The energy price surge that started in 2021 is taking place as the world emerges with difficulty from the Covid-19 pandemic and faces the impacts of extreme weather conditions due to climate change. Both, aggravation of climate change and higher energy prices can significantly amplify poverty and inequality. As part of its price stability mandate, the European Central Bank (ECB) has an important role to play: managing inflation by supporting a clean energy transition in the European Union (EU).
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To ensure monetary policy does not conflict with the EU’s carbon neutrality targets, the European Central Bank must replace its current ‘market neutrality’ approach and rely instead on the EU taxonomy, a new briefing by Positive Money Europe argues.
The EU today faces two dramatic challenges: the COVID-19 Pandemic and the climate transition. The EU’s recovery plan for the pandemic falls far short of the estimated €2 trillion needed for achieving a sustainable recovery in line with the EU’s environmental objectives. This report from Positive Money Europe and the Sustainable Finance Lab explains how the European Central Bank can incentivize private banks to lend more money for green investments. By tweaking its Targeted Longer-Term Refinancing Operations (TLTROs) programme, the ECB could make green lending much more affordable for small businesses and households.