IDEAS home Printed from https://ideas.repec.org/a/aes/amfeco/v24y2022i61p701.html
   My bibliography  Save this article

Decarbonisation and financial performance of energy companies

Author

Listed:
  • Agnes Horvath

    (University of Miskolc, Hungary)

  • Adrienn Takacs Papp,

    (University of Miskolc, Hungary)

  • Katalin Liptak

    (University of Miskolc, Hungary)

  • Laszlo Molnar

    (University of Miskolc, Hungary)

  • Klara Szucs Markovics

    (University of Miskolc, Hungary)

  • Ioana Manafi

    (Bucharest University of Economic Studies, Romania)

  • Zoltan Musinszki

    (University of Miskolc, Hungary)

Abstract

Our daily lives are unimaginable without energy. Producing it, however, may be harmful to the environment depending on the energy source. The Paris Agreement brought a key question to the fore: with or without coal? The Powering Past Coal Alliance (PPCA) members, including the European Union, have committed to the phasing out of coal by 2030. Several Member States of the European Union have recently closed almost 130 coal-fired power plants. The closure of these plants, in addition to impacting greenhouse gas (GHG) emissions, also exerts influence on the financial position of power plant owners. This study seeks to answer the question of how the profitability of the company groups that operate (and have closed) coal-fired power plants in the European Union has evolved. Is there a relationship between decarbonisation and profitability trends, and are there any patterns in the environmental and financial performance of individual company groups? The main added value of our research is highlighting that different groups of companies have responded differently to the EU’s decarbonisation targets, and these reactions have also been reflected in their financial performance. The study included 21 company groups that cover more than 70% of CO2 emissions from coal-fired power plants in the EU. The profitability indicators were calculated based on the publicly available consolidated annual reports of the companies for 2016 and 2020. Following a reliability test of the indicators, a cluster analysis was carried out. The different reactions allowed us to classify the energy groups into different clusters. The analysed companies were classified into four homogeneous groups: Frontrunner, Up and-coming, Sacrifice makers, and Stagnating companies. Although a significant relationship could not be found between the change in GHG emissions and the change in profitability position, a multidirectional relationship was identified between the environmental and financial performance of companies.

Suggested Citation

  • Agnes Horvath & Adrienn Takacs Papp, & Katalin Liptak & Laszlo Molnar & Klara Szucs Markovics & Ioana Manafi & Zoltan Musinszki, 2022. "Decarbonisation and financial performance of energy companies," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 24(61), pages 701-701, August.
    • Handle: RePEc:aes:amfeco:v:24:y:2022:i:61:p:701
    as

