THE CHANGE IN COST OF CAPITAL
But how is the cost of capital changing for clean relative to dirty for different technologies and sectors across different jurisdictions? What is driving these changes and is it changing fast enough? What is impeding or enabling the pricing of climate-related risks and stranded assets in the cost of capital? How could the changing cost of capital impact companies and providers of finance and investment, for example, through changing economic and financial returns?
Research in these areas is essential for, among other things, identifying transformational interventions and understanding whether current or past interventions, including policies and regulations, have actually been successful at creating or foregrounding risks for polluting activities, thereby affecting their access to capital.
The Energy Transition Risk and Cost of Capital Project (ETRC), starting with the energy sector, will seek to answer these questions systematically. ETRC is part of the Oxford Sustainable Finance Group (OxSFG) at the University of Oxford Smith School of Enterprise and the Environment.