Publications

The European co-legislators have just reached an agreement on the content of the future European Carbon Removal Certification Framework (CRCF). Negotiations were swift and fruitful, against a backdrop of a general step back in the adoption of the various Green Deal texts. While today sees environmental issues played off against farmer's livelihoods, this draft regulation brings these two elements together to create the conditions for investment in the transition of agriculture and forestry sectors. However, several details still need to be clarified to ensure that this framework actually enables effective and ambitious climate financing.

This week, I4CE launches the first European Climate Investment Deficit report. During a year’s research, we analysed investments in 22 sectors of the EU27 economy that are critical for the EU to deliver its 2030 climate and energy security objectives. The European Green Deal is gaining economic momentum, as climate investments in the EU grew 9% in 2022, reaching […]

Climate investments in the EU economy grew by 9% in 2022. This report finds that the European Green Deal is gaining economic momentum but investments in modernising energy, transport, and buildings must still double for the EU to hit 2030 climate targets.

I4CE's Landscape of Climate Finance is an overview of climate investments made by households, companies and public authorities. Such investments include retrofitting buildings, purchasing electric vehicles, installing renewable energy, as well as paying for rail, cycling and urban public transport infrastructure.

The European Union is continuing its efforts to ensure that the banking system takes climate change into account. Banks will have to draw up a "transition plan", according to the European Banking Authority’s (EBA) guidelines that are out for consultation until April.  One could hope that the banking authorities would seize this opportunity to encourage banks to better finance the transition, since their voluntary commitments are not sufficient. But the EBA does not make it a clear objective.

A report to clarify linkages between these two approaches to climate action for the financial sector. The mobilization of the sector is necessary to help to finance the low-carbon transition. Some stakeholders thus advocate the explicit mobilization of the sector in favor of financing the transition. This rationale for action is known as the “transition finance approach”. The sector is also exposed to the financial risks arising from climate change and the necessary transition. This observation motivates a rationale for action known as te “risk approach”, aimed at managing the exposure of financial institutions to such risks.

France should publish mid-year its first multi-annual strategy for financing the ecological transition. This is a long way from the first 2015 climate strategy, which barely touched funding aspects. And it is good news. We at I4CE believe that such plans are essential tools to support the transition to low-emission, climate-resilient economies. Credible, multi-year public spending targets help to embark the private sector and the funders of public action (debt holders, international donors) in the transition, and redirect financial flows as demanded by the Paris Agreement. Comprehensive financing plans also avoid simplistic approaches based on case-by-case project appraisal on the basis of limited cost-benefit considerations, which can ultimately result in significant additional costs.

After nearly 4 years of negotiations, the European Union has just reached an agreement to reform the Capital Requirements Directive (CRD) for banks. The inclusion of climate change is a major step forward: banks will have to draw up prudential transition plans, supervised by the European Central Bank. These plans will complement the European regulatory architecture that is being put in place for large companies, with the Sustainability Reporting Directive (CSRD) and the Due Diligences Directive (CSDD). Are these banking transition plans a sufficient breakthrough to finally commit banks to climate neutrality? The answer to this question will depend on the implementation of EU legislation.

The European Union has just adopted the Capital Requirements Directive (CRD) and introduced a new feature: transition plans will now integrate prudential regulations. This paper looks at the major opportunity represented by prudential transition plans and the decisive role that the European Banking Authority will play. It explains why the Authority should adopt a comprehensive definition of banking transition plans and how these plans should be consistent with the European directives on Corporate Sustainability Reporting (CSRD) and on Due Diligences (CSDDD).

The Global Stocktake at COP28 in Dubai marked the start of a cycle for reviewing governments’ decarbonization trajectories. The cycle will end at COP30 in Brazil at the end of 2025, and 2024 will hopefully show progress in the ambition of these trajectories. We equally hope that this renewed ambition will be accompanied by a reflection on the financing plans for national low-carbon trajectories, covering the amounts and evolution over time of domestic and international resources, and the respective roles of the private and public sectors. Because simply put, a low-carbon transition with no associated financing plan is not a transition, it is mere wishful thinking.

There is a broad consensus that private finance has an important role to play in financing the climate transition, given the scale of needs and the constraints on public finances. Beyond investments in climate alone, all financial activities must be reoriented to be compatible with the transition. This shift cannot take place on a voluntary basis at the scale and speed required. The inactivity of financial players, the weight of past financing, and the demands of shareholder profitability limit the effectiveness of voluntary international initiatives to which private financial players commit themselves.

