In this paper, we analyze the economic impacts of the West-East Electricity Transmission Project (WEETP) project using the multi-period difference-in-difference (DID) method based on county-level data from 2000 to 2020. Our findings indicate that the WEETP project inhibits firm entry in electricity-exporting regions while encouraging firm entry in electricity-importing regions, thus hindering regional development equalization. Specifically, the initiation of WEETP discouraged firm activity in the southern and central corridors' exporting regions but boosted firm activity in the northern corridor. Additionally, WEETP exacerbated infrastructure overbuilding and environmental damage in energy-exporting regions, further weakening entrepreneurial dynamism (ED) and widening the development gap with energy-importing regions. Our study provides insights into the real impact of national energy strategies on regional development and highlights the institutional factors contributing to the resource curse. The findings demonstrate the limitations of non-market pricing approaches to resource allocation, thereby offering an empirical basis for narrowing the development gap and promoting developmental affirmative action.
{"title":"Zooming in or zooming out: Energy strategy, developmental parity and regional entrepreneurial dynamism","authors":"Yanru Deng , Rabindra Nepal , Xuefeng Shao , Chante Jian Ding , Zhan Wu","doi":"10.1016/j.eneco.2024.108021","DOIUrl":"10.1016/j.eneco.2024.108021","url":null,"abstract":"<div><div>In this paper, we analyze the economic impacts of the <em>West-East Electricity Transmission Project</em> (WEETP) project using the multi-period <em>difference-in-difference</em> (DID) method based on county-level data from 2000 to 2020. Our findings indicate that the WEETP project inhibits firm entry in electricity-exporting regions while encouraging firm entry in electricity-importing regions, thus hindering regional development equalization. Specifically, the initiation of WEETP discouraged firm activity in the southern and central corridors' exporting regions but boosted firm activity in the northern corridor. Additionally, WEETP exacerbated infrastructure overbuilding and environmental damage in energy-exporting regions, further weakening <em>entrepreneurial dynamism</em> (ED) and widening the development gap with energy-importing regions. Our study provides insights into the real impact of national energy strategies on regional development and highlights the institutional factors contributing to the resource curse. The findings demonstrate the limitations of non-market pricing approaches to resource allocation, thereby offering an empirical basis for narrowing the development gap and promoting developmental affirmative action.</div></div>","PeriodicalId":11665,"journal":{"name":"Energy Economics","volume":"140 ","pages":"Article 108021"},"PeriodicalIF":13.6,"publicationDate":"2024-11-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142660763","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-10DOI: 10.1016/j.eneco.2024.108028
Mengxu Xiong , Chen Liu , Junyi Xiang
This paper investigates how the usage of financial derivatives affect energy firm's ESG. Using a sample of Chinese listed energy firms, we document a positive relation between the financial derivatives usage and corporate ESG performance, and the results remain robust under a series of robustness and endogeneity tests. Alleviated financial pressure, enhanced information efficiency and increased risk exposure are potential mechanisms through which financial derivative usage promotes ESG performance. Moreover, the influence of financial derivatives exhibits heterogeneity, and the improvement of corporate ESG performance is more pronounced for state-owned enterprises, large firms, firms receive more investor attention, and firms located in the eastern region in China. Our study may shed lights on the impact of financial derivatives usage on energy firm's sustainable development.
{"title":"How financial derivatives affect energy firms' ESG","authors":"Mengxu Xiong , Chen Liu , Junyi Xiang","doi":"10.1016/j.eneco.2024.108028","DOIUrl":"10.1016/j.eneco.2024.108028","url":null,"abstract":"<div><div>This paper investigates how the usage of financial derivatives affect energy firm's ESG. Using a sample of Chinese listed energy firms, we document a positive relation between the financial derivatives usage and corporate ESG performance, and the results remain robust under a series of robustness and endogeneity tests. Alleviated financial pressure, enhanced information efficiency and increased risk exposure are potential mechanisms through which financial derivative usage promotes ESG performance. Moreover, the influence of financial derivatives exhibits heterogeneity, and the improvement of corporate ESG performance is more pronounced for state-owned enterprises, large firms, firms receive more investor attention, and firms located in the eastern region in China. Our study may shed lights on the impact of financial derivatives usage on energy firm's sustainable development.</div></div>","PeriodicalId":11665,"journal":{"name":"Energy Economics","volume":"140 ","pages":"Article 108028"},"PeriodicalIF":13.6,"publicationDate":"2024-11-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142660765","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-10DOI: 10.1016/j.eneco.2024.108026
Yimin Zhang, Dominic Davis, Michael J. Brear, Andrea Vecchi
This work investigates the technical and financial performance of deeply decarbonised wholesale electricity markets with uncertain variable renewable generation (VRG), uncertain demand and different types of flexibility. It first finds that different combinations of power reserves (i.e. power generation capacity) and energy reserves (i.e. energy storage capacity), can achieve adequate system reliability at similar total costs. However, use of only energy reserves never achieved adequate system reliability, and this looks to be a fundamental challenge to the reliability of systems with only energy reserves but no power reserves. Two independent aspects of wholesale market operations are then found to be the main determinants of system reliability: the length of the unit commitment (UC) schedule prior to dispatch and the degree of operational uncertainty of VRG during dispatch.
