While in the past energy prices often fell as quickly as they rose, the need to step up the fight against climate change may imply that fossil fuel prices will now not only have to stay elevated, but even have to keep rising if we are to meet the goals of the Paris climate agreement.2 In the EU, price developments under the Emissions Trading System (ETS) signal such an impending structural shift.
While we address the public health issues, we want to ensure that these difficulties do not contaminate our financial system and trigger a negative feedback to the real economy. Ensuring the continued health of the financial system requires a whole-of-market approach.