REPORT: In everyone’s interest: How the ECB can support the energy transition with green interest rates
In a new report commissioned by the WWF European Policy Office, I explore how the European Central Bank (ECB) can accelerate Europe’s energy transition while reinforcing its price stability mandate. The report, entitled In Everyone’s Interest: How the ECB Can Support the Energy Transition with Green Interest Rates, presents a concrete proposal for integrating EU Taxonomy based differentiated interest rates in the future structural refinancing operations of the ECB.
This new study prolongs and deepen the previous paper which I wrote with colleagues at the Sustainable Finance Lab in 2024. It notably extends the analysis towards sectoral lending data published by banks as part of their Pillar 3 disclosures.
Key takeaways:
- The 2022-2023 energy crisis has shown Europe’s vulnerability due to its dependencies on fossil fuels gas. We are still paying a high price for this dependency, with high inflation and competitiveness disadvantage.
- In this context, the ECB should recognise the EU’s energy decarbonation goals as mission critical for both its primary and secondary mandate, and use differentiated interest rates policies as a leverage to support an accelerated deployment of renewable, grid upgrades, storage, and transport electrification.
- Green refinancing operations should be designed to incentivize banks to increase lending towards 68 selected Taxonomy activities that are most relevant for the decarbonation of the energy system.
- Based on an analysis of 47 EU banks’ ESG disclosures report I estimate that around €10 billion in annual lending could have qualified for such ECB green refinancing operations in 2024. Applying greenwashing safeguards – such as excluding lending to firms not aligned with Paris Aligned Benchmarks criteria – would reduce eligible lending to approximately €3 billion. These relatively low volumes show that introducing this policy would poses minimal risk to the ECB’s monetary policy stance on the short term.
- This research exercise has led me to identify many challenges in the use of the EU taxonomy by banks, in particular with DNSH criteria. For example, only 0.15% of the €82 billion stock of renovation loans in bank’s balance sheet have been found to be Taxonomy aligned. I propose some tentative solutions to remedy these difficulties.
Suggested citation
Jourdan, S. (2025) In everyone’s interest: How the ECB can support the energy transition with green interest rates. WWF-EU. Available at: https://wwfeu.awsassets.panda.org/downloads/in-everyones-interest-december-2025.pdf