Identifying Market Capitalization as a Leverage for Low Carbon Economy in Australia

Abstract

This study explores the relationship between market capitalization of the top listed energy companies in Australia with their CO2 emission. The data is secondary in nature taken from World development indicators for annual records of Australia ranging from 2010 till 2022. The paper attempts to check similarities in the behaviour of the two variables through the prism of cointegration and VAR technique. Initial tests for stationarity are done through correlograms and unit root tests before applying Co-integration or VAR Approach. VAR was possible to apply due to stationarity achieved for both the variables in the same order of integration [1]. Final results suggest an untapped leverage in the form of market capital available to redirect the flow of financing towards green initiatives.

Keywords

• Energy, Investment, Market Capitalisation, Emission, Vector Autoregression