ICYMI from last month

greencentralbanking.com/2023/09/18/ecb-stress-tests-faster-green-transition-period-cheaper/

Green Central Banking

key bits:

The ECB’s second climate stress test found that a longer transition period would be costlier for households, companies and banks. While an accelerated transition initially requires greater investment and higher energy costs, it would save European firms billions and limit bank risk, the study found.

Using data from 2.9mn companies and 600 banks in the eurozone, the study looked at three different transition scenarios. In the first, green policies and investments lead to a reduction in emissions by 2030 in line with the Paris Agreement. In the second scenario, the transition continues at its current pace but doesn’t speed up until 2026 to reach the 2030 emissions target. And in the third scenario, the transition is delayed until 2026 and the Paris goals are not reached by 2030.

In an accelerated transition, green investment rises to €2tn by 2025, but only €500bn for the longer transition scenarios. Meanwhile, energy costs in an accelerated transition would rise 10% for households before stablising in 2025. This would see annual losses for banks peak at €13bn in 2026 before declining to €6.6bn by 2030.