Climate Policy Research Articles

Financial regulations and sustainability: The role of energy price and climate policy uncertainty

Russia ranks among the top five countries worldwide in terms of carbon emissions, with the energy, transportation, and manufacturing sectors as the major contributors. This poses a significant threat to both current and future generations. Russia faces challenges in achieving Sustainable Development Goal 13, necessitating the implementation of more innovative policies to promote environmental sustainability. Considering this alarming situation, this study investigates the role of financial regulations, energy price uncertainty, and climate policy uncertainty in reshaping sectoral CO2 emissions in Russia. This study utilizes a time-varying bootstrap rolling-window causality (BRW) approach using quarterly data from 1990 to 2021. The stability test for parameters indicates instability, suggesting that the full sample causality test may yield incorrect inferences. Thus, the BRW approach is employed for valid inferences. Our findings confirm the time-varying negative impact of financial regulations on CO2 emissions from energy, manufacturing, and transportation sectors. Additionally, findings confirm time-varying positive impact of energy prices and climate policy uncertainty on CO2 emissions from the energy, manufacturing, and transportation sectors. Strong financial regulations and stable energy and climate policies are crucial for achieving sustainability, highlighting significant policy implications for policymakers and stakeholders.

Innovationspolitik für die Transformation zur Klimaneutralität

Abstract Rapid deployment and developments in green innovations are crucial for achieving climate neutrality. While market-based policy instruments are the backbone of climate policy, governmental support for research and development (R&D) complements an efficient policy mix that supports green innovations at all stages of the innovation process. Nonetheless, international R&D support has declined over the last decade. In an international comparison, Japan is at the forefront of green R&D support. Germany is also a leader in R&D support, but its market-based environmental policy stringency remains low, which undermines the importance of an adequate climate policy mix.

Carbon emissions and liquidity management

Do higher carbon-emitting firms increase liquidity out of reluctance to invest in an era of rapidly changing climate policy concerns? Are rapidly escalating climate concerns placing higher carbon-emitting firms in a position where they are liquidity stressed? Liquidity management has long informed scholarly research in corporate finance. However, despite nearly universal interest in environmental aspects of finance, the intersection of liquidity and emissions management remains thinly studied. To address this gap, we analyze data of non-financial firms' carbon emissions and liquidity management for 2014–2021, using a robust methodological approach involving static and dynamic analysis with robust standard errors, GMM, and 2SLS regressions. For robustness, we incorporate an instrumental variable based on local mortality rates attributable to air pollution. Results show a strong negative relationship between firm-level emissions and firm liquidity, as reflected by net working capital ratios. Results are consistent with emissions-generating firms being either confident to expend liquidity even in an era of changing climate policy risks or, more plausibly, being stressed to preserve liquidity.

Wie kann die grüne Transformation gelingen?

Abstract Germany aims to become climate-neutral by 2045. In order to achieve this ambitious goal, an all-encompassing transformation of the economy is necessary. In addition to the energy transition towards, at best, a complete supply of renewable energies, the promotion of green innovations is of central importance for the transformation. Furthermore, the pricing of CO₂ is emphasized as a central instrument of climate policy. However, carbon management strategies also play an important role. Finally, the carbon dividend should ensure social justice and create public support. The question arises as to whether the planned and implemented measures can actually make the green transformation a success.

Climate risks and the realized higher-order moments of financial markets: Evidence from China

The return distribution of energy assets deviates from the normal distribution, making volatility a partial measure of risk, and climate risk tend to affect the skewness preferences of environmentally conscious investors. However, limited evidence exists on the impact of climate risk on higher-order moments of asset returns, especially in China. Using data from December 2013 to June 2022, we study the time-varying Granger causal flow from two Chinese climate uncertainty indices (Chinese climate policy uncertainty (CPU) and Chinese climate uncertainty (CU)) to the realized high-order moments (volatility, skewness, and kurtosis) of various Chinese assets covering green energy, carbon emission allowances, and brown energy indices. The main results show evidence of time-variation in the causal flows from climate risks, without ignoring the heterogeneity between the two climate risk measures and across the three assets under study. Granger causality spans various time periods, and is generally more significant for the realized volatility. These results are robust to the specification of the time-varying causality analysis. They also remain significant when accounting for the impact of Chinese economic policy uncertainty, which further supports their robustness. These findings highlight the ability of climate risk to affect higher-order moments of asset returns through the channels of strong deviation of returns from the normal distribution, the preference of investors for skewness, and the frequent occurrence of crisis periods.

