The current high interest rates slow down the energy transition, making the Eurozone more vulnerable to fossilflation. With a green interest rate programme, the ECB can offset this effect. In this paper we analyse the most relevant design choices for such a green interest rate programme, like how to define ‘green’ and the structure and size of such a programme. Using data from the 2023 Taxonomy-alignment reports of banks we find that a green rate can accelerate the energy transition throughout the Eurozone against modest costs.
Recommended citation:
Jourdan, S., Van Tilburg, R., Kramer, B., Simić, A. and Bronstering, G. (2024) A green interest rate for the Eurozone: evaluating the design choices. Sustainable Finance Lab. Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5015926.