, 20 tweets, 12 min read Read on Twitter
THREAD: 'Quantitative Easing (#QE) for the #Climate', summary of blogpost of @pdegrauwe from @LSEEcon, questioning:

'To what extent can the money created by the central bank be used to finance investments in the environment?'

Short answer: fully
"There is no restriction on what types of assets the @ecb can buy. Since 2015 when it started QE, the @ecb has mainly bought government bonds, but also corporate bonds from financial inst. The @ecb could, however, also purchase bonds [...] to finance environmental investments."
"A possible objection is [...]: If the @ecb buys these "environmental bonds", it will be involved in the decision-making process about which environmental investments should have a priority. [...] These are all questions that have to be settled by political authorities [...]."
"One possible way out: The European authorities give a mandate to the @EIB to finance, for example, 1000 billion of environmental investments. These political authorities add guidelines for the @EIB about environmental priorities. ...
...The @EIB issues bonds to obtain the resources necessary to fund these investments. This is the moment the ECB can step in by buying the EIB-bonds at a pace dictated by the expiration of the old bonds on its balance sheet."
==> "The bottom line is that it is perfectly possible for the ECB to use the instrument of money creation to favour environmental investments without endangering price stability. [...] This can be done without creating inflation."
[1] These conclusions validate the proposal of @larrouturou and @Climat2020 & @Roosevelt_Be to create a large scale investment programme (#PacteFinanceClimat #Climat2020). Highlights of the European meeting in Paris on 19 Februari can be found at mobile.twitter.com/search?q=%40fl…
[2] With a ‘highlight’ on the quote of @larrouturou that 11 % of the total created QE amount ends up in the real economy and that 80 % stays in the financial system (for speculation/investment) . @pdegrauwe, can you confirm this?
[3] Might be of interest as well: a summary of a @Bruegel_org debate on decarbonisation policies and the role of institutions that was held the same 19th of February in Brussels: [bit.ly/bruegel-notes]
[4] Related to the institutional level: how to make sure the ETS system works (if it ever will), considering counteracting institutional interests. Ex: ETS money used to finance @exxonmobil in Flanders to "compensate for the ETS system" (yes, really...) :
[5] For a good overview of how much Multilateral Investment Banks current invest in renewable energy, I refer to the highly interesting work by @BjarneSteffen and Tobias S Schmidt from @ETH_EPG
[6] And last but not least: transparency (!) Increasing this will help a lot to get people on board.
[7] Two days ago @AMcDowell from @EIB wrote an opinion piece in @EURACTIV, stating that "@EIB financing and advice must be directed at investments that cut emissions and combat climate change" bit.ly/eib-climate :
[8] ..., claiming a "50 billion investment in the last 5 years" and stating that "the @ECB stopped financing coal production 30 years ago."
[9] These claims seem to be slightly (or strongly) over-estimating the efforts of the @EIB [see: and ]
[10] @BjarneSteffen and Tobias S Schmidt, do you agree with this? From their paper: "the database aims at being exhaustive for commitments to power-generation projects and programmes while excluding investments in other activities and avoiding double-counting"
[10] Irrespectively, @AMcDowell acknowledges that "global investment in research and development in renewable energy is still much too low" (2017: $32 billion, $22 by governments) = "half of what the EU automotive industry alone invests each year in R&D"
[11] Closing: "The @EIB is holding a public consultation on future energy lending. I invite a contribution from all stakeholders concerned [...], or from those wishing to help us accelerate the [...] transition" bit.ly/eib-con Deadline: 29 March! @larrouturou @Climat2020
[12] Given the gap between investments needed to accomplish the #ParisAgreement goals, it seems a good idea to bring efforts and voices together to raise the ambition/investment!
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