How can weather derivatives be used by the electricity and gas sector in Belgium, to protect against climate change ?

Abstract

With the climate change that the world is currently experiencing, many different sectors have been deeply impacted in their activities. Among these, the energy sector stands as no exception to this rule, and its vulnerability is widely acknowledged by stakeholders. In this context, the financial system can provide assistance, as evidenced by the emergence of weather derivatives. Building upon the expertise of climate expert groups and utilizing meteorological and energy-related data, this work aims to emphasize an options-based strategy that could be adopted by the sector, particularly by gas and electricity retailers, to mitigate revenue variations linked to temperature fluctuations.