Moody's Talks - Emerging Markets Decoded Emerging markets with stronger governance, diversified economies best placed to achieve a socially “just transition”
Nov 9, 2022
Ana Rayes, a member of the ESG team at Moody's, sheds light on the socioeconomic impact of the carbon transition in emerging markets. She discusses the challenges posed by rising energy prices and the complexities of implementing clean energy solutions. Rayes emphasizes the importance of a 'just transition' that protects vulnerable populations and fosters job creation. Evaluating the readiness of different sovereigns, she highlights that countries like Mauritius and Uruguay are better positioned, while Nigeria and Angola face significant hurdles.
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Conflict's Impact on Energy Transition
- The Russia-Ukraine conflict temporarily increased fossil fuel use due to energy security concerns but will accelerate the long-term energy transition.
- High energy prices and interest rates challenge lower-income countries' ability to invest in renewables.
Understanding a Just Transition
- A just transition means shifting to a low-carbon economy while maximizing socioeconomic benefits and minimizing harm to vulnerable groups.
- Emerging markets face greater challenges in achieving this due to social risks, weaker governance, and less robust safety nets.
Benefits of a Just Transition
- A just transition can create jobs in new sectors and improve public health by reducing pollution.
- It can provide universal access to affordable, clean, and reliable energy, generating socioeconomic benefits.