Today, the Council gave the final green light to a regulation establishing the first EU-level certification framework for permanent carbon removals, carbon farming and carbon storage in products. This voluntary framework will facilitate and encourage high-quality carbon removal and soil emission reduction activities in the EU, as a complement to sustained emission reductions.
 
Carbon removals and soil emission reductions
The regulation will be the first step in introducing a comprehensive certification framework for carbon removals and soil emission reductions into EU legislation. It will help the EU to achieve its goal of climate neutrality by 2050.
 
The regulation covers the following activities across the EU:

permanent carbon removals that capture and store atmospheric or biogenic carbon for several centuries (e.g. bioenergy with carbon capture and storage, direct air capture with storage)

carbon storage activities that capture and store carbon in long-lasting products for at least 35 years (such as wood-based construction products)

carbon farming activities that enhance carbon sequestration and storage in forests and soils,  or that reduce greenhouse gas emissions from soils, carried out over a period of at least five years (e.g. reforestation, restoring peatlands or wetlands, improved fertiliser use)

 
Certification criteria
Carbon removal activities will have to meet four overarching criteria in order to be certified:

they must bring about a quantified net carbon removal benefit or net soil emission reduction benefit
they must be additional, meaning that they go beyond statutory requirements at the level of an individual operator and they need the incentive effect of the certification to become financially viable
they must aim to ensure long-term storage of carbon while minimising the risk of carbon release
they should do no significant harm to the environment and should be able to result in co-benefits to one or more sustainability goals

In addition, activities eligible for certification will need to be independently verified by third-party certification bodies.
 
Certification schemes
Certification schemes will be in place for operators to prove compliance with the regulation. These will be subject to robust and transparent monitoring, verification and reporting rules to promote trust in the system and ensure environmental integrity. Liability mechanisms will also be in place for operators in order to address any release of captured carbon back into the atmosphere.
 
EU registry
Four years after the entry into force of the regulation, the Commission will establish an electronic EU-wide registry to ensure transparency and full traceability of the so-called certified units, which will be issued to reflect carbon net benefit generated through certified carbon removal and soil emission reduction activities.
 
Next steps
The regulation will now be published in the EU’s Official Journal and enter into force 20 days after its publication. It will then become directly applicable in all EU member states.
 
Background
On 30 November 2022, in an important first step towards the further integration of carbon removal schemes into EU climate policy, the Commission proposed a regulation creating a voluntary EU-wide framework to certify high-quality carbon removals.
The Council adopted its negotiating mandate at Coreper level on 17 November 2023, while the European Parliament reached its position on 21 November 2023. After three rounds of negotiations, the EU co-legislators reached an agreement on the final shape of the regulation on 20 February 2024.
For more information, please contact:

Peristera Dimopoulou, Press Officer, EU COUNCIL PRESS

 
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Combined measure allows for a deeper understanding of how wealth distribution affects the overall health of economies

Blog post by Henning Ahnert, Francien Berry, Darja Milic, Jorrit Zwijnenburg | Economists monitor income disparities because they can harden into more structural wealth inequalities that concern policymakers. Wider wealth gaps may also impact monetary policy transmission and financial stability.

Accordingly, the European System of Central Banks developed new experimental Distributional Wealth Accounts for the euro area and most European Union countries. Combining wealth information drawn from household surveys with broader economic indicators, the new data offer an integrated picture of wealth across groups that match national accounts figures.
This year’s release also marked a significant advance in addressing the Group of Twenty’s recommendation on household wealth results, as part of the third phase of the Data Gaps Initiative, a G20-led partnership involving the IMF, the Inter-Agency Group on Economic and Financial statistics, the Financial Stability Board, and statistical authorities, working to enhance economic and financial data quality worldwide.
As the Chart of the Week shows, net wealth in the euro area rose 27 percent over the past five years—accompanied by a slight decrease in inequality, partly because homeowners benefited from increasing housing prices. The share of wealth held by the top 10 percent stood at 56 percent in the fourth quarter of 2023, while the bottom half held just 5 percent. By comparison, the top 10 percent on a global basis holds about three-quarters of total wealth, according to the World Inequality Lab.

These Distributional Wealth Accounts far surpass the scope of standard distribution data. They are crucial because they detail not only who owns what—from real estate to savings—but they also align these figures with the broader economic metrics of an entire country. This integration provides more timely estimates and allows for a deeper understanding of how wealth distribution interacts with overall economic health.
Moreover, maintaining consistency across different countries enables more meaningful comparisons and informed policymaking. Essentially, these accounts provide policymakers with a clearer, richer picture of economic trends, helping to tailor policies that address inequality and promote economic fairness.
The G20’s recommendation will broaden this kind of analysis beyond Europe. Thirty-three countries, including 13 in the G20, have joined a new expert group convened by the Organisation for Economic Co-operation and Development to collaborate and develop internationally harmonized wealth distribution estimates. These would complement existing data on income, consumption, and saving, providing a unique and consistent picture of economic inequality across countries.
Harnessing household distributional data helps policymakers foster economic growth that benefits all, and better understand how their policies affect people. And that in turn lays the groundwork for crafting more equitable policies in the future.
—This blog is by Francien Berry and Darja Milic, economists in the IMF Statistics Department, Henning Ahnert, the European Central Bank’s head of financial accounts and fiscal statistics, and Jorrit Zwijnenburg, the acting head of national accounts at the OECD.

View original post here.

 
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Reduced energy excise tax rates in many countries in response to the recent energy crisis led to lower implicit carbon prices in 2023, but the development of new emissions trading schemes should lead to a greater share of emissions being priced in the next five years, according to a new OECD report. 
Pricing Greenhouse Gas Emissions 2024: Gearing Up to Bring Emissions Down tracks how emissions trading systems, carbon taxes, fuel and electricity excise taxes, and subsidies that lower pre-tax prices on emissions or energy products have evolved between 2021 and 2023 across 79 countries, covering approximately 82% of global greenhouse gas (GHG) emissions. The tax rates are for 1 April 2023, while emissions trading schemes implemented throughout 2023 are also included. Fuel excise taxes, which implicitly price carbon, declined after the energy crisis, while there has been an increase in the development of emissions trading systems.
Although the coverage of global greenhouse gas emissions by pricing systems stalled at 42% between 2021 and 2023, governments are preparing for higher carbon prices by expanding existing mechanisms or introducing new ones. Some are also considering cross-border effects and new policies, such as border carbon adjustments.
The report estimates that with 15 new carbon pricing schemes currently under development – mostly emissions trading schemes (ETSs) – coverage of emissions by an ETS or a carbon tax will rise from 27% to 34% over the next five years, bringing total coverage close to 50% of GHG emissions across the 79 economies.
“The recent energy crisis has driven carbon and energy prices downwards. However, looking ahead, we see governments preparing for more ambitious climate action. And as we approach 2030, the expansion of existing carbon mitigation mechanisms and the introduction of new ones offer tremendous opportunity for progress towards our shared objectives,” OECD Secretary-General Mathias Cormann said.

