How to use this calculator
- Enter emissions exposed to transition pricing.
- Set current and future carbon-price assumptions.
- Apply the reduction expected before the future scenario.
- Compare incremental exposure with operating profit.
#2948 · Energy & Environment Tool
Climate Risk Transition Risk Calculator
Screen transition risk by combining emissions, a future carbon price, demand exposure, and the probability that the scenario occurs. The calculator shows gross cost, revenue at risk, and a probability-weighted exposure for comparative planning.
Calculator
Climate transition exposureFormula
Gross exposure = Reduced emissions × future price + Revenue × demand impact %
Weighted exposure = Gross exposure × probability %
Weighted exposure = Gross exposure × probability %
What the result means
The main result is incremental carbon-cost exposure between the current and future cases. A negative value means modeled reductions more than offset the price increase.
This simplified scenario excludes pass-through, free allowances, taxes, technology capex, and interactions with specific regulations.
Example calculation
After a 25% cut, 35,000 tCO2e becomes 26,250 and costs $2,887,500 at $110. A 2% impact on $80 million adds $1.6 million; weighted at 35%, exposure is $1,570,625.
Tips for better results
- Use several future prices.
- Separate direct and value-chain exposure.
- Link reductions to funded projects.
- Compare exposure with profit and cash flow.
- Update scenarios as policy changes.
Frequently asked questions
Is the risk-adjusted exposure a guaranteed loss?
No. It is a scenario-weighted planning estimate, not a prediction or accounting provision.
Should I enter tonnes of CO2 or CO2e?
Use metric tonnes of carbon dioxide equivalent (tCO2e) consistently across all emissions fields.
What happens if I enter zero?
Zero is accepted where it is meaningful. The calculator blocks negative values and any input that would make the selected scenario invalid.
How should uncertain inputs be handled?
Run conservative, central, and optimistic cases by changing the uncertain inputs and compare the resulting exposure.
Can this result be used for regulatory reporting?
It is a planning estimate only. Apply the required reporting standard, boundaries, factors, and assurance process separately.
Related calculators
Transition stress-test inputs
| Variable | Unit | Use |
|---|---|---|
| Current price | $/tCO2e | Baseline planning cost |
| Future price | $/tCO2e | Stress-test assumption |
| Reduction | % | Planned emissions decline |
| Operating profit | $ | Financial resilience context |