Energy sector should act as a model for decarbonising the market.

A new study from the LSE highlights that to tackle the challenges of climate change, more investment needs to be mobilised in low-carbon technologies and capital assets.

According to a new paper from LSE Grantham Research Institute on Climate Change and the Environment, the shift towards a greener energy sector should act as a policy model for other sectors. 

The research found that firms producing green goods and services tend to have lower asset turnover than other firms, perhaps reflecting both more recent capital investments and higher investment costs. 

However, when studying the energy sector, firms with higher green revenues on average have higher profitability, and that this is also associated with better stock market performance..

The research argues that policy support can correct market failures and harness the ability for the private sector to pursue a cost effective low-carbon transition while delivering public goods.

The report reccomends that we need to learn from the energy sector experience. It says comprehensive policy packages should be implemented that target the decarbonisation of key sectors in order to trigger shifts in technologies and investments towards carbon neutrality in hard-to-decarbonise industries.

It also highlights that supporting financing costs for green investments and encouraging investment in new technologies along the supply chain will likely play an important role in ensuring ‘going green’ is economically viable.

To read the report, click here.

15 June 2020

Climate Action