Financing Low-Carbon Transitions through Carbon Pricing and Green Bonds
To finance the transition to low-carbon economies required to mitigate climate change, countries are increasingly using a combination of carbon pricing and green bonds. This paper studies the reasoning behind such policy mixes and the economic inte...
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/808771566321852359/Financing-Low-Carbon-Transitions-through-Carbon-Pricing-and-Green-Bonds http://hdl.handle.net/10986/32316 |
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okr-10986-323162022-09-20T00:12:32Z Financing Low-Carbon Transitions through Carbon Pricing and Green Bonds Heine, Dirk Semmler, Willi Mazzucato, Mariana Braga, Joao Paulo Flaherty, Michael Gevorkyan, Arkady Hayde, Erin Radpour, Siavash GREEN BONDS CARBON PRICING CLIMATE CHANGE INTERNATIONAL BURDEN SHARING CARBON TAX CLIMATE CHANGE MITIGATION CLIMATE CHANGE ADAPTATION To finance the transition to low-carbon economies required to mitigate climate change, countries are increasingly using a combination of carbon pricing and green bonds. This paper studies the reasoning behind such policy mixes and the economic interaction effects that result from these different policy instruments. The paper models these interactions using an inter-temporal model that proposes burden sharing between current and future generations. The issuance of green bonds helps to enable immediate investment in climate change mitigation and adaptation, and the bonds would be repaid by future generations in such a way that those who benefit from reduced future environmental damage share in the burden of financing the mitigation efforts undertaken today. The paper examines the effects of combining green bonds and carbon pricing in a three-phase model and uses a numerical solution procedure that allows for finite-horizon solutions and phase changes. The paper shows that green bonds perform better when they are combined with carbon pricing. The proposed policy option appears to be politically more feasible than a green transition based only on carbon pricing, and it is more prudent for debt sustainability than a green transition that relies overly on green bonds. 2019-08-22T16:48:08Z 2019-08-22T16:48:08Z 2019-08 Working Paper http://documents.worldbank.org/curated/en/808771566321852359/Financing-Low-Carbon-Transitions-through-Carbon-Pricing-and-Green-Bonds http://hdl.handle.net/10986/32316 English Policy Research Working Paper;No. 8991 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper |
| repository_type |
Digital Repository |
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Foreign Institution |
| institution |
Digital Repositories |
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World Bank Open Knowledge Repository |
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World Bank |
| language |
English |
| topic |
GREEN BONDS CARBON PRICING CLIMATE CHANGE INTERNATIONAL BURDEN SHARING CARBON TAX CLIMATE CHANGE MITIGATION CLIMATE CHANGE ADAPTATION |
| spellingShingle |
GREEN BONDS CARBON PRICING CLIMATE CHANGE INTERNATIONAL BURDEN SHARING CARBON TAX CLIMATE CHANGE MITIGATION CLIMATE CHANGE ADAPTATION Heine, Dirk Semmler, Willi Mazzucato, Mariana Braga, Joao Paulo Flaherty, Michael Gevorkyan, Arkady Hayde, Erin Radpour, Siavash Financing Low-Carbon Transitions through Carbon Pricing and Green Bonds |
| relation |
Policy Research Working Paper;No. 8991 |
| description |
To finance the transition to low-carbon
economies required to mitigate climate change, countries are
increasingly using a combination of carbon pricing and green
bonds. This paper studies the reasoning behind such policy
mixes and the economic interaction effects that result from
these different policy instruments. The paper models these
interactions using an inter-temporal model that proposes
burden sharing between current and future generations. The
issuance of green bonds helps to enable immediate investment
in climate change mitigation and adaptation, and the bonds
would be repaid by future generations in such a way that
those who benefit from reduced future environmental damage
share in the burden of financing the mitigation efforts
undertaken today. The paper examines the effects of
combining green bonds and carbon pricing in a three-phase
model and uses a numerical solution procedure that allows
for finite-horizon solutions and phase changes. The paper
shows that green bonds perform better when they are combined
with carbon pricing. The proposed policy option appears to
be politically more feasible than a green transition based
only on carbon pricing, and it is more prudent for debt
sustainability than a green transition that relies overly on
green bonds. |
| format |
Working Paper |
| author |
Heine, Dirk Semmler, Willi Mazzucato, Mariana Braga, Joao Paulo Flaherty, Michael Gevorkyan, Arkady Hayde, Erin Radpour, Siavash |
| author_facet |
Heine, Dirk Semmler, Willi Mazzucato, Mariana Braga, Joao Paulo Flaherty, Michael Gevorkyan, Arkady Hayde, Erin Radpour, Siavash |
| author_sort |
Heine, Dirk |
| title |
Financing Low-Carbon Transitions through Carbon Pricing and Green Bonds |
| title_short |
Financing Low-Carbon Transitions through Carbon Pricing and Green Bonds |
| title_full |
Financing Low-Carbon Transitions through Carbon Pricing and Green Bonds |
| title_fullStr |
Financing Low-Carbon Transitions through Carbon Pricing and Green Bonds |
| title_full_unstemmed |
Financing Low-Carbon Transitions through Carbon Pricing and Green Bonds |
| title_sort |
financing low-carbon transitions through carbon pricing and green bonds |
| publisher |
World Bank, Washington, DC |
| publishDate |
2019 |
| url |
http://documents.worldbank.org/curated/en/808771566321852359/Financing-Low-Carbon-Transitions-through-Carbon-Pricing-and-Green-Bonds http://hdl.handle.net/10986/32316 |
| _version_ |
1764476280981422080 |