The Russian coal industry in an uncertain world: Finally pivoting to Asia?

Despite the urgent need to reduce coal consumption to mitigate climate change, coal has received renewed interest as a source of energy due to the perfect storm of climate, health, geopolitical and energy crises. Post-COVID recovery boosted global coal production and Asian coal consumption. Because of the 2022 Russian invasion of Ukraine, coal saw a rise in demand in Europe to replace sanctioned natural gas and oil. Combined with volatile prices, these developments highlight profound uncertainties for the world's coal exporters. This paper focuses on Russia, which so far has been the world's largest fossil fuel exporter and third-largest coal exporter and where the coal sector is the backbone of several regional economies and local communities. Using the Triple Embeddedness Framework (TEF), the paper reviews internal and external pressures on the Russian coal industry and evaluates its capacity to adapt to the rapidly changing socio-political and techno-economic environment. Russian coal exporters have attempted to accelerate their shift to the East following the European Union's sanctions over the war in Ukraine and the Russian coal infrastructure is being expanded to serve the Asia-Pacific market. The analysis concludes that the Russian coal industry is not preparing for more long-term changes in international coal markets, and this exacerbates the magnitude of risks for local communities and regional economies within Russia as well as for global decarbonisation.

Ensuring Economic Security by Modifying Renewable Energy Systems

The paper presents the possibility of ensuring economic security by modifying the energy system of renewable energy sources, including solar, wind, hydropower, biofuels, etc. This process is related to the transition of economies to a less carbon-intensive and more sustainable energy system. Recovery in fuel demand and stability in international markets are driving a recovery in production in 2021 and sustained growth through 2025. The paper explores economic and policy incentives focused on clean energy that can directly or indirectly support renewable energy. Experts predict that renewable energy sources should take the leading place in the world's electricity sector. The authors propose using a dynamic information model to refine the forecasts. This research tool will provide data and forecasts in all sectors employing renewable energy technologies. The authors provide up-to-date indicators, analysis, and information on energy security and sustainability on a global scale. Moreover, they quantify the effects of the widespread global recession caused by COVID-19 and consider measures in the clean energy sector to address them. © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022.

Asymmetric effects and volatility transmission from metals markets to solar energy stocks: Evidence from DCC, ADCC, and quantile regression approach

Detrimental environmental repercussions have recently given rise to an interest in green investments. Although solar energy stocks are appealing assets for ethical investors, little is known about their dynamic correlations and linkages with metal (silicon, lithium, and rare earth) markets, particularly during economic events which is essential for hedging effectiveness and asset allocation. This study investigates the nexus between metal markets, oil price volatility (OVX), market sentiments (VIX), and solar energy markets using DCC, ADCC models, and the quantile regression approach. The results show both symmetric and asymmetric shock spillover between metals markets, VIX, OVX, and solar energy markets which are more prominent during COVID-19 pandemic, US-China trade frictions, and Russian invasion of Ukraine. For portfolio management, the hedging effectiveness of lithium stocks is highest, followed by silicon and rare earth metals. However, the hedge ratios are time-varying, and the variability is highest during US-China trade frictions. The quantile regression estimates reveal that lithium market is the most persistent determinant of solar energy stocks followed by silicon market even after segregating the periods into Paris Agreement and COVID-19 pandemic. Thus, lithium and silicon are driving markets of solar energy markets and can be a cause of omitted variable bias if stay unobserved. Nonetheless, there is little influence of VIX, rare earth metals, and OVX on solar energy stocks. Lastly, the estimations of threshold regression suggest that market sentiments change the association between metal markets and solar energy markets after the VIX reaches a certain threshold level. © 2023

How do carbon, stock, and renewable energy markets interact: Evidence from Europe

