Climate change litigation has been increasing rapidly and steadily for the past ten years, yet our understanding of the costs associated with this litigation are still very poor: policy frameworks are too shallow, estimations of these costs in the private sector are scarce and simplistic, and the academic literature on this issue is still very incipient and has a very fragmented focus. This essay provides a comprehensive analysis of the different types of costs that can arise from climate change litigation. Financial institutions provide an ideal focal point for this analysis because their role as enablers of some of the activities that contribute to aggravate the climate emergency make their exposure to the risk of climate change litigation unique and complex: they can be directly exposed to the risk of litigation as potential defendants in a case, facing potential pay-outs and fines, legal and administrative costs, insurance costs, financing costs, and reputational costs; but they can also be exposed indirectly, through litigation that targets their counterparties, especially their clients, which can lead to losses if the client’s solvency is affected, and can impose additional reputational costs. This typology, as well as the exploration of several methodological challenges, can support the incipient efforts to estimate the costs of climate change litigation for financial institutions that we observe among financial supervisors, credit rating agencies, and financial institutions themselves. It can also help guide attempts to estimate these costs in other industries that are particularly vulnerable to climate change litigation.
{"title":"Climate change litigation as financial risk","authors":"J. Solana","doi":"10.3934/gf.2020019","DOIUrl":"https://doi.org/10.3934/gf.2020019","url":null,"abstract":"Climate change litigation has been increasing rapidly and steadily for the past ten years, yet our understanding of the costs associated with this litigation are still very poor: policy frameworks are too shallow, estimations of these costs in the private sector are scarce and simplistic, and the academic literature on this issue is still very incipient and has a very fragmented focus. This essay provides a comprehensive analysis of the different types of costs that can arise from climate change litigation. Financial institutions provide an ideal focal point for this analysis because their role as enablers of some of the activities that contribute to aggravate the climate emergency make their exposure to the risk of climate change litigation unique and complex: they can be directly exposed to the risk of litigation as potential defendants in a case, facing potential pay-outs and fines, legal and administrative costs, insurance costs, financing costs, and reputational costs; but they can also be exposed indirectly, through litigation that targets their counterparties, especially their clients, which can lead to losses if the client’s solvency is affected, and can impose additional reputational costs. This typology, as well as the exploration of several methodological challenges, can support the incipient efforts to estimate the costs of climate change litigation for financial institutions that we observe among financial supervisors, credit rating agencies, and financial institutions themselves. It can also help guide attempts to estimate these costs in other industries that are particularly vulnerable to climate change litigation.","PeriodicalId":41466,"journal":{"name":"Green Finance","volume":null,"pages":null},"PeriodicalIF":8.6,"publicationDate":"2020-10-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46298239","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
To meet the future energy and climate targets in 2030 and 2050 in Austria, it is absolutely necessary to apply extensive measures to reduce the use of fossil fuels. By then, Austria will have to realize a 36% decrease (from 2005 levels) for emission sources outside the European Emission Trading System. The transport sector is a key driver of recently increasing greenhouse gas emissions in Austria. Hence, we examine the macroeconomic and ecologic impacts of an environmental tax reform in Austria from 2020 to 2030. We implement a revenue-neutral tax reform that raises revenues via an increase of the mineral oil tax on diesel and petrol consumption and redistributes these fiscal revenues to the industry and households. In addition, increased fossil fuel taxing would enhance revenues for green investments in e-mobility and thermal refurbishment that stimulate the Austrian economy. The simulation analyses focus on central macroeconomic variables as gross domestic product, employment, investment and private consumption and carbon dioxide emissions. We find that the proposed environmental tax reform generates a triple dividend, leading simultaneously to economic growth and the reduction of greenhouse gas emissions while low-income households can be fully compensated.
