Rethinking the Green Transition: Production, Profitability, and the Political Economy of Differential Interest Rates

The impact of human consumption and production on the environment is one of the biggest concerns facing policymakers. This project explores a non-conventional policy proposal to introduce differential interest rates, with lower, subsidised rates for environmentally beneficial investment. While recent policy debates have highlighted the potential of green‑differentiated rates, existing analyses remain largely descriptive and lack a formal account of how such instruments shape technological choices within production. This project addresses this gap by developing a new theoretical framework based on the classical tradition of political economy to examine how such policy can support the transition towards technologies compatible with climate and environmental goals.