Cross-Border Risks of a Global Economy in Mid-Transition

Abstract

This paper analyzes the cross-border risks that could result from a decarbonization of the world economy. We develop a typology of cross-border risks and their respective channels. Our qualitative and quantitative scenario analysis suggests that the mid-transitiona period during which fossil-fuel and lowcarbon energy systems co-exist and transform at a rapid pacecould have profound stability and resilience implications for global trade and the international financial system.