Project Aim

The energy transitions towards renewables is a top policy agenda in many countries. Despite internationally coordinated efforts (e.g., Paris Agreement), data show that countries follow different transitions paths at different speeds. On the one hand, many developed economies, including EU members, follow a relatively fast transition. On the other hand, the speed of transition in many developing countries is rather slow. Among many factors, finance has emerged as a key driver of the transition given the need for the deployment of new infrastructure, the improvement in energy efficiency, research and development for new technologies, as well as, opting for adaptation and mitigation strategies. With this motivation, this project aims to study the dynamics of the energy transitions and primarily, focuses on the role of sustainable finance, as a critical enabler, in facilitating the transitions, while also examining the financial risks associated with the transitions.

The project consists of five studies. The first study focuses on the main factors explaining the speed of energy transitions. The second and third studies spotlight the importance and effectiveness of sustainable finance instruments in enabling the transitions. Finally, the last two studies attempt to understand the nature of stranded assets and associated risks, while providing estimates on their potential size. All the five studies will deliver comprehensive discussion papers and commentary notes, while the first study will also provide a country-level energy transition index.

The output of this project will provide a better understanding of the energy transitions’ dynamics that is a top-policy agenda for many countries. It will focus on the role of sustainable finance in facilitating energy transitions and managing the associated risks. Findings of the project will significantly contribute to the academic literature on the enablers of energy transitions, and more importantly, it will provide direct inputs to Saudi Arabia’s great efforts for a more vibrant and diversified economy, as expressed in the Vision 2030.

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