Discussion paper

DP17207 War and Policy: Investor Expectations on the Net-Zero Transition

This study employs novel text-based proxies to analyze corporate exposure to regulatory risks in the low-carbon transition. In response to the Russia-Ukraine war, stocks with higher transition risk outperformed, suggesting an expected slowdown in the transition. These effects were far more pronounced in the US than Europe, where renewable energy policy support was anticipated. The US Inflation Reduction Act (IRA) and the REPowerEU plan increased the value of firms with renewable energy opportunities, but the IRA also benefited higher transition risk firms. Overall, the findings highlight an international divergence in the energy transition pace.


Wagner, A, M Deng, M Leippold and Q Wang (eds) (2022), “DP17207 War and Policy: Investor Expectations on the Net-Zero Transition”, CEPR Press Discussion Paper No. 17207. https://cepr.org/publications/dp17207