January 22, 2026

Climate Pressure Hits Banks January 22, 2026 admin Climate Risks Begin to Hit Borrowing Costs as Markets Price In Global Warming For years, climate experts have argued that markets would eventually force companies to take climate change more seriously as risks become clearer. New research suggests that shift is now underway, with borrowers starting to face tangible financial penalties for ignoring the dangers ahead. A paper published this month by the European Central Bank found that banks with the highest exposure to so-called transition risks are now paying significantly more to borrow in funding markets. That followed a December study by the Central Bank of Ireland showing that companies exposed to physical climate risks face higher borrowing costs and are increasingly required to post more collateral. Together, the findings suggest that the two main channels through which climate change is expected to affect corporate finances — transition risk and physical risk — are beginning to materialize in day-to-day financial pricing. “These papers illustrate well how the economics of the transition is working on a micro-, day-to-day level in the financial system,” said Ulf Erlandsson, chief executive officer of the Anthropocene Fixed Income Institute. Transition risk refers to the threat that companies slow to cut carbon-intensive activities will be penalized by regulators, investors or shifting consumer preferences. While long viewed as difficult to quantify — particularly as governments repeatedly delay net-zero policies — physical risks tied to extreme weather are becoming harder to dismiss as climate disasters mount. In the ECB study, senior economist Margherita Giuzio, alongside Bige Kahraman and Jasper Knyphausen of Oxford Saïd Business School, examined how banks’ exposure to carbon-intensive borrowers affects funding costs in Europe’s repo market. That market allows banks to manage short-term liquidity by selling and repurchasing high-quality assets, often overnight. By combining data on European banks’ repo borrowing between 2019 and 2022 with measures of their financed emissions — the carbon footprint of their lending — the researchers found a clear pricing effect. Banks with higher financed emissions consistently paid more to borrow. A one standard deviation increase in financed emissions translated into repo rates that were on average 7% to 12% higher. The findings “provide the first evidence that climate risks affect the pricing of bank liquidity in Europe’s core funding market,” the researchers wrote, adding that transition risks could amplify financial fragilities and interact with the transmission of monetary policy. “Banks are exposed to the economic conditions of the firms they lend to,” Giuzio said in an emailed response. “Shocks affecting those firms can influence their ability to repay loans. Transition risk, for example arising from changes in carbon pricing, regulation or consumer preferences, can affect firms’ costs and profitability, and therefore their credit risk.” Not all regulators agree that climate change threatens financial stability. The issue sparked tense debate at a meeting of the Financial Stability Board last year, where US officials argued that climate risk should only be monitored if there is evidence of an imminent threat to the financial system. Evidence of physical risk affecting borrowing costs is also mounting. Ireland’s Central Bank examined more than 40,000 corporate loans and found that companies located in flood-prone areas pay around 7 to 13 basis points more than peers elsewhere. Those firms are also more likely to back loans with collateral. The central bank warned that exposure to flood risk is expected to rise significantly as climate change alters weather patterns. A broader global picture emerges from recent research by Karol Kempa of the Frankfurt School of Finance & Management. Analyzing about 86,000 syndicated bank loans worldwide, the study found that firms in countries with higher climate vulnerability face meaningfully higher borrowing costs. A one standard deviation increase in climate vulnerability was associated with a 39 basis-point rise in loan pricing. “Climate-related events could cause substantial economic damages to firms,” Kempa wrote, adding that those shocks could be transmitted to the financial system through loan defaults, falling asset prices and, ultimately, threats to financial stability. Recommended Article Climate Pressure Hits Banks Trump Rattles Wind Industry China breaks the Davos hush on climate Trump’s latest blow to climate Iran Protests Grow as Rial Plunges EV Boom Slows as Subsidies Fade ‘Untouchable’ no longer Blockbuster year Another log on the fire Hybrids pick up speed It’s not all bad news Under New Ownership New front in the war on wind Blown away What the end of the F-150 means

