{"id":32456,"date":"2026-03-06T13:27:47","date_gmt":"2026-03-06T18:27:47","guid":{"rendered":"https:\/\/www.bu.edu\/gdp\/?p=32456"},"modified":"2026-03-06T13:36:58","modified_gmt":"2026-03-06T18:36:58","slug":"power-projects-face-climate-double-whammy","status":"publish","type":"post","link":"https:\/\/www.bu.edu\/gdp\/2026\/03\/06\/power-projects-face-climate-double-whammy\/","title":{"rendered":"Power Projects Face Climate \u201cDouble Whammy\u201d"},"content":{"rendered":"<figure id=\"attachment32458\" aria-describedby=\"caption-attachment32458\" style=\"width: 713px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" src=\"\/gdp\/files\/2026\/03\/kilian-murphy-fMQAb8kNEF0-unsplash-636x358.jpg\" alt=\"\" width=\"703\" height=\"396\" class=\" wp-image-32458\" srcset=\"https:\/\/www.bu.edu\/gdp\/files\/2026\/03\/kilian-murphy-fMQAb8kNEF0-unsplash-636x358.jpg 636w, https:\/\/www.bu.edu\/gdp\/files\/2026\/03\/kilian-murphy-fMQAb8kNEF0-unsplash-1024x576.jpg 1024w, https:\/\/www.bu.edu\/gdp\/files\/2026\/03\/kilian-murphy-fMQAb8kNEF0-unsplash-768x432.jpg 768w, https:\/\/www.bu.edu\/gdp\/files\/2026\/03\/kilian-murphy-fMQAb8kNEF0-unsplash-1536x864.jpg 1536w, https:\/\/www.bu.edu\/gdp\/files\/2026\/03\/kilian-murphy-fMQAb8kNEF0-unsplash-2048x1152.jpg 2048w\" sizes=\"(max-width: 703px) 100vw, 703px\" \/><figcaption id=\"caption-attachment32458\" class=\"wp-caption-text\">Fuzhou, China. Photo by Kilian Murphy via Unsplash.<\/figcaption><\/figure>\n<p>By <a href=\"https:\/\/www.bu.edu\/gdp\/profile\/xia-li\/\" target=\"_blank\" rel=\"noopener\">Xia Li<\/a><\/p>\n<p>A new power plant can look like a straightforward win for a fast-growing economy. It means more electricity for homes, hospitals, factories and schools. But our new study suggests the story is far more complicated. Today, every major energy investment is increasingly shaped by two climate realities at once.<\/p>\n<p>First, there\u2019s the risk from the\u00a0<em>changing climate itself<\/em>: stronger storms, worsening floods, rising seas, harsher heat and growing water stress. These hazards can damage infrastructure built for historical climate conditions; for example, power plants designed to withstand flooding expected once every 100 years may now face these conditions more frequently.<\/p>\n<p>Second, there\u2019s the risk from the\u00a0<em>world\u2019s response<\/em>\u00a0to climate change: tighter regulations, changing energy markets and growing pressure to cut emissions. For high-carbon projects, these shifts can turn a \u201cgood investment\u201d into a costly liability.<\/p>\n<p>A <span><a href=\"https:\/\/iopscience.iop.org\/article\/10.1088\/1748-9326\/ae3848\" target=\"_blank\" rel=\"noopener\"><strong><em>new journal article<\/em><\/strong><\/a><\/span> in\u00a0<em>Environmental Research Letters<\/em>\u00a0calls this pairing a climate \u201cdouble whammy\u201d: the same power projects that face high risks from the energy transition often also face high physical climate risks.<\/p>\n<h5>Two Climate Risks That Are Usually Studied Separately<\/h5>\n<p>The authors\u2014<a href=\"https:\/\/www.bu.edu\/gdp\/profile\/xia-li\/\" target=\"_blank\" rel=\"noopener\"><span>Xia Li<\/span><\/a>, <span><a href=\"https:\/\/www.bu.edu\/gdp\/profile\/kevin-p-gallagher\/\" target=\"_blank\" rel=\"noopener\">Kevin P. Gallagher<\/a><\/span> and <a href=\"https:\/\/www.bu.edu\/gdp\/profile\/xu-chen\/\" target=\"_blank\" rel=\"noopener\">Xu Chen<\/a>\u2014look at 578 overseas power projects across 105 countries, financed bilaterally by the US, China and Japan, the world\u2019s three largest economies. They focus on two categories of climate risks:<\/p>\n<ul>\n<li><strong>Transition risk<\/strong>: the risk that a project becomes less valuable in a world moving toward lower emissions. The study measures this using a project\u2019s\u00a0committed CO\u2082 emissions\u2014the carbon pollution a plant is expected to produce over its operating lifetime once it\u2019s built.