    Download full text from publisher

    File URL: http://www.amfiteatrueconomic.ro/temp/Article_3138.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ana Kundid Novokmet & Andrijana Rogošiæ, 2017. "Long-Term Financial Effects of Quality Management System Maturity Based on ISO 9001 Principles," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 19(S11), pages 1003-1003.
    2. Rentier, Gerrit & Lelieveldt, Herman & Kramer, Gert Jan, 2019. "Varieties of coal-fired power phase-out across Europe," Energy Policy, Elsevier, vol. 132(C), pages 620-632.
    3. Lee Cronbach, 1951. "Coefficient alpha and the internal structure of tests," Psychometrika, Springer;The Psychometric Society, vol. 16(3), pages 297-334, September.
    4. Brauers, Hanna & Oei, Pao-Yu, 2020. "The political economy of coal in Poland: Drivers and barriers for a shift away from fossil fuels," Energy Policy, Elsevier, vol. 144(C).
    5. Adrian Tan?ãu & Ana-Maria Iulia ªanta, 2019. "Best Practices for a Sustainable Energy Sector at European Union Level – Chances and Challenges for Romania," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 21(52), pages 697-697, August.
    6. Hainsch, Karlo & Löffler, Konstantin & Burandt, Thorsten & Auer, Hans & Crespo del Granado, Pedro & Pisciella, Paolo & Zwickl-Bernhard, Sebastian, 2022. "Energy transition scenarios: What policies, societal attitudes, and technology developments will realize the EU Green Deal?," Energy, Elsevier, vol. 239(PC).
    7. Lindberg, Marie Byskov & Markard, Jochen & Andersen, Allan Dahl, 2019. "Policies, actors and sustainability transition pathways: A study of the EU’s energy policy mix," Research Policy, Elsevier, vol. 48(10).
    8. Lund, Peter D., 2017. "Implications of Finland's plan to ban coal and cutting oil use," Energy Policy, Elsevier, vol. 108(C), pages 78-80.
    9. Schabek, Tomasz, 2020. "The financial performance of sustainable power producers in emerging markets," Renewable Energy, Elsevier, vol. 160(C), pages 1408-1419.
    10. Brauers, Hanna & Oei, Pao-Yu, 2020. "The political economy of coal in Poland: Drivers and barriers for a shift away from fossil fuels," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 144.
    11. Heinrichs, Heidi Ursula & Markewitz, Peter, 2017. "Long-term impacts of a coal phase-out in Germany as part of a greenhouse gas mitigation strategy," Applied Energy, Elsevier, vol. 192(C), pages 234-246.
    12. Mariana Vu?ã & Sorin-Iulian Cioacã & Mihai Vuþã & Adrian Enciu, 2019. "An Empirical Analysis of Corporate Social Responsibility Effects on Financial Performance for Romanian Listed Companies," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 21(52), pages 607-607, August.
    13. Magdalena Kludacz-Alessandri & Małgorzata Cygańska, 2021. "Corporate Social Responsibility and Financial Performance among Energy Sector Companies," Energies, MDPI, vol. 14(19), pages 1-16, September.
    14. Karakosta, Ourania & Petropoulou, Dimitra, 2022. "The EU electricity market: Renewables targets, Tradable Green Certificates and electricity trade," Energy Economics, Elsevier, vol. 111(C).
    15. Papadis, Elisa & Tsatsaronis, George, 2020. "Challenges in the decarbonization of the energy sector," Energy, Elsevier, vol. 205(C).
    16. Aastvedt, Tonje Marthinsen & Behmiri, Niaz Bashiri & Lu, Li, 2021. "Does green innovation damage financial performance of oil and gas companies?," Resources Policy, Elsevier, vol. 73(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Furmankiewicz, Marek & Hewitt, Richard J. & Kazak, Jan K., 2021. "Can rural stakeholders drive the low-carbon transition? Analysis of climate-related activities planned in local development strategies in Poland," Renewable and Sustainable Energy Reviews, Elsevier, vol. 150(C).
    2. Löffler, Konstantin & Burandt, Thorsten & Hainsch, Karlo & Oei, Pao-Yu & Seehaus, Frederik & Wejda, Felix, 2022. "Chances and barriers for Germany's low carbon transition - Quantifying uncertainties in key influential factors," Energy, Elsevier, vol. 239(PA).
    3. Akerboom, Sanne & Botzen, Wouter & Buijze, Anoeska & Michels, Ank & van Rijswick, Marleen, 2020. "Meeting goals of sustainability policy: CO2 emission reduction, cost-effectiveness and societal acceptance. An analysis of the proposal to phase-out coal in the Netherlands," Energy Policy, Elsevier, vol. 138(C).