Trump Rattles Wind Industry January 22, 2026 admin Al Gore Slams Trump’s Offshore Wind Pushback as Illogical at Davos US President Donald Trump’s efforts to block offshore wind projects defy economic and technological logic, said Al Gore, chairman of Generation Investment Management and a former US vice president, as debates over the energy transition intensified at the World Economic Forum in Davos. “Why are we ending the wind farms that are now being built on the coast of the United States?” billionaire financier David Rubenstein asked Gore during a public conversation at Bloomberg House on Wednesday. “Because Trump is insane,” Gore replied, drawing laughter from the audience. Gore said solar and wind power are now the cheapest sources of electricity globally and are rapidly becoming dominant as economies electrify. “Renewable is taking over,” he said, adding that governments have little practical choice but to continue the transition. Trump’s administration has sought to halt offshore wind development, citing unspecified national security risks. While judges have recently allowed stalled projects in New York, Rhode Island and Virginia to resume construction, those rulings are temporary. The White House has vowed to continue its legal fight, leaving the fate of several large-scale projects uncertain. Energy leaders at Davos offered a more nuanced view of the transition. Andrés Gluski, chief executive officer of US renewable power producer AES Corp., warned against politicizing energy choices. “I find a lot of the thinking is politicized — either you’re 100% renewables or you’re against renewables,” Gluski said during an energy security panel. “This makes no sense whatsoever. With today’s technology, you have to combine the two.” Fatih Birol, executive director of the International Energy Agency, reiterated the agency’s forecast that global electricity demand will grow three times faster than overall energy demand, driven by artificial intelligence, air conditioning and electric vehicles. Renewables, natural gas and nuclear power are expected to meet most of that demand, he said. “Lots of supplies are coming,” Birol said. “But it won’t be forever.” Meanwhile, lower oil prices may not benefit US producers as much as policymakers expect, according to Meghan O’Sullivan, a Harvard professor and former deputy national security adviser under President George W. Bush. “A $53-a-barrel oil price is not consistent with high American oil production,” O’Sullivan said. “There’s a real tension there, and American companies feel that acutely.” She added that the Trump administration’s growing use of foreign policy tools — including diplomacy and military force — to influence global energy markets could dampen long-term investment rather than support it. Recommended Article Trump Rattles Wind Industry China breaks the Davos hush on climate Trump’s latest blow to climate Iran Protests Grow as Rial Plunges EV Boom Slows as Subsidies Fade ‘Untouchable’ no longer Blockbuster year Another log on the fire Hybrids pick up speed It’s not all bad news Under New Ownership New front in the war on wind Blown away What the end of the F-150 means walking away from coal

China breaks the Davos hush on climate January 22, 2026 admin China Promotes Green Leadership at Davos as Trump Returns to Global Stage Since President Donald Trump’s first election, Chinese leaders have repeatedly used the backdrop of Switzerland’s snow-capped mountains and retreating glaciers to present a global vision centered on green development a sharp contrast to the US leader’s long-standing climate skepticism. That contrast is set to sharpen further as Trump arrives in Davos on Wednesday, where he is expected to deliver a major speech at the World Economic Forum. The gathering has already been noticeably subdued on climate issues this year. Chinese Vice Premier He Lifeng used his address on Tuesday to reinforce Beijing’s green credentials, urging global cooperation with China and its clean-technology exporters to accelerate efforts to curb emissions. “We invite enterprises from all over the world to embrace the opportunities from the green and low-carbon transition, and work closely with China in such areas as green infrastructure, green energy, green minerals and green finance,” He said. He, who has led trade negotiations with Washington over the past year, also sought to preempt growing global concerns over China’s record trade surplus, particularly in green technologies such as solar panels, batteries, and electric vehicles. “China will pursue green development and share with the world the opportunities,” he said. Over the past year, Beijing has taken steps to ease tensions and push back against a wave of trade barriers targeting its green exports. Measures include lowering tax rebates for solar and battery shipments, negotiating minimum price thresholds for EV sales to the European Union, and shifting more green manufacturing capacity overseas. China’s upcoming five-year plan will continue to prioritize green development, reflecting the rising contribution of its solar, battery, and electric vehicle sectors to economic growth, especially as the country grapples with a prolonged downturn in real estate, He said. Despite being the world’s largest greenhouse-gas emitter, China is showing “firm resolve and maximum effort” to meet President Xi Jinping’s first-ever pledge to reduce the country’s absolute emissions, according to the vice premier. Recommended Article China breaks the Davos hush on climate Trump’s latest blow to climate Iran Protests Grow as Rial Plunges EV Boom Slows as Subsidies Fade ‘Untouchable’ no longer Blockbuster year Another log on the fire Hybrids pick up speed It’s not all bad news Under New Ownership New front in the war on wind Blown away What the end of the F-150 means walking away from coal The Rising Global Energy Demand