CAPTURE - CArbon Pricing and energy Transition in an Uncertain world: how to Repower Europe?
ProjectThe need to boost EU economy in a radically new way is a crucial question in times of instability and geopolitical turmoil. The CAPTURE project examines the economic, social, and political consequences of European climate policies accounting for real life complexities and increasing uncertainty surrounding the green transition, starting from the evolution of major European carbon-pricing instruments design and implementation and focusing on how these policies affect firms, households, insurance markets, and political support for climate action, pairing EU level focus with attention to Italy, which represents a particularly relevant case study due to its dependence on carbon-intensive energy and its potential gains from the low-carbon transition. CAPTURE starts from the observation that climate policies are often analysed separately from the behavioural and distributive mechanisms that shape their implementation. The current literature appears to have devoted less attention to the interaction between policy credibility, firms’ adaptive strategies, households’ perceptions, financial risks, and political acceptability. The CAPTURE project fills this scientific and policy gap by adopting an integrated and interdisciplinary framework combining heterogeneous and complimentary expertises in macroeconomic analysis, behavioural economics, microeconometrics, dynamic optimisation, insurance economics, and agent-based modelling.
The research is organised around five interconnected units, with specific objectives that are interrelated within a common analytical structure. The project investigates how climate policies influence heterogeneous economic agents and how their reactions, in turn, affect the long-term feasibility and performance of decarbonisation strategies. The development of a EU level policy scenario, and the consequent identification of climate policy implications at a national (i.e. Italian) level will be coupled with households’ climate change and policy perceptions, to achieve a better understanding of how citizens’ opinion shapes public support for and the actual effectiveness of climate policies. A specific role will be played by the awareness of climate damages and policy costs, as well as by the willingness of households to adopt preventive strategies (in the form of insurance). The role of insurance in coping with climate risk will also be investigated at firms’ level, addressing the links with policy design. Another central theme will be the assessment of climate policies, risk coping strategies and demand side effects on the eco-innovative efforts by firms along the net-zero emissions path. The continuous interaction across units will generate a unified process producing evidence feeding into an ABM analysis. The latter will model economic and social interactions to achieve a proper understanding of how climate policy should be designed to effectively make net-zero objectives achievable in the future.
The research is organised around five interconnected units, with specific objectives that are interrelated within a common analytical structure. The project investigates how climate policies influence heterogeneous economic agents and how their reactions, in turn, affect the long-term feasibility and performance of decarbonisation strategies. The development of a EU level policy scenario, and the consequent identification of climate policy implications at a national (i.e. Italian) level will be coupled with households’ climate change and policy perceptions, to achieve a better understanding of how citizens’ opinion shapes public support for and the actual effectiveness of climate policies. A specific role will be played by the awareness of climate damages and policy costs, as well as by the willingness of households to adopt preventive strategies (in the form of insurance). The role of insurance in coping with climate risk will also be investigated at firms’ level, addressing the links with policy design. Another central theme will be the assessment of climate policies, risk coping strategies and demand side effects on the eco-innovative efforts by firms along the net-zero emissions path. The continuous interaction across units will generate a unified process producing evidence feeding into an ABM analysis. The latter will model economic and social interactions to achieve a proper understanding of how climate policy should be designed to effectively make net-zero objectives achievable in the future.