How can financial markets help us tackle climate change

40

Transcript of How can financial markets help us tackle climate change

Figure SPM.7a Global average surface temperature change

Figure SPM.8a,b Maps of CMIP5 multi-model mean results

Carbon pricing helps align private and social incentives by internalising the

negative externality

Political apetite will vary for different market-based instruments

𝑇𝑝 =𝜆𝑝

1−𝑔∙ 5.35𝑙𝑛 ∙ 1 +

𝐴𝑝𝑄𝑝

𝐶𝐴0+ 𝑅𝑁𝑝

With 𝑔 =5.35𝜆𝑝 𝛾

𝐶𝐴0+𝐴𝑝𝑄𝑝

𝑄 𝑡 = 𝑄 𝑡1 +𝐸𝑚−𝑒𝑟∙(𝑡1−𝑡𝑚)

𝑟+

𝐸𝑚∙ −𝑒𝑚∙ 𝑡𝑚−𝑡 ∙ 𝑚∙ 𝑚+𝑟 ∙ 𝑡−𝑡𝑚 +2 +𝑟 +2𝑚+𝑟

𝑚2

𝐸 𝑡 =

𝑜𝑏𝑠𝑒𝑟𝑣𝑎𝑡𝑖𝑜𝑛𝑠𝐸𝑚 ∙ 𝑒𝑟∙(𝑡−𝑡𝑚)

𝑓 𝑡With 𝑓 𝑡 = 𝐸𝑚 ∙ [1 + 𝑟 + 𝑚 ∙ 𝑡 − 𝑡𝑚 ] ∙

𝑒−𝑚∙(𝑡−𝑡𝑚)

𝑞 𝑖,𝑡 = 𝐸(𝑡) ∙ 𝛼𝑡FS𝑖,𝑡 + (1 − 𝛼𝑡)GS𝑖,𝑡

FS𝑖,𝑡 =𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛𝑖,𝑡

𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛𝑖,𝑡

GS𝑖,𝑡 =𝑞𝑖,2009

𝑞𝑖,2009

𝛼𝑡