1887

OECD Environment Working Papers

This series is designed to make available to a wider readership selected studies on environmental issues prepared for use within the OECD. Authorship is usually collective, but principal authors are named. The papers are generally available only in their original language English or French with a summary in the other if available.

English

Exploring options to measure the climate consistency of real economy investments

The transport sector in Latvia

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.

English

Keywords: climate change, transport, investment, low-greenhouse gas development, finance, energy efficiency, tracking, capital expenditure, Latvia, scenarios, measurement, taxonomy, emissions
JEL: H54: Public Economics / National Government Expenditures and Related Policies / National Government Expenditures and Related Policies: Infrastructures; Other Public Investment and Capital Stock; G32: Financial Economics / Corporate Finance and Governance / Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill; 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; Q54: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Climate; Natural Disasters and Their Management; Global Warming; G31: Financial Economics / Corporate Finance and Governance / Capital Budgeting; Fixed Investment and Inventory Studies; Capacity; E01: Macroeconomics and Monetary Economics / General / Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts; L91: Industrial Organization / Industry Studies: Transportation and Utilities / Transportation: General; E22: Macroeconomics and Monetary Economics / Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy / Investment; Capital; Intangible Capital; Capacity
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