The Climate Bonds Initiative has recommended various policies to governments to facilitate a rapid transition to a net-zero economy. Some key policy recommendations include:
1. Sustainable Finance Roadmap
- Develop a coordinated sustainable finance roadmap that aligns all government departments, the central bank, and regulators to ensure investor certainty on policy introduction.
2. Stop Fossil Fuel Subsidies
- Stop subsidizing fossil fuels and damaging ecosystem practices to free up government spending for transition efforts. Targeted support can prevent adverse impacts on low-income groups.
3. Carbon Pricing Reform
- Implement carbon pricing reform by removing free allowances and limiting the purchase of carbon credits. This ensures that carbon pricing can force change effectively.
4. Carbon Border Adjustment Mechanisms (CBAM)
- Implement CBAMs to apply local carbon prices to imports of carbon-intensive goods, encouraging exporters to reduce emissions.
5. Green Derisking Facilities
- Establish green derisking facilities to enable investments in key green technologies by reducing investment risks and costs.
6. Sovereign Green Bond Programs
- Initiate sovereign green bond programs to demonstrate the benefits of green bonds, attract international investors, and fund key government expenditures.
7. Climate Risk Recognition
- Encourage central banks to recognize climate risk as a financial stability risk and adjust policies accordingly.
8. Disclosure Requirements
- Mandate climate disclosure requirements for corporations to signal climate risks clearly and encourage transition plans.
9. Standards and Taxonomies
- Establish clear standards and taxonomies to guide green investments and facilitate cross-border capital flows.
10. Targeted Subsidies
- Implement targeted subsidies to enable cost competitiveness of green technologies and support industrial transitions.
These policies aim to reduce climate-related risks, accelerate green investments, and drive a rapid transition to net-zero economies.
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