The Impact of Climate Policy on Oil and Gas Investment: Evidence from Firm-Level Data

The Impact of Climate Policy on Oil and Gas Investment: Evidence from Firm-Level Data
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Volume/Issue: Volume 2023 Issue 140
Publication date: June 2023
ISBN: 9798400248443
$20.00
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Topics covered in this book

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Economics- Macroeconomics , Taxation - General , Economics / General , Industries - Energy , Environmental Economics , Public Policy- Environmental Policy , Fossil fuel phase out , Paris Agreement , energy transition , DiD , climate policy uncertainty , gas investment , investment model , climate policy exposure , gas firm , Climate policy , Oil sector , Climate change , Oil prices , Carbon tax , Global

Summary

Using a text-based firm-level measure of climate policy exposure, we show that climate policies have led to a global decline of 6.5 percent in investment among publicly traded oil and gas companies between 2015 and 2019, with European companies experiencing the most significant impact. Similarly, climate policy uncertainty has also had a negative impact. Results support the Neoclassical investment model, which predicts a pre-emptive cut in investment in reaction to downward shifts in prospective demand, in contrast with the “green paradox” that predicts an increase in current investment to shift production toward the present.