Abstract:
Ministries of Finance need to jointly manage four sources of risk from climate change: physical risks; risks of overcapacity and stranded assets as carbon-intensive industries decline; risks of potential shortages from the delayed establishment of alternatives; and the risk of a disorderly transition driven by economic and political shocks, investor uncertainty, and mismanagement.
MoFs can use analytical tools and policy mechanisms to help understand and manage these risks, but more work needs to be done. Of the four risks, that of a disorderly transition is particularly dangerous and poorly understood.
Citation:
Nelson, D. (2025), 'The economic impacts of disorderly climate transitions: how Ministries of Finance can avoid boom and bust with sound economic analysis and effective climate policy', Contribution to ‘Compendium of Practice from a Global Community of Ministries of Finance and Leading Organizations’, Coalition of Finance Ministers for Climate Action.