Uncertainty in climate policy and energy industry

Hugo Morão

No 2025/0393, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa

Abstract: This study looks at how the the climate policy uncertainty (CPU) shocks affect Portugal’s energy sector, specifically examining their effects on turnover, output prices, and labor market dynamics. The structural vector autoregression (SVAR) analysis shows that CPU shocks lead to a significant increase in domestic turnover. Output prices rise both at home and abroad, but foreign prices are more sensitive. The labor market shows a more nuanced reaction, hours worked marginally increase and wages remain unchanged. Furthermore, the study finds that CPU has been a key driver of historical variations in the energy sector, particularly during global policy events like COP26 and domestic policy changes like carbon or car tax changes. These findings establish CPU as significant driver in energy prices and underscore the importance of judicious climate policymaking.

Keywords: climate policy; climate policy uncertainty; SVAR; energy crisis; Portugal. (search for similar items in EconPapers)
JEL-codes: C32 E62 F18 G18 H23 L94 Q48 (search for similar items in EconPapers)
Date: 2025-09
New Economics Papers: this item is included in nep-eur
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Journal Article: Uncertainty in climate policy and energy industry (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:ise:remwps:wp03932025

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