The report, presented today at the OECD’s COP29 Virtual Pavilion, measures carbon prices using the Net Effective Carbon Rates indicator, which is the sum of four components: specific taxes on fossil fuels, carbon taxes, prices of tradeable emission permits, less subsidies on fossil fuels. All four components change the price signal for carbon emissions. The report also measures energy rates through the Net Effective Energy rate that additionally includes electricity taxes and subsidies that apply to energy use.
Download the full report.

 
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Honourable Member of the European Parliament,
dear Mr Zijlstra,
Thank you for your letter regarding the potential costs of the digital euro project, which was passed on to me by Ms Aurore Lalucq, Chair of the Committee on Economic and Monetary Affairs, accompanied by a cover letter dated 9 October 2024.
In your letter, you raise the question of how the digital euro could be cheaper for merchants than private alternatives. I would like to highlight that international card schemes currently account for 64% of card payments in the euro area. These can be very costly for merchants, who collectively pay a significant amount each year to international card schemes. And the cost is mostly borne by smaller merchants, who can incur charges three to four times higher than larger companies. As a result, merchant associations strongly support the digital euro.
The Eurosystem would bear the costs of establishing the digital euro scheme and infrastructure, as it does for producing and issuing euro banknotes – which, like the digital euro, are a public good. This would allow acquirers to offer competitive tariffs to merchants. By providing a true alternative to international card schemes, the digital euro would also put European merchants in a stronger position to negotiate better conditions with other, currently dominant providers. The digital euro would thus help support a competitive European payments market, which at present tends to be dominated by a few non-European players. Without the digital euro, the market could become even more concentrated, potentially leading to even higher costs for merchants.
The European Commission’s draft legislative proposal for the digital euro currently includes safeguards for merchants by proposing a cap to their fees. As such, merchants would not pay higher fees for the digital euro than for a comparable digital means of payment. This prevents payment service providers from exploiting the mandatory acceptance of digital euro by merchants as legal tender.
In your letter, you also raised the question regarding the cost of the digital euro project. We are committed to keeping development and potential operational expenses as low as possible, while delivering a digital euro that brings value to consumers and merchants.
By reusing existing standards and building on established infrastructures as much as possible, market participants could integrate the digital euro in a cost-effective way. The Rulebook Development Group, where all stakeholders are represented, is taking this principle into account in its drafting of a single set of rules and standards for the digital euro.
The Eurosystem’s costs will depend on the components and related services that would need to be developed and our rigorous procurement process ensures that we can obtain the best value for money. At the start of this year, we initiated the process of selecting potential providers. We issued calls for applications to establish framework agreements for five digital euro components expected to be operated by providers outside the Eurosystem. Other components, such as payment settlement, would be sourced from within the Eurosystem. The calls for applications included ranges of estimated total value for the framework agreements with external providers, determined by the responses received in the ECB’s market research carried out in January 2023. These estimated costs not only cover the development of the component, but also their operation – a total period of ten years for three components, and 15 years for the remaining two. These ranges also include significant buffers to avoid new procurement processes having to start soon. We are currently assessing offers from potential providers, and will negotiate with them to finalise framework agreements. For the time being, the ECB has no financial commitment to these potential suppliers and only bears the administrative costs related to conducting the tender procedures. As per regular ECB practice, the outcome of the public tender procedure will be published on the ECB’s website, and we will inform all the relevant stakeholders, including the co-legislators.
Please note that the Eurosystem would not charge or benefit from any digital euro transaction fees. As mentioned above, the Eurosystem would only bear its own costs, as it does for the production and issuance of banknotes. In the case of banknotes, these costs are more than compensated by the generated seigniorage. We can expect a similar outcome for the digital euro, but this would ultimately depend on the actual amount of digital euro held by users. Any net profits generated by digital euro seigniorage would be distributed to the euro area national central banks, in line with Article 33.1 of the Statute of the ESCB.
It is important that the digital euro reflects its nature as a public good. Therefore, it would be free for basic use for consumers and cost-efficient for merchants. Mr Cipollone and I remain committed to engaging regularly with the European Parliament on this topic and more broadly on the digital euro. We appreciate all the work that the ECON Committee has done so far, and. Going forward, the ECB stands ready to provide continued technical support to co-legislators as needed.
 
Yours sincerely,
[Signed]
Christine Lagarde
Read original letter here.
 
