In a nutshell
The objective of this brief is to examine how financial markets are affected by climate and energy transition risks. We show that fossil fuels are associated to a higher risk premium on public debt. Moreover, this risk premium increases with a higher level of CO2 emissions per capita. We also show that the quality of institutions plays an important role in counterbalancing the effects of climate-related variables on the risk premium. Finally, we conclude that financial markets could foster energy transition and encourage the implementation of effective environmental policies.
![Are Financial Markets the Last Resort to Save the Environment?](https://erf.org.eg/app/uploads/2021/11/1637747354_887_82971_nl_mouezfodha-150x150.png)
Research Fellows
Mouez Fodha
Professor, University Paris 1 Panthéon-Sorbonne
![Are Financial Markets the Last Resort to Save the Environment?](https://erf.org.eg/app/uploads/2020/08/1599052805_317_3284_aff_no_image-150x150.png)
Authors
Djamel Kirat
University of Orleans
![Are Financial Markets the Last Resort to Save the Environment?](https://erf.org.eg/app/uploads/2015/12/1645603632_235_83899_nl_chahirzaki-150x150.png)
Research Fellows
Chahir Zaki
Chaired Professor of Economics, University of Orléans