Review of the Bank of Russia – NES Workshop ‘Transition to a Low-Carbon Economy: Costs and Risks for the Financial Sector’

Abstract

In early July 2022, the Bank of Russia and the New Economic School held a joint workshop titled ‘Transition to a Low-Carbon Economy: Costs and Risks for the Financial Sector’. The presentations delivered at the workshop enable a number of general conclusions to be drawn. First, as follows from the results of the calculations in general equilibrium models, the Russian economy will struggle to avoid losses in welfare in the face of the global (or expedited) energy transition. These losses will be especially heavy if domestic climate policy fails to drive economic diversification and technological advancement, which, in the ‘new reality’, would come with more costs. Second, if climate risks materialise, their implications for corporate sector debt can be measured as moderate. Third, financial market participants – banks and investors – have so far treated green and brown projects or companies in essentially the same way in terms of conditions for financing.