It is then argued that reliable, least cost and efficient wholesale markets with dominant renewables need acceptably low levels of operational uncertainty of VRG, sufficient flexibility in generation and/or demand, and UC schedules that are significantly longer than the longest energy storage durations present. Rather than suggesting that innovation in market design is required, these results therefore suggest that different technical approaches should have important, future roles. These include mitigating the operational uncertainty of VRG via several potential means as well as flexible generation, battery storage of a few hours duration and flexible electrolysis. Long duration energy storage, however, may challenge market performance and all participants’ returns even if it supports system reliability.
{"title":"The performance of renewable-rich wholesale electricity markets with significant energy storage and flexibility","authors":"Yimin Zhang, Dominic Davis, Michael J. Brear, Andrea Vecchi","doi":"10.1016/j.eneco.2024.108026","DOIUrl":"10.1016/j.eneco.2024.108026","url":null,"abstract":"<div><div>This work investigates the technical and financial performance of deeply decarbonised wholesale electricity markets with uncertain variable renewable generation (VRG), uncertain demand and different types of flexibility. It first finds that different combinations of power reserves (i.e. power generation capacity) and energy reserves (i.e. energy storage capacity), can achieve adequate system reliability at similar total costs. However, use of only energy reserves never achieved adequate system reliability, and this looks to be a fundamental challenge to the reliability of systems with only energy reserves but no power reserves. Two independent aspects of wholesale market operations are then found to be the main determinants of system reliability: the length of the unit commitment (UC) schedule <em>prior to dispatch</em> and the degree of operational uncertainty of VRG <em>during dispatch</em>.</div><div>It is then argued that reliable, least cost and efficient wholesale markets with dominant renewables need acceptably low levels of operational uncertainty of VRG, sufficient flexibility in generation and/or demand, and UC schedules that are significantly longer than the longest energy storage durations present. Rather than suggesting that innovation in market design is required, these results therefore suggest that different technical approaches should have important, future roles. These include mitigating the operational uncertainty of VRG via several potential means as well as flexible generation, battery storage of a few hours duration and flexible electrolysis. Long duration energy storage, however, may challenge market performance and all participants’ returns even if it supports system reliability.</div></div>","PeriodicalId":11665,"journal":{"name":"Energy Economics","volume":"140 ","pages":"Article 108026"},"PeriodicalIF":13.6,"publicationDate":"2024-11-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142660774","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-09DOI: 10.1016/j.eneco.2024.108025
Chien-Chiang Lee , Godwin Olasehinde-Williams , Oktay Özkan
{"title":"Retraction notice to “Geopolitical oil price uncertainty transmission into core inflation: Evidence from two of the biggest global players” Energy Economics Volume 126, October 2023, 106,983.","authors":"Chien-Chiang Lee , Godwin Olasehinde-Williams , Oktay Özkan","doi":"10.1016/j.eneco.2024.108025","DOIUrl":"10.1016/j.eneco.2024.108025","url":null,"abstract":"","PeriodicalId":11665,"journal":{"name":"Energy Economics","volume":"140 ","pages":"Article 108025"},"PeriodicalIF":13.6,"publicationDate":"2024-11-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142660773","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-08DOI: 10.1016/j.eneco.2024.108031
Minh Nhat Nguyen, Ruipeng Liu, Youwei Li
We investigate whether green (brown) portfolios constructed from clean energy ETFs (fossil fuel ETFs) yield positive (negative) returns conditional on climate-related risks. While the green portfolios do not unconditionally outperform the brown ones, the outperformance of green portfolios is statistically significant under the conditional setting using non-parametric estimates with imposing inequality restrictions. Our conditional studies also show that brown portfolios are riskier than green ones with various measurements. We present the heterogeneity in the effect of climate information on the return and risk of green and brown portfolios. Furthermore, we document that fund flows for green assets are higher than those for brown ones during periods of high climate risks. Our findings are robust to alternative specifications.
