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Measuring the Effects of an Optimization in Brazilian Environmental Regulation in the Oil and Gas Sector

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  • Monteiro Caldeira, Thiago Costa

    (Brazilian Institute of Education, Development and Research - IDP, Brazil)

  • Tessmann, Mathias Schneid

    (Brazilian Institute of Education, Development and Research - IDP, Brazil)

  • Boueri Miranda, Rogerio

    (Brazilian Institute of Education, Development and Research - IDP, Brazil)

  • de Castro Soares, Danny

    (Brazilian Institute of Education, Development and Research - IDP, Brazil)

Abstract

This paper aims to investigate the oil and gas sector in Brazil by assessing how much its results would improve if there were an optimization in environmental regulation. To this end, data from 5 companies traded on the Sa?o Paulo stock exchange, the capital asset price model, and input-output matrices are considered. The difference between the CAPM betas of Brazilian firms and firms from benchmark countries is used to estimate the weighted average cost of capital with more efficient environmental governance in the country, which is then used to perform simulations in the input- output matrices. The results indicate that the destruction of the value of investments can vary between 33 and 110 billion reais in 5 years for delays in licensing of 6 and 24 months, respectively, and negative effects on GDP can reach 70 billion reais in 5 years for delays of 6 months in the licensing process. These findings underscore the importance of effective environmental governance for the country and are valuable for policymakers, investors, and supply chain agents who consider the sector in their decision-making.

Suggested Citation

  • Monteiro Caldeira, Thiago Costa & Tessmann, Mathias Schneid & Boueri Miranda, Rogerio & de Castro Soares, Danny, 2025. "Measuring the Effects of an Optimization in Brazilian Environmental Regulation in the Oil and Gas Sector," International Journal of Energy Economics and Policy, International Journal of Energy Economics and Policy, vol. 16(1), pages 60-74, December.
    • Handle: RePEc:eco:journ2:v:16:y:2025:i:1:id:20719
    DOI: 10.32479/ijeep.20719
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    References listed on IDEAS

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    1. Victor Ajayi & Michael G. Pollitt, 2025. "Changing times: incentive regulation, corporate reorganizations, and productivity growth in the Great Britain’s gas networks," Applied Economics, Taylor & Francis Journals, vol. 57(4), pages 453-470, January.
    2. Ryan Kellogg & Mar Reguant, 2021. "Energy and Environmental Markets, Industrial Organization, and Regulation," NBER Working Papers 29235, National Bureau of Economic Research, Inc.
    3. Tomasz Grodzicki, 2024. "Disparities in Energy Productivity across the EU Countries," International Journal of Energy Economics and Policy, International Journal of Energy Economics and Policy, vol. 14(3), pages 87-92, May.
    4. Bahman Huseynli, 2023. "Causality Relationship between the Development of the Oil and Gas Sector and Foreign Investments," International Journal of Energy Economics and Policy, International Journal of Energy Economics and Policy, vol. 13(2), pages 404-409, March.
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