LONDON -The rise in demand for coal following Russia's invasion of Ukraine is a setback to reaching a net-zero economy by 2050 but will also help bolster investment in renewable energy, a Bank of England (BoE) policymaker said on Tuesday.
Elisabeth Stheeman, a member of the BoE's Financial Policy Committee (FPC), said the impact on the transition to net zero of the increase in energy prices, as a result of Russia’s invasion of Ukraine, was yet to be determined.
"Recent events have highlighted the transition risks that businesses face," Stheeman said in a speech.
"In light of this situation, the role for central banks and supervisors is to continue to help build resilience to climate-related financial risks, and in doing so they can also help support the transition," she added.
The Bank has conducted a "climate scenario" exercise to assess the resiliency of banks, insurers and the wider financial system to different climate-related risks.
Aggregated results will be published on May 24.
"The exercise is not intended to inform the setting of capital requirements," Stheeman said.
"The FPC will also use it to understand risk management capabilities in the financial sector, and how banks and insurers may adapt their business models in the face of different climate pathways," she added.