ANNOUNCEMENTS
This study focuses on mitigation strategy with emphasis on the role of private participation in climate change mitigation. Some key elements of mitigation strategy are phasing down of fossil fuel, incentivizing use of renewable energy, technological R&D, carbon sequestration projects and carbon trading programs. Therefore, the study aims to study the dynamics between private investments in clean energy companies, prices of conventional fuel, technological innovation, carbon compliance cost and carbon offset credits from Nature-Based projects using a Vector Autoregression supplemented with Impulse Response Function. The focus is on United States as it is an oil dependent nation and secondary data is collected for a period of 60 weeks for daily observation. Some important inferences found from this analysis brings out the inefficiency of carbon allowance prices in promoting energy transition. The relationship between carbon compliance and carbon offset highlights some investor patterns that investors would rather ‘voluntarily’ invest in carbon sequestration than pay a ‘penalty’ irrespective of costs. Most importantly, the paper discusses that for US that is a large producer and consumer of oil is facing substantial resistance against the energy transition. From these results, it is recommended to strengthen insurance opportunities for carbon credits received against forest projects which are risky due to exposure to natural disaster. It is also recommended to define the legalities of ‘held to maturity’; ‘available for sale’; and ‘available to trade’ types of securities to attract various pool of investor who invest with different motives.
Keywords: Clean Energy, Oil Price, Carbon Compliance, Offset Credit, Vector Autoregression.