The response rules to maintain social stability facing the climate change in ming dynasty

Studying the mechanisms by which climate change interacted with human societies during the historical period can provide historical insights and cultural roots for climate policy building in the region. In this study, we constructed Stability-Robustness-Resilience Model (SSR model) and used the TOPSIS method (Technique for Order Preference by Similarity to Ideal Solution) and the entropy weight method to assess the change processes of robustness, resilience, and stability of Ming's society in response to climate threats. We have also compared three extreme droughts that occurred in different periods of social robustness-resilience combinations by using the SRR model. The results are as follows. (1) The stability of the Ming society was high in YongLe - HongZhi period (1402–1505 CE), when both social robustness and resilience were higher than the average level of Ming Dynasty (0.5611 for the former and 0.4215 for the latter), but there was a significant decline in social stability in TianShun period (1457–1464 CE). In ZhengDe - ChongZhen period (1506–1644 CE), the stability of Ming society gradually decreased, and it rebounded shortly in the LongQing-WanLi period (1506–1620 CE). (2) The high stability benefited from higher socio-economic levels, better government finance levels, larger national food reserves, safer social environments (high robustness), and higher levels of ruling class governance and risk response (high resilience); whereas insecure social environment induced by war, declining socio-economic levels and government finance levels were the main reasons for the decline in society's stability. (3)The ChengHua and WanLi droughts both happened at a time with high social robustness, so although their meteorological anomalies were severe, their impact on society was small. While the JiaJing drought happened at a time with low social robustness and resilience, so although the meteorological anomaly was relatively weak, it resulted in a more severe social consequence than the other two events.

Macroeconomic impact of environmental policy uncertainty and monetary policy implications

This paper evaluates the macroeconomic implications of uncertainty arising from delays or unpredictability regarding the timing and extent of environmental policy implementation. An environmental dynamic stochastic general equilibrium (E-DSGE) model shows that increasing uncertainty about environmental policies is associated with a subsequent decline in investment, as firms prefer to postpone investment decisions. The decline in physical investment within polluting sectors subsequently induces a fall in employment, consumption and output. Using a novel climate policy uncertainty index developed by Gavriilidis (2021), alongside Google Trend data index, the paper shows that uncertainty about climate regulations has both recessionary and inflationary effects, corroborating the theoretical findings. Further analysis suggests that appropriate monetary policy tools could moderate the welfare cost arising from the environmental policy uncertainty, emphasizing the need for Central Banks to adopt a more aggressive stance in stabilizing GDP and inflation in the face of environmental policy uncertainty shocks.

Assessing credit risk sensitivity to climate and energy shocks: Towards a common minimum standards in line with the ECB climate agenda

A disordered energy transition might impact borrowers’ ability to repay and service debt; this calls for methods for integrating climate into credit risk modelling. This integration is required not only for risk management, but also for adjusting credit ratings for collateral pledged in Eurosystem monetary policy operations. This study introduces an innovative methodology to evaluate Italian non-financial firms' exposure to climate policy risks, gauging the impact of climate policies on firm-level default probability (PD). By simulating a shock to energy expenditure originating from different levels of a carbon tax, we analyze the potential impact on firms’ PD. Our method offers a comprehensive understanding of the channels through which energy shocks propagate and their implications on firms’ vulnerability. Our findings show that the impact of carbon taxation on credit risk would be contained, raising the average PD by a range of 0.6–4.1 basis points according to the different levels of carbon tax. The effect is slightly larger for the Agriculture and Services sector, while there is no clear pattern relating to firm size.

The Crossover between Climate Politics and Central Banking: How Green Central Banking Emerged in the US, the EU, and the UK

Climate change has emerged on the agenda of central bankers. We argue that the rise of green central banking resulted from a crossover between climate politics after the 2015 Paris Climate Agreement and central banking after the 2008 financial crisis. Actors in these unconnected fields constructed and exploited this new linkage to their advantage. In the wake of the Paris Agreement, climate advocates promoted green central banking as part of a broader push for climate action beyond typical climate policy. Central bankers, in turn, endorsed green central banking to shore up political support. After their post-2008 unconventional monetary policies had alienated many right-wing backers, central bankers needed to make their policies more broadly appealing. This logic prevailed to varying degrees in the European Union and the United Kingdom, thanks to a new openness to climate action. In the United States, however, political polarization around the climate issue set clear limits to the crossover.

