This paper proposes an analytical framework to quantify the impacts of climate policy and transition narratives on economic and financial variables necessary for financial risk assessment. Focusing on transition risks, the scenarios considered include unexpected increases in carbon prices and productivity shocks to reflect disorderly transition processes. The modelling framework relies on a suite of models, calibrated on the high-level reference scenarios of the Network for Greening the Financial System (NGFS). Relying on this approach, the ACPR has selected a number of quantitative scenarios to be submitted to agroup of voluntary banks and insurance companies to conduct the first bottom-up pilot climate-related risk assessment.

Climate-Related Scenarios for Financial Stability Assessment: an Application to France

This chapter is an introduction to climate change risk for the financial sector (banks and investors). We propose to cover how the topic emerged, what it means for financial institutions, what are the specific types of approaches to address it as well as related developments in the industry, how regulation is approaching the question, and what are the next steps for academic research. The chapter is aimed at financial professionals, researchers and policymakers in the area of banking and investment who seek to understand where this new field of research currently is and what evolutions are to expect. The chapter’s ambition is to provide the reader with a snapshot of the current state of the art and guidance on the relevant literature to go further.

Climate Change and Financial Risk

In Deutschland ist eine intensive Debatte uber eine Kurskorrektur in der Klimapolitik und die Moglichkeiten und Grenzen entsprechender Reformoptionen entbrannt. Ausgelost wurde diese Debatte nicht zuletzt von mittlerweile in vielen Landern vorgebrachten Protesten von Teilen der Bevolkerung uber unzureichende Fortschritte beim Klimaschutz. Sie wird zudem von der zunehmenden Einsicht getragen, dass es hierzulande sehr schwer wird, die aufgrund internationaler Vereinbarungen verbindlichen europaischen Zielvorgaben zur Reduktion von Treibhausgasemissionen zu erreichen. Gleichzeitig kam es in Frankreich zu Protesten unter anderem gegen die Erhohung von Umweltsteuern. Vor diesem Hintergrund hat die Bundesregierung den Sachverstandigenrat gebeten, in einem Sondergutachten Reformoptionen in der Klimapolitik zu diskutieren...

https://www.econstor.eu/bitstream/10419/200981/1/srw-sondergutachten-2019.pdf

Aufbruch zu einer neuen Klimapolitik

Climate Change and the Irish Financial System

A disorderly transition to a low-carbon economy may pose significant costs for both financial and nonfinancial firms through the stranding of physical assets, firms’ defaults, and volatility in asset prices. The spread of these disruptions through production and financial networks may exacerbate transition costs. Green financial and monetary policies may help to mitigate the cost of transitioning to a low-carbon future, but coordination among public institutions (governments, central banks, and financial supervisors) is needed. We discuss qualitative, empirical, modeling, policy, and institutional research on this topic and identify priorities for future research.

https://cris.unibo.it/bitstream/11585/891097/1/Campiglio%20and%20van%20der%20Ploeg%20%282022%29%20Macrofinancial%20risks%20of%20the%20transition%20to%20a%20low-carbon%20economy%20-%20REEP.pdf

Macrofinancial Risks of the Transition to a Low-Carbon Economy

In the summer of 2018, the House of Representatives of the Netherlands supported the legislative proposal for a Climate Act. The Climate Act stipulates that in 2050, greenhouse gas emissions must have been reduced by 95% relative to their 1990 level. To achieve this objective, the government is aiming to reduce emissions by 49% in 2030. This requires ambitious climate policies, which also include the option of introducing a direct tax on carbon emissions. An efficient way of reducing harmful emissions is to assign a price to the external effects of emissions. Data evidences that compared with other countries, Dutch enterprises emit large quantities of greenhouse gases and are paying relatively little for these emissions. The most straightforward approach would be to introduce a European carbon tax, after the example of the European Emissions Trading System (ETS). The option of introducing a national policy, with the Netherlands leading the field in terms of imposing a direct carbon tax on corporations, requires more insight into its impact on production costs, international price competitiveness and sales. This study addresses this, distinguishing between the various industry sectors within the Dutch economy.

Ad Stokman

Papers

The price of transition: an analysis of the economic implications of carbon taxing