The transitioning to a low-carbon society, as mandated by the Paris Agreement and net-zero targets, requires substantial investments. These decisions rely heavily on firms’ expectations, yet significant knowledge gaps exist: current models can't fully assess their impact, empirical data is limited, and there's little understanding of what drives their evolution and how to align them with climate goals. Misaligned expectations risk failure or disorderly decarbonisation. The BELIEFS project will lay the foundations of a novel analytical framework capable of shedding light on the complex interaction between firms’ beliefs, investment decision-making and climate policy strategies, so as to identify credible paths to a netzero society. The project will deliver a methodological breakthrough by developing a dynamic transition model with a realistic representation of expectations as heterogeneous, evolving and interdependent. A large survey will provide the first comprehensive empirical assessment of transition expectations and their influence on decisions. The results of the project will be pivotal in identifying effective policy and institutional strategies to ensure alignment of beliefs, thereby enabling a swift and orderly decarbonisation process. Over the course of five years, BELIEFS aims to offer pioneering interdisciplinary contributions to advance our understanding of the macro-behavioural dimensions of low-carbon transitions, integrating elements from climate economics, transition theory, behavioural sciences and political economy. 

General Objectives

 The project aims to find reliable ways to develop a zero-emission society:

• providing novel insights into the nature and defining characteristics of firms’ transition-related expectations;
• exploring the key mechanisms through which heterogeneous expectations affect investment decision-making, policy-making and the broader dynamics of the low-carbon transition.
• outlining effective policy and institutional strategies to align firms’ expectations so as to ensure a rapid and orderly low-carbon transition. 

 

Expected Results

BELIEFS will lay the foundations of a novel analytical framework capable of shedding light on the complex interplay between firms’ beliefs, investment decision-making and climate policy strategies, so as to identify credible paths to a net-zero society. 

The project will generate ground-breaking and timely insights into:

1. the distribution of transition-related expectations;
2. factors influencing their evolution;
3.  the mechanisms through which they affect investment decision-making; and
4.  their dynamic interactions with policy and institutional factors.