Impact of Climate Policy Uncertainty, Clean Energy Index, and Carbon Emission Allowance Prices on Bitcoin Returns

This research aimed to investigate the relationship between climate policy uncertainty (CPU), clean energy (ENERGY), carbon emission allowance prices (CARBON), and Bitcoin returns (BTC) for the period from August 2012 to August 2022. The empirical analysis strategies utilized in this study included the Fourier Bootstrap ARDL long-term coefficient estimator, the Fourier Granger Causality, and the Fourier Toda–Yamamoto Causality methods. Following the confirmation of cointegration among the variables, we observed a positive relationship between BTC and CARBON, a positive relationship between BTC and CPU, and a negative relationship between BTC and ENERGY. In terms of causal associations, we identified one-way causality running from CARBON to BTC, BTC to CPU, and BTC to the ENERGY variable. The study underscores the potential benefits and revenue opportunities for investors seeking diversified investment strategies in light of climate change concerns. Furthermore, it suggests actionable strategies for policymakers, such as implementing carbon taxes and educational campaigns, to foster a transition towards clean energy sources within the cryptocurrency mining sector and thereby mitigate environmental impacts.

Re‐examining the effect of heat and water stress on agricultural output growth: How is Sub‐Saharan Africa different?

AbstractWe examine the impact of climate driven heat and water stress on aggregate crop production growth, paying particular attention to the Sub‐Saharan Africa (SSA) region as opposed to studies with a global or Non SSA focus. Using gridded data on temperature and precipitation, which is crop weighted and averaged to the national level, we generate measures of stressors that capture average temperature and precipitation shocks, and extreme punctuated events like dry spells and heat waves for 38 countries in Sub Saharan Africa between 1979 and 2016. We find in general that compared to estimates with a global or non SSA focus, the detrimental effect of increased annual temperature has been overstated, while the damage caused by shorter‐term extremes like dry spells and heat waves has been understated. This implies that region specific analysis is key in developing a more comprehensive understanding of climate change. Such analyses are pivotal for climate policy development allowing for more spatially efficient allocation of limited financial resources, and greater accuracy in estimating adaptation effects.

CO2-Bepreisung und Industriepolitik

Abstract Carbon pricing is a central instrument of a market-based climate policy. However, the different international price levels vary greatly, thereby creating new distortions of competition. To compensate for this, state aid for transformation efforts becomes relevant. Industrial policy therefore has a new and difficult role to play in the transformation.

Carbon border adjustment mechanism challenges and implications: The case of Visegrád countries

Stricter climate policies across the European Union are enhancing the phenomenon of free riding by nonacting countries, which translates into carbon leakage and loss of competitiveness. This paper investigates the trade, economic and environmental implications of the future implementation of a carbon border adjustment mechanism (CBAM) in Visegrád countries as EU member states. We exploit trade data to estimate price and income elasticities for emission-intensive trade-exposed (EITE) goods imported from non-EU trading partners to Visegrád countries. Based on these estimates, which are combined with the average carbon intensity of the EU's proposed list of EITE goods, we simulate the implications of six different configurations of restrictiveness of the CBAM imposed on imports from non-EU countries. We find that a high price elasticity and carbon intensity tend to significantly decrease import demand for EITE goods under the CBAM. Moreover, future CBAM implementation will yield a relatively small adverse impact on economic growth in Visegrád countries and a small decrease in total carbon emissions in non-EU countries.

Effect of Dobbs on the Obstetrics and Gynecology Workforce [ID 2683443

INTRODUCTION: After the Dobbs v. Jackson decision in June 2022, 17 U.S. states have functionally banned abortion. Little research has focused on consequences of these bans for obstetrician–gynecologists in affected states, for whom medically necessary care provision may now carry serious personal and professional consequences. The objective of the Study of Ob-Gyns in Post-Roe America (SOPRA) was to characterize how abortion bans affect obstetrician–gynecologists and identify institution-level practices to support obstetrician–gynecologists in abortion-restrictive policy climates. METHODS: This was a cross-sectional qualitative study of 54 obstetrician–gynecologists from 13 of 14 states that had banned abortion as of March 2023. Data included semistructured interviews conducted from March to August 2023, which were thematically coded and analyzed. Institutional review board approval was obtained. RESULTS: We identified three major domains in which laws affected obstetrician–gynecologists: 1) clinical effects (waiting to provide necessary care until patients became sicker or institutional permission to treat was obtained; inability to counsel on pregnancy options; inability to provide or refer for appropriate care; patient relationships); 2) professional effects (conflicts with colleagues; documentation; fears and perceived consequences of law violation; practicing below the standard of care; moral distress and moral injury; job satisfaction; intention to leave the state); and 3) personal effects (health and well-being). Institutional practices—both helpful and harmful—modified the laws' effects on physicians. CONCLUSION: Findings reveal pervasive effects of state abortion bans on obstetrician–gynecologists, with implications for workforce sustainability, physician health, and patient outcomes. Institutional practices to support and protect obstetrician–gynecologists in restrictive policy environments may help mitigate laws’ effects on attrition and physician well-being.

