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UCL Institute for Sustainable Resources

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Financing the low carbon transition

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What we do

The sustainability transition requires a system-wide structural change towards low-carbon processes backed by an unprecedented mobilisation of financial resources. 

ISR sustainable finance explores the cross-cutting role of finance in the global transition to a low-carbon economy, with a particular emphasis on avenues for integrating finance elements into climate policy design.

Our work

LINKS: Tracing climate investments

LINKS explores the market structures for low-carbon finance - capital flows directed towards renewables and energy efficiency interventions with direct greenhouse gas mitigation benefits - with advanced computational techniques and extensive financial and investment data. The goal is to show how micro investors’ behaviour and interactions give rise to large scale investment trends. Employing network analysis on long-term investment data allows me to determine the structure and growth of the investment system based on the dynamism of investors’ behaviour, their influence in the system and investment trends.

Shifting the trillions’ to close the climate investment gap requires to exploit such investors’ dynamics as they shape the actual flows in low-carbon technologies and drive the direction of technical change. The evolution of inter-connected structures will determine how the system could pool long-term financial assets to boost the low-carbon transition; how policy can seek to take advantages of non-linearity and tipping points in the system by influencing key actors and connections; and will determine the main winners and losers within the financial system itself. Understanding such aspects of the financial system is crucial to identifying points of intervention that climate policy can leverage to spur green finance.


GREEN-WIN: Win-win solutions for green-growth strategies

GREEN-WIN focuses upon the financing dimensions of low carbon investment and transition, and its interaction with technology and modelling. In particular, key analyses include: 

  1. Map out key actors and financial instruments for climate finance in G20 countries with a focus on the US, China and selected European countries, including Germany, UK and Italy.
  2. Analyse the reasons why institutional finance is not directing more substantial investment to low-carbon projects, and identify which policy packages can leverage more finance into low carbon assets;
  3. Explore how decarbonisation pathways differ when region-specific financing costs are represented and explored.

RIPPLES: Implications for low-carbon pathways

RIPPLES focuses on the financial implications of NDC and 2°C-1.5°C trajectories, in terms of investment required across all sectors, cross-border capital flows, public budgets, and the financial system more broadly. 

The analysis focuses on the role of the financial sector in facilitating the transition towards the Paris Agreement goals. It undertakes both quantitative and qualitative approaches in order to provide key recommendations to stakeholders and policymakers related to climate finance. The modelling analysis soft-links three different model types (TIAM-UCL, MEWA and ENGAGE) to consider investment requirement pathways and how the levels of investment are achieved through different financial instruments. The qualitative analysis explores how the financial sector must be transformed to meet the long-term public interest and common goods.

People

Nadia Ameli
Principle Research Fellow
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Jamie Rickman
Research Fellow
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Sumit Kothari
PhD student
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Dongyang Pan
PhD Student
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Hugues Chenet
Honorary Senior Research Fellow
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Michael Grubb
Professor of Energy and Climate Change
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