<\/li>\n<li><strong>Physical risk<\/strong>: the risk that climate impacts such as flooding or water stress harm the project or disrupt its performance. The team\u00a0geolocates each plant\u00a0and matches its coordinates with forward-looking climate risk indicators from\u00a0Moody\u2019s ESG Solutions.<\/li>\n<\/ul>\n<p>Finance and policy debates often treat decarbonization and climate resilience as separate conversations. This study, by linking project-specific emissions with the corresponding physical climate exposure, brings the two together.<\/p>\n<h5>The Risks Often Pile Up, Not Cancel Out<\/h5>\n<p>Across the full set of projects, the researchers find a positive relationship between transition and physical climate risks. In other words, projects that lock in more CO\u2082 emissions also tend to be in places with greater exposure to climate hazards. This is the double whammy.<\/p>\n<p>Physical and transition climate risks aren\u2019t just two separate problems. They can reinforce each other. A plant hit by floods, heat waves or water shortages may become more expensive to insure and maintain\u2014leaving less financial room to adapt or upgrade. Meanwhile, a plant threatened by tougher climate policies may struggle to attract new capital for resilience investments. As Figure 1 shows, these bilaterally financed power projects are geographically distributed across regions with varying fuel types and levels of physical climate risks.<\/p>\n<p style=\"text-align: center;\"><strong>Figure 1: Distribution of Overseas Power Projects and Their Physical Climate Risks<\/strong><\/p>\n<figure id=\"attachment32459\" aria-describedby=\"caption-attachment32459\" style=\"width: 646px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" src=\"\/gdp\/files\/2026\/03\/double-whammy-figure-636x333.jpg\" alt=\"\" width=\"636\" height=\"333\" class=\"size-medium wp-image-32459\" srcset=\"https:\/\/www.bu.edu\/gdp\/files\/2026\/03\/double-whammy-figure-636x333.jpg 636w, https:\/\/www.bu.edu\/gdp\/files\/2026\/03\/double-whammy-figure-1024x535.jpg 1024w, https:\/\/www.bu.edu\/gdp\/files\/2026\/03\/double-whammy-figure-768x402.jpg 768w, https:\/\/www.bu.edu\/gdp\/files\/2026\/03\/double-whammy-figure-1536x803.jpg 1536w, https:\/\/www.bu.edu\/gdp\/files\/2026\/03\/double-whammy-figure.jpg 1725w\" sizes=\"(max-width: 636px) 100vw, 636px\" \/><figcaption id=\"caption-attachment32459\" class=\"wp-caption-text\"><strong>Source:<\/strong> <a href=\"https:\/\/iopscience.iop.org\/article\/10.1088\/1748-9326\/ae3848#erlae3848f2\" target=\"_blank\" rel=\"noopener\">Li et al 2026<\/a>.<\/figcaption><\/figure>\n<h5>Fossil Fuels Are the Main Driver of The Double Whammy<\/h5>\n<p>The strongest pattern comes from fossil fuel projects. The study finds that the overall positive relationship between physical risk and emissions is\u00a0driven primarily by fossil fuel investments, with coal and gas standing out.<\/p>\n<p>This matters because overseas fossil fuel plants are often long-lived. Once built, they can operate for decades, locking in emissions and shaping national power systems. If these projects are also located in places with intensifying physical hazards, they may become expensive burdens for host countries through repairs, outages, higher financing costs or early retirement.<\/p>\n<p>The authors connect this to a familiar term in climate finance:\u00a0stranded assets.\u00a0These are assets that lose value earlier than expected as policies, markets or technologies change. Our results suggest another reason this can happen: infrastructure may also become financially vulnerable because of physical climate exposure.<\/p>\n<h5>A Reminder: \u201cClean\u201d Doesn\u2019t Automatically Mean \u201cSafe\u201d<\/h5>\n<p>One interesting part of the study is its nuance about renewables. Clean energy projects generally have low transition risks because they don\u2019t rely on high emissions to generate revenue, but they still face the physical impacts of climate change. For example, hydropower projects face the\u00a0highest flood risk\u00a0among fuel types, while solar projects show high exposure to\u00a0water stress.