The net-zero transition, i.e. the transformation towards a carbon-neutral and resilient economy, is a major and urgent challenge for reducing the effects of climate change. This transformation requires the transition and adaptation of all activities and all economic agents. It is first and foremost a matter for the real economy and must be based on an operational roadmap of actions to be taken. This must be defined by an ambitious economic policy (budgetary, fiscal, monetary, regulation of products and sectors, etc.).

COP28 in Dubai kicks off amidst a worrying climate backdrop. For the first time, the threshold of a 2°C temperature rise compared to the pre-industrial era was exceeded in one day. In addition, a report published by the UN this week warns that current policies are placing the planet on a warming trajectory of 2.9°C, and that the chances of maintaining the increase at +1.5°C are now of only 14%. The results of the first Global Stocktake, a worldwide assessment of the actions taken by countries since the Paris Agreement, will be published at the COP and should confirm the urgent need to change the trajectory of greenhouse gas emissions. 

Residential real estate in France is a key target for transition policies, and a the sector is highly exposed to climate risks. With While housing home loans accounting for almost 85% of outstanding household loans in France, it is legitimate to ask how climate risks are passed on from the real estate sector to banks. This article, written with the Banque de France, explores investigates the exposure of residential real estate to present and future climate risks - present and future - and as well as their transmission to bank the lending activities of the banking sector.

Much of the discussions at COP28 will focus on the 100 billion USD/year target decided at Copenhagen to support climate investments in the Global South, and on the new climate finance goal set to replace it. But, whilst keeping our eyes on the volumes laid on the table, we also need to look more into the impact of every dollar spent. Identifying and building on the value added of every actor in the economy is essential to avoid overlaps and maximise synergies. Three types of actors have a pivotal role to play in the paradigm shift: governments, public financial institutions and private financial institutions.

After several years of strong growth, the revenue generated by carbon pricing mechanisms (carbon taxes or markets) worldwide, as reported in our 2023 edition of the Global Carbon Accounts, stabilized at nearly USD 100 billion. This stabilization could not be more deceptive.  The future has rarely been so uncertain for carbon prices, caught between very strong opposing trends, and the next two years could mark a major turning point, for good or bad, for the use of these climate policy instruments worldwide. 

What are the carbon taxes and markets around the world, the range of carbon prices, the revenues generated, the emissions covered by these mechanisms? Find the answers to these questions, and many more, in the new edition of the Global Carbon Accounts from I4CE.

Investment in the development of the cleantech sector in Europe is too slow and unevenly spread across EU member states and despite its best intentions, it is not clear that the EU’s Net-Zero Industry Act (NZIA) will rectify this. Unveiling the Net-Zero Industry Act (NZIA) earlier this year, Ursula Von Der Leyen declared it would “create the best conditions for those sectors that are crucial for us to reach net-zero by 2050: technologies like wind turbines, heat pumps, solar panels, renewable hydrogen as well as CO2 storage.”

NewClimate Institute and the Institute for Climate Economics (I4CE) submitted a response to a public consultation on the Glasgow Financial Alliance for Net Zero’s proposed set of voluntary guidance for financing the early retirement of coal-fired power plants in Asia-Pacific. This blog post highlights key points from our submission. Preventing the worst impacts of the climate crisis, particularly for the most vulnerable, requires halting coal-fired power plants (CFPPs) in the pipeline and retiring a substantial portion of the existing global coal fleet before the end of their technical lifetime. While countries have committed to phase out unabated coal in the Glasgow Climate Pact, 350 GW of new capacity is proposed globally with an additional 192 GW under construction.

Year after year, France becomes aware of the drastic deterioration in the carbon sink of its forests. Tree mortality increases sharply with droughts and health crises. Yet France needs this carbon sink to achieve its climate objectives and needs to preserve it by improving the resilience of its forests, but also - and this is less obvious - by making the best possible use of the harvested wood from the forests. France's climate strategy is counting heavily on maximising the carbon sink in wood products, i.e. making greater use of the wood harvested to manufacture long-lasting products, particularly in the construction industry. Some products store carbon over the long term, and are not only those that we imagine at first glance, as we showed in a previous study.