Cover Staff Climate Notes
Buy Book in Print
Energy Transition and Geoeconomic Fragmentation: Implications for Climate Scenario Design
Author:
Charlotte Gardes-Landolfini
Search for other papers by Charlotte Gardes-Landolfini in
Current site
Google Scholar Close
,
Pierpaolo Grippa
Search for other papers by Pierpaolo Grippa in
Current site
Google Scholar Close
,
William Oman https://isni.org/isni/0000000404811396 International Monetary Fund

Search for other papers by William Oman in
Current site
Google Scholar Close
, and
Sha Yu
Search for other papers by Sha Yu in
Current site
Google Scholar Close
Series:
Staff Climate Notes
Volume/Issue:
Volume 2023: Issue 003
Language:
English
Publication Date:
28 Nov 2023
DOI:
https://doi.org/10.5089/9798400258220.066
ISBN:
9798400258220
ISSN:
2789-0600
Pages:
44
Keywords:
Climate scenarios; polycrisis; climate risks; carbon lock-in; risk assessment; geoeconomic fragmentation; energy transition; energy security; disorderly transition; trade multilateralism; fossil fuel development; IMF staff climate note; IMF staff climate NOTE 2023/003; climate scenario; Renewable energy; Climate policy; Climate change; Non-renewable resources; Global; Central America; Caribbean
Legal-disclaimer:
The IMF Notes Series aims to quickly disseminate succinct IMF analysis on critical economic issues to member countries and the broader policy community. The IMF Staff Climate Notes provide analysis related to the impact of climate change on macroeconomic and financial stability, including on mitigation, adaptation, and transition. The views expressed in IMF Staff Climate Notes are those of the author(s), although they do not necessarily represent the views of the IMF, or its Executive Board, or its management.
Download PDF (2.7 MB) Download Epub
The transition to a low-carbon economy, which is needed to mitigate climate change and meet the Paris Agreement temperature goals, has been affected by the supply chain and energy supply disruptions that originated during the COVID-19 pandemic, the Russian invasion of Ukraine, and the subsequent energy crisis and exacerbation of geopolitical tensions. These developments, and the broader context of the ongoing “polycrisis,” can affect future decarbonization scenarios. This reflects three main factors: (1) pullbacks in climate mitigation policies and increased carbon lock-in in fossil fuel infrastructure and policymaking; (2) the decreasing likelihood of continuous cost reduction in renewable energy technologies; and (3) the likely intensification of macroeconomic shocks amid increasing geoeconomic fragmentation, and the associated policy responses. In this context, the note assesses the implications of the polycrisis for hypothetical scenarios used to assess climate-related financial risks. Following an analysis of the channels through which these effects are likely to materialize over short- and long-term horizons and some policy implications, the note proposes potential adjustments to the design of the climate scenarios used by financial institutions, central banks, and financial sector supervisors and regulators within their risk management frameworks.
  • Collapse
  • Expand
Cover Staff Climate Notes
Staff Climate Notes
Publisher:
International Monetary Fund