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With Arctic sea ice under threat, super storms on the rise, and air pollution killing half a million people each year in the European Union, the need to move to a low-carbon economy is clear. Banks and non-financial corporations will also be affected by climate change as loan defaults and insurance claims mount.
The EU wants to cut carbon emissions by 40% by 2030 and by 80% by 2050, but switching from fossil fuels to new sources of energy costs money - at least €379bn a year, according to the European Commission, and up to €1 trillion if transport is included.
To fund the energy transition, the financial system needs to undergo a complete change of culture, a Friends of Europe Café Crossfire event heard on 25 April. Participants at the debate, from industry and finance, agreed that a mix of demand- and supply-side measures will be needed – including more transparent financial disclosures, better infrastructure projects and higher carbon pricing. And with the EU falling behind China in per capita renewables funding, there is even more reason for the EU to press ahead.
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