Diversifier or more? Hedge and safe haven properties of green bonds during COVID-19.

Against the backdrop of the COVID-19 pandemic, the study explores the hedging and safe-haven potential of green bonds for conventional equity, fixed income, commodity, and forex investments. We employ the cross-quantilogram approach to understand better the dynamic relationship between two assets under different market conditions. Our full sample results reveal that the green bond index could serve as a diversifier asset for medium- and long-term equity investors. Besides, it can serve as a hedging and safe-haven instrument for currency and commodity investments. Moreover, the sub-sample analysis of the pandemic period shows a heightened short- and medium-term lead-lag association between the green bond index and conventional investment returns. However, the green bond index emerges as a significant hedging and safe-haven asset for long-term investors of conventional financial assets. Our findings offer valuable insights for long-term investors when their portfolios are comprised of conventional assets such as equities, commodities, forex, and fixed income securities. Further, our findings reveal the potential role of green bond investments in global financial recovery efforts without compromising the low-carbon transition targets.

Impact of COVID-19 on the quantile connectedness between energy, metals and agriculture commodities.

With many studies highlighting the heterogeneous impact of the COVID-19 pandemic on different commodity markets, this study provides evidence of quantile connectedness between energy, metals, and agriculture commodity markets before and during the COVID-19 outbreak. Since mean-based measures of connectedness are not necessarily suitable to measure connectedness in the crisis period, especially in the tails of the return distribution, thus in this study, we use the newly developed approach of quantile-based connectedness. The full-sample analysis results show that return shocks only propagate within the energy commodity group. The findings manifest that transmission of return spillovers is stronger in the left and right tails of the conditional return distribution. In addition, the results unveil that degree of tail-dependence between energy, metals, and agriculture commodities are time-varying. Meanwhile, our sub-sample analysis clearly shows that the commodity market return connectedness demonstrates a significant shift over time due to COVID-19 shocks. There is evidence of strong transmission of return shocks between energy, metals, and agriculture commodities during the COVID-19 fiasco. Finally, the results also illustrate that softs and livestock commodities hold significant diversification benefits for energy market investors.

Energy security, economic growth and environmental sustainability in India: Does FDI and trade openness play a role?

India is one of the world's largest emerging economies and, therefore, has a critical role to play in ensuring global sustainability, while the Indian economy is also prioritizing energy security. The paper explores the dynamic linkages between energy security captured through national-level energy use, foreign direct investment (FDI), economic output, carbon emissions, and trade openness in India spanning the period from 1978 to 2016 in a multivariate framework based on the theoretical premise of an Environmental Kuznets Curve. Time series econometric modelling based on the ARDL model and VECM Granger causality tests are employed for this purpose. The results confirm the presence of a co-integrating relationship and finds a strong energy-output-CO2-FDI long-run nexus. A 1% increase in FDI results in a 0.013% reduction in energy use. Energy use is found to be Granger caused by output, carbon emissions, FDI and trade openness in the long-run. The adoption of energy-efficient techniques through FDI is essential for reducing carbon emissions in India based on our findings. The Indian government should also galvanize FDI inflow in the renewable energy sectors by assuring incentives to investors to concurrently achieve favorable macroeconomic outcomes and ensure sustainable economic development. These are globally important policy lessons for other developing and emerging economies.

Economical and environmental impacts of decarbonisation of Indonesian power sector.

Renewable energy has been prioritised in decarbonising Indonesia's electricity system. Indonesia aims to attain an efficient energy system by applying renewable energy tariffs that are lower than the cost of fossil fuel-generated electricity. However, the effectiveness of this policy is questionable, as renewable energy investments under previous premium feed-in tariffs did not meet expectations. This study aims to estimate generation costs from renewable energy expansions under three scenarios, namely existing power plant planning, and 11% and 14% emission reductions in Indonesia's electricity sector. We develop an agent-based model (ABM) tool called PowerGen-ABM that employs multi-approaches: linear programming and input-output analysis. The optimisation result shows that the emission reduction targets would increase the average electricity generation costs in 2028 from 65.3 USD/ MWh in the existing plan of power plant expansions to 68.3 USD/ MWh. The increased costs are caused by insufficient dispatchable renewables in several regions such as North Maluku. Renewable energy production share in total electricity production and emission reduction achievement of the existing plan in 2025 will be 22.8% and 6.5% below the targets of 23% and 11%, respectively. In contrast, the emission reduction scenarios could achieve those targets due to higher renewables productions, especially with wind energy from 5,268 GWh in the existing plan into anywhere between 64,472 to 75,085 GWh. Several policy implications are discussed based on these findings.

Estimating the impacts of financing support policies towards photovoltaic market in Indonesia: A social-energy-economy-environment model simulation.

This study develops a hybrid energy agent-based model that integrates the input-output analysis, environmental factors and socioeconomic characteristics of rural and urban households in Indonesia. We use the model to estimate the effects of four solar energy policy interventions on photovoltaic (PV) investments, government expenditure, economic outputs, CO2e emissions and the uses of steel, aluminium, concrete and energy. The results of our analysis call for the abolition of the PV donor gift policy, the improvement of production efficiency in the PV industry and the establishment of after-sales services and rural financing institutions. A 100 W peak (Wp) PV under this recommendation would be affordable for 80.6% of rural households that are projected to be without access to electricity in 2029. Net metering is the most effective policy for encouraging urban people to invest in PV in a situation where fossil energy prices are increasing and PV prices are declining. A donor gift policy may induce USD 51.9 new economic outputs for every Wp of PV operating to capacity in 2029, but would require a subsidy of USD 18.6/Wp. The recommended policies do not require subsidies and reduce CO2eq emissions and the consumption of aluminium, energy, steel and concrete by between 83.1% and 89.7% more than the existing policy. Several policy implications are discussed in response to these findings. As a contribution to energy modelling literature, the model can be used for other developing countries by merely changing its data.