In a low-carbon context, the connectedness among carbon, stock, and renewable energy markets has been strengthening. This study examines the effect of Brexit, the launch of the European Green Deal and the COVID-19 pandemic on the connectedness among carbon, stock, and renewable energy markets by employing Time Varying Parameter -Vector Auto Regression (TVP-VAR). First, equal interval impulse response analysis shows that in the short term, the renewable energy market suffers from a positive shock from the carbon market and this shock gradually decreases from the initial 1.6×10−3. In the long run, the connectivity between the carbon market and the stock market, and between the carbon market and the renewable energy market is almost 0. Second, we can conclude that the positive connectivity between stock market to carbon market and renewable energy market to carbon market is enhanced by COVID-19 in the short term, with values of 7.5×10−3 and 3.6×10−3 respectively. Finally, renewable energy market received a greater negative impact from the carbon market during COVID-19 than during the release of the European Green Deal, while Brexit allowed positive carbon price spillover to renewable energy price. © 2023 Elsevier Ltd

Dynamic spillover between traditional energy markets and emerging green markets: Implications for sustainable development

This study employs the time-varying vector parameter autoregression model and Diebold-Yilmaz (2012, 2014) spillover approach to explore the static, net, dynamic and directional spillover effects between China's traditional energy and emerging green markets and the impact of the COVID-19 outbreak on spillover effects. Spillover networks are constructed to observe structural changes in the directional spillover of each target financial market before and after the pandemic's outbreak. Changes in hedging indicators of portfolios composed of two types of markets before and after the outbreak of COVID-19 are compared to provide directional guidance for investors to choose portfolios in the post-pandemic era. We found that the outbreak of the pandemic had a considerable impact on the volatility of various spillover effects of the studied markets. The total spillover level of the system increased rapidly by 18% in the early stages of the pandemic. Green bond was the largest net recipient of volatility spillovers in the whole system, followed by crude oil, while new energy was the largest net contributor of volatility spillovers in the whole system, followed by clean energy. After the outbreak, the hedging effectiveness of portfolios with long positions in traditional energy markets and short positions in emerging green markets improved significantly. In particular, a portfolio with long positions in the crude oil market and short positions in the green bond market is the best risk-hedging portfolio. © 2023 Elsevier Ltd

Superhighways and roads of multivariate time series shock transmission: Application to cryptocurrency, carbon emission and energy prices

Inferring the heterogeneous connection pattern of a networked system of multivariate time series observations is a key issue. In finance, the topological structure of financial connectedness in a network of assets can be a central tool for risk measurement. Against this, we propose a topological framework for variance decomposition analysis of multivariate time series in time and frequency domains. We build on the network representation of time–frequency generalized forecast error variance decomposition (GFEVD), and design a method to partition its maximal spanning tree into two components: (a) superhighways, i.e. the infinite incipient percolation cluster, for which nodes with high centrality dominate;(b) roads, for which low centrality nodes dominate. We apply our method to study the topology of shock transmission networks across cryptocurrency, carbon emission and energy prices. Results show that the topologies of short and long run shock transmission networks are starkly different, and that superhighways and roads considerably vary over time. We further document increased spillovers across the markets in the aftermath of the COVID-19 outbreak, as well as the absence of strong direct linkages between cryptocurrency and carbon markets. © 2023 Elsevier B.V.

An Wavelet analysis of connectedness between volatility of the energy and other markets during the COVID-19 crisis

By applying novel partial wavelet coherency, this paper investigates the transmission mechanism of the volatility from the oil, gold, and silver sector to the energy sector in the time and frequency dimensions as well as the influence of the COVID-19 health crisis on this linkage. The multiple coherencies suggest at least five multiple cycles, which are located at high frequencies (the 52 – 132-day frequency band). Among these cycles, the largest one occurs at the low frequency (the 120 – 132-day frequency band), and this cycle is persistently prolonged. Notably, the four sectors' remarkable interlinkages of the volatility are presented more clearly since the COVID-19 pandemic first appeared and hit the globe (from the end of 2019 to the middle of 2020). The partial coherency between the volatility of the energy sector and the volatility of the oil sector reveals that the relations between two sectors are relatively persistent, which changes in the energy sector's volatility cause the oil sector to become more volatile. The partial coherency between the volatility of the energy sector and the volatility of the gold and silver sector suggests their interlinkages are time-varying and can be divided into four phases. The relationships are either positive or negative, and the energy sector or the silver or gold sector could be an attendant of other market's rising volatility. During the time of the COVID-19 pandemic, the energy sector's volatility is in-phase with the oil and silver sector's volatility leading, whilst the gold sector's volatility leads to the energy sector's volatility, and the relation is negative. © 2023

