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Exploring options to measure the climate consistency of real economy investments: The transport sector in Latvia

Author

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  • Alexander Dobrinevski

    (OECD)

  • Raphaël Jachnik

    (OECD)

Abstract

Mitigating climate change requires aligning real economy investments with climate objectives. This pilot study measures the climate consistency of investments in transport infrastructure and vehicles in Latvia between 2008 and 2018, estimated at EUR 1.5 billion per year on average. To do so, three complementary mitigation-related reference points are used. Applying the criteria defined by the European Union Taxonomy for Sustainable Activities results in 4.2% of investments assessed as making a substantial contribution to climate change mitigation. Comparing actual greenhouse gas trajectories for each transport mode to a 2°C scenario from the International Energy Agency’s for the European Union and to projections from Latvia’s 5th National Communication to the UNFCCC, indicates 32% climate-consistent and up to 9% climate-inconsistent investments. The majority of investments volumes could at this stage not be characterised due to limitations relating to the granularity or coverage of the reference points. Comparing current trends to 2030 and 2050 decarbonisation targets nevertheless highlights future investment and financing challenges, especially for road transport. The methodology piloted in this study can be replicated and scaled up across countries and sectors, using different or complementary reference points specifically aligned to the temperature goal of the Paris Agreement.

Suggested Citation

  • Alexander Dobrinevski & Raphaël Jachnik, 2020. "Exploring options to measure the climate consistency of real economy investments: The transport sector in Latvia," OECD Environment Working Papers 163, OECD Publishing.
  • Handle: RePEc:oec:envaaa:163-en
    DOI: 10.1787/48d53aac-en
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    Keywords

    capital expenditure; climate change; emissions; energy efficiency; finance; investment; Latvia; low-greenhouse gas development; measurement; scenarios; taxonomy; tracking; transport;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General

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