In this piece, Meridian Economics’ thinking on ‘Phase Down Finance’ is featured by the World Economic Forum as part of their Sustainable Investment series. The piece responds to the observation that divestment from emitting assets does not necessarily lead to their closure, leaving a gap in low carbon investment strategies. We join a growing number of voices calling for investors to remain invested, but only on conditions of responsible and Paris-aligned phase-down of emitting assets. We term this “Phase Down Finance and argue that it can assist in managing the socio-economic consequences of transition while ensuring Paris-aligned outcomes, and providing a mechanism for compensation of lost economic value under international climate finance regimes.
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