Conference Agenda

Achieving global climate and biodiversity goals requires unprecedented levels of green investment, yet the financing conditions facing public and private actors remain deeply unequal. This paper develops a heuristic, dynamic framework to explain how financing conditions for green assets and actions emerge, evolve, and interact with macroeconomic structures. Combining insights from ecological macroeconomics, neo-Schumpeterian theory, and balance-sheet approaches, we conceptualise the green finance gap not as a static shortfall, but as a dynamic misalignment between needed actions, the agents capable of implementing them, and the funding sources they can effectively access. We demonstrate how heterogeneous costs, risks, expected returns, and context-specific constraints shape a path-dependent selection of green investments, thereby influencing their distributive and economic effects. Our approach clarifies how different green-finance mechanisms — including cost-reducing instruments, resource-enabling tools, and risk-mitigation schemes — can reshape the investment environment and alter agents’ financing conditions to reach ecological targets. These insights provide a foundation for more context-specific policy design and call for future empirical work linking project-level dynamics, institutional arrangements, and macro-financial vulnerabilities across diverse national settings.

This paper examines the distributional consequences of carbon pricing and alternative revenue-recycling schemes using an environmental dynamic stochastic general equilibrium model calibrated to the U.S. economy. The general equilibrium setting captures both income and consumption channels through which carbon pricing affects low- and high-income households. We compare several redistribution options, including transfers to low-income households, labor and consumption tax cuts, and government investment in the green sector. Results show that carbon pricing increases inequality in the absence of revenue recycling, even without heterogeneity in household emissions intensity of consumption or employment across sectors, challenging conventional explanations of inequality under carbon pricing. Transfers to low-income households most effectively reduce inequality, but at the cost of lower output. Labor tax cuts balance efficiency and equity, while policies supporting green companies tend to worsen inequality. The welfare-optimal policy depends on society’s inequality aversion: labor tax cuts dominate when efficiency is prioritized, whereas transfers are preferred when equity concerns are stronger.

This paper develops a two-country New Keynesian open-economy E-DSGE model with a detailed energy block to study how alternative carbon-pricing architectures reshape the international transmission of business-cycle shocks. Energy combines fossil fuels (oil and natural gas) and electricity produced with brown and green technologies. Nested CES aggregators place energy both in firms’ marginal costs and in households’ consumption bundle, allowing us to separate energy-in production from energy-in-consumption. Emissions arise from firms’ energy use and households’ final demand, which lets us compare ETS designs that regulate industrial emissions only (ETS1) with designs that also cover household emissions (ETS2) and track the pollution content of trade. We evaluate three policy dimensions. Under international cap-and-trade, the permit price is state-contingent: after a positive Home productivity shock it rises and tightens the carbon wedge, increasing marginal costs and dampening energy use and emissions relative

to a fixed-price carbon tax; after a contractionary monetary policy shock it falls, relaxing carbon costs and cushioning the downturn. Coverage shifts adjustment: in ETS2, permit price movements pass through to retail fuels, so productivity-driven increases compress energy-in-consumption and household emissions, whereas monetary-driven declines sustain energy demand and make emissions less responsive than under ETS1. Finally, when only Home prices carbon, Foreign faces no carbon cost and spillovers are stronger, generating leakage in energy use and emissions; a CBAM primarily works through import prices: when permits become more expensive (productivity shock) imports contract and the goods trade balance improves, while cheaper permits (monetary shock) weaken this improvement.

The distributional effects of climate change are at the heart of international climate negotiations. This paper shows how different property rights regimes, ranging from “right to pollute” to “right to no pollution”, rationalize different welfare weights in climate-economic models with heterogeneous regions. Commonly used Negishi weights separate the issues of climate change and global wealth inequality. However, we show that the separation of these issues does not yield a unique Pareto efficient allocation since climate change and climate policies have distributional consequences of their own. As a result, different property rights characterize a set of efficient allocations. In addition to Negishi weights, which implicitly reflect mixed property rights, we define beneficiary pays and polluter pays weights, derived from liability rules consistent with right to pollute and right to no pollution property rights, respectively. These weights correspond to distinct Pareto efficient allocations that differ only in the distribution of the cost burden of climate damages and abatement, and we show how nations’ characteristics shape their preferences for different property rights regimes. Unlike the Negishi solution, the other efficient allocations involve international transfers for abatement and climate damages, providing theoretically grounded definitions for climate mitigation finance and Loss and Damage payments—both widely discussed in international negotiations. We use calibrated simulations to illustrate the distributional implications of different property rights regimes.