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Contribution by Piero Cipollone, Member of the Executive Board of the ECB, to the Centre for European Reform’s annual economics conference on “A European path to higher economic growth”
Thank you for inviting me to discuss whether a “hot” economy can drive productivity growth.
A lot has been said recently about the structural reasons for the productivity gap between Europe and the United States, notably in Mario Draghi’s recent report.[1]
But this gap has worsened in the post-pandemic period, as productivity growth accelerated in the United States and stalled in the euro area (Chart 1). The hotter US economy largely explains this, whereas the euro area economy caught a cold as a result of the energy shock to which it was much more exposed.[2]
So today, I want to discuss how a strong recovery in productivity is critical for the euro area. Beyond its short-term benefit, it is also essential to avoiding a further erosion of the euro area’s economic potential. Monetary policy should take the medium and long-term effects of an excessively restrictive stance into account.[3]
The conditions for a cyclical recovery in euro area productivity
Earlier this year, I noted that unwinding supply shocks are creating an opportunity for recovery in the euro area economy, by making it possible to achieve lower inflation and higher growth simultaneously. I therefore argued for letting the recovery proceed by allowing for wages to rebound in the short term – thus recouping past real income losses. And I indicated that the improving inflation outlook should give us the confidence to dial back monetary policy restriction. This in turn would help the economy and productivity to pick up, with wages gradually moderating over the medium term to be consistent with trend productivity growth and our inflation target.[4]
So how far have we come on this path to a healthier economic environment?
Inflation
As expected, the unwinding of the energy shock has allowed headline inflation to continue its decline in recent months, falling to 2% in October (Chart 2). Although headline inflation will be bumpy in coming months because of energy base effects, we expect it to converge to 2% in the course of 2025.
Indicators of underlying inflation have also moderated somewhat (Chart 3).[5] Core inflation fell to 2.7% in October. Domestic inflation remains high, as services inflation tends to lag headline inflation, and is sustained by the wage catch-up in the short term. But the ECB’s measure of the Persistent and Common Component of Inflation (PCCI)[6], a more forward-looking indicator of underlying inflationary pressures that tends to be a better predictor of future inflation, stood at 2% in September, the last month for which this statistic is available.
This encouraging picture is further supported by market-based inflation expectations and fixings[7], which stand around 2% (Chart 4, left-hand panel). The option-implied risk-neutral distribution of average inflation over the next two years is now more balanced, around 2%, albeit assigning increasing probability to inflation rates below 2% (Chart 4, right-hand panel).
Wages
Lower inflation has contributed to a recovery in real income. This recovery has also been supported by the catch-up in wages, which has brought real wage developments more in line with those of productivity since the onset of the pandemic (Chart 5).
At the same time, unit labour costs growth has been buffered by lower unit profits and import prices. This has allowed the total supply deflator, which has provided a good early indicator of HICP inflation since the pandemic, to moderate to between 1.5% and 1.7% over the past year (Chart 6).
Moreover, the forward-looking wage tracker is consistent with a gradual moderation of wages in the coming year (Chart 7), in line with the outlook embedded in our projections, after rising further this year. This moderation should be supported by the gradual cooling down in labour market dynamics (Chart 8).
GDP growth
After several quarters of stagnation, euro area GDP growth has gradually increased, with annual GDP growth rising from 0.1% in the last quarter of 2023 to 0.9% in the third quarter of this year.
However, we are seeing contrasting signals.
First, domestic demand remained weak in the second quarter of 2024, as the small positive contribution of consumption was counterbalanced by a decline in investment (Chart 9). Initial indications suggest that consumption gathered pace in the third quarter, while investment contracted further.
Second, activity and economic sentiment have been very uneven across sectors, with manufacturing underperforming compared with services (Chart 10). This is also reflected in a reduction of inventories amid low capacity utilisation in the manufacturing sector, which has dragged down euro area growth over the past year (Chart 9).
These developments remain consistent with a gradual, consumption-led recovery, but this has not yet allowed for a turn in the investment cycle. Moreover, growth figures for the third quarter benefited from summer events such as the Olympics. Whether the recovery will firm up therefore remains to be confirmed and risks to economic growth are tilted to the downside.
Implications for productivity growth
The overall picture of a gradual and heterogenous recovery amid a resilient labour market also implies a slow cyclical recovery in labour productivity, with uneven developments across sectors (Chart 11).
This suggests that some factors have been slowing the upturn in consumption and holding back investment, delaying a cyclical recovery in productivity.
Risks to a cyclical recovery in euro area productivity
Three aspects warrant particular attention: households’ saving behaviour, the impact of monetary policy restriction and uncertainty associated with global economic policy.
Saving behaviour
Let me start with the first aspect. In recent quarters, households have allocated a portion of their increased real income to restoring their financial buffers or deleveraging. The saving ratio has increased, as household spending has not kept up with growth in real disposable income (Chart 12, left-hand panel). Empirical estimates suggest that high interest rates and a loss in households’ real net wealth have been key factors in this development (Chart 12, right-hand panel).
The effect is heterogenous across the household income distribution. Lower-income households – who are spending more relative to their income (Chart 13) – have accumulated almost no excess savings since the onset of the pandemic compared to the pre-pandemic trend (Chart 14).[8] Because of budget constraints, these households had to reduce their savings more than others in response to the energy price spike (Chart 15). They also had to rely more heavily on consumer loans, despite rising interest rates, to avoid reducing essential consumption.[9] This points to the need for lower-income households to deleverage and shore up their balance sheets as real income improves.
Conversely, higher-income households, who are more likely to be net savers, have benefited from higher interest rates. In the first half of this year, euro area non-labour income, such as net interest receipts and dividends, rose by 4.1%, which is more than twice the increase seen in 2015-19.
A tentative signal of a possible change in households’ recent saving behaviour is that recent data from the Consumer Expectations Survey are pointing to a decline in savings (Chart 12, left-hand panel). At the same time, the data confirm there is heterogeneity across the household income distribution (Chart 16, left-hand panel). Survey responses also indicate that households with an adjustable-rate mortgage already experienced an increase in their interest payments and a corresponding drop in their saving rate in the last two years, while those with fixed-rate mortgages increased their saving rate (Chart 16, right-hand panel).
Monetary policy restriction
This brings me to the second aspect: the effects of monetary policy restriction. After the sharpest monetary policy tightening in the ECB’s history – ten consecutive hikes that raised our policy rate by 450 basis points between July 2022 and September 2023 – followed by a period of holding rates steady, we have gradually dialled back restriction since June. Markets expect us to continue bringing rates down to a neutral level, within the range of natural rate estimates (Chart 17).[10]
