An Empirical Investigation into Carbon Lock-In: What Determines the Stringency of Environmental Policy?

Abstract

Carbon lock-in is referring to the prolonged utilization of
a fossil-based energy system despite an increasing number
of reasons for the shift to alternative technologies. This
paper uses environmental policy stringency (EPS), an
index published by the OECD, as a proxy for carbon lockin.
A fixed effect and a generalized methods of moments
estimator are used. These approaches yield the conclusion
that EU- membership and GDP per capita are associated
with a higher EPS. Furthermore, electricity production
from coal, gas and oil sources has a small positive, and
GDP growth a small negative impact on EPS.