Energy and finance: our bills, businesses and Europe’s sovereignty
Europe continues to face high and volatile energy prices. Global shocks, from geopolitical tensions to fossil fuel supply disruptions, have driven prices up and weakened the competitiveness of European industries.
Evidence shows that fossil fuel price shocks accounted for up to 60% of peak inflation in 2022, while extreme weather (such as droughts, heatwaves) contributed to 3.7% of food inflation.
However, banks and investors still finance fossil fuels because they bring short-term profits. But this exposes Europe to instability, from volatile LNG markets to extreme weather, and increases long-term financial risk.
Public institutions, including the European Central Bank (ECB), have the power to influence whether and how money incentivises a good or a questionable solution for our future and the planet. Their decisions determine how cheap it is to invest in clean energy, housing renovation or smart infrastructure, and whether Europe builds a competitive clean economy or remains tied to fossil imports.
What we do on green finance
We work with experts, partner organisations, and the renewables sector to make sure their needs, affordable energy and stable prices are heard.
We provide briefings and insight to EU lawmakers, governments and ECB experts, keeping an eye on decisions that shape how finance supports clean and competitive European industries.
In particular, we work in coalition to promote green monetary policy tools that help deliver stable prices, energy security and a healthy, livable future.
Public finance can strengthen energy security and competitiveness
The European Central Bank’s primary role (or “mandate”) is to ensure price stability. But under EU Treaties, it must also support the Union’s broader economic goals as long as this does not interfere with inflation control, all of which includes energy security, competitiveness, innovation and economic resilience.
Clean, European energy is increasingly the cheapest and most predictable power source available. Mario Draghi’s competitiveness report confirms that high fossil energy costs are instead one of Europe’s biggest economic weaknesses.
Shifting finance towards clean energy, energy efficiency and resilient infrastructure can:
lower energy bills
reduce Europe’s dependence on fossil fuels
stabilise inflation
strengthen Europe’s industrial base
Our key points for a cleaner and smarter Europe
1. Make clean energy and efficiency investments cheaper
Clean energy and building renovation projects are highly sensitive to borrowing costs. Research shows that high interest rates slow down renewable investment and energy-efficiency upgrades. Affordable credit reduces bills for households and small and medium enterprises and boosts EU competitiveness.
We support tools that lower financing costs for:
Renewable energy production
Energy efficiency
Green renovations
Grid modernisation and storage
2. Make ECB rules in line with a greener and more competitive Europe, discouraging fossil fuels
The ECB’s collateral framework sets the rules for how banks can borrow from the central bank. Banks must offer financial assets – such as corporate bonds or government securities – as collateral, in a process similar to how a homeowner uses their property to secure a mortgage. Because of this, the framework plays a key role in shaping how banks allocate capital. Today, fossil-heavy assets remain too easily accepted as collateral, still favouring sectors that expose Europe to volatile prices.
We support reforms that exclude certain assets from its programmes, making them less appealing for banks and investors, apply higher haircuts to high-risk, high-carbon assets and reward clean and sustainable sectors.
The ECB itself recognises that a fast green transition is less costly for financial stability than delayed action.
3. Push the ECB to support more stable and cleaner European investments
A financially stable Europe requires investment in sectors with predictable long-term costs, not fossil volatility. The ECB holds a large portfolio of assets. By prioritising green bonds and clean-energy assets, the ECB can:
support strategic infrastructure
help governments finance renewables expansion, energy efficiency and renovation
encourage private investments in European clean-solutions.
4. Strengthen ESG standards so finance serves people and the real economy
Europe needs transparent, credible Environmental, Social and Governance (ESG) rules that help capital flow towards activities supporting long-term stability, modernisation and healthier communities.
People must be protected from unnecessary risk. Financial education should come from public institutions, not banks with conflicts of interest. Stability and safety for households must remain the priority.
Victory: the ECB introduces a climate factor in its collateral framework
In summer 2025 the ECB adopted a new “climate factor” in its collateral framework, a historic breakthrough that recognises climate risk as financial risk. This reform reflects years of advocacy and research from us!
The ECB will now assess the climate exposure of corporate assets posted as collateral. High-risk, high-carbon assets may face stricter conditions, encouraging banks to shift financing toward more sustainable, resilient companies.
This change:
strengthens price and financial stability,
aligns monetary policy with EU strategic goals
and sets a global precedent for central banks.
It reflects research including our report Nature’s Nudge, produced with WWF, and confirms that sustainable finance is not only environmental, it is essential for a competitive, stable European economy.
However, this new climate factor only applies to a small part of the ECB’s lending rules. At the moment, it covers only certain corporate financial assets and looks at climate risks alone (not nature and biodiversity). To have a real impact, it should be expanded, strengthened and complemented with tools such as favourable rates for clean-energy loans, and integration of biodiversity risk.
The road ahead for European clean energy
Europe faces major decisions on the next EU budget (the Multiannual Financial Framework 2028-2034, or MFF), clean-tech competitiveness, energy security and renovation financing. These choices will determine whether Europe continues to face high bills and dependence on fossil imports or build a stable clean economy.
We will continue working to ensure the financial system supports a secure energy future, stable prices and a healthy, liveable planet for all.
