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May 2018: This discussion paper aims to pave the way for the development of a framework for assessing and moving forward the “contribution of green bonds to scaling up the investments in green projects”. The paper focuses on the case of ‘Use-of-Proceeds Green Bonds’ (UoP GB) that represent 95% of the market in 2016. It discusses the link between increasing investment in UoP-GB on the one hand, and the growth of investments in green projects by issuers on the other hand, suggesting how this approach can be enhanced to achieve further impact.
May 2018: Our working paper “The Bigger Picture” shows that under optimistic assumptions around breakthrough technologies, oil demand could drop by 50% in only 22 years. A combination of shared economy, 3D printing, autonomous vehicles, nanotechnologies, and artificial intelligence, among others, could shave around 30 million barrels per day off of global oil demand. Once you add the ‘traditional’ assumptions around the effects of electric vehicles and the end of oil in the power sector, oil demand could drop to 47 million barrels per day by 2040.
The paper builds on a comprehensive literature review of the potential effects of breakthrough technologies, building on the optimistic assumptions founds in academic literature, as well as research by industry experts (McKinsey). Squarely in the realm of the possible, the analysis represents an alternative vision of what an oil demand crash could look like if technology disruption materializes. Our objective in this paper is not to forecast, but rather to show where optimistic technology assumptions lead the oil sector, providing the potential basis for alternative stress-testing frameworks for fossil fuels.
April 2018: In the context of mobilising policy actions with regard to sustainable finance, the European Parliament and Commission are considering introducing a Green Supporting Factor (GSF) or Brown Penalty (BP) for capital reserve requirements. The objective of this working paper is to identify the potential impacts of introducing a GSF or a Brown Penalty.
Jan 2018: An overview of the current state of the household credit market. We argue that household credit has so far been an overlooked topic in climate finance. While there are some tentative steps from early movers to assess the climate impact of various types of household credit, much potential remains to be unlocked.
Jan 2018: 2°ii contributed to the final report of the EU High-Level Expert Group (HLEG) on Sustainable Finance, “Financing a Sustainable European Economy”.
The European Commission established the HLEG to help develop an overarching and comprehensive EU roadmap on sustainable finance. It requested advice on how to ‘steer the flow of capital towards sustainable investments; identify steps that financial institutions and supervisors should take to protect the financial system from sustainability risks; and deploy these policies on a pan-European scale’.
Given the complexity of the financial system and its policy and regulatory framework, there is no single lever to achieve these ambitions and ‘switch’ the financial system to sustainability. Improving the contribution of the financial system to sustainable and inclusive growth requires a comprehensive review, the identification of areas where changes are needed, and the development of specific recommendations in these areas. That is what the HLEG has sought to deliver.
The full report can be found here.