Ireland must become low-carbon economy sooner, says Central Bank chief

(Irish Times, 5 Feb 2019) Philip Lane outlines risks of climate change to Irish economy, calls for higher carbon tax.

If the pace of transition to a low-carbon economy in Ireland is too slow, it will pose macroeconomic and financial stability risks as sharper adjustments will be necessary, the Central Bank governor Philip Lane has warned.

The financial system had a central role in managing climate risks and financing decarbonisation, but regulatory policies and supervisory practices must also play their part, he said in Galway on Tuesday.

Outlining challenges facing the Irish financial system posed by climate change, Mr Lane said the necessary transition to a low-carbon economy – supported by a phased schedule of increasing carbon taxes – required the funding of considerable investment by households, firms and the Government.

An increase in frequency of severe weather events had implications for macroeconomic outcomes, asset prices, house prices, credit risks and the cost and coverage of insurance contracts, he said.

“The economy-wide and societal challenges posed by climate change mean that it is inevitable that the financial system has a central role in managing climate risks and financing the carbon transition,” he added.

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Irish Times, 5 Feb 2019: Ireland must become low-carbon economy sooner, says Central Bank chief