The rising cost of credit, used by central banks to fight inflation, should not be used as an excuse to delay investments in the green transition, a senior official of the European Central Bank (ECB) warned on Tuesday.
It would be misleading to use higher interest rates as a scapegoat to further delay the green transition, ECB executive board member Isabel Schnabel said in a speech in Stockholm.
Faced with record inflation, which exceeded 10% in October in the euro zone, driven by energy prices, the ECB launched a rate hike cycle of unprecedented speed.
As interest rates rise, financing investments in green technologies will become more expensive, risking slowing the pace of decarbonisation of economies, Ms Schnabel acknowledged.
But it is a transitory evil for a good, assures the official, because the green transition could not prosper in an environment of high inflation, which gives bad signals on prices and therefore on investments, she said. argue.
Rates must also rise further, she pleaded, because, now hitting a whole basket of goods, inflation will not diminish by itself.
There is therefore no contradiction between honoring the mandate of price stability and helping the ecological transition, believes Ms. Schnabel: by reducing inflation, monetary policy will restore the conditions necessary for the success of the green transition.
The acceleration of this green transition must come from governments that have failed to take advantage of recent years of low interest rates to accelerate investment in green energy projects, she argued.
These delays, accentuated by red tape, prevent the deployment of renewable energies at a pace compatible with achieving climate neutrality by 2050 at the latest, she continued.
The ECB for its part announced last July a series of measures to green its monetary policy by targeting polluting debt issuers.
This does not go far enough in the eyes of environmental NGOs who are pushing the institution to launch targeted green loan operations.
It could be an instrument to consider in the future, but only when policy (monetary, editor’s note) becomes expansionary again, according to Ms Schnabel.