Interdependence of clean energy and green markets with cryptocurrencies

The adverse effects of the high-power energy consumption by cryptocurrencies on the environment and sustainability have raised the interest of a large body of policymakers and market participants. We apply a network approach to investigate the dependency across clean energy, green markets, and cryptocurrencies from 1 January 2018 to 30 November 2021. Our results indicate that sustainable investments, particularly DJSI and ESGL, play a pivotal role in the network system during the COVID-19 crisis. We find that green bonds are the least integrated with the other financial markets, suggesting their significant role in providing diversification benefits to investors. Rolling windows estimation shows that the dependency across the examined marked increased sharply during the COVID-19 crisis, especially between March 2020 and March 2021, after which it faded and became weak and stable until the end of the sample period. Results of the centrality network are consistent with the dependency network analysis. © 2023

COVID-19 and negative oil prices – an empirical analysis comparing importing and exporting countries

The coronavirus pandemic has forced lockdown in many countries, reducing the use of vehicles and planes, resulting in a negative oil demand shock. In the USA, West Texas Intermediate (WTI) crude oil FOB spot price was recorded to be negative $36.98 per barrel on April 20, 2020. This would seem to be good news for oil importers and bad news for oil exporters. However, the results of an event study analysis of indices data ranging from July 1, 2019 to May 29, 2020 present a different picture. The incidence of a negative oil price had a negative impact on the stock markets of both major oil importing and exporting countries, although the effects on exporting countries were much more negative. Cumulative average abnormal returns, measured using a historical mean model and in reference to the event day of April 20, were significantly negative for all groups in the first two days, vanishing quickly in the very short term. Copyright © 2023 Inderscience Enterprises Ltd.

Could volatile cryptocurrency stimulate systemic risks in the energy sector? Evidence from novel connectedness models

By identifying the connectedness of seven indicators from January 1, 2019, to June 13, 2022, we choose an extended joint connectedness approach to a vector autoregression model with time-varying parameter (TVP-VAR) to analyze interlinkages between Crypto Volatility (CV) and Energy Volatility (EV). Our findings show that the COVID-19 outbreak seems to have an impact on the dynamic connectedness of the whole system, which peaks at about 60% toward the end of 2019. According to net total directional connectedness over a quantile, throughout the 2020–2022 timeframe, natural gas and crude oil are net shock transmitters, while the CV, clean energy, solar energy, and green bonds consistently receive all other indicators. Specifically, pairwise connectedness indicates that the CV appears to be a net transmitter of shocks to all energy indicators before the COVID-19 outbreak but acts as a net receiver of shocks from clean energy, wind energy, and green bonds in late 2020. The CV mostly has spillover effects on green bonds. The primary net transmitter of shocks to the Crypto market is crude oil. Our findings are critical in helping investors and authorities design the most effective policies to lessen the vulnerabilities of these indicators and reduce the spread of risk or uncertainty. © 2023 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.

Information transmission in regional energy stock markets.

