According to a new report, a proposed overhaul of the European Union’s debt rules will leave most member states without enough power to finance the climate transition.
Only Sweden, Ireland, Denmark, and Latvia would have enough fiscal space to meet the climate commitments needed to keep global warming below 1.5 degrees under proposals put forward by the European Commission this week, according to a study by the Foundation for a New Economy.
Moreover, according to Bloomberg, half of EU countries cannot spend enough to meet climate goals under current borrowing rules.
According to the report, 13 nations, including France, Italy, Spain, Poland, and the Netherlands, will need more time to invest to meet their EU green targets. In fact, it comes as the bloc tries to compete with the US and China on clean technologies.
Sebastian Mang, senior policy and advocacy officer at the Foundation, stated that New Economics offer a broken systematic format, which called for creating an EU climate change fund. In fact, the European Commission should take a ‘leaf from the American book’ and allow more borrowing for its climate actions.
Among other things, EU finance ministers will discuss this at their regular meeting in Stockholm on Friday.
The Fed will not be a climate policymaker
The Federal Reserve’s independence from political influence is key to the institution’s ability to fight inflation. However, Federal Reserve Chairman Jerome Powell says it must steer clear of issues such as climate change, which are outside the mandate set by Congress.
As CNBC reminds us, this year, the US central bank will launch a pilot program for the six largest banks in the country to participate in the analysis of ‘climate scenarios,’ to examine companies’ ability to manage key aspects of significant climate events.