{"title":"Performance of energy ETFs and climate risks","authors":"Minh Nhat Nguyen, Ruipeng Liu, Youwei Li","doi":"10.1016/j.eneco.2024.108031","DOIUrl":"https://doi.org/10.1016/j.eneco.2024.108031","url":null,"abstract":"We investigate whether green (brown) portfolios constructed from clean energy ETFs (fossil fuel ETFs) yield positive (negative) returns conditional on climate-related risks. While the green portfolios do not unconditionally outperform the brown ones, the outperformance of green portfolios is statistically significant under the conditional setting using non-parametric estimates with imposing inequality restrictions. Our conditional studies also show that brown portfolios are riskier than green ones with various measurements. We present the heterogeneity in the effect of climate information on the return and risk of green and brown portfolios. Furthermore, we document that fund flows for green assets are higher than those for brown ones during periods of high climate risks. Our findings are robust to alternative specifications.","PeriodicalId":11665,"journal":{"name":"Energy Economics","volume":"1 1","pages":""},"PeriodicalIF":12.8,"publicationDate":"2024-11-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142665658","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-08DOI: 10.1016/j.eneco.2024.107983
Arvind Rangarajan, Jiri Svec, Sean Foley, Stefan Trück
This paper examines the suspension of the Australian National Electricity Market (NEM) that occurred in June 2022. Our study aims to (i) identify the key factors leading to the market suspension, (ii) investigate the behaviour of market participants and price outcomes during this period, and (iii) provide important recommendations for policy and decision-makers related to avoiding or managing crises in wholesale electricity markets. We contribute to the literature by focusing on a severe market crisis event, thoroughly examining generator bidding, dispatch and spot price dynamics over different time periods around the suspension event. Our study examines these dynamics at a high degree of granularity, presenting results at the generator fuel level and for different sub-samples, including the pre-crisis period, the built-up of the crisis, the suspension period, and after the crisis. Our empirical findings highlight that policymaking, in particular the set level of the administered price cap, as well as a lack of reliable substitutes for fossil fuel generation, were leading causes for the suspension. Further, our analysis finds limited evidence of strategic bidding on average but does not deny its possibility at granular levels. Finally, we propose policy implications based on our findings to ensure a well-functioning NEM that can facilitate a smooth energy transition.
{"title":"Revisiting the crisis: An empirical analysis of the NEM suspension","authors":"Arvind Rangarajan, Jiri Svec, Sean Foley, Stefan Trück","doi":"10.1016/j.eneco.2024.107983","DOIUrl":"https://doi.org/10.1016/j.eneco.2024.107983","url":null,"abstract":"This paper examines the suspension of the Australian National Electricity Market (NEM) that occurred in June 2022. Our study aims to (i) identify the key factors leading to the market suspension, (ii) investigate the behaviour of market participants and price outcomes during this period, and (iii) provide important recommendations for policy and decision-makers related to avoiding or managing crises in wholesale electricity markets. We contribute to the literature by focusing on a severe market crisis event, thoroughly examining generator bidding, dispatch and spot price dynamics over different time periods around the suspension event. Our study examines these dynamics at a high degree of granularity, presenting results at the generator fuel level and for different sub-samples, including the pre-crisis period, the built-up of the crisis, the suspension period, and after the crisis. Our empirical findings highlight that policymaking, in particular the set level of the administered price cap, as well as a lack of reliable substitutes for fossil fuel generation, were leading causes for the suspension. Further, our analysis finds limited evidence of strategic bidding on average but does not deny its possibility at granular levels. Finally, we propose policy implications based on our findings to ensure a well-functioning NEM that can facilitate a smooth energy transition.","PeriodicalId":11665,"journal":{"name":"Energy Economics","volume":"22 1","pages":""},"PeriodicalIF":12.8,"publicationDate":"2024-11-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142665659","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-08DOI: 10.1016/j.eneco.2024.108006
Yeguang Chi, Lina El-Jahel, Thanh Vu
This study investigates the relationship between novel and old news sentiment and commodity futures returns. Using TRNA data from Thomson Reuters, we measure daily sentiment of both novel and old news to estimate their impact on commodity futures returns. Our findings reveal that both novel and old news sentiment significantly correlate with returns, with old sentiment having a stronger effect. Notably, only old news sentiment triggers an overreaction on the news day, which largely reverses over the subsequent 30 trading days. During periods of high financial stress and uncertainty, old news sentiment has a more pronounced impact on commodity futures returns. This paper contributes to the literature by highlighting the distinct impact patterns of old and novel news sentiment.
