ECB’s high interest rate policy negatively impacts renewable energy producers, such as wind and solar energy. This is not true for fossil fuel producers, where monetary policy has no effect. These are the findings of the recent ESB paper by SFL colleagues Mark Sanders, Friedemann Polzin and Aleksandar Simić.
In spite of the recent push for the green CMU, authors find that a green interest rate would be a more effective policy. Younger companies in Europe usually rely more on bank lending than bond issuance. A green stimulus would thus be more effective through the banking channel.
On the need for a green interest rate in Europe you can read our previous policy paper with Stan Jourdan, Rens van Tilburg, Brenda Kramer, Aleksandar Simić and Gaston Bronstering.
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