Measuring crisis from climate risk spillovers in European electricity markets

This paper studies how climate risks spill over to European electricity markets across time and frequency domains using the connectedness network approach. By introducing three climate risk measures—the climate policy uncertainty index, climate physical risk index, and climate concern index—the empirical results reveal the vulnerability of European electricity markets to volatile climate policies and extreme climate crisis events. Overall, the spillover effects in the climate–electricity nexus are primarily concentrated in the medium- and long-term frequency domains, indicating that the impact of climate risk shocks is persistent. Compared with the impact of climate physical risks and climate concern shocks, the spillovers from climate policy uncertainty shocks to the electricity market are higher and more persistent. These findings highlight the need to consider the heterogeneous impacts of climate risks on electricity markets at different frequency bands.

Exploring the Landscape of Canadian Climate Policy

La politique canadienne en matière de climat est de plus en plus complexe, avec de nombreuses politiques obligatoires et volontaires visant à réduire les émissions de gaz à effet de serre. Ces politiques d’échelle nationale et infranationale comportent une variété d'instruments de politiques. Les interventions politiques peuvent viser l'ensemble de l’économie (p. ex., prix des émissions) ou certains secteurs seulement (p. ex., réglementation visant la production d’électricité propre), ou même des mesures précises (p. ex., des subventions pour le remplacement de combustible). Dans cet espace de politiques actives, il est crucial d’étudier les effets des changements et des interactions de politiques. L'article fait le survol des politiques climatiques canadiennes et décrit les tendances en matière de recherche dans le domaine des politiques climatiques et environnementales. En dépit de la richesse du paysage politique, il y a peu de travaux de recherche évaluant l'efficacité (réduction des émissions) et la rentabilité (coût par tonne de réduction de la pollution) des politiques climatiques canadiennes, de l’équité et des conséquences sur la répartition des choix en matière de politiques et de l'interaction entre les politiques. Des travaux de recherche supplémentaires sur ces thèmes pourraient aider à améliorer la conception des politiques et aider le Canada à atteindre ses objectifs en matière de réduction des émissions. Note des rédacteurs : Le premier volume de Canadian Public Policy/Analyse de politiques a été publié en 1975. Ce volume-ci est le cinquantième. Pour commémorer cet événement, nous avons organisé une série de conférences qui sont publiées dans ce numéro spécial. La professeure Winter a donné cette conférence lors des réunions de l'Association canadienne d’économique à Winnipeg en juin 2023.

Multi-centennial evolution of the climate response and deep-ocean heat uptake in a set of abrupt stabilization scenarios with EC-Earth3

Abstract. Understanding long-term committed climate change due to anthropogenic forcing is key to informing climate policies, yet these timescales are still underexplored. We present here a set of 1000-year-long abrupt stabilization simulations performed with EC-Earth3. Each simulation follows a sudden stabilization of the external forcing at the level specified by CMIP6 for historical (1990) or SSP5-8.5 scenario (2025, 2050, 2065, 2080, 2100) conditions, with a final temperature increase ranging between 1.4 and 9.6 K with respect to the pre-industrial baseline. Remarkably, the simulation stabilized at a greenhouse gas (GHG) level close to the present day (2025) exceeds the Paris Agreement goals of 1.5 and 2° warming above pre-industrial in the long term, and only the 1990 simulation leads to a stabilized climate below 1.5° warming. We first focus on the evolution of the climate response at multi-centennial timescales and its dependence on the level of forcing. We note a decrease in the magnitude of the climate feedback parameter at longer timescales. Conversely, simulations with higher forcing exhibit a larger feedback parameter (in magnitude). Subsequently, the evolution of surface warming patterns over multi-centennial timescales is studied. While the response is generally consistent across simulations, some variations, particularly in the South Pacific and at high latitudes, suggest a certain level of state or forcing dependence. The patterns of precipitation change also evolve during the stabilization runs: the drying trends found in the subtropical oceans and in Mediterranean-like hotspots in the SSP5-8.5 scenario tend to be reduced or even reversed. We finally focus on the rate of heat storage in the global ocean, which is the main driver of the climate response at multi-centennial timescales. We find that the rate of warming of the deep ocean is almost independent from the amplitude of the forcing so that most of the additional heat remains in the upper layers at high forcing. This might be due – at least partly – to a decreased ventilation of the deep ocean, caused by changes in the Meridional Overturning Circulation (MOC). These results highlight the importance of studying multi-centennial timescales of climate change to better understand the response of the deep ocean, which will play a crucial role in determining the final state of the climate system once GHG concentrations are stabilized.

