Assessing the impact of climate policy uncertainty on lobbying: An empirical analysis of European countries

Climate policies are a key focus of the European Union's political agenda. Lobbyists aim to exert influence on these policies to advance their interests. This paper uses a panel dataset from 2011 to 2022 of European organizations to investigate the relationship between Climate Policy Uncertainty (CPU) and Lobbying Expenditure (LE). The dataset includes annual observations from organizations across eight European countries, incorporating both microeconomic and macroeconomic factors. The results indicate a positive association between CPU and LE, suggesting that higher levels of CPU are systematically linked to increased lobbying efforts within our sample. This relationship remains robust after addressing potential endogeneity concerns using the Two-Stage Least Squares (2SLS) approach. The effect is particularly pronounced in countries with high GDP or high CO₂ emissions, as well as for organizations with lower participation in European Commission meetings. The study also examined the presence of an exogenous shock, specifically the COVID-19 pandemic. While COVID-19 did not alter the existing relationship between CPU and LE, an analysis focused on the pandemic period revealed a reversal in the relationship. These findings carry important policy implications. Governments should prioritize transparency in lobbying activities and address the regulatory challenges posed by CPU to uphold accountability, balance diverse organizational interests, and safeguard the integrity of climate policymaking.