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Transition scenarios for Ministries of Finance: a review of relevant approaches and a roadmap for upgrading analytical capability

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Institution
Coalition for Capacity on Climate Action (C3A)
Author(s)
Bastien Bedossa, Adam Poupard, and Matthieu Bordenave
Published
Topic Area
The economic and fiscal impacts the green transition
Question
What are the macroeconomic impacts of the transition and how can they be managed?
Citation

Coalition for Capacity on Climate Action (2025) Transition scenarios for Ministries of Finance: a review of relevant approaches and a roadmap for upgrading analytical capability, Contribution to ‘Compendium of Practice from a Global Community of Ministries of Finance and Leading Organizations’, Coalition of Finance Ministers for Climate Action

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A recent technical note by C3A explores methodological approaches that Ministries of Finance could draw upon to build scenarios of the low-carbon and nature transition to support analysis of risks and opportunities and develop appropriate policies.

Global climate scenarios have been developed by the Intergovernmental Panel on Climate Change (IPCC), Network for Greening the Financial System (NGFS), and the International Energy Agency (IEA), for instance, with scenarios for biodiversity in the works, and regional and national scenarios also being developed. These are all valuable at various stages in the policymaking process.

Key Messages

  • Global scenarios created by international organizations (e.g., IPCC, NGFS, IEA) helped create a general framework for assessing the long-term impacts of climate change and can be used to assess risks and opportunities of national strategies in the global context.
  • Regional and national scenarios have primarily been used to inform public policies, including national contributions to global agendas such as nationally determined contributions (NDCs), Long-Term Low-Emission Development Strategies, and forthcoming National Biodiversity Strategies and Action Plans (NBSAPs).
  • Scenarios can be used to assess interlinkages between global trends, national vulnerabilities to climate change, and domestic policy priorities. This is especially useful for assessing the impacts of biophysical transformation on economic and fiscal aggregates, on opportunities and risks of the transition, and short- and long-term impacts of climate policies, and for establishing narratives for transition pathways.
  • Throughout the policy cycle, scenario analysis can help inform decision-makers, set a policy agenda for the transition, refine priorities, and design policy options. More broadly, scenarios can facilitate the exploration of ideas within the framework of systemic change.
  • As existing scenario-based approaches are not specifically designed for decision-making processes within MoFs, the C3A technical note outlines how current or new scenarios could be developed and used by MoFs for policy appraisals in the transition process.
Keywords
capacity buildingdatapolicy prioritiesrisk assessmentscenarios