Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/190290 
Year of Publication: 
2018
Series/Report no.: 
ADBI Working Paper No. 869
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
The investment in sustainable energy required to meet the climate change commitments made by 190 countries signatory to the 2015 Paris Accord is in the order of $100 trillion over the next 2 decades. Reducing carbon emissions requires a financing strategy for managing risk that is an intergenerational burden. This paper proposes a "cap and invest" strategy for building up the necessary infrastructure to reduce greenhouse gas (GHG) emissions consistent with national commitments. "Cap and invest" is in sharp contrast to "cap and trade." An economy-wide general environmental tax (GET) on consumption is the basis for financing the energy transition. The GET creates a large "pool of capital" to de-risk investment in emerging low-carbon solutions in support of an energy infrastructure resilient to the threat of climate change. Innovation in governance is an integral part of the policy to leverage the capital markets through public-private partnership in green financing.
Subjects: 
"cap and invest"
environmental trust fund
financing intergenerational burdens
general environmental tax
global energy transitions
JEL: 
Q4
Q5
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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