\u00a0Each energy technology has a distinct climate-resilience profile. Planning and financing decisions need to consider those profiles upfront.<\/p>\n<h5>It Doesn\u2019t Matter Much Who Finances the Project<\/h5>\n<p>Because the study focuses on projects financed by the US, China and Japan, it also speaks to a major geopolitical and development question: do different financiers create different risk outcomes?<\/p>\n<p>Surprisingly, the study finds\u00a0no evidence\u00a0that the positive relationship between physical and transition risks differs meaningfully by the\u00a0financing country, neither do we find major difference\u00a0in the double-risk pattern across financing channels.<\/p>\n<p>This is an important message for the broader policy debate. It suggests the double whammy should not just be a blame on the private sector or a country. Instead, it indicates a systemic issue tied to how and where the global power sector has been built over the last two decades, and what climate change is now doing to the risk landscape.<\/p>\n<h5>What Decision-Makers Can Do<\/h5>\n<p>The paper points to a straightforward policy and finance lesson: integrate physical and transition climate risk assessments in international energy finance. In practice, that could mean:<\/p>\n<ul>\n<li><strong>Screening projects for both risks from the start<\/strong>. Not just \u201cHow much CO\u2082 will this plant emit?\u201d but also \u201cHow vulnerable is it to floods, heat, storms and water stress over its lifetime?\u201d<\/li>\n<li><strong>Reconsidering new overseas fossil fuel investments<\/strong>. The study offers another rationale for reducing investment in coal and gas abroad, or considering earlier retirement for existing projects.<strong>\u00a0<\/strong><\/li>\n<li><strong>Building resilience into clean energy expansion<\/strong>. Clean energy can support decarbonization, but they need climate-smart siting, design and operation to ensure that these projects are also resilient.<\/li>\n<\/ul>\n<h5>The Botton Line<\/h5>\n<p>Climate risks don\u2019t come one at a time. For overseas power projects, the economic risk of a low-carbon transition and the physical climate risk exposures can stack up on the same assets\u2014creating a double whammy that investors, governments and communities may not be prepared for. A clear understanding of how these risks interact is essential to designing policies that strengthen resilience while supporting an equitable, efficient shift to low-carbon activities.<\/p>\n<p>*<\/p>\n<a href=\"https:\/\/iopscience.iop.org\/article\/10.1088\/1748-9326\/ae3848\" class=\"button\">Read the Journal Article<\/a>\n","protected":false},"excerpt":{"rendered":"<p>By Xia Li A new power plant can look like a straightforward win for a fast-growing economy. It means more electricity for homes, hospitals, factories and schools. But our new study suggests the story is far more complicated. Today, every major energy investment is increasingly shaped by two climate realities at once. First, there\u2019s the [&hellip;]<\/p>\n","protected":false},"author":25029,"featured_media":32458,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[398,1070,156,72,105,1075],"tags":[4924,1083,394,1933,1935,497,1136,4947,1165,1047,1079,429,4949,1687,4948,622,416,582],"_links":{"self":[{"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/posts\/32456"}],"collection":[{"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/users\/25029"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/comments?post=32456"}],"version-history":[{"count":6,"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/posts\/32456\/revisions"}],"predecessor-version":[{"id":32465,"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/posts\/32456\/revisions\/32465"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/media\/32458"}],"wp:attachment":[{"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/media?parent=32456"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/categories?post=32456"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/tags?post=32456"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}