Climate policy does not discourage oil and gas investments and requires global coordination

Authors: Francesca Larosa (University College London), Figo Lau (University College London), Nadia Ameli (University College London)
Presenter: Francesca Larosa (University College London)
Abstract: The transition to a global low-carbon economy requires massive investments in low-carbon assets, while also phasing out fossil fuel ones. Co-dependencies and dynamics between these two markets are little explored and result in biased understanding of the effectiveness of policy mechanisms. We fill this gap by exploring whether and to what extent domestic and international climate policies affect investments in oil and gas in presence of low-carbon assets globally. Results suggest that low-carbon and fossil fuels are two separate markets and that tailored policies are needed to halt fossil-fuel production and expand renewable energy penetration. Furthermore, we find that climate policies can lead to unequal reallocation of investments locking more vulnerable countries in high-carbon economies for decades.
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