{"title":"Economic, ecological and social benefits through redistributing revenues from increased mineral oil taxation in Austria: A triple dividend","authors":"Sebastian Goers, F. Schneider","doi":"10.3934/gf.2019.4.442","DOIUrl":"https://doi.org/10.3934/gf.2019.4.442","url":null,"abstract":"To meet the future energy and climate targets in 2030 and 2050 in Austria, it is absolutely necessary to apply extensive measures to reduce the use of fossil fuels. By then, Austria will have to realize a 36% decrease (from 2005 levels) for emission sources outside the European Emission Trading System. The transport sector is a key driver of recently increasing greenhouse gas emissions in Austria. Hence, we examine the macroeconomic and ecologic impacts of an environmental tax reform in Austria from 2020 to 2030. We implement a revenue-neutral tax reform that raises revenues via an increase of the mineral oil tax on diesel and petrol consumption and redistributes these fiscal revenues to the industry and households. In addition, increased fossil fuel taxing would enhance revenues for green investments in e-mobility and thermal refurbishment that stimulate the Austrian economy. The simulation analyses focus on central macroeconomic variables as gross domestic product, employment, investment and private consumption and carbon dioxide emissions. We find that the proposed environmental tax reform generates a triple dividend, leading simultaneously to economic growth and the reduction of greenhouse gas emissions while low-income households can be fully compensated.","PeriodicalId":41466,"journal":{"name":"Green Finance","volume":null,"pages":null},"PeriodicalIF":8.6,"publicationDate":"2019-12-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49505038","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Climate technology transfer to developing countries face a range of challenges stemming from the capacity of destination or host countries. Access to finance has been identified as a major barrier in academic literature as well as by the donor community, and efforts were made to not only fill some of the gap, but also to reduce local hurdles and usher in private sector investments. This latter phenomenon has not gained similar scrutiny as projects under carbon finance schemes or technical assistance projects of international development organizations. This paper offers an outcome evaluation of a public-private partnership as it relates to climate finance & technology investment in developing countries. The analysis focused on the activities of Private Financing Advisory Network (PFAN), which works through open solicitation of projects sought from developing countries. Therefore, it would be expected that some countries are better equipped to attract investments than others. Using cross-sectional country characteristics data, negative binomial regression was used to associate the characteristics with the count of projects in host countries. Results show that key characteristics associated with the respective number of projects are the size of the market, and a composite score measuring health of the financial sector in host countries. It reaffirms the pattern that private-sector driven initiatives tends to tilt towards destination where the returns of investments are greatest, or the risks of investments are lower. The findings highlight the question of additionality of climate technology investments, and whether the public-private partnership address the barrier of access to finance.
{"title":"Host country characteristics attracting climate projects through public-private partnerships","authors":"N. Haque, Sungida Rashid","doi":"10.3934/gf.2019.4.405","DOIUrl":"https://doi.org/10.3934/gf.2019.4.405","url":null,"abstract":"Climate technology transfer to developing countries face a range of challenges stemming from the capacity of destination or host countries. Access to finance has been identified as a major barrier in academic literature as well as by the donor community, and efforts were made to not only fill some of the gap, but also to reduce local hurdles and usher in private sector investments. This latter phenomenon has not gained similar scrutiny as projects under carbon finance schemes or technical assistance projects of international development organizations. This paper offers an outcome evaluation of a public-private partnership as it relates to climate finance & technology investment in developing countries. The analysis focused on the activities of Private Financing Advisory Network (PFAN), which works through open solicitation of projects sought from developing countries. Therefore, it would be expected that some countries are better equipped to attract investments than others. Using cross-sectional country characteristics data, negative binomial regression was used to associate the characteristics with the count of projects in host countries. Results show that key characteristics associated with the respective number of projects are the size of the market, and a composite score measuring health of the financial sector in host countries. It reaffirms the pattern that private-sector driven initiatives tends to tilt towards destination where the returns of investments are greatest, or the risks of investments are lower. The findings highlight the question of additionality of climate technology investments, and whether the public-private partnership address the barrier of access to finance.","PeriodicalId":41466,"journal":{"name":"Green Finance","volume":null,"pages":null},"PeriodicalIF":8.6,"publicationDate":"2019-12-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70251691","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, we evaluate the impact of economic policy uncertainty shocks on inflation expectations in China by using a MF-VAR approach. We find that China’s inflation expectations are sensitive to policy-related uncertainty shocks. Meanwhile, there exist heterogeneous impacts of national economic policy uncertainty shocks on inflation expectations in China. Overall, the inflation expectations in China rise in response to the European, Japanese and China’s own uncertainty shocks. Whereas, the reaction of the inflation expectations in China to the uncertainty shocks made by both the US and BRICS (except China and South Africa) is negative. The results also reveal that the policy-related uncertainty shocks are dominant driving force of the inflation expectations in China especially during the post-crisis period. In addition, the contribution of China’s domestic uncertainty shocks is remarkably higher than that of foreign uncertainty shocks.
