Climate laws and firms’ access to energy

Abstract

This study examines whether the maturity of national climate-law regimes improves firms' access to energy. We merge firm-level energy-constraint information from the World Bank Enterprise Surveys with country-level climate-law implementation dates for 125 economies over 2006–2022. Firms' energy constraints are measured using a WBES indicator for whether energy is reported as an operational obstacle, while climate-law maturity is captured as the number of years since a country's first qualifying climate law entered into force. We find that longer-standing climate laws are associated with a significantly lower likelihood that firms face energy constraints. The association is stronger for capability-rich firms: older, higher-sales and exporting firms, and is amplified by experienced management and public listing, while financing constraints weaken firms' ability to benefit from regulatory maturity. Country energy conditions matter: higher renewable energy production and lower energy price inflation coincide with fewer constraints. We address endogeneity using instrumental-variable estimation, conditional mixed-process estimation, propensity score matching, and extensive robustness checks (alternative outcome and regulatory proxies, outlier exclusions, and additional controls), which yield consistent evidence in support of the main result. The findings suggest that maintaining credible, durable climate laws, paired with renewable capacity expansion, price-stability policies, and targeted finance for constrained firms, can deliver operational co-benefits by improving firm-level energy access.

keywords: Access to energy, Climate laws, Developing countries, Environmental regulation, Institutions