Climate Risks in the Power Generation Sector

May 2024

Source: United Nations EP

Photo Source: Unsplash

Despite rapid growth in renewable energy, fossil fuels still account for 82% of the global energy mix. As a result of its substantial contribution to CO2 emissions, and with the global energy mix expected to shift significantly in the coming decades, the power generation sector faces high transition and physical risks.  

This brief provides an in-depth outline of the key transition and physical risks faced by the power generation sector, focusing on both power generation from fossil fuels and low-emissions alternatives. Through case studies and risk management recommendations for each risk identified, the report aims at assisting financial institutions in effectively managing both their own risks associated with power generation and those of their clients. By helping firms mitigate risks and reduce their financed emissions, this brief can also assist financial institutions to meet their net-zero commitments. 

This brief is part of a series covering the following major economic sectors and their associated physical and transition climate risks. All these resources are part of the UNEP FI Risk Centre which helps members take an integrated approach to sustainability risks and aims to accelerate the move a sustainable financial and economic system

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