BOC pushes ahead with climate research
The Bank of Canada has released a multi-year plan to study the economic impacts of climate change and the transition to a low-carbon economy.
In a paper published Tuesday, the central bank described what it believes will be the main research questions involved in understanding what the changes mean for the macro-economy, for example, how models can be augmented to gauge the effect of more severe weather on forecasting or to analyze the structural shifts associated with climate policy.
It will also look at how severe weather events or an abrupt transition to a low-carbon economy could affect the financial system.
The goal is to “develop climate stress-testing frameworks to assess the resilience of the financial system to hypothetical extreme but plausible scenarios,” the central bank said. A lack of available data on the subject is one of the barriers to identifying climate-related exposures.
“To address this gap, central banks and regulatory authorities must co-operate and combine standard macroeconomic, financial market and supervisory reporting data with new climate databases,” the bank said.
The Bank of Canada is one of the 40-odd members of the Central Banks and Supervisors Network for Greening the Financial System, an international group founded two years ago pushing for financial systems to meet the Paris Climate Goals. A goal of the 2015 Paris Agreement is to hold increases in global temperatures within a range of 1.5 C to 2 C.
Scientists estimate the emission of greenhouses gases have already caused a 1 C of global warming above pre-industrial levels.