An unprecedented increase in “low carbon” spending is required to put countries on a pathway toward net zero emissions (Kölbel, Heeb, Paetzold & Busch, 2020; Matthews & Wynes, 2022). The private sector must provide a large share of the additional capital, and markets must be “influenced” to avoid green production being competitively disadvantaged compared to more polluting alternatives. The standard tools used in financial markets to evaluate the risks and returns of traditional investments are ill-adapted to deal with climate and environmental issues. For this reason, central banks, financial supervisors, governments, and other relevant policy actors need to provide investors with adequate instruments and policy frameworks to generate the necessary investments for “making finance flows consistent with a pathway toward low greenhouse gas emissions and climate-resilient development” (UN Framework Convention on Climate Change, 2016). Similarly, governing institutions need to introduce climate-related fiscal policies as one of the dimensions determining the competitiveness of firms. Since the early 2000s, several policy efforts have been implemented to promote climate-related invest- ments (D’Orazio, 2022; D’Orazio & Thole, 2022). This chapter analyzes financial and fiscal policy measures introduced to tame climate risks and promote climate finance, thus facilitating the transition to a low-carbon economy. The chapter is organized as follows. Section 2 pro- vides context for the analysis. Section 3 reviews climate-related financial policy actions, their adoption, and diffusion; while Section 4 discusses fiscal policy actions. Section 5 provides concluding remarks.
Policies to mobilize finance for low-carbon transition
Marco Amendola;Marco Valente
2024-01-01
Abstract
An unprecedented increase in “low carbon” spending is required to put countries on a pathway toward net zero emissions (Kölbel, Heeb, Paetzold & Busch, 2020; Matthews & Wynes, 2022). The private sector must provide a large share of the additional capital, and markets must be “influenced” to avoid green production being competitively disadvantaged compared to more polluting alternatives. The standard tools used in financial markets to evaluate the risks and returns of traditional investments are ill-adapted to deal with climate and environmental issues. For this reason, central banks, financial supervisors, governments, and other relevant policy actors need to provide investors with adequate instruments and policy frameworks to generate the necessary investments for “making finance flows consistent with a pathway toward low greenhouse gas emissions and climate-resilient development” (UN Framework Convention on Climate Change, 2016). Similarly, governing institutions need to introduce climate-related fiscal policies as one of the dimensions determining the competitiveness of firms. Since the early 2000s, several policy efforts have been implemented to promote climate-related invest- ments (D’Orazio, 2022; D’Orazio & Thole, 2022). This chapter analyzes financial and fiscal policy measures introduced to tame climate risks and promote climate finance, thus facilitating the transition to a low-carbon economy. The chapter is organized as follows. Section 2 pro- vides context for the analysis. Section 3 reviews climate-related financial policy actions, their adoption, and diffusion; while Section 4 discusses fiscal policy actions. Section 5 provides concluding remarks.File | Dimensione | Formato | |
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