Dynamic correlation among renewable energy, technology, and carbon markets: Evidence from a novel nonparametric time-frequency approach

Ozkan O., OLANIPEKUN I. O., OLASEHINDE WILLIAMS G. O.

Renewable Energy, cilt.237, 2024 (SCI-Expanded) identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 237
  • Basım Tarihi: 2024
  • Doi Numarası: 10.1016/j.renene.2024.121667
  • Dergi Adı: Renewable Energy
  • Derginin Tarandığı İndeksler: Science Citation Index Expanded (SCI-EXPANDED), Scopus, Academic Search Premier, PASCAL, Aerospace Database, Aquatic Science & Fisheries Abstracts (ASFA), CAB Abstracts, Communication Abstracts, Compendex, Environment Index, Geobase, Greenfile, Index Islamicus, INSPEC, Pollution Abstracts, Public Affairs Index, Veterinary Science Database, DIALNET, Civil Engineering Abstracts
  • Anahtar Kelimeler: Carbon market, Dynamic correlation, Nonparametric time-frequency test, Renewable energy market, Returns, Technology market
  • İstanbul Ticaret Üniversitesi Adresli: Evet

Özet

In addressing the challenges of energy security and climate change, ongoing efforts involve the development of innovative technologies to support the shift from conventional to clean energy sources. Concurrently, the establishment of carbon markets aims to facilitate a decrease in carbon emissions by enabling the trade of carbon credits. This study adds to the energy-climate discussion by examining the evolving dynamics of returns on investments in renewable energy, technology, and carbon markets. Specifically, the time-varying correlation among renewable energy, technology, and carbon markets in the European Union is examined from September 18, 2017 to December 14, 2022. The techniques employed for empirical analyses are the nonparametric time-frequency, Benjamini-Hochberg, and Benjamini-Yekutieli correlation techniques, as well as the time-varying Granger causality. Highlights from the results are as follows. Renewable energy, technology, and carbon markets exhibit time and frequency variations in their relationships, with significant correlations notably present during periods marked by major shifts in energy policy. Secondly, renewable energy and carbon markets exhibit very weak or even absent correlation, indicating their suitability for portfolio diversification. Furthermore, investors could benefit significantly by including both technology and carbon markets in their portfolios to reduce overall risk. Several additional recommendations are also provided in this study.