Djellil Bouzidi, member of the Bridge Tank’s board, wrote with Michael Mainelli an article for the Official Monetary and Financial Institutions Forum entitled “How climate cuffs could save the planet” on the 26th of October 2020.
He recommended sustainability-linked bonds as efficient instruments against climate change, as they are dedicated to “green projects”. Policy performance bonds have also become increasingly popular, as they prioritise targeted outcomes. Djellil Bouzidi also recommended these bonds, as “any policy with clear goals can set an interest rate, percentage of renewable energy generation, carbon prices, forestation, or educational attainment levels”. These instruments have also been accepted by the
European Central Bank. This opens the way for governments to issue policy performance bonds with interest payments linked to the issuing country’s greenhouse gas emissions. The sale of such bonds linked to carbon targets would lead to a convergence of the global carbon price, locally handled clean-up costs and a much smaller need for carbon tariffs.