(2021), “Climate change and monetary policy in the euro area”, Report of the Eurosystem work stream on climate change and monetary policy, ECB Occasional Paper Series, No 271, September. 11. This channel is also described in Schnabel, I. (2022), “A new age of energy inflation: climateflation, fossilflation and greenflation”, speech at The ECB and its Watchers XXII Conference, March. 12.
If fossil fuel producers expect demand for fossil fuels to decline in the future due to the green transition, they might extract as much fossil fuel reserves as they can in the near term when demand for their commodity is still high. Higher production will in turn put downward pressure on fossil fuel prices. 13.