European Green Bonds and mechanisms for long-term policy commitment

Green sovereign bonds—government borrowing tied to expenditure commitments to climate action—are becoming more common. Notably, the European Union has decided to issue green bonds to finance its coronavirus response program. But how effective will official-sector green bonds be in delivering on climate goals, and could we do better?

This blog reports on a seminar in the Political Economy of European Climate Action series, hosted by the European Studies Centre of St. Antony’s College Oxford, on May 24, 2021, which examined green sovereign bonds. Daniel Hardy (EuPEP, St. Antony’s College, Oxford) dissected their likely efficacy, and proposed an alternative approach; Fatos Koc (OECD), and Martin Ellison (Nuffield College, Oxford) reacted; and Charles Enoch (EuPEP) chaired the session. Click here for the podcast of this session.

Hardy started by documenting the recent proliferation of government green bonds (issues by Germany, UK, Italy, Hungary, Poland, France, Belgium, etc., etc.) but reminded the audience how small this financing still is: government green bonds make up much less than half a percent of world debt; the planned €250 billion issue of Next Generation EU bonds would more than double their stock.

He then examined governments’ motivations for choosing green bonds (instead of plain untied borrowing) and—spoiler alert—found that official green bonds have significant shortcomings in delivering on these objectives.

European Green Bonds and mechanisms for long-term policy commitment

Local energy communities and the EU’s clean energy package: An enduring ...

Local energy communities and the EU’s clean energy package: An enduring innovation?

This EuPEP webinar took place on 17 May 2021. The speakers were Jake Barnes (The Newcomers Project, Environmental Change Institute, Oxford) and Jenny Palm (International Institute of Industrial Environmental Economics, Lund University). The discussant was Kristian Petrick (Prosumers for the Energy Union (PROSEU)). Kalypso Nicolaidis (St Antony’s College, Oxford; School of Transnational Governance, European University Institute) chaird the discussion.

The EU's Clean Energy Package (CEP), finalised in 2019, gave new momentum to the “energy communities” movement as part of an overall strategy for moving to a sustainable, carbon-neutral energy system. Energy communities are organizations, not owned by traditional utilities, that provide energy with the primary purpose of generating environmental, economic or social community benefits for members or the local area. As explained by Barnes and Palm, the EU’s Renewable Energy Directive and the Directive on common rules for the Internal Electricity Market enshrine the rights of individuals and communities to generate, store, and sell energy, and enjoin member states to remove undue barriers to the establishment and success of energy communities. The directives define principles applicable to Renewable Energy Communities, which are local organizations dedicated to the promotion of renewable energy in any form, and to Citizen Energy Communities, which are non-commercial organizations that can engage across the electricity market. Thus, energy communities are given scope to contribute to the energy transition and also envisaged as vehicles for citizen engagement and empowerment.

A transparency code for Central Banks: Implications for Europe

This EuPEP webinar took place on 10 May. The speaker was Ghiath Shabsigh (International Monetary Fund); the discussants were Daniel C. Hardy (European Studies Centre, St Antony’s College) and      Johannes Lindner (European Central Bank). Charles Enoch (European Studies Centre, St Antony’s College chaired the discussion.)

The expanding role of central banks in a broad array of policy areas has increased the importance of their communication and dialogue with diverse stakeholders. Shabshigh (IMF) started by pointing out that the extension in central bank activities and remit has been going on for some time, but accelerated after the global finance crisis and now the Covid-19 pandemic. Many central banks have greatly increased their balance sheet size through asset purchase programs, and took on new responsibilities in such areas as macroprudential policy. This extension has provoked calls for central banks to be more transparent, without which their cherished autonomy may be put in question.

A transparency code for central banks: Implications for Europe

Financing for Covid-19 and climate action? The best use of the IMF SDR allocation

A new issue of SDRs by the IMF will contribute US$650 billion to the global economy, to fight the pandemic and strengthen recovery. It will be shared across the world proportionately to countries’ economic size—but some critics believe there could be a better distribution. Proposals are emerging that the UK, the EU, and other rich countries should reallocate at least some of the new issue to rebuild ODA budgets, support vaccines and public health in developing countries, and/or boost financing for climate action. As the chair of the G7 and the host of COP26, the UK will be at the centre of this debate in the coming months.

This blog reports on a seminar in the Political Economy of European Climate Action series, hosted by the European Studies Centre of St. Antony’s College Oxford, on May 3, 2021, which examined the political and technical issues surrounding the SDR allocation and discussed options. Mark Plant (Center for Global Development) gave an overview of the SDR allocation and the issues it raises for G7 policymakers; Mark Henstridge (CEO, Oxford Policy Management) and Stevan Lee (Chief Economist, Oxford Policy Management) then gave a UK perspective on aid priorities; and Adrienne Cheasty (EuPEP, Oxford) chaired.