Europe has to “push” the green transition forward if it wants to remain competitive on the global stage, the European Central Bank (ECB) has warned.
The assertion was made in the first in a series of articles from Fatih Birol, executive director of the International Energy Agency, Werner Hoyer, president of the European Investment Bank, and Christine Lagarde, president of the ECB, written to accompany COP28.
Noting 2023 was set to be the hottest year on record, the authors argued the continent needed to be “clear-sighted, ambitious, and determined”, making use of private capital directed towards green technologies.
“Financing instruments such as EU-issued green bonds will help fund breakthroughs in clean technologies, and would be even more powerful in a fully completed capital markets union,” they said. “Tailored financing solutions or guarantees to alleviate the risk attached to highly innovative private investments − like floating windfarms, green hydrogen or new battery technologies − will help roll out the infrastructure Europe needs to achieve net zero.”
They added: “And at the global level, carbon pricing would provide transparency to encourage consumers and investors to move towards sustainable and energy-efficient products and assets.”
‘EuGB’ green bond regime
The same week, the European Union (EU) released its new regulation on European Green Bonds and optional disclosures for bonds marketed as environmentally-friendly and for sustainability-linked bonds. The regulation seeks to set up uniform requirements for bond issuers looking to use the ‘European Green Bond’ or ‘EuGB’ regime for their bonds.
The EC claimed last month the regulation was a further step in implementing the EU’s strategy on financing sustainable growth and the transition to a climate-neutral, resource-efficient economy. The new standard “would foster consistency and comparability in the green bond market, benefitting both issuers and investors of green bonds,” it added.
According to the EC, issuers will be able to demonstrate they are funding legitimate green projects aligned with the EU taxonomy. Investors’ confidence in green investment should be enhanced thanks to a framework that reduces the risks posed by greenwashing, ultimately stimulating capital flows into environmentally sustainable projects, it said.
