Economic challenges from carbon intensity reduction and energy transition: oil demand shocks, business profitability and market structures

This paper explores a significant shift in economic research on decarbonization based on recent findings by Masnadi et al. (2021). Traditional studies have focused on reducing carbon intensity (CI) through macroeconomic variables such as income per capita, tourism, and exports. However, these approaches have yet to lead to effective policies. Recent research highlights the importance of shocks in oil demand, business profitability, and market structures for CI reduction. Aligning with Masnadi et al. (2021), this paper examines the implications of these factors for policy and the role of public intervention versus market forces in accelerating the energy transition, improving energy efficiency, and reducing CI. Given the variability of petroleum resources and the diversification of the carbon footprint of the global oil supply, this paper aims to highlight the gaps and challenges in existing policies for reducing carbon intensity and offer a significant shift in economic research perspectives. The research reveals striking insights into energy vulnerability and resilience policy dynamics. These findings carry relevant implications for understanding the role of oil demand shocks and the carbon footprint of marginal oils. Future research will be crucial for exploring new scholarly avenues and offering solutions to pressing energy policy and geopolitical challenges for achieving net-zero.