{"title":"Novel and old news sentiment in commodity futures markets","authors":"Yeguang Chi, Lina El-Jahel, Thanh Vu","doi":"10.1016/j.eneco.2024.108006","DOIUrl":"10.1016/j.eneco.2024.108006","url":null,"abstract":"<div><div>This study investigates the relationship between novel and old news sentiment and commodity futures returns. Using TRNA data from Thomson Reuters, we measure daily sentiment of both novel and old news to estimate their impact on commodity futures returns. Our findings reveal that both novel and old news sentiment significantly correlate with returns, with old sentiment having a stronger effect. Notably, only old news sentiment triggers an overreaction on the news day, which largely reverses over the subsequent 30 trading days. During periods of high financial stress and uncertainty, old news sentiment has a more pronounced impact on commodity futures returns. This paper contributes to the literature by highlighting the distinct impact patterns of old and novel news sentiment.</div></div>","PeriodicalId":11665,"journal":{"name":"Energy Economics","volume":"140 ","pages":"Article 108006"},"PeriodicalIF":13.6,"publicationDate":"2024-11-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142660764","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-08DOI: 10.1016/j.eneco.2024.108027
Feng Wang , Mengdie Qu
Income inequality and energy poverty are critical obstacles to the worldwide low-carbon transformation and deeply affect human behavior. Applying a dynamic panel data model, this study investigates the effect of income inequality and energy poverty on global carbon emissions. We determine the effect of the interaction between income inequality and energy poverty on the global low-carbon transformation based on a panel data set of 193 countries from 1990 to 2019. A one standard deviation decrease in the Gini coefficient causes a 2.98 % decrease in carbon emissions per capita, with the median value of energy poverty. However, in poor countries where the proportion of population with access to electricity is less than 86.0 %, reducing income inequality will increase carbon emissions. The role of energy poverty on carbon emissions per capita is also affected by income inequality. When the Gini coefficient is lower than 0.461, increasing access to electricity will reduce carbon emissions. In contrast, when the Gini coefficient is higher than the critical value of 0.461, increased access to electricity will raise carbon emissions. These findings indicate a new strategy for advancing low-carbon transformation based on the interrelationship between income equality and energy poverty eradication.
{"title":"The interaction of income inequality and energy poverty on global carbon emissions: A dynamic panel data approach","authors":"Feng Wang , Mengdie Qu","doi":"10.1016/j.eneco.2024.108027","DOIUrl":"10.1016/j.eneco.2024.108027","url":null,"abstract":"<div><div>Income inequality and energy poverty are critical obstacles to the worldwide low-carbon transformation and deeply affect human behavior. Applying a dynamic panel data model, this study investigates the effect of income inequality and energy poverty on global carbon emissions. We determine the effect of the interaction between income inequality and energy poverty on the global low-carbon transformation based on a panel data set of 193 countries from 1990 to 2019. A one standard deviation decrease in the Gini coefficient causes a 2.98 % decrease in carbon emissions per capita, with the median value of energy poverty. However, in poor countries where the proportion of population with access to electricity is less than 86.0 %, reducing income inequality will increase carbon emissions. The role of energy poverty on carbon emissions per capita is also affected by income inequality. When the Gini coefficient is lower than 0.461, increasing access to electricity will reduce carbon emissions. In contrast, when the Gini coefficient is higher than the critical value of 0.461, increased access to electricity will raise carbon emissions. These findings indicate a new strategy for advancing low-carbon transformation based on the interrelationship between income equality and energy poverty eradication.</div></div>","PeriodicalId":11665,"journal":{"name":"Energy Economics","volume":"140 ","pages":"Article 108027"},"PeriodicalIF":13.6,"publicationDate":"2024-11-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142660768","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-08DOI: 10.1016/j.eneco.2024.107978
Anna Małgorzata Bartczak, Wiktor Budziński, Ulf Liebe, Jurgen Meyerhoff
Distributive justice is an important but often overlooked factor in policy evaluation. We thus examine how people's attitudes towards distributive justice affect their preferences for programmes aimed at reducing ambient air pollution resulting from the combustion of fossil fuels for residential heating. To do so, we carried out two multifactorial survey experiments that allowed us to incorporate justice attitudes into non-market valuation. The first experiment focused on recording justice attitudes towards payment distribution for air quality improvement, while the second experiment measured the willingness to pay for air pollution reduction programmes. Both experiments were conducted with the same respondents, from four cities in Poland, and were conducted separately one to two weeks apart. As a modelling approach, we employ a hybrid choice model. Our findings indicate that people strongly support an equity-based cost distribution and that those with a stronger equity-based distributive justice attitude are more willing to pay for air quality improvement programmes.