{"title":"Stabilizing inflation expectations in China: Does economic policy uncertainty matter?","authors":"Siming Liu, Mengxin Wang, Y. Tan","doi":"10.3934/gf.2019.4.429","DOIUrl":"https://doi.org/10.3934/gf.2019.4.429","url":null,"abstract":"In this paper, we evaluate the impact of economic policy uncertainty shocks on inflation expectations in China by using a MF-VAR approach. We find that China’s inflation expectations are sensitive to policy-related uncertainty shocks. Meanwhile, there exist heterogeneous impacts of national economic policy uncertainty shocks on inflation expectations in China. Overall, the inflation expectations in China rise in response to the European, Japanese and China’s own uncertainty shocks. Whereas, the reaction of the inflation expectations in China to the uncertainty shocks made by both the US and BRICS (except China and South Africa) is negative. The results also reveal that the policy-related uncertainty shocks are dominant driving force of the inflation expectations in China especially during the post-crisis period. In addition, the contribution of China’s domestic uncertainty shocks is remarkably higher than that of foreign uncertainty shocks.","PeriodicalId":41466,"journal":{"name":"Green Finance","volume":null,"pages":null},"PeriodicalIF":8.6,"publicationDate":"2019-12-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49268078","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, we quantify the spillovers of Chinese financial cycles from 1990Q1 to 2017Q4. We construct a spillover index for Chinese financial cycles and fit the Markov-switching autoregressive model. Our main findings indicate that Chinese financial cycle spillover shows several general characteristics and has significant time-varying features that are very sensitive to specific events. We examine the three different regimes of net spillovers, labeling them contraction, moderation, and expansion, and find that the moderation regime dominates.
{"title":"Chinese financial cycle spillovers to developed countries","authors":"Tinghui Li, Junhao Zhong, Hai Zhang, P. Failler","doi":"10.3934/gf.2019.4.364","DOIUrl":"https://doi.org/10.3934/gf.2019.4.364","url":null,"abstract":"In this paper, we quantify the spillovers of Chinese financial cycles from 1990Q1 to 2017Q4. We construct a spillover index for Chinese financial cycles and fit the Markov-switching autoregressive model. Our main findings indicate that Chinese financial cycle spillover shows several general characteristics and has significant time-varying features that are very sensitive to specific events. We examine the three different regimes of net spillovers, labeling them contraction, moderation, and expansion, and find that the moderation regime dominates.","PeriodicalId":41466,"journal":{"name":"Green Finance","volume":null,"pages":null},"PeriodicalIF":8.6,"publicationDate":"2019-11-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46244444","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study is to investigate the heterogeneous effect of economic policy uncertainty (EPU) on the exchange rate volatility of China using quantile regression for the period Jan 2003–Jan 2019. This paper significantly contributes to the empirical literature by taking into account the effect in individual and distributional heterogeneity and exploring the transmission mechanism of heterogeneity. The results demonstrate that, first, EPU from different countries have a heterogeneous impact on China’s exchange rate volatility both direction as well as distribution. Second, this paper further assesses the EPU transmission mechanism of bilateral trading and interest rate difference is mixed. These results provide policymakers with critical policy recommendations that contribute to the reduction of the exchange rate volatility and ensure stable economic development in China.
{"title":"Sustainable exchange rates in China: Is there the heterogeneous effect of economic policy uncertainty?","authors":"Liming Chen, Ziqing Du, Y. Tan","doi":"10.3934/gf.2019.4.346","DOIUrl":"https://doi.org/10.3934/gf.2019.4.346","url":null,"abstract":"This study is to investigate the heterogeneous effect of economic policy uncertainty (EPU) on the exchange rate volatility of China using quantile regression for the period Jan 2003–Jan 2019. This paper significantly contributes to the empirical literature by taking into account the effect in individual and distributional heterogeneity and exploring the transmission mechanism of heterogeneity. The results demonstrate that, first, EPU from different countries have a heterogeneous impact on China’s exchange rate volatility both direction as well as distribution. Second, this paper further assesses the EPU transmission mechanism of bilateral trading and interest rate difference is mixed. These results provide policymakers with critical policy recommendations that contribute to the reduction of the exchange rate volatility and ensure stable economic development in China.","PeriodicalId":41466,"journal":{"name":"Green Finance","volume":null,"pages":null},"PeriodicalIF":8.6,"publicationDate":"2019-11-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43107984","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Crude oil plays an important role in economic activities, with both commodity attributes and financial characteristics. Through comprehensive review of the literature on crude oil prices, the following phenomena are presented. First, the forecasts and risk management of crude oil prices are still important topics when researchers conduct studies, however, the uncertainty of economic activity has aggravated the fluctuation of crude oil prices. Second, factors from supply side and demand side are main drivers of movements of crude oil prices, and investor sentiment gradually becomes an important factor affecting the expected level of crude oil prices. Third, economic activities and financial stability are influenced by shocks of crude oil prices, meanwhile, many studies confirm the asymmetric effects. However, due to changes in the external environment, more complex nonlinear time-varying features are exhibited. In addition, the advent of text mining technology and artificial intelligence technology provides new and effective methods for forecasting the trend of crude oil prices and conducting risk measurement in crude oil market.
