<\/p>\n
News<\/strong>: Recently, the Reserve Bank of India (RBI) has hiked the main policy rate like the central bank of the western economies. Further, <\/span>Holcim, MNC of cement making is rearranging its portfolio (sell in India) to fit its climate adaptation plan for 2025.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n The inflation has been at a higher <\/span>level<\/span><\/b>. Therefore, the central bank decided to tighten credit for the sake of price stability.\u00a0<\/span>\u00a0<\/span><\/p>\n Therefore, <\/span>big investors<\/span><\/b> like Indian cement-makers like Aditya Birla group etc. would find it difficult to invest in the <\/span>Holcim\u2019s assets<\/span><\/b> due to <\/span>dearer debt.<\/span><\/b>\u00a0<\/span><\/p>\n The cost of capital is going to increase. The local banks will have to pay 4.4% on funds taken from its repo window. Further, the lenders are expected to raise their own rates in response. Therefore, the cost of borrowings will increase in India.<\/span>\u00a0<\/span><\/p>\n There is an ongoing global reshuffle of <\/span>carbon-heavy assets<\/span><\/b>. Till now it was visible coal mining and oil and gas sector. But, <\/span>Holcim\u2019s rearrangement<\/span><\/b> of its asset is a step in this direction in the field of cement industry. The cement making business involves <\/span>dirty processes<\/span><\/b> that cause carbon emissions and pollution. Therefore, corporations are setting emission caps to go green.<\/span>\u00a0<\/span><\/p>\n This would worsen the <\/span>planet\u2019s crisis<\/span><\/b>. This system will not bring emissions down. There are many buyers for <\/span>high-exhaust<\/span><\/b> and <\/span>high-return assets<\/span><\/b>. The polluting technologies remain in daily use by those companies which are under less climate pressure.<\/span>\u00a0<\/span><\/p>\n The basic problem behind climate arbitrage stems from <\/span>green plans<\/span><\/b> running <\/span>ahead <\/span><\/b>of <\/span>usage reality<\/span><\/b>.\u00a0<\/span>\u00a0<\/span><\/p>\n Therefore, the <\/span>game theory<\/span><\/b> calls for collective action with a cap-and-trade system based on <\/span>carbon pricing<\/span><\/b>. A global framework should be created which stop a reshuffle of assets.<\/span> Source<\/strong>: The post is based on an article \u201cClimate arbitrage: Cost of carbon versus capital<\/strong>\u201d published in the Live Mint<\/strong> on 05<\/strong><\/span>th<\/strong> May 2022<\/strong>.<\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" News: Recently, the Reserve Bank of India (RBI) has hiked the main policy rate like the central bank of the western economies. Further, Holcim, MNC of cement making is rearranging its portfolio (sell in India) to fit its climate adaptation plan for 2025.\u00a0\u00a0\u00a0 Why was the policy rate hiked?\u00a0 The inflation has been at a… Continue reading Climate arbitrage: Cost of carbon versus capital\u00a0<\/span><\/a><\/p>\n","protected":false},"author":10328,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10501],"class_list":["post-182926","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-live-mint","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704918450},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/182926","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10328"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=182926"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/182926\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=182926"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=182926"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=182926"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Why was the policy rate hiked?<\/span><\/b>\u00a0<\/span><\/h5>\n
Impact of the policy hike<\/span><\/b>\u00a0<\/span><\/h5>\n
About the Climate arbitrage<\/span><\/b><\/h5>\n
What are the issues in climate arbitrage?<\/span><\/b>\u00a0<\/span><\/h5>\n
Way Forward<\/span><\/b>\u00a0<\/span><\/h5>\n
\n<\/span><\/p>\n