Since markets are undergoing severe turbulent economic periods, this study investigates the information transmission of energy stock markets of five regions including North America, South America, Europe, Asia, and Pacific where we differentiated the regional energy markets based on their developing and developed state of economy. We employed time-frequency domain from Jan 1995 to May 2021 and found that energy stocks of developed regions are highly connected. The energy markets of North America, South America, and Europe are the net transmitters of spillovers, whereas the Asian and Pacific energy markets are the net receivers of spillovers. The results also reveal that the connectedness of regional energy markets is time and frequency dependent. Regional energy stocks were highly connected following the Asian financial crisis (AFC), global financial crisis (GFC), European debt crisis (EDC), shale oil revolution (SOR), and COVID-19 pandemic. Time-dependent results reveal that high spillovers formed during stress periods and frequency domain show the higher connectedness of regional energy stock markets in the short run followed by an extreme economic condition. These results have significant implications for policymakers, regulators, investors, and regional controlling bodies to adopt effective strategies during short run to avoid economic downturns and information distortions.

Connectedness among various financial markets classes under Covid-19 pandemic and 2022 Russo-Ukrainian war: evidence from TVP-VAR approach

PurposeThis paper examines the time-varying return connectedness between renewable energy, oil, precious metals, the Gulf Council Cooperation region and the United States stock markets during two successive crises: the pandemic Covid-19 and the 2022 Russo-Ukrainian war. The main objective is to investigate the effect of the Covid-19 pandemic and the Russo-Ukrainian war on the connectedness between the considered stock markets. Design/methodology/approachThis paper uses the time-varying parameter vector autoregression approach, which represents an extension of the Spillover approach (Diebold and Yilmaz, 2009, 2012, 2014), to examine the time-varying connectedness among stock markets. FindingsThis paper reflects the effect of the two crises on the stock markets in terms of shock transmission degree. We find that the United States and renewable energy stock markets are the main net emitters of shocks during the global period and not just during the two considered crises sub-periods. Oil stock market is both an emitter and a receiver of shocks against Gulf Council Cooperation region and United States markets during the full sample period, which may be due to price fluctuation especially during the two crises sub-periods, which suggests that the future is for renewable energy. Originality/valueThis paper examines the effect of the two recent and successive crises, the Covid-19 pandemic and the 2022 Russo-Ukrainian war, on the connectedness among traditional stock markets (the United States and Gulf Council Cooperation region) and commodities stock markets (renewable energy, oil and precious metals).

Quantile time-frequency connectedness between cryptocurrency volatility and renewable energy volatility during the COVID-19 pandemic and Ukraine-Russia conflicts

Our article employs a quantile vector autoregression (QVAR) to identify the connectedness of seven variables from April 1, 2019, to June 13, 2022, in order to examine the relationships between crypto volatility and energy volatility. Our findings reveal that the dynamic connectedness is approximately 25% in the short term and approximately 9% in the long term. The 50% quantile equates to the overall average connectedness of the entire period, according to dynamic net total directional connectedness over a quantile, which also indicates that connectedness is very intense for both highly positive changes (above the 80% quantile) and crypto and energy volatility (below the 20% quantile). With the exception of the early 2022 period when the Crypto Volatility Index transmits a net of shocks because of the Ukraine-Russia Conflict, dynamic net total directional connectedness implies that in the short term, the Crypto Volatility Index acts as a net shock receiver across time. While this indicator is a net shock receiver for long-term dynamics, wind energy is a net shock transmitter during the short term. Green bonds are a short-term net shock receiver. This role is valid in the long term. Clean energy and solar energy are the long-term net transmitters of shocks;nevertheless, the series is always and only momentarily a net receiver of shocks because of the short-term dynamics. Natural gas and crude oil play roles in both two quantiles. Dynamic net pairwise directional connectedness over a quantile suggests that uncertain events like the COVID-19 epidemic or Ukraine-Russia Conflict influence cryptocurrency volatility and renewable energy volatility. © 2022 Elsevier Ltd

Europe's Fragile Unity

The EU is unlikely to develop the kinds of efficient collective responses to the Russia–Ukraine war that it produced in reaction to the COVID-19 pandemic. The conditions of strategic interdependence generated by the Ukraine crisis are more demanding than those triggered by the pandemic because its consequences are asymmetrically distributed across member states. Germany will find it difficult to play the role of regional stabiliser, anti-Europe parties could become stronger, new intra-European cleavages may arise over collective goals, and the expansion of the crisis's time horizon could weaken prospects for effective collective action.

