As economies and societies align with net zero, climate-related risks will arise through changes in policy, technology, and market preferences.

These transition risks will have implications for the cost of capital, investment decisions, and ultimately, the operations of companies.

ETRC, starting with the energy sector, and as part of the Oxford Sustainable Finance Group, will be undertaking research on these topics systematically over multiple years. Below are the latest ETRC publications.

Energy Transition and the Changing Cost of Capital: 2023 Review


Our 2023 report extends the scope of analysis to the cost of equity as well as expanding our analysis of the cost of debt. In this process, we looked at corporate bonds and included data from other sources, including the Platts World Electric Power Plants Database (WEPP) and the Institutional Brokers’ Estimate System (IBES). We tracked the cost of capital across the global energy system in both electric utilities (renewable and fossil fuel) and energy production (oil & gas, coal mining, and renewable fuels & technology).
Breaking the Bond: Primary Markets and Carbon-Intensive Financing

15 June 2021 | Christian Wilson, Ben Caldecott | Working Paper

Financial institutions with over $70 trillion in assets have so far pledged to achieve net zero portfolios and loanbooks by 2050, including meeting ambitious interim 2030 targets. This working paper reveals that passive corporate bond funds not only hold fossil fuel assets, but directly finance them by buying large quantities of new bonds issued by fossil fuel companies. To track and manage transactions that are channeling capital flows directly into fossil fuels, the authors propose a new metric, Primary Market Carbon Exposure (PMCE). PMCE measures the proportion of securities bought in primary market transactions, for example shares at IPO or new bond issuance, from fossil fuel companies. They find that between 2015 – 2020, 14% of the value of new bond issues bought by U.S. corporate bond Exchange Traded Funds (ETFs) were in fossil fuels.
The energy transition and changing financing costs

19 April 2021 | Xiaoyan Zhou, Christian Wilson, Ben Caldecott | Report

This report seeks to understand how the cost of debt across different energy technologies and markets has changed over the last twenty years. It forms the first output of the Energy Transition Risk and Cost of Capital Project (ETRC). While climate-related transition risks in the energy sector are sometimes viewed as distant, long-term risks, the impacts of which will not be felt for decades to come, we find this does not reflect reality.