By allowing the European Central Bank to intervene directly and deeply in capital markets, the EU’s approach to climate change violates the fundamental principles of sound economic policy. Fortunately, her embrace of a once maligned clean energy source shows she hasn’t completely abandoned common sense.
MUNICH – With its 2020 “Sustainable Business Taxonomy”, the European Union has found a way to use the European Central Bank to steer capital markets by directly subsidizing interest charges for “green” investment projects “. Many European politicians, especially those from green parties in German-speaking countries, have applauded this approach. But now they are dismayed that the European Commission, under pressure from France, will classify nuclear as a green energy.
Coming from the anti-nuclear movement, today’s European Greens never imagined that this ostracized source of power would not only regain respectability, but would even be associated with their own brand. Their humiliation could not be greater.
But the question of whether nuclear energy is a form of green energy is not just a question of ideology. Huge sums of money are at stake, as the ECB will offer banks particularly attractive refinancing conditions if they use EU-classified green bonds as collateral. The ECB has also made it clear that it is more willing to buy a disproportionate share of green bonds, thereby creating a new interest rate structure within capital markets. Now that environmentally friendly investment goals are increasingly benefiting from lower interest rates, a significant share of Europeans’ savings – accumulated over generations – are being diverted from other sectors of the economy. economy towards projects classified as green.
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