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Political Science > Environmental Policy

You are looking at 1 - 10 of 38 items for :

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Cover Staff Climate Notes
Unlocking Adaptation Finance in Emerging Market and Developing Economies
Deepali Gautam, Ekaterina Gratcheva, Fabio M Natalucci, and Ananthakrishnan Prasad
Mitigation and decarbonization efforts are falling short of the 1.5°C goal, making adaptation critical. Developing economies are affected the most, despite having contributed the least to the problem. Nearly 98 percent of adaptation finance comes from public actors, with highly fragmented flows from the private sector. As financing needs increase, bringing private sector finance becomes critical and requires reframing adaptation investments from being seen not just as a risk exposure but also as an investment opportunity. This requires addressing real and perceived investment barriers, public-private collaboration and risk sharing, as well as financial incentives and innovation to unlock scalable, inclusive solutions. Adaptation is more complex than mitigation, with challenges in defining, evaluating, pricing, and scaling investments. Progress on adaptation requires policy reforms, incentives, and partnerships between governments, businesses, and communities and public-private risk sharing.
Keywords:
climate finance; climate adaptation; climate resilience; climate finance architecture; adaptation finance; emerging markets and developing countries; private finance mobilization; sustainability; IMF Resilience and Sustainability Trust.; IMF staff climate note; IMF resilience; IMF staff climate Note 2024/007; Climate change; Financial sector; Climate policy; Global
Cover IMF Working Papers
Following the Money: Who is Keeping Coal Alive?
Gregor Schwerhoff and Mouhamadou Sy
The 2023 United Nations Climate Change Conference reinforced already existing pressure to transition away from fossil fuels, in particular for the most polluting source, coal. We use a comprehensive dataset on bank loans for coal projects to shed light on which type of banks continue to finance coal and how coal phase-out commitments affect coal financing. We find that coal financing is becoming increasingly concentrated, partly in banks with a very high coal exposure. We also find that many coal loans have maturities much shorter than the remaining lifetime of coal assets, thus exposing equity holders of coal assets to the risk of a more difficult loan rollover. An econometric analysis shows that countries with a strong commitment to coal phase-out, fixed in national law for example, receive less coal financing. Using an instrumental variable, we identify this effect as causal.
Keywords:
Coal; climate change; stranded assets; coal; divestment; United Nations climate change conference; Coal financing; phase-out commitment; coal financing; financing to the coal sector; Non-renewable resources; Financial sector development; Climate policy; Foreign direct investment; Asia and Pacific; Global; Europe; Middle East; Sub-Saharan Africa
Cover Staff Climate Notes
Embedded in Nature: Nature-Related Economic and Financial Risks and Policy Considerations
Charlotte Gardes-Landolfini, William Oman, Jamie Fraser, Mariza Montes de Oca Leon, and Bella Yao
The economy is embedded in, and dependent on, nature. Yet economic activity is degrading nature at an unprecedented pace. Interacting with climate change, nature loss and transformation generates significant threats to the global economy and financial system. However, work on the implications of nature-related risks for macroeconomic and financial sector policies remains at an early stage. This note seeks to contribute to this emerging policy space in three main ways: (i) it proposes a conceptual framework for understanding nature-related risks by mapping out macroeconomic transmission channels, emphasizing their impact on the economy and financial systems through “double materiality;” (ii) it conducts empirical analysis, finding that nearly 38 percent of bank loans of the 100 largest global banks are to harmful subsidies-dependent sectors and 44 percent are exposed to conservation areas under the Global Biodiversity Framework, and that industries most exposed to nature degradation are not well prepared to manage these risks; and (iii) it discusses takeaways for macroeconomic and financial sector policies and frameworks.
Keywords:
nature; environment; macroeconomics; macroeconomic policies; financial stability; banks; nature-related risks; financial regulation; financial supervision; Minsky moment; ecosystem services; planetary boundaries.; IMF staff climate note; ecosystem service; biodiversity loss; biodiversity conservation; biodiversity hotspot; Environmental policy; Climate change; Financial sector policy; Natural resources; Global
Cover IMF Working Papers
Banking Law and Climate Change: Key Legal Issues
Mario Tamez, Ender Emre, and Alessandro Gullo
This paper explores the intersection of climate change policies with banking supervisory law. Statutory mandates define banking supervisory agencies’ objectives, functions and powers. Policies that aim to address climate change risks appear fully germane to banking supervisors’ main objective of safety and soundness. As such, banking supervisory agencies have a duty to address climate risks in light of their mandate. A mandate that is not anchored on safety and soundness in light of best practice would blur the accountability of banking supervisory agencies and undermine their legitimacy also with respect to climate. While legal changes can help provide greater legal certaintly, particularly given the long-term perspective of climate change, bank supervisory agencies can take action without fundamental reforms of their legal framework. Accordingly, they have set expectations or requirements for banks to incorporate climate into their strategy and business model, risk management, and governance. A combination of legal instruments—based on soft law and hard law—helps to achieve this objective. Notwithstanding implementation challenges, taxonomies and disclosures remain important tools, and banking supervisors should assess their role in the development of such tools in light of their mandate. The key responsibility to address climate risks rests on banks, and corporate governance frameworks could assist.
Keywords:
Climate Change; Banking Law; Legal Framework; climate change risk; banking supervisor; corporate governance framework; supervisory agency; climate consideration; Climate policy; Bank legislation; Corporate governance; Global
Cover IMF Working Papers
Central Banks and Climate Change: Key Legal Issues
Mario Tamez, Hans Weenink, and Akihiro Yoshinaga
Well-designed legal frameworks and institutional arrangments support the legitimacy of central banks’ autonomous decision-making when grounded on sound legal basis and can prevent over-stepping in the remit of other authorities. This paper explores the key legal intersections of climate change and central banks. Climate change could impact price and finanical stability, which are at the core of a central bank’s mandate. While central banks’ legal frameworks can support climate change efforts they also determine the boundaries of the measures they can adopt. Central banks need to assess their mandate and authority under their current legal frameworks when considering measures to contribute to the global response to climate change, while taking actions to fulfill their legal mandates.
Keywords:
Climate Change; Central Bank; Legal Framework; central bank development programs; autonomous decision-making; IMF working paper No. 24/192; central bank's mandate; core objective; Financial sector stability; Climate policy; Central bank mandate; Central bank legislation; Global
Cover Selected Issues Papers
Deep Dive on the Climate Transition for France: Macroeconomic Implications, Fiscal Policies, and Financial Risks
Iulia Ruxandra Teodoru, Xun Li, Rachel Lee, Hugo Rojas-Romagosa, and Nate Vernon
Climate change presents an unprecedented long-term challenge to the French and global economy. While France has made significant progress towards reducing greenhouse gas emissions, important additional policy efforts will be needed to meet key mitigation targets. Decarbonization costs and risks can be significant, highlighting the need to identify efficient and equitable fiscal and regulatory policy options to meet emission goals. To accelerate the green transition and mitigate its costs, France has increasingly relied on green spending measures, which could be complemented by higher carbon pricing and other revenue-neutral schemes. Recycling of revenues via cash transfers could offset the price impact on lower-income households. Over the medium term, new measures for road transportation, such as distance-based charges, could also be considered. Ensuring a timely and orderly climate transition will be critical to mitigate the credit risk impact on banks. French banks should also continue to mitigate climate transition risks by integrating them into their governance, strategy, and risk management processes.
Keywords:
Climate Transition; Climate fiscal policies; Financial transition risks; policy option; climate transition risk; reform option; EU climate policy; transportation revenue; Greenhouse gas emissions; Global; Europe