In the Eye of the Storm: Hurricanes, Climate Migration, and Climate Attitudes

Climate disasters raise the salience of climate change’s negative consequences, including climate-induced migration. Policy action to address climate displacement is especially contentious in the United States, where weak support for tackling climate change intersects with high opposition to migration. Do climate disasters foster receptivity toward climate migrants and broader willingness to combat climate change? To study this question, we leverage the occurrence of Hurricane Ian during fielding of a preregistered survey in autumn 2022. Hurricane exposure increased concern about and support for policies to address climate migration. Hurricane exposure also increased support for climate action and belief in anthropogenic climate change. Effects of hurricane exposure cross-cut partisanship, education, age, and other important correlates of climate attitudes but decay within 6 months. Together, these results suggest that climate disasters may briefly increase favorability toward climate migrants and climate policy action but are unlikely to durably mobilize support even in severely impacted areas.

Indigenous Land-Based Perspectives on Environmental Sustainability: Learning from the Khasis Indigenous Community in Bangladesh

This research explores Indigenous land-based perspectives on environmental sustainability, centering on the Khasis Indigenous community in Bangladesh. With a critical connection to their land-based cultural heritage and environment, the Khasis community offers a distinctive perspective for examining environmental challenges. Emphasizing the traditional land-based knowledge and practices of the Khasis, as well as their insights on environmental challenges, this study employs a land-based theoretical framework. It sheds light on the adaptive strategies of Khasis Indigenous communities amidst shifting environmental conditions, illustrating how they integrate sustainable practices into daily life by drawing upon Indigenous land-based knowledge and practices to mitigate environmental risks. Additionally, the research scrutinizes the challenges faced by the Khasis in preserving their land-based knowledge, practices, and identity in the face of a global environmental crisis. The findings contribute to broader discussions on Indigenous land-based knowledge and practices and their significance in contemporary climate discourse. By amplifying the voices of the Khasis Indigenous community’s land-based knowledge and practices, this study advocates for the incorporation of Indigenous perspectives into climate policies and interventions. It underscores the necessity for a more inclusive and culturally sensitive approach to environmental sustainability, one that acknowledges and respects the resilience of Indigenous communities like the Khasis in Bangladesh.

Connectedness among Chinese climate policy uncertainty, exchange rate, Chinese and international crude oil markets: Insights from time and frequency domain analyses of high order moments

This paper investigates the connectedness among the Chinese climate policy uncertainty, CNYUSD exchange rate, the Chinese crude oil and the international crude oil futures markets in terms of average return, volatility and high order moments. Meanwhile, different timescales and frequencies are also studied using Diebold and Yilmaz (2012) and Baruník and Křehlík (2018) approaches. The empirical results show that the connectedness among climate policy uncertainty, exchange rate and crude oil futures markets are time-varying and can be intensified by extreme events. The strength of connectedness depends on the moment order of spillovers. Covid-19 intensified the return, volatility and kurtosis connectedness. However, the impact of Covid-19 on higher order connectedness is relatively weak. In addition, the return spillovers are mainly caused by the short-term effect while higher order moment spillovers are driven by the long-term effect. Brent oil is the largest net shock transmitter and the Chinese crude oil futures mostly is the largest net shock receiver. Exchange rate is a net receiver except for kurtosis spillovers. The role of Chinese climate policy uncertainty is uncertain. In terms of the net pairwise connectedness, Chinese crude oil futures receives most shocks from Brent oil. In oil-exchange rate nexus, Chinese crude oil futures transmits shocks to the exchange rate in high order moment spillovers. The correlation between climate policy uncertainty and Chinese crude oil futures is time-varying. These findings offer useful implications for investors, policymakers and market supervisors.