A1148
Title: Modelling the transition of fossil fuel corporations
Authors: Isabel Figuerola-Ferretti - Universidad Pontificia Comillas (Spain) [presenting]
Ioannis Paraskevopoulos - Universidad Pontificia Comillas (Spain)
Abstract: The aim is to develop a theoretical model to investigate how carbon pricing and the greenium influence the transition dynamics of energy companies. A stochastic model is developed, distinguishing economic stranding points, when fossil assets become unviable, and the full transition period, defined by the policy-determined time-frame for achieving climate goals. The model delivers explicit relationships between firm characteristics and regulatory conditions. Using quarterly panel data for 191 energy firms from 2015 to 2024, it is found that higher carbon prices and greenium levels significantly accelerate economic stranding of fossil-based activities. However, current economic signals from carbon pricing alone appear insufficient to meet 2050 net-zero targets. These findings highlight the need for targeted policies that enhance the transition of fossil fuel firms.
