Investment in new oil & gas assets: The effect of energy-related uncertainty and climate policy

To meet climate goals, investment in new oil & gas assets needs to be curtailed. Yet, there is limited empirical evidence assessing the drivers of investment decisions by oil & gas firms within the context of the energy transition. Using asset-level data (1991–2022), we examine how energy-related uncertainty and climate policy impact final investment decisions in oil & gas at the firm level and at the asset level. Using the Energy-Related Uncertainty Index ( Dang et al., 2023 ) and the OECD Environmental Policy Stringency Index, we find that increased uncertainty and more robust market-based policies, such as carbon prices, both reduce investment. These findings are relevant to policymakers seeking to understand the impact of climate policy and uncertainty on new oil & gas supply. • Examined the effect of uncertainty and climate policy on investment by oil and gas (O&G) firms. • Track new oil & gas investment using asset-level data. • Increased energy-related uncertainty and more stringent climate policy limit investment in new O&G assets.