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Who will finance the green transition?
Can central banks help?
With public debt at unprecedented levels it is difficult to see how governments could consider contributing any sizeable amounts.
A carbon tax would have a significant impact on growth and inflation, with Emerging Markets particularly affected.
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Five questions on the impact of carbon taxes on economies and markets
EXPECTED RETURNS
Expected returns
Carbon Tax most and least negatively affected countries
by Net Cost
by Inflation (CPI)
Most affected
Least affected
1
1
2
2
3
4
4
3
5
5
India
Switzerland
Russia
China
Bulgaria
Taiwan
Denmark
Norway
Ireland
France
Most affected
Least affected
1
2
2
1
3
4
4
3
5
5
Indonesia
China
France
India
Russia
Switzerland
Norway
Sweden
USA
Denmark
Source: Roncalli T., Guenedal T., Desnos B., Morais P., “ From climate stress testing to climate value-at-risk: A stochastic approach”, Amundi Investment Institute, July 2023. From climate stress testing to climate value-at-risk: a stochastic approach
Illustrative impact of a Carbon Tax at sector level
Pass-through (PT) = 25%
PT Best estimates
HIGH
Energy
Source: Roncalli T., Guenedal T., Desnos B., Morais P., “ From climate stress testing to climate value-at-risk: A stochastic approach”, Amundi Investment Institute, July 2023. From climate stress testing to climate value-at-risk: a stochastic approach
Dispersion within the sector
HIGH
HIGH
HIGH
MEDIUM
LOW
LOW
LOW
LOW
LOW
LOW
Materials
Industrials
Consumer discretionary
Consumer staples
Health Care
Financials
Information
Technology
Utilities
Comm Services
Real Estate