{"title":"A systematic review in crude oil markets: Embarking on the oil price","authors":"Yuhang Zheng, Ziqing Du","doi":"10.3934/gf.2019.3.328","DOIUrl":"https://doi.org/10.3934/gf.2019.3.328","url":null,"abstract":"Crude oil plays an important role in economic activities, with both commodity attributes and financial characteristics. Through comprehensive review of the literature on crude oil prices, the following phenomena are presented. First, the forecasts and risk management of crude oil prices are still important topics when researchers conduct studies, however, the uncertainty of economic activity has aggravated the fluctuation of crude oil prices. Second, factors from supply side and demand side are main drivers of movements of crude oil prices, and investor sentiment gradually becomes an important factor affecting the expected level of crude oil prices. Third, economic activities and financial stability are influenced by shocks of crude oil prices, meanwhile, many studies confirm the asymmetric effects. However, due to changes in the external environment, more complex nonlinear time-varying features are exhibited. In addition, the advent of text mining technology and artificial intelligence technology provides new and effective methods for forecasting the trend of crude oil prices and conducting risk measurement in crude oil market.","PeriodicalId":41466,"journal":{"name":"Green Finance","volume":null,"pages":null},"PeriodicalIF":8.6,"publicationDate":"2019-09-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48187504","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Solar Power is redefined in a new mathematical framework which describes its pertinent properties. It is shown that it is an economic good and that there are Property Rights and Economic Ownership associated with it. Its externalities have been examined with a view of including economic obligations created during the post emission control periods which correspond to growth without climate sustainability obligations. Also its valuation has been examined in states of both non-use and use in electricity production. A new definition of a Green Public Good is described which retains Samuelson's classic definition and has an climate externality component which under Pigouvian tax/subsidy does not satisfy Samuelson's second condition for Pareto optimality.
{"title":"Solar Power: A new mathematical definition and theoretical proof it is a Green Public Good","authors":"Kalomoira Zisopoulou, D. Panagoulia","doi":"10.3934/gf.2019.3.312","DOIUrl":"https://doi.org/10.3934/gf.2019.3.312","url":null,"abstract":"Solar Power is redefined in a new mathematical framework which describes its pertinent properties. It is shown that it is an economic good and that there are Property Rights and Economic Ownership associated with it. Its externalities have been examined with a view of including economic obligations created during the post emission control periods which correspond to growth without climate sustainability obligations. Also its valuation has been examined in states of both non-use and use in electricity production. A new definition of a Green Public Good is described which retains Samuelson's classic definition and has an climate externality component which under Pigouvian tax/subsidy does not satisfy Samuelson's second condition for Pareto optimality.","PeriodicalId":41466,"journal":{"name":"Green Finance","volume":null,"pages":null},"PeriodicalIF":8.6,"publicationDate":"2019-09-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47633963","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper identifies the change point of stock returns of energy firms, and examines the impact of macroeconomic news on stock returns of energy firms. Our analysis used China’s A-share listed energy firms from January 2008 to December 2018. First, we use high-dimensional time series factor models to pick up most of the structural changes in the common components of stock returns of energy firms. And then based on the change-points, we use the TVP-VAR method to explore the complex relationship between the macroeconomic news and the common component of stock returns of energy firms in different periods. The results show that there are three change points in the common components of stock returns of energy firms, but the idiosyncratic components don’t have change points. What’s more, for different periods, macroeconomic news has a heterogeneous impact on stock returns of energy firms.
{"title":"The impact of macroeconomic news on stock returns of energy firms—evidence from China","authors":"Yaya Su, Gaoke Liao","doi":"10.3934/gf.2019.3.297","DOIUrl":"https://doi.org/10.3934/gf.2019.3.297","url":null,"abstract":"This paper identifies the change point of stock returns of energy firms, and examines the impact of macroeconomic news on stock returns of energy firms. Our analysis used China’s A-share listed energy firms from January 2008 to December 2018. First, we use high-dimensional time series factor models to pick up most of the structural changes in the common components of stock returns of energy firms. And then based on the change-points, we use the TVP-VAR method to explore the complex relationship between the macroeconomic news and the common component of stock returns of energy firms in different periods. The results show that there are three change points in the common components of stock returns of energy firms, but the idiosyncratic components don’t have change points. What’s more, for different periods, macroeconomic news has a heterogeneous impact on stock returns of energy firms.","PeriodicalId":41466,"journal":{"name":"Green Finance","volume":null,"pages":null},"PeriodicalIF":8.6,"publicationDate":"2019-09-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42203903","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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