The impact of statutory net-zero targets on clean energy investment

Setting national targets for reaching net zero is a key indicator of countries' commitment to climate action. But how effective are net-zero targets in driving down emissions? Here, we use a difference-in-differences model to study the link between statutory net-zero targets in 24 countries and clean energy investment from 2014 to 2023. We find that laws with target years of 2045 or earlier are associated with economically large and statistically significant increases in low-carbon investment, whereas laws targeting 2050 or later show no comparable average effect without frequent NZT reporting. Investment responses are stronger among firms with higher net-zero disclosure scores and in countries that report progress toward net-zero targets more frequently. These findings suggest that legislative ambition and transparency matter. Only credible and ambitious net-zero targets are able to mobilize private low-carbon investment.