{"title":"Distributive justice concerns when combating air pollution: The joint modelling of attitudes and preferences","authors":"Anna Małgorzata Bartczak, Wiktor Budziński, Ulf Liebe, Jurgen Meyerhoff","doi":"10.1016/j.eneco.2024.107978","DOIUrl":"https://doi.org/10.1016/j.eneco.2024.107978","url":null,"abstract":"Distributive justice is an important but often overlooked factor in policy evaluation. We thus examine how people's attitudes towards distributive justice affect their preferences for programmes aimed at reducing ambient air pollution resulting from the combustion of fossil fuels for residential heating. To do so, we carried out two multifactorial survey experiments that allowed us to incorporate justice attitudes into non-market valuation. The first experiment focused on recording justice attitudes towards payment distribution for air quality improvement, while the second experiment measured the willingness to pay for air pollution reduction programmes. Both experiments were conducted with the same respondents, from four cities in Poland, and were conducted separately one to two weeks apart. As a modelling approach, we employ a hybrid choice model. Our findings indicate that people strongly support an equity-based cost distribution and that those with a stronger equity-based distributive justice attitude are more willing to pay for air quality improvement programmes.","PeriodicalId":11665,"journal":{"name":"Energy Economics","volume":"22 1","pages":""},"PeriodicalIF":12.8,"publicationDate":"2024-11-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142665657","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-07DOI: 10.1016/j.eneco.2024.108036
Jiahao Liu , Bo Zhu , Xin Hu
In recent years, the worsening global geopolitical conditions have led investors and policy makers to become increasingly concerned about systemic risk in the global energy market. However, the existing literature has little empirical evidence on this problem from a geopolitical perspective. Based on an Elastic-Net-VAR model for depicting high-dimensional left-tail interdependence, this paper measures time-varying systemic risk spillovers among 212 energy firms in 36 countries. Then, a panel data model is established to examine the impact of geopolitical risk (GPR) on risk spillovers. Our results indicate that the GPR of a country directly intensifies the risk spillovers of the country's energy firms, as well as spreads to other countries based on geographic proximity and energy trade flows and indirectly intensifies the risk spillovers of the energy firms in these countries. Specifically, the indirect effects of GPR are more pronounced than the direct effects for fossil fuel firms, in oil-consuming countries, and during stable periods in global geopolitics. Moreover, the potential firm-level mechanisms through which GPR intensifies risk spillovers are declines in asset turnover, deceleration in corporate investment, and negative market forecasts. These findings can help to mitigate the adverse effects of GPR on energy firm performance, national energy security, and stability in the global energy market.
{"title":"Systemic risk spillovers among global energy firms: Does geopolitical risk matter?","authors":"Jiahao Liu , Bo Zhu , Xin Hu","doi":"10.1016/j.eneco.2024.108036","DOIUrl":"10.1016/j.eneco.2024.108036","url":null,"abstract":"<div><div>In recent years, the worsening global geopolitical conditions have led investors and policy makers to become increasingly concerned about systemic risk in the global energy market. However, the existing literature has little empirical evidence on this problem from a geopolitical perspective. Based on an Elastic-Net-VAR model for depicting high-dimensional left-tail interdependence, this paper measures time-varying systemic risk spillovers among 212 energy firms in 36 countries. Then, a panel data model is established to examine the impact of geopolitical risk (GPR) on risk spillovers. Our results indicate that the GPR of a country directly intensifies the risk spillovers of the country's energy firms, as well as spreads to other countries based on geographic proximity and energy trade flows and indirectly intensifies the risk spillovers of the energy firms in these countries. Specifically, the indirect effects of GPR are more pronounced than the direct effects for fossil fuel firms, in oil-consuming countries, and during stable periods in global geopolitics. Moreover, the potential firm-level mechanisms through which GPR intensifies risk spillovers are declines in asset turnover, deceleration in corporate investment, and negative market forecasts. These findings can help to mitigate the adverse effects of GPR on energy firm performance, national energy security, and stability in the global energy market.</div></div>","PeriodicalId":11665,"journal":{"name":"Energy Economics","volume":"140 ","pages":"Article 108036"},"PeriodicalIF":13.6,"publicationDate":"2024-11-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142660770","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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