Decarbonization under geoeconomic distress? Energy shocks, carbon lock‐ins, and Germany's pathway toward net zero

Milan Babić and Daniel Mertens

Regulation & Governance, 2025, vol. 19, issue 2, 448-468

Abstract: How can decarbonization governance endure under increasing geoeconomic distress? Global tensions threaten to divert financial and political resources from the green transition toward national security issues. However, we lack the analytical tools to assess decarbonization governance in this age of global rivalries. To address this gap, we develop an analytical framework to study the effects of geoeconomic shocks through investment, operational, and political channels. Using macro‐ and company‐level data and document analysis, we empirically test our framework using Germany's decarbonization governance following the cutoff of its Russian gas supply in 2022 as a case study. We find that this shock had negative short‐term effects on decarbonization via the operational channel, mixed effects via the political channel, and positive long‐term effects via the investment channel. Our framework and findings contribute to establishing climate change and energy politics as core issues for future political economy research.

Date: 2025
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https://doi.org/10.1111/rego.12634

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Persistent link: https://EconPapers.repec.org/RePEc:wly:reggov:v:19:y:2025:i:2:p:448-468

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