Co-movement between dirty and clean energy: A time-frequency perspective

In the backdrop of the recent covid-19 pandemic there is a renewed interest to understand the interlinkages between dirty and clean energies. In this regard, the study examines the co-movement structure between clean energy stocks and dirty energies before and during the covid-19 outbreak. The study analyses the interlinkages between the underlying markets by utilizing a vast sample of dirty energies namely crude oil, heating oil, gas oil, gasoline and natural gas, whereas clean energy sector is proxied by S&P Global clean energy index and Wilder Hill clean energy index. We make use of rolling window wavelet approach and wavelet coherence analysis to identify interdependencies between the clean energy stocks and dirty energies. The results exhibit weak linkages between clean energy equities and dirty energies in the short-run, while;we also record few occasions of high co-movements among dirty and clean energy markets in the long-run. Noticeably, a distinct decoupling effect persisted between dirty and clean energy markets. In addition, the findings also illustrate that clean energy market is relatively isolated from dirty energies during the recent pandemic crisis, amplifying portfolio diversification benefits across clean and dirty energy markets. The findings of the study hold meaningful insights for investors, policy makers and other market participants in energy financial markets.

The footprints of Russia–Ukraine war on the intraday (in)efficiency of energy markets: a multifractal analysis

Purpose>This paper examines the impact of Russian invasion of Ukraine on the intraday efficiency of four major energy markets, namely, diesel oil, Brent oil, light oil and natural gas.Design/methodology/approach>This study applies the multifractal detrended fluctuation analysis (MFDFA) to high-frequency returns (30-min intervals) for the period from October 21, 2021, to May 20, 2022. The data sample of 5,141 observations is divided into two sub-samples, before and after the invasion of 24th February 2022. Additionally, the magnitude of long memory index is employed to investigate the presence of herding behavior around the invasion period.Findings>Results confirm the presence of multifractality in energy markets and reveal significant changes of multifractal strength due to the invasion, indicating a decline of intraday efficiency for oil markets. Surprisingly, the natural gas market, being the least efficient before the invasion, turns out to be more efficient after the invasion. The findings also suggest that investors in these energy markets are likely to show herding, more prominently after the invasion.Practical implications>The multifractal patterns, in particular the long memory property of energy markets, can help investors develop profitable investment strategies. Furthermore, the improved efficiency observed in the natural gas market, after the invasion, highlights its unique traits and underlying complexity.Originality/value>This study is the first attempt to assess the impact of the Russia–Ukraine war on the efficiency of global commodity markets. This is quite important because the adverse effects of the war on financial markets may potentially cause destabilizing outcomes and negative effects on social welfare on a global scale.

The spillovers among cryptocurrency, clean energy and oil

The COVID-19 causes strong spillover effects between financial markets. This paper explores the dynamic spillover effects among cryptocurrency, clean energy and oil during the COVID-19 by employing TVP-VAR extended joint connectedness approach. The empirical results show that clean energy and oil markets appear to be the net receivers of spillovers, whereas cryptocurrency market appears to be a net transmitter of spillovers. The dynamic total connectedness experiences a rapid increase in March 2020 when the COVID-19 spreads around the world. © 2022 The Authors. Published by Elsevier B.V.

The asymmetric impact of economic policy uncertainty on global retail energy markets: Are the markets responding to the fear of the unknown?