However, it will take some time for the dialling back of monetary policy restriction to transmit to lending rates and loan demand. Lending rates have only just started to decline for new loans and stabilise for outstanding amounts (Chart 18). Lending to firms remains weak, while lending to households has shown signs of improvement from a low level (Chart 19).
The further transmission of our less restrictive stance will also depend on confidence that we will gradually but surely lower our policy rates further toward neutral levels. While the direction is clear, we are following a meeting-by-meeting approach, enabling us to adjust the pace and extent of rate cuts depending on our assessment of incoming data.
Dialling back monetary policy restriction should support investment. It should also provide relief to households, especially at the bottom of the wealth distribution[11], and thus boost the consumption-led recovery, supporting the positive effects from rising labour income.
At the same time, the path towards a neutral stance should also take into account that credit supply to firms is still very weak, amid tight credit conditions and signs of deteriorating bank asset quality due to an increase in underperforming and non-performing loans. In addition, the incipient recovery in lending to households has to be balanced against the high level of credit application rejections and signs of higher default rates on consumer loans. Moreover, bank lending conditions in the coming months could be further influenced by reduced liquidity in the system as the central bank balance sheet continues to shrink.
Risks from global policy developments
Let me now turn to the third key aspect: risks from global policy developments. Recent global political developments increase risks of disruption to the cyclical recovery of productivity in the euro area and have implications for how far we can support this recovery with our monetary policy, given the possible effects on inflation.
The prospect of higher trade tariffs being implemented by the United States could significantly weigh on activity, especially in manufacturing, because of the impact on euro area confidence, exports and investment. Moreover, political uncertainty in some euro area countries – which reduces the predictability of fiscal and economic policy – could weigh on consumer confidence and firms’ investment decisions. In countries with higher fiscal deficits, this could also increase Ricardian effects, where the support to economic activity from a loose fiscal stance is blunted by the expectation that fiscal policy will need to be tightened in the future.
These developments could in turn put downward pressure on euro area inflation, as a result of the impact on demand, global confidence, and the likely reorientation of third-country exports away from the US and to the euro area, which would weigh on import prices. However, these disinflationary effects could be countervailed by the depreciation of the euro exchange rate and tariff retaliation, which would increase the prices of imported goods.
An increase in US oil production, combined with the negative effects of tariffs on global activity and thus oil demand, could push oil prices down. This would counterbalance upward risks to oil prices arising from current geopolitical conflicts.
Implications for the euro area’s economic potential
Overall, this paints a picture of nascent recovery that is still fragile.
While there is some uncertainty around estimates of the level of the neutral rate given their wide range (Chart 17), downward risks to inflation have been increasing and risks to the economic outlook are tilted to the downside.
A risk management approach also needs to consider the medium to long-term negative consequences we would incur if our monetary policy proved to be out of step with the evolving balance of risks and thus remained too restrictive for too long.
It could be self-defeating to tolerate an economy running persistently below potential as an insurance against possible future inflationary shocks. Such a tactic could lower potential growth, thereby weakening the economy’s resilience to both demand and supply shocks.
Three key elements need to be considered when assessing the costs of running an economy cold – in other words, below its potential – for a long time. These are the effects on capital accumulation, human capital and structural reforms.
Consider capital accumulation.
Investment has been stagnating, or even declining, in the euro area in recent quarters, adding a cyclical shortfall to the existing structural gap with respect to the United States (Chart 20). This is likely to weigh on productivity growth given the role of capital accumulation (Chart 21).
While the weak productivity growth seen since the pandemic is potentially a short-lived phenomenon reflecting firms’ response to a temporary change in the relative prices of labour, capital and energy, the long-run trend may be permanently scarred by the current slow or declining pace of capital accumulation. The absence of investment growth not only reduces labour productivity by hampering capital deepening, but is also likely to weigh on total factor productivity growth by reducing the adoption and production of new technologies.[12]
Excessive restriction could also have implications for human capital.
Demographic trends and increased obsolescence of skills caused by technological transformation imply a shortage of deployable human capital. Under these conditions, any slack in the labour market and further underinvestment in adequately equipping the workforce would lead to a further loss of scarce resources that should instead be fully mobilised, not least to enable workers to update their skill sets and increase their employability in the light of fast-changing labour demand.
Finally, excessive restriction could have implications for our ability to address the structural dimension of the productivity gap. Structural reforms are hard to implement, as they imply costs for those that are displaced.[13] Their implementation is thus easier when the economy is running at potential, as confirmed by the literature.[14] This indeed creates room for public finance to reduce the risk that some end up worse-off as a result of the reforms, facilitating a Pareto efficient outcome. And it is easier to reallocate capital and labour when they are in high demand.
In summary, imposing more restriction than necessary on the economy in the short term could have transitory and also permanent costs, as it could exercise significant negative influence on total factor productivity dynamics via weak capital accumulation[15], depletion of human capital and a slower pace in implementing structural reforms. This would reduce economic potential, and thus affect the speed limit of the economy – that is, the level at which GDP growth becomes inflationary.
Conclusion
Let me conclude.
In the euro area, labour productivity tends to be strongly affected by the business cycle.[16] For productivity growth to rebound fully, we need the nascent signs of economic recovery to firm up.
The unwinding of the energy shock and the associated decline in inflation have allowed us to start dialling back monetary restriction. This should support investment and reinforce the effect of rising real incomes on consumption, especially for lower-income households.
The current balance of risks suggests that we can and should reduce further the current level of monetary policy restriction. The pace and extent of this reduction will depend on the incoming data.
A cyclical recovery in productivity would support the disinflationary process in the euro area and reduce the risk of permanent scars on the euro area’s economic potential. So we should not be more restrictive than what is necessary to ensure the timely convergence of inflation to our 2% target.
We do not want an overheated economy. But we do want to see our economy reach the right temperature, which would certainly be hotter than it has been recently.
Thank you for your attention.

