Work

Investment in new oil & gas assets: The effect of energy-related uncertainty and climate policy

Year: 2025

Type: article

Abstract: To meet climate goals, investment in new oil & gas assets needs to be curtailed. Yet, there is limited empirical evidence assessing the drivers of investment decisions by oil & gas firms within the context of the energy transition. Using asset-level data (1991–2022), we examine how energy-related uncertainty and climate policy impact final investment decisions in oil & gas at the firm level and at the asset level. Using the Energy-Related Uncertainty Index ( Dang et al., 2023 ) and the OECD Environmental Policy Stringency Index, we find that increased uncertainty and more robust market-based policies, such as carbon prices, both reduce investment. These findings are relevant to policymakers seeking to understand the impact of climate policy and uncertainty on new oil & gas supply.

Source: Energy Economics

DOI: 10.1016/j.eneco.2025.108917

Authors: Christian Wilson, Gireesh Shrimali, Ben Caldecott

Institution: University of Oxford

Language: English

Topic: Climate Change Policy and Economics

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Climate action, Affordable and clean energy

Open Access status: hybrid

Estimated APC paid: $4,280