Macrofinancial Risks of the Transition to a Low-Carbon Economy

Campiglio, Emanuele; Ploeg, Frederick van der

doi:10.1086/721016

Cited by 25 publications

(15 citation statements)

References 79 publications

(76 reference statements)

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“…Our treatment of transition expectations positions us close to the literature studying the 'stranding' of physical or financial assets along a low-carbon transition (Campiglio and van der Ploeg, 2022;Daumas, 2023;van der Ploeg and Rezai, 2020). To our knowledge, this paper is the first to incorporate capital stranding into a model with heterogeneous expectations, with most other contributions assuming homogeneity (see for instance Baldwin et al, 2020;Rozenberg et al, 2020).…”

Section: Introductionmentioning

confidence: 55%

Stranding Ahoy? Heterogeneous Transition Beliefs and Capital Investment Choices

et al. 2022

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Section: Introductionmentioning

confidence: 55%

Stranding Ahoy? Heterogeneous Transition Beliefs and Capital Investment Choices

et al. 2022

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“…This can happen earlier than physical asset stranding and might happen abruptly if enough investors adjust their expectations of future returns downward at the same time. Such a ‘green swan’ event substantially devalues stocks, which in turn could affect macro-financial stability (Campiglio & van der Ploeg, 2022). Carbon lock-in is when an incumbent set of infrastructure, institutions, and behaviors creates inertia that make it harder for clean energy to compete and replace fossil fuels (Kemfert et al, 2022).…”

Section: Resultsmentioning

confidence: 99%

“…Potential economic losses from stranded assets in upstream oil and gas are estimated upward of 1 trillion USD, held predominantly in the Global North through cross-border financial stakes in oil and gas fields elsewhere (Semieniuk et al, 2022). Stranded assets can have macroeconomic consequences by affecting the valuation of other assets, that is, contagion and triggering spillovers from the financial to the real economy (Campiglio & van der Ploeg, 2022). Governments are directly exposed through state-owned companies and reduced taxes and royalties, and indirectly through commitments to bailing out private fossil fuel investors or stabilizing the financial system.…”

Section: Resultsmentioning

confidence: 99%

Ten new insights in climate science 2023

Bustamante,

Roy,

Ospina

et al. 2023

Glob. Sustain.

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Non-technical summary. We identify a set of essential recent advances in climate change research with high policy relevance, across natural and social sciences: (1) looming inevitability and implications of overshooting the 1.5°C warming limit, (2) urgent need for a rapid and managed fossil fuel phase-out, (3) challenges for scaling carbon dioxide removal, (4) uncertainties regarding the future contribution of natural carbon sinks, (5) intertwinedness of the crises of biodiversity loss and climate change, (6) compound events, (7) mountain glacier loss, (8) human immobility in the face of climate risks, (9) adaptation justice, and (10) just transitions in food systems. Technical summary. The Intergovernmental Panel on Climate Change Assessment Reports provides the scientific foundation for international climate negotiations and constitutes an unmatched resource for researchers. However, the assessment cycles take multiple years. As a contribution to cross-and interdisciplinary understanding of climate change across diverse research communities, we have streamlined an annual process to identify and synthesize significant research advances. We collected input from experts on various fields using an online questionnaire and prioritized a set of 10 key research insights with high policy relevance. This year, we focus on: (1) the looming overshoot of the 1.5°C warming limit, (2) the urgency of fossil fuel phase-out, (3) challenges to scale-up carbon dioxide removal, (4) uncertainties regarding future natural carbon sinks, (5) the need for joint governance of biodiversity loss and climate change, (6) advances in understanding compound events, (7) accelerated mountain glacier loss, (8) human immobility amidst climate risks, (9) adaptation justice, and (10) just transitions in food systems. We present a succinct account of these insights, reflect on their policy implications, and offer an integrated set of policy-relevant messages. This science synthesis and science communication effort is also the basis for a policy report contributing to elevate climate science every year in time for the United Nations Climate Change Conference. Social media summary. We highlight recent and policy-relevant advances in climate change researchwith input from more than 200 experts.

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“…As the world moves towards renewable energy sources, petroleum operations face the risk of stranded assets, reduced market demand for traditional fossil fuels, and the need to adapt to new technologies and energy paradigms. The evaluation of transition risks involves assessing the financial implications of changing market dynamics, ensuring that investments align with emerging sustainable trends, and strategically positioning the industry for a carbon-neutral future (Campiglio & van der Ploeg, 2022, Semieniuk, et. al., 2021.…”

Section: Climate Risk Assessment In Petroleum Operationsmentioning

confidence: 99%

Climate risk assessment in petroleum operations: A review of CSR practices for sustainable Resilience in the United States and Africa

Chinwe Chinazo Okoye,

Onyeka Chrisantus Ofodile,

Adeola Olusola Ajayi Nifise

et al. 2024

GSC Adv. Res. Rev.

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Climate risk assessment has emerged as a critical component in the sustainability efforts of petroleum operations, given the increasing frequency and severity of climate-related events. This paper provides a comprehensive review of Corporate Social Responsibility (CSR) practices employed in the United States and Africa to enhance sustainable resilience in the face of climate risks within the petroleum industry. In the United States, where stringent environmental regulations and public scrutiny prevail, petroleum companies have adopted a range of CSR practices to assess and mitigate climate risks. These practices encompass comprehensive environmental impact assessments, carbon footprint reduction initiatives, and the integration of renewable energy sources into their operations. The paper explores how these CSR practices contribute to the overall resilience of petroleum operations in the United States. In contrast, Africa presents a diverse landscape with varying levels of regulatory frameworks and industrial practices. The paper delves into the unique challenges and opportunities faced by petroleum operations on the African continent in managing climate risks. It highlights the role of CSR practices in promoting sustainable development, community engagement, and ecosystem conservation as integral components of climate risk resilience. The review emphasizes the importance of a holistic approach to climate risk assessment, considering both the environmental and social dimensions of petroleum operations. It sheds light on the need for collaboration between industry stakeholders, governments, and local communities to develop effective CSR strategies that enhance resilience while fostering sustainable practices. By synthesizing insights from both the United States and Africa, this paper contributes to the global discourse on climate risk management in the petroleum industry. It underscores the significance of CSR practices as instrumental tools for achieving sustainable resilience and fostering a harmonious coexistence between petroleum operations and the environment in diverse geopolitical contexts.

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Macrofinancial Risks of the Transition to a Low-Carbon Economy

Cited by 25 publications

References 79 publications

Stranding Ahoy? Heterogeneous Transition Beliefs and Capital Investment Choices

Stranding Ahoy? Heterogeneous Transition Beliefs and Capital Investment Choices

Ten new insights in climate science 2023

Climate risk assessment in petroleum operations: A review of CSR practices for sustainable Resilience in the United States and Africa

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