Annexes

Draghi, M. (2024), The future of European Competitiveness, September.
Dias da Silva, A., Di Casola, P., Gomez-Salvador, R. and Mohr, M. (2024), “Labour productivity growth in the euro area and the United States: short and long-term developments”, Economic Bulletin, Issue 6, ECB.
Jordà, Ò., Singh, S.R. and Taylor, A. M. (2024), “The Long-Run Effects of Monetary Policy”, paper presented at the ECB Conference on Monetary Policy 2024.
Cipollone, P. (2024), “The confidence to act: monetary policy and the role of wages during the disinflation process”, speech at an event organised by the House of the Euro and the Centre for European Reform, 27 March.
Underlying inflation is the persistent component of inflation, signalling where headline inflation will settle in the medium term after temporary factors have vanished. See Lane, P. (2024), “Underlying inflation: an update”, speech at the Inflation: Drivers and Dynamics Conference 2024 organised by the Federal Reserve Bank of Cleveland and the ECB, 24 October.
Bańbura, M. and Bobeica, E. (2020), “PCCI – a data-rich measure of underlying inflation in the euro area”, Statistics Paper Series, ECB, No 38, October.
Inflation fixings are swap contracts linked to specific monthly releases in euro area year-on-year HICP inflation excluding tobacco.
That is, they had accumulated fewer savings since the onset of the pandemic compared with what would have been expected based on the 2015-19 trend.
See Kouvavas, O. and Tsiortas, A. (2024), “Consumer credit: Who’s applying for loans now?”, The ECB Blog, ECB, 15 May. Despite rising interest rates, the share of consumers who applied for credit has increased from a low of 12.6% in July 2022 to roughly 17% at the beginning of 2024. This increased demand has mainly come from households with lower income, while the share of the top 20% of income earners who applied for credit has been steadily decreasing. Low-income households are in particular applying for consumer credit, which saw a 4.7 percentage point increase, significantly more than for mortgage applications.
The neutral (or natural) rate of interest is the real interest rate level that contemporaneously brings output into line with its potential and stabilises inflation at the central bank’s target in the absence of transitory shocks or nominal rigidities. See Brand, C., Bielecki, M. and Penalver, A. (eds.) (2018), “The natural rate of interest: estimates, drivers, and challenges to monetary policy”, Occasional Paper Series, No 217, ECB, December.
Recent ECB research indeed indicates that a restrictive monetary policy reduces the consumption of less wealthy households much more than that of their wealthier counterparts. See Bobasu, A., Dobrew, M. and Repel, A. (2024), “Heterogeneous effects of monetary tightening in response to energy price shocks”, Research Bulletin, No 123, ECB, October.
See Anzoategui, D., Comin, D., Gertler, M. and Martinez, J. (2019), “Endogenous technology adoption and R&D as sources of business cycle persistence”, American Economic Journal: Macroeconomics, Vol. 11, pp. 67-110. The authors provide evidence that productivity-enhancing investment such as research and development is highly procyclical, in the context of the US economy. See also Fiori, G. and Scoccianti, F. (2021), “Aggregate Dynamics and Microeconomic Heterogeneity: The Role of Vintage Technology”, Bank of Italy Occasional Paper, No 651, 23 November.
IMF (2024), “Understanding the Social Acceptability of Structural Reforms”, World Economic Outlook, Chapter 3, October.
Campos, N.F., De Grauwe, P. and Ji, Y. (forthcoming), “Structural Reforms and Economic Performance: The Experience of Advanced Economies”, Journal of Economic Literature. The authors find that the timing of the implementation of the reforms is very important for their effectiveness: reforms that are implemented during recessions appear to be less effective than those implemented during economic upturns. See also Bordon, A.R., Ebeke, C.H. and Shirono, K. (2016), “When Do Structural Reforms Work? On the Role of the Business Cycle and Macroeconomic Policies”, IMF Working Paper, No. 2016/062, 15 March. The paper finds that supportive macroeconomic policies increase the effect of labour and product market reforms, consistent with the view that some structural reforms are best initiated in conjunction with supportive fiscal or monetary policy.
Moran, P. and Queralto, A. (2018), “Innovation, productivity, and monetary policy”, Journal of Monetary Economics, Vol. 93, pp. 24-41. The paper establishes a link between total factor productivity growth and monetary policy, via the latter’s impact on firms’ technology innovation and adoption activity.
Arce, O. and Sondermann, D. (2024), “Low for long? Reasons for the recent decline in productivity”, The ECB Blog, ECB, 6 May.

 
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(Translated from Spanish)
Opening remarks
Madam President, ladies and gentlemen,
Allow me to use Spanish to address you in this session that is as important as what will happen in our relations with the United States after the election of President [Donald J.] Trump. An election that is not fortuitous, but rather demonstrates a profound political and cultural transformation in American society.
[It demonstrates] a new relationship with politics, even a new relationship with the truth, because the truth seems to be excessively malleable. What is happening in the United States should not leave us indifferent because our two societies have [an] enormous porosity, and enormous relations between them. What has happened in the United States has a lot to do with the sociopolitical dynamics on the European continent.
There would be much to talk about the reasons for this election, but you do not want to have a sociological or sociopolitical debate about why Americans have voted for someone they already know. It is not the first time they have voted for him. And this time, more people voted for him.
You want to debate – and I think it is very pertinent – ​​how this is going to affect the world, what geopolitical consequences it is going to have. I can tell you that it is going to have many geopolitical consequences; that this election, this decision of the American voters, is going to mark the development of the world as it will be for our grandchildren.
The next ten years will undoubtedly be marked by what Trump is going to do and what consequences it will have, but we are not here to speculate either. It is not the first time that someone promises something to be elected and then does not do it or even does something else. Therefore, I will not dedicate myself to speculating what President Trump can do, but I will tell you that we have to be prepared for what may happen. Calmly, vigilantly, but without giving the impression that we are paralyzed, like a deer in the night in front of the powerful headlights of a car that it meets on the road.
We must not show that we are frightened or divided – although in reality we certainly are, because the reception of President Trump’s victory has not been the same in one capital as in another.
In any case, this will have profound consequences for our bilateral relations as well. Trump talks about imposing 10% customs duties on all European products. If such a thing were to happen, it would certainly affect our competitiveness.
He also talks about imposing 60% customs duties on Chinese products. This, in a globalised market, would also affect us because Chinese products that would not go to the United States could come to Europe.
He also talks about massively expelling immigrants, which, apart from the moral and human issues, would also have an inflationary effect, which would increase interest rates in response from the US central bank and that has geoeconomic effects on all of us.
But you want to talk not about geoeconomics, but about geopolitics. Speaking of geopolitics, there are three areas on which you should focus your attention in this debate, which I will follow with great interest because it may probably be the last for me: the first is undoubtedly what can happen in Ukraine; the second is the Middle East; the third is the relationship with China and Taiwan.
All three are based on three key words: security, trade and technology. And I am going to concentrate on the first, on security, which is the core of my portfolio, of my competences – security and defence. Within this security dynamic, allow me to focus my attention and yours on Ukraine, because I have just returned from Kyiv.
I have just returned from Ukraine, where I spent three days visiting military training centres, visiting fortifications, visiting drone factories, visiting the places where Russia exercised its terror. I have had conversations with all the Ukrainian officials, with President Zelenskyy, with his military commanders. And, of course, they are worried about what decision the next American administration might take. They ask us what our reaction will be when, probably, [the new administration] – at least that is what [Trump] has said during the election campaign – makes its military support to Ukraine conditional from January.
I think that the European response cannot be anything other than to continue to maintain our commitments to that country, to Ukraine, to its people, and to continue to provide them with the support they need to continue to defend themselves. That will require resources. The relationship between American and European aid to Ukraine plays in our favour. We help Ukraine more – taking into account all forms of aid – than the United States. In the military dimension, the United States provides approximately 25% more than us, in military terms 25% more.
Replacing the United States would therefore represent a considerable financial and industrial effort, which would force us to ask ourselves again questions that we have already discussed. [For example,] what to do with the frozen funds of Russia, whose profits we have decided to take to help finance the Ukrainian defense industry and which, however, would not be sufficient. We would enter fully into a nuclear issue, debated and unresolved, but which will surely be put on the table: What is it: what to do, not with the profits from capital, but with capital itself.
The military situation is not easy, with high casualties on both sides, but we must avoid a diplomatic solution that marginalizes Ukraine and that in the process marginalizes us as well. An agreement between Trump’s United States and Putin’s Russia – bypassing Ukraine and the European Union to put a ceasefire on the table, postponing political discussions until later – is something that Ukraine rejects and that we must also reject. Nothing should be decided without the participation and agreement of Ukraine, which is paying the highest price for this war.
Of course, we must try to end it as soon as possible, but the way it ends matters. How it ends matters. Perhaps for some it doesn’t matter. Perhaps for some it is enough that it ends without knowing how and with what consequences, but I think that the European Union cannot help but care. What is more, it cares a lot about the way it knows, which can only be in a fair and sustainable way.
That brings me to another consideration, and I take advantage of these circumstances to say it. Trump’s election should serve to make us clearly aware of the need to strengthen our security, to take our destiny into our own hands, as they say now. But it is the same thing that was said in 2017, when Trump was first elected. The same words: “We must take our destiny into our own hands,” said [German] Chancellor Angela Merkel, 10 or 7 years ago.
We say the same thing today, but what has happened in these 7 years? For example, Germany’s military spending was 1.15% of GDP and recently it was 1.3% of GDP; [it has gone] from 1.15% to 1.3%. You can’t say that that is taking our destiny into our own hands, right? Now we are saying the same thing again and I hope that this time it is true.
Let me tell you something, the European Union is not an economic Union, or it is not just an economic Union. Of course, it is not about saying that on one side there is the North Atlantic Treaty Organization (NATO) to ensure security, and on the other side there is the European Union to deal with economic issues. No.
Since the Maastricht Treaty, the European Union has had the will and ambition to develop a common security and defence policy. The Union has military responsibilities, which do not end with the production of weapons for NATO armies. That would be a clear regression from what we have done over the last five years with the Strategic Compass and [with] everything we have put in place to ensure that the European Union also has a military role.
Not incompatible with NATO; not alternative, but complementary. ‘But complementary’ does not mean that it does not exist. Of course it does. No, it is true that on the one hand NATO deals with security and on the other hand we Europeans deal with the production of munitions. We have a Strategic Compass, approved by all the [member] countries, which must be followed, applied and developed in the next mandate.
The situation in the Middle East will also change. Surely this [new] American administration will not put the same weight that President [Joe] Biden and my friend [Secretary of State Antony] Blinken have put into trying to find a ceasefire. There will certainly be more permissiveness with regard to the expansionist tendencies of the Netanyahu government, less security for the Palestinians.
On China, we will see, to begin with, trade problems, and certainly a more belligerent attitude when it comes to the major technological and commercial issues, but I do not want to go on any longer. Thank you very much for your attention.
Link to video: https://audiovisual.ec.europa.eu/en/video/I-263518
 
