The E-axes Forum on Climate Change, Macroeconomics, and Finance

Rick van der Ploeg

“Climate Risks: Carbon Pricing and Financial Policy”

Event description

Rick van der Ploeg presented some results from his paper “Macro-Financial Implications of Climate Change and the Carbon Transition.” From the abstract:

A review is given of what needs to be done to ensure a smooth transition to the carbon-free economy. If policy internalises global warming damages, the carbon price rises at the same rate as economic activity and the level depends on economic and climatic uncertainties. If policy makers keep temperature below a ceiling, the carbon price must grow at a rate equal to the risk-adjusted interest rate. Both approaches benefit from asset pricing insights. It is shown how climate policy is frustrated by the motive to diversify assets across carbon-intensive and green assets. Business-as-usual and optimal outcomes are contrasted with outcomes where there is a risk of policy tipping. The latter leads to sudden changes in market valuation and risk of stranded assets. Empirical evidence for effects of anticipated green transitions on asset returns is reviewed. Finally, macro-financial policies for the green transition and policies to avoid disorderly green transitions are discussed.


Emanuele Campiglio
Associate Professor, University of Bologna

Rick van der Ploeg

Rick van der Ploeg is Professor of Economics and Research Director of OXCARRE, Oxford University and (part-time) University Distinguished Professor of Environmental Economics at the University of Amsterdam. He was formerly at University of Cambridge, LSE, EUI, Florence and at Tilburg and VU Amsterdam Universities. His research interests span (open economy) macroeconomics, public finance and development with interests in climate and natural resource economics. He has consultancy experience with IMF, OECD, EU, World Bank, ADB, AfDB and the private sector. In addition, he is a former State Secretary of Education, Culture and Science and Member of Parliament of the Netherlands and former member of the UNESCO World Heritage Committee.

Paper and slides

“Climate Risks: Carbon Pricing and Financial Policy” (paper)

“Climate Risks: Carbon Pricing and Financial Policy” (slides)



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