even when they face a steep increase in the cost of their emissions. JEL Classification: C58, E58, G32, Q51, Q56, Q58

Keywords: climate change; debt finance; EU ETS; low-carbon transition; transition finance (search for similar items in EconPapers)
Date: 2023-05
New Economics Papers: this item is included in nep-ene, nep-env and nep-fdg
Note: 3546207
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20232813

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