Closing remarks
Thank you, Madam President, thank you ladies and gentlemen, Members of Parliament, for this set of points of view.
I have listened attentively to this long debate with a very large number [of participants], more than 50 interventions – which I believe only you and I, Madam President, have listened to all of them for reasons of our position. Obviously I don’t think there is any other Member who has seen fit to follow the debate beyond his own intervention.
That does not detract from the value of a debate that I have the honour of closing and, of course, please allow me a couple of minutes more so because this will surely be my last intervention in the Plenary.
We talk about the United States, but it is not the same United States under [US President Donald J.] Trump as it was under [former US President Barack] Obama. We talk about Spain, but it is not the same Spain under Franco as it was under [former Spanish Prime Minister Felipe] González.
We talk about Israel, but it is not the same Israel under [Israeli Prime Minister Benjamin] Netanyahu as it is under [former Israeli Prime Minister Shimon] Pérez. They are the same States, but with different governments.
We would do well to talk about governments, which, in the end, it is true, in some cases – only in some cases – represent the will of their citizens. And this, of course, is the case of the United States. It was not Franco’s Spain, but it is undoubtedly Trump’s United States.
The United States has chosen. It has chosen with full knowledge of the facts because it has already chosen once. They have chosen him again and we have to face a situation that is not the end of the world, certainly not, but it is the beginning of a different world than it could have been, had the Americans made another choice.
We do not know how President Trump will act, but we can guess that he will not increase military aid to Ukraine, right? He will rather decrease it.
Can we reasonably think that he will decrease it or even drastically reduce it? It seems more reasonable [to think so] than the opposite. That puts us in a position where we have to assume a responsibility that we have proclaimed to help a country defend itself from the aggressor.
I know that there are different points of view on this, but history will judge us on whether we have helped Ukraine defend itself or whether we have let it slip. Can we think that Trump will prevent the colonization of the West Bank? Not at all, rather he will push it forward. Can we think that he will try to contain the brutal and disproportionate reaction against the Palestinians? No, we cannot think so, quite the contrary.
Can we think that he will make it easier for lies not to be used as an electoral argument? Not at all, judging by experience. Can we expect that he will fight climate change? Not at all, right? Quite the opposite, it is, as some of you have said, a purely ideological problem. Can we think that he will ensure the security of Europeans? [It is still a] question mark. Can you put your hand in the fire to ensure that the security of Europeans will be guaranteed through NATO with a president like Trump? Can you think that he will guarantee freedom to Ukrainians or rather that he will sit down to dinner with Putin, with Ukraine on the menu? That is rather what will happen.
Well, that is what we have to take into account. This debate has been very interesting, you have all asked for action, but what action are you talking about? Surely not the same one. In some cases, I agree with the action you are asking for. In other cases, not really.
I think that the action that I would like to continue developing is the same one that we started [a few years ago]. Going faster, for example, in the application of the Strategic Compass, which allows us Europeans to equip ourselves with autonomous defense capabilities.
That does not mean that NATO is not the ultimate guarantee of our security. As long as the president of the United States wants it to be, and it remains to be seen. [It does not mean] that we [do not] continue working to increase military capabilities, because Europe is not just an economic union, it is a political union that has responsibilities in its defense as well.
It is not just about producing weapons and ammunition – [it is] that too, but not only that. We cannot outsource our security indefinitely. We have to assume our historical and strategic responsibility.
I think that is what Europeans have to do in the face of the question that President Trump represents, which in some cases is not a question. Some of you think what he proposes is excellent, others are worried. I am among those who are concerned.
They are concerned about an unbridled trade war, they are concerned about the expulsion of tens of thousands of migrants, they are concerned about the abandonment of Ukraine. They are concerned about the continued sacrifice of Palestinian rights, they are concerned about entering into a conflict that will destabilise the world.
It is not the end of the world, it is the beginning of a different world. Yes, the Americans have made their choice and we have to respond to it, knowing that our relationship with the United States, with the people, the American economy is very great. Millions of jobs in Europe depend on the trade relationship with the United States. Our prosperity is linked to theirs and the fight for freedom and democracy too.
For this, ladies and gentlemen, I thank you for having been able to participate in this debate. I thank you for the attention – and the criticism – that I have received over the last 5 years and I hope that you continue to work for a more united, stronger Europe, capable of facing the challenges of the world.
Thank you very much.
Read original text here.
 
