Climate Double Whammy: Assessing the Combined Climate Risks of Overseas Power Projects

Abstract This study deploys new data and examines the combined climate risks−i.e., the combination of facilities’ climate change exposures and climate change impact−of bilaterally-financed global power projects from the world’s three biggest economies: the U.S., China, and Japan. We find a positive association between climate change impacts and climate change exposures across these overseas power projects. Specifically, coal power plants have significantly higher climate change impacts and climate change exposures. Although hydropower projects can have low climate change impacts, they have high climate change exposures compared to most other fuel types. Projects financed by the U.S., China, and Japan have similar climate change impacts and exposures. Greenfield foreign direct investment projects have lower combined climate risks than projects financed by development finance institutions.