Climate Transition Risk
Like the coronavirus, climate change will affect everyone globally, albeit on a scale of decades and centuries rather than months and years. It too will not distinguish between caste, color, creed, religion, or national boundaries, and like the coronavirus, climate change will have its greatest impact on the poor and most vulnerable.
This brief outlines the current state of global finance for climate adaptation, and includes potential new data sources and recommendations to improve adaptation finance tracking going forward.
As we move forward past this crisis, policymakers should have resilience in the front of their minds. There are some practical steps that can be taken in our policy response not only to enable us to boost green growth and reduce greenhouse gas emissions but also to create a more resilient financial system.
In South Africa, Climate Policy Initiative Energy Finance examined the risks to the central government, municipalities, companies and financial institutions and found that the transition to a low carbon economy would cost its economy $124bn. In this report, we not only diagnose the challenges for an economy and society that relies on coal exports, we also make a series of recommendations on the policy steps South Africa can take to mitigate climate risks and maximise the potential upside of the transition. This report is the first to be published from CPI EF’s sovereign risk programme.
This report explores the current state of finance for climate adaptation and proposes practical, near term solutions to both fill in knowledge gaps and to increase investment.
One of the most important risks to the Indian renewable energy sector is the counterparty credit risk, associated with the risk of state-owned utilities delaying or defaulting on their contractual payments to power producers, adding as much as 1.07% of additional risk premium to the cost of debt for renewable energy projects (CPI, 2018), and also limiting the availability of capital.