News Service from House Harris

Fed: After Kyoto, if emissions rise, stocks fall

BRISBANE, Aug 7 AAP - The Kyoto Protocol on climate change has had a profound effect on the Australian oil and gas industry's share prices, a university researcher has found.

Griffith University PhD student Svetlana Vlady is exploring the way in which the capital market takes notice of climate change.

Ms Vlady found that before Kyoto an increase in emissions denoted economic activity, and share prices rose as investors moved in.

"However, after 1997, which marks the signing of the Kyoto Protocol, this trend flipped dramatically and investors preferred to pull the plug if emissions rose," Ms Vlady said.

She said further research is needed to determine if investors are becoming greener, or if they are reacting to the industry's sustainability, given oil and gas production is dependent on climatic conditions.

The relationship between the oil and gas industry and climate change was reciprocal, Ms Vlady said.

"While the industry is responsible for a substantial portion of carbon emissions and climate impact, the industry's production also depends on climatic conditions," she said.

"Hence, the investors' perception about the financial relevance of climate change has become critically important to climate change outcomes in the world."

Due to shareholders' preference and other government and market forces, Ms Vlady said it was clear that industry players were taking up new clean and renewable technologies.

Her PhD, due to be completed later this year, analysed data on weather, climate change and the stock exchange from the past 25 years.