• Energy Research
• 2025-2025close
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• Imperial College London: Spiral close

Abstract Climate change and the associated issue of curbing carbon emissions have risen on the agenda of policymakers worldwide. However, global coordination on matters such as harmonized regulation has been subject to significant political frictions, and the large intergovernmental transfers needed to finance the transition of developing economies have proven hard to raise. Recently, there have been considerable responses to climate change from the private sector, with stakeholders placing more pressure on firms, and financial markets mobilizing increasingly more capital towards the reduction of negative externalities. We argue that although multinational enterprises (MNEs) have been a major contributor to the problem, they can be an important part of the solution – they have unique features that enable them to play an important role in the fight against climate change. MNEs have extensive and efficient internal markets for governance, financing, and technology, which enable them to circumvent country-specific frictions to climate action such as heterogeneous regulation, corruption, and the lack of technology. We analyze how different public and private incentive mechanisms could be designed to leverage MNEs’ unique features, realign their incentives, and engage their potential to play a role in decarbonizing the economy. Lastly, we discuss challenges, opportunities, and future research.

Abstract Climate change and the associated issue of curbing carbon emissions have risen on the agenda of policymakers worldwide. However, global coordination on matters such as harmonized regulation has been subject to significant political frictions, and the large intergovernmental transfers needed to finance the transition of developing economies have proven hard to raise. Recently, there have been considerable responses to climate change from the private sector, with stakeholders placing more pressure on firms, and financial markets mobilizing increasingly more capital towards the reduction of negative externalities. We argue that although multinational enterprises (MNEs) have been a major contributor to the problem, they can be an important part of the solution – they have unique features that enable them to play an important role in the fight against climate change. MNEs have extensive and efficient internal markets for governance, financing, and technology, which enable them to circumvent country-specific frictions to climate action such as heterogeneous regulation, corruption, and the lack of technology. We analyze how different public and private incentive mechanisms could be designed to leverage MNEs’ unique features, realign their incentives, and engage their potential to play a role in decarbonizing the economy. Lastly, we discuss challenges, opportunities, and future research.

The global expansion of solar photovoltaic (PV) is central to the global energy transition. As governments aim to triple renewable energy capacity by 2030, solar PV is poised for rapid growth, particularly outside mid-latitude regions (China, Europe, US) where uptake has been highest. These new growth areas face diverse environmental conditions, where factors like higher temperatures and aerosol concentrations strongly impact solar power production. A comprehensive review of these effects therefore aids PV performance optimization. This review examines six key influences: solar irradiance, ambient temperature, atmospheric conditions, terrain effects, extreme weather events, and long-term irradiance changes. First, solar irradiance has strong geographic and temporal variability, making it the most significant factor. Second, raising module temperature reduces efficiency by 0.4–0.5% per degree Celsius, limiting productivity in hotter climates. Third, atmospheric conditions (clouds, aerosols, pollutants, and dust) can reduce electricity output by up to 60%, especially in desert regions. Fourth, terrain factors like albedo and snow present mixed effects, with increased reflection boosting output but snow obstructing panels. Fifth, extreme weather like wildfires and hailstorms cause substantial damage, while solar eclipses lead to large but short-lived output losses. Finally, long-term changes in solar irradiance, driven by climate change and air pollutants, present future challenges for maintaining PV efficiency. Optimizing PV systems for diverse climates and mitigating environmental impacts on productivity is important to the continued success of solar photovoltaics. This review highlights the need for tailored strategies to maintain performance in varied and evolving environmental contexts.

The global expansion of solar photovoltaic (PV) is central to the global energy transition. As governments aim to triple renewable energy capacity by 2030, solar PV is poised for rapid growth, particularly outside mid-latitude regions (China, Europe, US) where uptake has been highest. These new growth areas face diverse environmental conditions, where factors like higher temperatures and aerosol concentrations strongly impact solar power production. A comprehensive review of these effects therefore aids PV performance optimization. This review examines six key influences: solar irradiance, ambient temperature, atmospheric conditions, terrain effects, extreme weather events, and long-term irradiance changes. First, solar irradiance has strong geographic and temporal variability, making it the most significant factor. Second, raising module temperature reduces efficiency by 0.4–0.5% per degree Celsius, limiting productivity in hotter climates. Third, atmospheric conditions (clouds, aerosols, pollutants, and dust) can reduce electricity output by up to 60%, especially in desert regions. Fourth, terrain factors like albedo and snow present mixed effects, with increased reflection boosting output but snow obstructing panels. Fifth, extreme weather like wildfires and hailstorms cause substantial damage, while solar eclipses lead to large but short-lived output losses. Finally, long-term changes in solar irradiance, driven by climate change and air pollutants, present future challenges for maintaining PV efficiency. Optimizing PV systems for diverse climates and mitigating environmental impacts on productivity is important to the continued success of solar photovoltaics. This review highlights the need for tailored strategies to maintain performance in varied and evolving environmental contexts.

Using data on 10,776 firms across 22 emerging markets, we show that both credit constraints and weak green management hold back corporate investment in green technologies embodied in new machinery, equipment, and vehicles. In contrast, investment in measures to explicitly reduce emissions and other pollution is mainly determined by the quality of a firm’s green management and less so by binding credit constraints. Data from the European Pollutant Release and Transfer Register reveal the environmental impact of these organizational constraints. In areas where more firms are credit constrained and weakly managed, industrial facilities systematically emit more CO2 and pollutants. A counterfactual analysis shows that credit constraints and weak management have respectively kept CO2 emissions 4.5% and 2.3% above the levels that would have prevailed without such constraints. This is further corroborated by our finding that in localities where banks had to deleverage more due to the global financial crisis, carbon emissions by industrial facilities remained 5.6% higher a decade later. This paper was accepted by Lukas Schmid, finance. Supplemental Material: The online appendices and data files are available at https://doi.org/10.1287/mnsc.2023.00772 .

Using data on 10,776 firms across 22 emerging markets, we show that both credit constraints and weak green management hold back corporate investment in green technologies embodied in new machinery, equipment, and vehicles. In contrast, investment in measures to explicitly reduce emissions and other pollution is mainly determined by the quality of a firm’s green management and less so by binding credit constraints. Data from the European Pollutant Release and Transfer Register reveal the environmental impact of these organizational constraints. In areas where more firms are credit constrained and weakly managed, industrial facilities systematically emit more CO2 and pollutants. A counterfactual analysis shows that credit constraints and weak management have respectively kept CO2 emissions 4.5% and 2.3% above the levels that would have prevailed without such constraints. This is further corroborated by our finding that in localities where banks had to deleverage more due to the global financial crisis, carbon emissions by industrial facilities remained 5.6% higher a decade later. This paper was accepted by Lukas Schmid, finance. Supplemental Material: The online appendices and data files are available at https://doi.org/10.1287/mnsc.2023.00772 .