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

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  • Wilson, Christian
  • Shrimali, Gireesh
  • Caldecott, Ben

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.

Suggested Citation

  • Wilson, Christian & Shrimali, Gireesh & Caldecott, Ben, 2025. "Investment in new oil & gas assets: The effect of energy-related uncertainty and climate policy," Energy Economics, Elsevier, vol. 151(C).
    • Handle: RePEc:eee:eneeco:v:151:y:2025:i:c:s0140988325007443
    DOI: 10.1016/j.eneco.2025.108917
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