{"id":66158,"date":"2023-05-31T10:59:42","date_gmt":"2023-05-31T09:59:42","guid":{"rendered":"https:\/\/www.lse.ac.uk\/granthaminstitute\/?post_type=publication&p=66158"},"modified":"2024-08-16T12:23:14","modified_gmt":"2024-08-16T11:23:14","slug":"the-co2-content-of-the-tltro-iii-scheme-and-its-greening","status":"publish","type":"publication","link":"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication\/the-co2-content-of-the-tltro-iii-scheme-and-its-greening\/","title":{"rendered":"The CO2<\/sub> content of the TLTRO III scheme and its greening"},"content":{"rendered":"\n

This paper investigates the climate impact of central bank refinancing operations, with a focus on the European Central Bank’s Targeted Longer-Term Refinancing Operations (TLTRO) III programme.<\/p>\n\n\n\n

The authors find that the emissions content of bank loans granted over the TLTRO III reference period (March 2020 to March 2021) amount to 8% of 2019 emissions in the euro area, and over 80% of total loans issued were directed towards polluting companies. Through the lens of a theoretical model, the authors then investigate the effectiveness of a green credit easing scheme. They find first, that this central bank policy can increase the costs of lending to polluting companies, thus redirecting loans to less-polluting firms, and second, that such a policy could have financial stability implications and therefore should be carefully designed. The paper finishes by outlining three alternative ways to implement a ‘green’ TLTRO programme.<\/p>\n\n\n\n

Key points for decision-makers<\/h2>\n\n\n\n