In a speech at COP31 in Antalya, Dutch central banker Olaf Sleijpen, chair of the Network for Greening the Financial System (NGFS), called for a faster energy transition to reduce exposure to both climate damage and volatile fossil fuel prices. Adaptation must complement efforts to limit warming, rather than replace them. The transition must reduce fossil fuel use to a level consistent with net zero greenhouse gas emissions, since diversifying the energy mix alone would not sufficiently limit climate change.
Climate shocks already affect economic activity and financial stability, while fossil fuel price increases transmit through inflation, production costs and purchasing power. A temporary 25% rise in carbon intensive energy prices could increase inflation by an average of 2 percentage points in the short term, with larger effects in economies more dependent on those fuels. Earlier action could also reduce transition costs. NGFS scenarios put the economic cost of early, globally coordinated action at around 0.5% of global GDP by 2030, compared with 1.3% following a delay of three years.
Sleijpen urged governments to implement their Nationally Determined Contributions and provide credible, consistent climate policies that enable private investment, including emissions pricing. Targeted, temporary subsidies would support households and firms most affected by the transition, whose costs governments cannot bear alone. Greater reliance on renewables also creates dependencies on batteries and their raw materials, requiring diversification across renewable energy sources and, particularly in the European Union, greater integration of national energy markets.