Leading researchers and policymakers pooled their expertise to confront the challenges climate change poses to the global economy over two days at Lancaster University Management School.

The ‘Climate Change and the Global Economy’ workshop brought together academics from UK and European universities with representatives from institutions including the Bank of England, the European Central Bank, and the OECD.

They discussed a wide range of issues on a topic increasingly important to business and society.

In her keynote address, Professor Hilde C Bjørnland, from BI Norwegian Business School, discussed her study on the effects of the introduction of the EU Emissions Trading System (EU ETS). Her research revealed that stringent emission supply restrictions mandated by the EU ETS framework played a pivotal role in reducing emissions. However, demand-side factors, including changes in consumer behaviour, production practices, and government policies, also contributed significantly, albeit to a lesser extent, to curb emissions.

Other researchers presented work highlighting that while economic literature has primarily focused on the effects of carbon taxes, it is essential to consider other policies and green technology for a more accurate and realistic analysis. Economic models should incorporate empirically validated facts, based on concepts such as resilience and biodiversity. Furthermore, accounting for differences across countries and sectors is crucial for understanding the economy's response to both physical and transition risks.

Professor Barbara Annichiarico, from the University of Rome Tor Vergata, delivered a special lecture for the LUMS Economics Department’s Macro Reading Group. She presented a paper examining the role of expectations and monetary policy in understanding the economy's response to climate policies. Her analysis demonstrated that although the transition to a greener economy can pose challenges to price stability, central banks can mitigate these risks by acting within the scope of their mandate.

The workshop was organised by Drs Stefano Fasani and Anthony Priolo, of Lancaster’s Department of Economics, as part of the Environmental Policy and Carbon Leakage: The Case of Multinationals project, funded through a LUMS Pump Prime grant. It was also sponsored by the LUMS Centre for Financial Econometrics, Asset Markets & Macroeconomic Policy.