Following the paucity of empirical studies on the effects of economic policy uncertainty (EPU) on global retail energy markets and the need to reassess the markets for the prevalence of rockets and feathers effect and rent-seeking behavior by retailers during the Covid-19 pandemic, we studied the asymmetric response of the markets to changes in EPU and crude oil costs. We estimated nonlinear autoregressive distributed lag models over the period 2004 M11-2020 M6 using data for global and domestic EPUs as well as gasoline, automotive diesel, domestic heating oil, industrial fuel oil and crude oil markets. We find that rising uncertainty significantly increases retail energy prices both in the short-run and long-run, especially in UK, Japan and Europe. The asymmetric patterns show that many of the markets respond more to rising uncertainty than declining uncertainty, suggesting the prevalence of the "fear of the unknown”. Our results also showed significant evidence of rockets and feathers effect in all the countries, except Canada. Furthermore, the likelihood of rent-seeking by retailers was observed in the diesel and domestic heating oil markets in Italy, UK, and France. The study concluded that these findings have important policy implications, particularly as they relate to consumer welfare, antitrust policies and stability of the policy environment.

Oil markets between Scylla of recovery and Charybdis of climate policy

In 2020 the energy transition path was distorted by the COVID-19 pandemic which caused a sharp economic decline and a fast global recovery in 2021. Unlike that period, the years between 2001 and 2019 illustrated a different type of energy evolution for developed and developing countries regarding primary energy consumption. During this period the composition of energy balances of these two major groups demonstrated dramatic disparity, notably marked by the high share of coal in developing countries. The shock of 2020 led to a belief in expediting the transition to green energy, but in 2021 the economic recovery revived demand for oil and coal, dashing hopes for the growing renewable energy sources sector in the European Union that year. The return of coal, however, to the EU energy sector and stable demand for motor fuel globally led to the restoration of the GHG emission growth against the backdrop of the climate policy implementation failure. The current energy transition is denoted by features such as the flat oil demand in developed countries, the flat global demand for motor gasoline and the growing demand for diesel. The econometrics of demand for two motor oil products are quite opposite. For gasoline we have almost all hypotheses met: the negative influence of climate policy and oil prices, strong effect of dummies for shock of 2020 and 2021, and naturally 0.3 coefficient at GDP growth rate. Nevertheless, for diesel everything is exactly the opposite — only 0,4 coefficient at GDP and practically nothing else. This effect shows the strong role and trend for cargo use of diesel fueled trucks in the global economy. The high income of oil and gas majors in 2021 did not secure the investment upturn. A mature oil industry receives substantial profits for its investors, supplying dividends, and buying back debts without enlarging production capacities. At this point climate policy expectations of phasing out fossil fuels in the foreseeable future operated as a braking mechanism against reinvesting oil incomes. Moreover, at this junction we can observe governments’ limited capacity to pursue policies toward multiple objectives simultaneously: modest energy prices, energy transition and securing the sufficient capital formation for energy. The continued fusion of the economic upturn and energy transition will be dependent on demand and supply matching in the oil markets. It is also possible that the sanctions policies of 2022 may aggravate the situation, triggering high prices and uncertainties. © 2022 Non-profit partnership “Voprosy Ekonomiki”.

Dynamic spillovers and asymmetric connectedness between fossil energy and green financial markets: Evidence from China

With the purpose of risk management for fossil energy investors, this paper examines the dynamic spillover effect and asymmetric connectedness between fossil energy, green financial and major traditional financial markets in China. By employing the spillover index model of Diebold and Yilmaz, a weak correlation between green financial and fossil energy markets is verified, and the market connectedness remains relatively calm despite the COVID-19 pandemic outbreak. Specifically, green bonds receives fewer shocks from crude oil than coal, green stocks receive fewer shocks from coal than crude oil. In addition, rather than the safe-haven characteristics presented by gold, this paper further proves that green bonds also have the potential to act as safe-haven assets, due to the fact that the connectedness between green bonds and energy markets is at low levels. Finally, the magnitude of return spillovers between markets would vary significantly during different periods. The results obtained in this paper have practical implications for both investors and policymakers. Copyright © 2022 Deng, Guan, Zheng, Xing and Liu.