Risks and opportunities related to environmental transition are usually evaluated through the use of scenarios, produced and maintained by international bodies such as the International Energy Agency. This approach assumes perfect knowledge of the scenario by the agent, but in reality, scenario...

We develop a real-options approach to evaluate energy assets and potential investment projects under transition scenario uncertainty. Dynamic scenario uncertainty is modelled by assuming that the economic agent acquires the information about the scenario progressively by observing a signal. The...

We develop a structural model for pricing a defaultable bond issued by a companysubject to climate transition risk. We assume that the magnitude of thetransition risk impacts depends on a transition scenario, which isinitially unknown but is progressively revealed through theobservation of the...