世界发展银行-Climate-Change-in-APEC-_-Assessing-Risks,-Preparing-Financial-Markets,-and-Mobilizing-Institutional-Investors_109页_4mb

Summary of Climate Change in APEC: Assessing Risks, Preparing Financial Markets, and Mobilizing Institutional Investors

Core Content

This report provides a comprehensive analysis of the impacts of climate change on APEC member economies and outlines the role of financial markets and institutional investors in addressing these challenges. It emphasizes the need for coordinated action between policymakers, regulators, and investors to mitigate climate risks, align financial systems with climate goals, and mobilize capital for sustainable development.

Main Points

1. Climate Change Impacts on APEC Member Economies

• Physical Impacts: Climate change is expected to increase extreme heat days, droughts, sea level rise, and coastal/rain flood events, all of which pose significant risks to infrastructure and economic activity.
• Human Impacts: These include increased mortality from extreme heat and cold, disease spread due to warming, and displacement from flooding. Air pollution from fossil fuel combustion is also a major health concern.
• Economic Impacts: The report estimates that climate change could cause GDP losses of up to 7.3% in 2100. These losses are expected to be even higher if global temperatures rise beyond 3°C.
• Mitigation Benefits: Reducing emissions to limit warming to below 2°C could result in economic benefits, including reduced damage costs and health improvements. It could also lead to a significant reduction in mortality, up to 500,000 annually by 2050.
• Carbon Taxation: Carbon taxes can generate substantial government revenue and encourage the shift from fossil fuels to renewable energy, particularly in economies with large informal sectors.

2. Climate Risks to Financial Institutions

• Physical Risks: Include damage to supply chains, worker productivity, and capital assets from extreme weather events and rising sea levels.
• Transition Risks: Arise from policy changes such as carbon pricing and emission standards, and shifts in consumer preferences towards sustainable products.
• Financial System Vulnerabilities: Climate risks are not adequately reflected in financial markets, potentially leading to underpricing and systemic instability.
• Green Credit Markets: These offer opportunities for financial institutions to reduce exposure to climate risks and support low-carbon investments. Green bonds and green loans are particularly effective in funding climate-resilient projects.

3. Mobilizing Institutional Investors

• Investor Role: Institutional investors in APEC manage over $42 trillion in assets, making them key players in climate finance. They are particularly vulnerable to climate risks due to their long-term investment horizons.
• Barriers to Climate Investment: Fossil fuel subsidies, inadequate regulatory frameworks, and limited availability of climate-aligned financial products hinder institutional investors from effectively managing climate risks and investing in low-carbon solutions.
• Policy and Regulatory Solutions: Eliminating fossil fuel subsidies, implementing carbon pricing, and aligning with international climate disclosure standards (e.g., TCFD) are essential steps to support institutional investors.
• Market Solutions: Blended finance structures, green credit markets, and improved infrastructure pipelines can attract institutional investment to climate projects.
• Case Studies: Chile's policy changes and the use of blended finance in projects like Climate Investor One and the Sarulla geothermal project in Indonesia illustrate successful approaches to climate investment.

Key Information

• Global Warming Projections: Under a weak policy scenario, global temperatures are expected to rise by more than 3°C by 2100, with a 20% chance of exceeding 4°C.
• Economic Costs of Inaction: The economic costs of unmitigated climate change are estimated to be significantly higher than the costs of mitigation.
• Investment Opportunities: Strict climate policies could create an estimated $470 billion in new annual investment opportunities in APEC member economies.
• Co-benefits of Climate Action: Include health improvements, increased formal sector economic activity, and reduced mortality from air pollution and extreme weather events.

Conclusion

The report underscores the urgency of climate action and the critical role of institutional investors in financing sustainable development. It highlights the importance of policy, regulatory, and market reforms in aligning financial systems with climate goals and reducing the risks posed by climate change. By working together, policymakers, regulators, and investors can effectively manage climate risks and capitalize on new investment opportunities to build a more resilient and sustainable future for the APEC region.

Key Figures and Tables

• Figure 1: Modelling framework used to assess climate impacts.
• Figure 2: Global emissions and temperature increase under the baseline scenario.
• Figure 3: Country-level temperature change in the baseline scenario.
• Figure 4: Impact of disease on labor productivity per degree of warming.
• Figure 5: Economic losses in 2100 as a share of GDP.
• Figure 6: Economic impacts under baseline scenario.
• Figure 7: Extra economic impacts under higher climate sensitivity.
• Figure 8: Change in global emissions and temperature increase.
• Figure 9: Cost of emissions reduction in 2050 for fossil fuel exporters.
• Figure 10: Additional annual investment needed in energy system under Paris scenario.
• Figure 11: Benefits of emissions reduction in avoided air pollution mortality.
• Figure 12: Avoided mortality from extreme hot and cold days under Paris compatible policy.
• Figure 13: Predicted revenues from carbon tax as share of GDP.
• Figure 14: Increase in formal sector economy due to carbon tax.
• Figure 15: Benefits of lower temperatures outweigh costs in most APEC economies.
• Figure 16: UK banks' approach to climate financial risk.
• Figure 17-20: Growth in green bond and loan markets globally and in APEC.
• Figure 21-22: Trends in institutional investors' participation in APEC.
• Figure 23-25: Contributions to climate finance and fossil fuel subsidies.

Appendices and References

• Appendix A: Methodological assumptions and additional data tables.
• Appendix B: Trends in global climate finance over time.
• References: Include studies and reports from the IPCC, Vivid Economics, and other institutions.

This report serves as a vital reference for policymakers, financial regulators, and institutional investors in APEC, offering a roadmap for addressing climate change through coordinated financial and policy actions.