Low-carbon transition challenges
Achieving the Paris Agreement’s climate targets requires to scale up massive investments in low-carbon energy and technologies and to divest from fossil fuels and carbon-intensive assets.
But the alignment of investments to the climate targets is proceeding at a much slower speed than needed, exposing investments in the economy and finance to the risk of carbon stranded assets, with implications on asset price volatility and financial stability.
To foster the low-carbon transition and reach a carbon-free economy by 2050, the European Commission has launched a European Green Deal proposal, that follows the Action Plan on Sustainable Finance.
Green fiscal and monetary policies (e.g. carbon tax, a green Quantitative Easing) and financial regulations (e.g. Green Supporting Factor and Brown Penalizing Factor) have been proposed but their design and conditions of implementation, and their implications on macroeconomic competitiveness, financial stability and inequality have still to be fully understood.
GREENFIN develops innovative research on the conditions for the scaling-up of green finance in the EU and in Austria, by delivering on 5 objectives:
- Understand what role do markets, policies and institutions play in driving/hindering the success of green finance
- Analyse if Austrian investors reacting to climate announcements and how does this affect the financial performance of green and brown companies and assets
- Assess under which conditions could policies and regulations contribute to scale up green investments in Austria while minimizing trade-offs for economic competitiveness, financial stability and inequality
- Analyse to what extent could greening Austrian development finance contribute to sustainable growth in the beneficiary countries thus minimizing risk of losses for Austrian investors
- Identify lessons can be learned from international examples to scale up green finance in Austria
To achieve these objectives we focus on three interconnected pillars: financial markets, policy and governance, exploring:
New green finance paths characterized by different market instruments (e.g. green bonds and ESG products), mission-oriented green policies, and governance structures involving synergies across public financial institutions, is at the core of GreenFin’s research.
Policies and instruments’ ability to foster i) green investments (in Austria and in the neighbouring Western Balkans), ii) economic competitiveness, iii) fiscal and financial stability, and iv) social cohesion, will be analysed against a scenario of inaction.
Policy and financial conditions for implementing a Green New Deal for Austria and the EU.