    4. Faber, Hugo, 2023. "How does falling incumbent profitability affect energy policy discourse? The discursive construction of nuclear phaseouts and insufficient capacity as a threat in Sweden," Energy Policy, Elsevier, vol. 174(C).
    5. Malec, Marcin, 2022. "The prospects for decarbonisation in the context of reported resources and energy policy goals: The case of Poland," Energy Policy, Elsevier, vol. 161(C).
    6. Smoliński, Adam & Howaniec, Natalia & Gąsior, Rafał & Polański, Jarosław & Magdziarczyk, Małgorzata, 2021. "Hydrogen rich gas production through co-gasification of low rank coal, flotation concentrates and municipal refuse derived fuel," Energy, Elsevier, vol. 235(C).
    7. Johannes (Joost) Platje & Markus Will & Monika Paradowska & Ynte K. van Dam, 2022. "Socioeconomic Paradigms and the Perception of System Risks: A Study of Attitudes towards Nuclear Power among Polish Business Students," Energies, MDPI, vol. 15(19), pages 1-15, October.
    8. Aurelia Rybak & Aleksandra Rybak, 2021. "Methods of Ensuring Energy Security with the Use of Hard Coal—The Case of Poland," Energies, MDPI, vol. 14(18), pages 1-25, September.
    9. T. B. White & S. O. Petrovan & L. A. Bennun & T. Butterworth & A. P. Christie & H. Downey & S. B. Hunter & B. R. Jobson & S. O. S. E. zu Ermgassen & W. J. Sutherland, 2023. "Principles for using evidence to improve biodiversity impact mitigation by business," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4719-4733, November.
    10. Tinta, Abdoulganiour Almame, 2023. "Energy substitution in Africa: Cross-regional differentiation effects," Energy, Elsevier, vol. 263(PA).
    11. Kateryna Redko & Olena Borychenko & Anatolii Cherniavskyi & Volodymyr Saienko & Serhii Dudnikov, 2023. "Comparative Analysis of Innovative Development Strategies of Fuel and Energy Complex of Ukraine and the EU Countries: International Experience," International Journal of Energy Economics and Policy, Econjournals, vol. 13(2), pages 301-308, March.
    12. Jingna Kou & Wei Li & Rui Zhang & Dingxiong Shi, 2023. "Hydrogen as a Transition Tool in a Fossil Fuel Resource Region: Taking China’s Coal Capital Shanxi as an Example," Sustainability, MDPI, vol. 15(15), pages 1-19, August.
    13. Piotr F. Borowski, 2022. "Management of Energy Enterprises in Zero-Emission Conditions: Bamboo as an Innovative Biomass for the Production of Green Energy by Power Plants," Energies, MDPI, vol. 15(5), pages 1-16, March.
    14. Duarte, Rosa & Serrano, Ana, 2021. "Environmental analysis of structural and technological change in a context of trade expansion: Lessons from the EU enlargement," Energy Policy, Elsevier, vol. 150(C).
    15. Nachatter Singh Garha, 2022. "From Decarbonization to Depopulation: An Emerging Challenge for the Carbon-Intensive Regions under the Energy Transition in Spain," Sustainability, MDPI, vol. 14(22), pages 1-22, November.
    16. Mariusz Pyra, 2023. "Simulation of the Progress of the Decarbonization Process in Poland’s Road Transport Sector," Energies, MDPI, vol. 16(12), pages 1-21, June.
    17. Patrycjusz Zarębski & Dominik Katarzyński, 2023. "A Theoretical Framework for a Local Energy Innovation System Based on the Renewable Energy Case of Poland," Energies, MDPI, vol. 16(9), pages 1-24, April.
    18. Sylwia Mrozowska & Jan A. Wendt & Krzysztof Tomaszewski, 2021. "The Challenges of Poland’s Energy Transition," Energies, MDPI, vol. 14(23), pages 1-22, December.
    19. Wadim Strielkowski & Lubomír Civín & Elena Tarkhanova & Manuela Tvaronavičienė & Yelena Petrenko, 2021. "Renewable Energy in the Sustainable Development of Electrical Power Sector: A Review," Energies, MDPI, vol. 14(24), pages 1-24, December.
    20. Oskar Juszczyk & Juliusz Juszczyk & Sławomir Juszczyk & Josu Takala, 2022. "Barriers for Renewable Energy Technologies Diffusion: Empirical Evidence from Finland and Poland," Energies, MDPI, vol. 15(2), pages 1-14, January.

    More about this item

    Keywords

    decarbonisation; GHG emission; corporate financial performance; profitability; energy companies;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aes:amfeco:v:24:y:2022:i:61:p:701. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Valentin Dumitru (email available below). General contact details of provider: https://edirc.repec.org/data/aseeero.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.