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The rapid adoption of AI in finance means that authorities should address information gaps for monitoring, assess the adequacy of current policy frameworks and enhance supervisory and regulatory capabilities.
This report revisits the 2017 FSB report on AI and machine learning in financial services by taking stock of recent advancements, exploring use cases in the financial sector and drivers of adoption, as well as new potential benefits and AI-related financial sector vulnerabilities.
In the past few years, technological advancements and increased computational power have led to an uptake in AI adoption by financial firms and supervisors. AI offers benefits such as increased operational efficiency, regulatory compliance, financial product customisation and advanced analytics. With the advent of generative AI (GenAI) and large language models, the range of use cases has become more diverse.
While AI offers benefits like improved operational efficiency, regulatory compliance, personalised financial products, and advanced data analytics, it may also potentially amplify certain financial sector vulnerabilities. AI-related vulnerabilities that stand out for their potential to increase systemic risk include: (i) third-party dependencies and service provider concentration; (ii) market correlations; (iii) cyber risks; and (iv) model risk, data quality and governance. GenAI also increases the potential for financial fraud and disinformation in financial markets. Misaligned AI systems that are not calibrated to operate within legal, regulatory, and ethical boundaries can also engage in behaviour that harms financial stability. And from a longer-term perspective, AI uptake could also drive changes in market structure, macroeconomic conditions and energy use that could have implications for financial markets and institutions.
While existing regulatory and supervisory frameworks address many of the vulnerabilities associated with AI adoption, more work may be needed to ensure that these frameworks are sufficient. The report calls for national financial authorities and international bodies to enhance monitoring of AI developments, assess whether financial policy frameworks are adequate, and enhance their regulatory and supervisory capabilities including by using AI-powered tools.
 
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U.S Customs and Border Protection has published its first Isotopic Testing Guidance document, which can be accessed on the CBP website using the following link – https://www.cbp.gov/document/publications/isotopic-testing-guide [cbp.gov]. The Guidance  explains CBP’s perception of the role of isotopic testing in supply chain traceability and sets out recommended isotopic testing standards.
As explained in the Guidance, isotopic testing is a scientific method that identifies the atomic structure of naturally occurring materials, or a “fingerprint” of the material, affected by local environmental conditions. When that “fingerprint” is compared to a library of like materials from various geographic areas, isotopic testing can indicate whether the raw material being tested is consistent with the claimed geographic origin.
Although supply chain traceability has always been important, post implementation of the Uyghur Forced Labor Prevention Act (“UFLPA”), an importer’s ability to fully trace the raw materials and inputs used to fabricate its imported goods has become crucial in accessing the U.S. market. The need for traceability is most pronounced in demonstrating the absence of forced labor, but the ability to substantiate origin can be equally relevant in showing that a shipment is not subject to China 301 duties or antidumping/countervailing duties, among other things. Although not a silver bullet, isotopic testing is one tool importers may want to consider in managing risk in their supply chains.
 
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Multilateral development banks (MDBs) today issued a joint statement at COP29 in Baku outlining financial support and other measures for countries to achieve ambitious climate outcomes.
MDBs estimate that by 2030, their annual collective climate financing for low- and middle-income countries will reach USD 120 billion, including USD 42 billion for adaptation, and MDBs aim to mobilize USD 65 billion from the private sector.
For high-income countries, this annual collective climate financing is projected to reach USD 50 billion, including USD 7 billion for adaptation, and MDBs aim to mobilize USD 65 billion from the private sector.
MDBs significantly exceeded their ambitious 2025 climate finance projections set in 2019, with a 25% increase in direct climate finance and mobilization for climate efforts doubling over the past year.
“It is clear we must stay the course. The green energy revolution is underway, and communities and businesses have understood that ambitious climate action is not only the right thing to do but the smart thing to do. The family of multilateral development banks is walking the talk: with our collective commitment here at COP29 to global climate action over the next five years. This also involves increasing the impact of the projects we finance – helping countries around the world to meet their climate goals and adapt to the effects of climate change,” said EIB President Nadia Calviño.
“While the scale of MDBs’ financial commitments is essential, MDBs’ most significant impact comes from our ability to drive transformative change,” the statement said. “As emphasized by the Group of Heads of MDBs in the recent Viewpoint Note: MDBs Working as a System for Impact and Scale, we MDBs are focused on amplifying our catalytic effect by enhancing the results and impact of our financing, deepening engagement with countries through platforms, supporting clients’ climate ambitions, and increasing private sector mobilization.”
“Rallying to the call for urgent climate action, MDBs recognize the central importance of establishing a New Collective Quantified Goal on Climate Finance (NCQG) at COP 29 in Baku. A robust and ambitious NCQG is essential for achieving the goals of the Paris Agreement, and we urge Parties to reach a strong conclusion on this objective,” the statement said.
Recognizing that quality and systemic impact must be informed by climate results, the MDBs released the Common Approach to Measuring Climate Results: Update on Indicators. The common approach, issued in April, is the first shared framework to define, measure, and link global progress on climate mitigation and adaptation with the climate results of MDB activities.
The MDBs also published their Country Platforms for Climate Action – MDB Statement of Common Understanding and Way Forward, reaffirming their joint support for efforts to foster collaboration between host countries, MDBs, donors, and the private sector. Based on country demand, MDBs will build on successful examples to support the launch of new platforms, while deepening collaboration with partners including the International Monetary Fund.
The statement was issued by the African Development Bank Group, the Asian Development Bank, the Asian Infrastructure Investment Bank, the Council of Europe Development Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank, the Islamic Development Bank, the New Development Bank, and the World Bank Group.
EIB at COP29
Find an overview of EIB activities at COP29 on our website. The EIB has a pavilion in the side event area of the blue zone and is running a series of events on numerous topics. You will find the full agenda here. You are welcome to join to watch the sessions either live or later at your convenience. In addition, the EIB shares a pavilion with the group of multilateral development banks. You will find the full agenda here.
Background information
The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.
The EIB Group has been transforming itself into the climate bank through more than a decade of progress and substantial investment, tied to several milestones: the world’s first green bonds in 2007, our first Climate Strategy in 2015 in the wake of COP21 in Paris, our new Energy Lending Policy in 2019 (ending support for fossil fuel energy projects), and then in 2020 the Climate Bank Roadmap.

