Public Finance: Facilitating Climate Transition under Fundamental Uncertainty Increasing Risk

At the time of writing, the world is in great need of capital development and deployment to mitigate and halt the climate crisis through decarbonization. However, in recent years, central banks have pivoted from targeting historically low interest rates toward a rapid and wide-spread rate hiking regime, which threatens spending on physical capital required to decarbonize at a global scale. This article argues that governments around the world should develop more public financial institutions and increase the capacity of existing public banks to respond to these myriad challenges. This article highlights how the US government and others worldwide have successfully deployed these strategies before, despite present trends under the second Trump administration, and notes the ways these institutions may promote this capacity going forward.