Governor Signe Krogstrup: The European competitive­ness agenda can benefit green investment

Financing for green investments has increased in recent years, but more financing is still needed than what is provided on market terms. This is evident from assessments from the European Commission, among others. High savings in Denmark provide a good basis for investments in the green transition. However, market failures continue to hold back investments.

On 21 August 2025, Governor Signe Krogstrup participated in a debate on green financing at the Danish Environmental Economic Conference 2025, organised by the Danish Economic Councils.

The most important measure to increase financing is taxation of CO2 emissions. When the price of CO2 emissions increases, banks and investors are incentivized to increase financing for green investments. Denmark’s CO2e taxes and the EU Emissions Trading System are good examples. At the same time, sustainable finance can contribute to increasing funding. Here, markets for e.g. green bonds and investments from sustainable investment funds have grown.

“The most important measure to increase financing for green investments is taxation of emissions. Here, we are making good progress in Denmark and the EU. But sustainable finance will also play a role,” commented Signe Krogstrup.

Danmarks Nationalbank’s most important contribution is to ensure stable economic and financial conditions for the transition. This follows from Danmarks Nationalbank’s objectives of ensuring stable prices and financial stability. Stability enables long-term planning and investments in a greener future. Further, as part of its role as manager of government debt, Danmarks Nationalbank issues green bonds on behalf of the Ministry of Finance. This contributes to the development of the Danish green bond market.

The green transition and the need for financing extend beyond Denmark’s borders. Currently, different European agendas are interacting, such as priorities for strengthening productivity and the green transition.

Signe Krogstrup says: ”Initiatives to strengthen European competitiveness and energy security can contribute to increasing investment in the green transition.”

Read more in Signe Krogstrup and Marcus Mølbak Ingholt’s contribution to the Danish Climate Council’s publication ”Planeten og Danmark – dansk klimapolitik i en global kontekst” from 8 May 2025. The presentation from the Danish Environmental Economic Conference 2025 is available below (in Danish only).