 In 2023, EIB Group green finance reached nearly €50 billion, more than double the amount of green finance provided in 2019, when European countries asked the EIB to strengthen its role as the climate bank.
 In 2021, the EIB became the first MDB to align our financial activities with the Paris Agreement.
With its Climate Bank Roadmap the EIB Group is on track to support €1 trillion of investment in climate action and environmental sustainability through the critical decade, 2021-2030.
The EIB has committed to increase investment in climate action and environmental sustainability to more than 50% of annual EIB lending by 2025 – last year that was exceeded with 60%.
In August 2024, the EIB passed the €100 billion mark of Climate Awareness Bonds and Sustainable Awareness Bonds  issuance. This makes the EIB the world’s largest issuer of green bonds as well as assured sustainable bonds with dedicated use of proceeds among multilateral development banks. To meet the needs of a broad investor base, the EIB has issued these bonds in 23 currencies, a market record.

EIB Global is the EIB Group’s specialised arm dedicated to operations outside the European Union, and a key partner of the European Union’s Global Gateway strategy. We aim to support at least €100 billion of investment by the end of 2027, around one-third of the overall target of Global Gateway. Within Team Europe, EIB Global fosters strong, focused partnerships alongside fellow development finance institutions and civil society. EIB Global brings the EIB Group closer to local communities, companies and institutions through our offices across the world.
 
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A significant gap in policy ambition exists between globally agreed temperature goals and the emissions reductions of national climate targets, according to a new report on countries covered by the OECD’s International Programme for Action on Climate (IPAC).
According to the 4th edition of the Climate Action Monitor, Nationally Determined Contributions (NDCs) currently commit to a collective reduction in greenhouse gas emissions of only 14% by 2030, compared to 2022 levels, in countries covered by IPAC which produce over 80% of global GHG emissions. This is well short of the estimated 43% global emission reduction needed to limit global warming to 1.5° Paris Agreement goal according to the Intergovernmental Panel on Climate Change (IPCC).

The report also points to the risk that net-zero targets may not be fulfilled, noting that most current commitments lack a legal basis on which to be enforced. As of August 2024, 110 countries have pledged a net-zero target for 2050 and beyond, covering about 88% of global GHG emissions. However, only 27 countries and the EU, representing 16% of global GHG emissions, have enshrined these targets into law.
“Our 2024 Climate Action Monitor underscores the growing impact of climate-related hazards and confirms that countries’ emission reduction pledges are not consistent with the Paris Agreement temperature goals,” OECD Secretary-General Mathias Cormann said. “Making real progress on the net-zero transition requires more ambitious mitigation targets and effective implementation”.
The report also highlights the recent slowdown in countries’ climate policy action across the countries that produce nearly two thirds of total greenhouse gas emissions. Based on the Climate Actions and Policies Measurement Framework (CAPMF), which tracks both the number of adopted national climate policies and their stringency, national climate mitigation action only expanded by 1% and 2% in 2022 and 2023 respectively, compared to an average of 10% per year between 2010-21. This trend suggests that there could be a significant implementation gap where even the current modest GHG emissions reduction targets may not be achieved by 2030.
With 2024 on track to set new records for global warming, the detrimental effects of rising temperatures, changing rain patterns and other climate-related hazards are being seen on food systems, with croplands increasingly exposed to agricultural droughts. Many countries have observed a notable decline in soil moisture levels on croplands during 2019-23 when compared to the reference period of 1981-2010, highlighting the urgent need for adaptation strategies to enhance resilience in farming practices. Heatwaves, wildfires, floods, and hurricanes have raged across the globe, destroying lives and livelihoods and the population exposed to extreme temperatures is growing rapidly. During the same period, the countries covered in the report experienced on average an additional 30 days of above-average temperatures compared to the baseline period.
 
Note to Editors:
The fourth edition of the Climate Action Monitor is a deliverable of the Net Zero+ International Programme for Action on Climate (IPAC), which provides foundational data and metrics to assess country progress towards net-zero greenhouse gas emissions and the Paris Agreement goals. IPAC examines key trends and developments while assessing the progress of countries’ climate policies, complementing and supporting the monitoring frameworks of the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement.
IPAC data underpins numerous climate initiatives at the OECD, including the Inclusive Forum on Carbon Mitigation Approaches. Making progress towards the net-zero challenge not only demands ambitious mitigation targets and effective implementation, but also dealing with the barriers and opportunities presented by the policy landscape and ensuring that the transition is resilient to changing circumstances.
IPAC covers the following countries: all OECD countries, OECD partner countries (Brazil, People’s Republic of China, India, Indonesia, South Africa), prospective members (Argentina, Bulgaria, Croatia, Peru, Romania), Saudi Arabia, Malta and the EU.
Countries that have enshrined net-zero targets in law: Australia, Austria, Canada, Chile, Colombia, Denmark, Fiji, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Japan, Korea, Liechtenstein, Luxembourg, Maldives, New Zealand, Nigeria, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, and the EU.
The Climate Actions and Policies Measurement Framework (CAPMF) is a climate mitigation database developed by the OECD that measures governments’ climate policy action both in terms of policy adoption and stringency. It consistently tracks 56 key climate policies based on 130 policy variables from 1990 to 2023 for all OECD and OECD partners countries except the United States, which jointly account for nearly two thirds of global greenhouse gas emissions.

 
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