How to Foster Investments in Decarbonisation

Businesses’ investment decisions to achieve net-zero targets depend crucially on their expectations concerning the ecological transition. However, these expectations are currently very difficult to define, and any misalignment may lead to confused or ineffective decarbonisation pathways.

The BELIEFS project – Climate-related Beliefs and Low-Carbon Transition Dynamics – led by Emanuele Campiglio, professor at the Department of Economics of the University of Bologna, will address this issue by shedding light on the complex interaction between business positions, investment choices, and climate policy strategies.

Funded with a €2 million ERC Consolidator Grant, the project is carried out in collaboration with the Euro-Mediterranean Centre on Climate Change (CMCC). Its goal is to identify credible pathways towards a net-zero society.

“Today there are significant gaps in our understanding of expectations regarding the ecological transition: current models are not able to accurately assess the impacts of green investments,” explains Campiglio. “This is why the BELIEFS project will develop a dynamic model of transition processes, with a realistic representation of business expectations, which are heterogeneous, interdependent, and constantly evolving.”

The BELIEFS project therefore aims to create a dynamic model to assess how businesses’ expectations regarding the ecological transition—and consequently their investment choices in this direction—evolve and influence one another over time.

By integrating elements of climate economics, transition theory, behavioural sciences, and political economy, the new model will be built on extensive data collection, including surveys and experiments.

“Through a large-scale statistical survey we will produce the first comprehensive empirical assessment of business expectations regarding the ecological transition and their impact on economic decisions,” confirms Campiglio. “This will make it possible to identify effective policies and strategies to ensure a rapid and orderly decarbonisation process.”