Low‐carbon transition risks for finance

Autor: Jean-Francois Mercure, Neil R. Edwards, Emanuele Campiglio, Ulrich Volz, Gregor Semieniuk
Přispěvatelé: Semieniuk G., Campiglio E., Mercure J.-F., Volz U., Edwards N.R.
Jazyk: angličtina
Rok vydání: 2021
Předmět:
Atmospheric Science
010504 meteorology & atmospheric sciences
media_common.quotation_subject
Geography
Planning and Development
Climate change
Low-carbon economy
401905 Nachwachsende Rohstoffe
010501 environmental sciences
01 natural sciences
transition risks
financial stability
low-carbon economy
stranded assets
structural change
sunset industries
transition risks
Debt
Rest (finance)
401905 Renewable resources
Economics
Production (economics)
Asset (economics)
0105 earth and related environmental sciences
media_common
Consumption (economics)
Finance
Global and Planetary Change
502042 Umweltökonomie
502018 Macroeconomics
business.industry
502042 Environmental economics
502018 Makroökonomie
sunset industrie
stranded asset
structural change
201128 Sustainable building
low-carbon economy
Default
business
201128 Nachhaltiges Bauen
financial stability
ISSN: 1757-7799
Popis: The transition to a low-carbon economy will entail a large-scale structural change. Some industries will have to expand their relative economic weight, while other industries, especially those directly linked to fossil fuel production and consumption, will have to decline. Such a systemic shift may have major repercussions on the stability of financial systems, via abrupt asset revaluations, defaults on debt, and the creation of bubbles in rising industries. Studies on previous industrial transitions have shed light on the financial transition risks originating from rapidly rising “sunrise” industries. In contrast, a similar conceptual understanding of risks from declining “sunset” industries is currently lacking. We substantiate this claim with a critical review of the conceptual and historical literature, which also shows that most literature either examines structural change in the real economy, or risks to financial stability, but rarely both together. We contribute to filling this research gap by developing a consistent theoretical framework of the drivers, transmission channels, and impacts of the phase-out of carbon-intensive industries on the financial system and on the feedback from the financial system into the rest of the economy. We also review the state of play of policy aiming to protect the financial system from transition risks and spell out research implications. This article is categorized under: Climate Economics > Economics and Climate Change.
Databáze: OpenAIRE
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