Energy and Environmental Challenges in the European Union and Green Bonds

Abstract

Could the European Union mitigate the negative effects of economic, pandemic and environmental crises using only one tool? The answer is positive, by implementing “green” fiscal expansion financed by “green” common debt, such as issuing green bonds. In this paper, we connect the independent responses to different crises into a single response that could end them. The European Union’s theoretical background is based on new-classical models, but current research findings doubt new-classical orthodoxy, underling the importance of economic federalism for sustainable economic and green growth. We argue that the Economic and Monetary Union has to speed up fiscal federalism by establishing a powerful European Union common budget using green Eurobonds and implementing fiscal transfers as a mechanism to address the consequences of the triple crisis.