IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v95y2021ics0140988321000414.html
   My bibliography  Save this article

What are the shocks of climate change on clean energy investment: A diversified exploration

Author

Listed:
  • Chen, Xia
  • Fu, Qiang
  • Chang, Chun-Ping

Abstract

Climate change may affect energy consumption and thus bring shocks to clean energy investment. By employing instrumental variable quantile regression model, this research investigates the effects of climate change on clean energy investment according to global panel data spanning a long period. In addition to the sample of all countries, we also carry out investigations of sub-samples for OECD and non-OECD countries to analyze whether there exists heterogeneity in development levels. Overall, we provide a diversified exploration on how climate change shocks impact clean energy investment. More specifically, we find that effects of climate change on clean energy investment vary significantly in countries with different levels of clean energy investment; i.e., climate change is likely to promote clean energy investment in countries whose clean investments are greater, and there exists significant heterogeneity in the subsamples. From these results, we offer policy implications such as carrying out differentiated clean energy plans based on the specific environment, implementing policies on clean energy, and copying the practices in some OECD countries that have high levels of clean energy investment.

Suggested Citation

  • Chen, Xia & Fu, Qiang & Chang, Chun-Ping, 2021. "What are the shocks of climate change on clean energy investment: A diversified exploration," Energy Economics, Elsevier, vol. 95(C).
    • Handle: RePEc:eee:eneeco:v:95:y:2021:i:c:s0140988321000414
    DOI: 10.1016/j.eneco.2021.105136
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988321000414
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2021.105136?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Wei, Yi-Ming & Mi, Zhi-Fu & Huang, Zhimin, 2015. "Climate policy modeling: An online SCI-E and SSCI based literature review," Omega, Elsevier, vol. 57(PA), pages 70-84.
    2. Pinglin He & Yulong Sun & Ying Zhang & Tao Li, 2020. "COVID–19’s Impact on Stock Prices Across Different Sectors—An Event Study Based on the Chinese Stock Market," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(10), pages 2198-2212, August.
    3. Polzin, Friedemann & Migendt, Michael & Täube, Florian A. & von Flotow, Paschen, 2015. "Public policy influence on renewable energy investments—A panel data study across OECD countries," Energy Policy, Elsevier, vol. 80(C), pages 98-111.
    4. Koenker, Roger, 2004. "Quantile regression for longitudinal data," Journal of Multivariate Analysis, Elsevier, vol. 91(1), pages 74-89, October.
    5. Bilgen, S., 2014. "Structure and environmental impact of global energy consumption," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 890-902.
    6. Narayan, Paresh Kumar & Devpura, Neluka & Wang, Hua, 2020. "Japanese currency and stock market—What happened during the COVID-19 pandemic?," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 191-198.
    7. Fei, Li & Dong, Suocheng & Xue, Li & Liang, Quanxi & Yang, Wangzhou, 2011. "Energy consumption-economic growth relationship and carbon dioxide emissions in China," Energy Policy, Elsevier, vol. 39(2), pages 568-574, February.
    8. Ahmadov, Anar Kamil & van der Borg, Charlotte, 2019. "Do natural resources impede renewable energy production in the EU? A mixed-methods analysis," Energy Policy, Elsevier, vol. 126(C), pages 361-369.
    9. Chun-Ping Chang & Li Wan Zhang, 2020. "Do Natural Disasters Increase Financial Risks? An Empirical Analysis," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 23(Special I), pages 61-86, January.
    10. Zhen Yu & Yao Xiao & Yuankun Li, 2020. "The Response of the Labor Force Participation Rate to an Epidemic: Evidence from a Cross-Country Analysis," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(10), pages 2390-2407, August.
    11. Fuss, Sabine & Szolgayová, Jana & Khabarov, Nikolay & Obersteiner, Michael, 2012. "Renewables and climate change mitigation: Irreversible energy investment under uncertainty and portfolio effects," Energy Policy, Elsevier, vol. 40(C), pages 59-68.
    12. Ewing, Bradley T. & Payne, James E. & Caporin, Massimilano, 2022. "The Asymmetric Impact of Oil Prices and Production on Drilling Rig Trajectory: A correction," Resources Policy, Elsevier, vol. 79(C).
    13. Yang, Hao-Yen, 2000. "A note on the causal relationship between energy and GDP in Taiwan," Energy Economics, Elsevier, vol. 22(3), pages 309-317, June.
    14. Morikawa, Masayuki, 2012. "Population density and efficiency in energy consumption: An empirical analysis of service establishments," Energy Economics, Elsevier, vol. 34(5), pages 1617-1622.
    15. Menyah, Kojo & Wolde-Rufael, Yemane, 2010. "CO2 emissions, nuclear energy, renewable energy and economic growth in the US," Energy Policy, Elsevier, vol. 38(6), pages 2911-2915, June.
    16. Sadorsky, Perry, 2011. "Trade and energy consumption in the Middle East," Energy Economics, Elsevier, vol. 33(5), pages 739-749, September.
    17. Liu, Ximei & Zeng, Ming, 2017. "Renewable energy investment risk evaluation model based on system dynamics," Renewable and Sustainable Energy Reviews, Elsevier, vol. 73(C), pages 782-788.
    18. Nyambuu, Unurjargal & Semmler, Willi, 2020. "Climate change and the transition to a low carbon economy – Carbon targets and the carbon budget," Economic Modelling, Elsevier, vol. 84(C), pages 367-376.
    19. Chernozhukov, Victor & Hansen, Christian, 2008. "Instrumental variable quantile regression: A robust inference approach," Journal of Econometrics, Elsevier, vol. 142(1), pages 379-398, January.
    20. Jun Wen & Mingbo Zheng & Gen-Fu Feng & Sunwu Winfred Chen & Chun-Ping Chang, 2020. "Corruption And Innovation: Linear And Nonlinear Investigations Of Oecd Countries," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(01), pages 103-129, March.
    21. Chien, Taichen & Hu, Jin-Li, 2008. "Renewable energy: An efficient mechanism to improve GDP," Energy Policy, Elsevier, vol. 36(8), pages 3035-3042, August.
    22. Zeb, Raheel & Salar, Laleena & Awan, Usama & Zaman, Khalid & Shahbaz, Muhammad, 2014. "Causal links between renewable energy, environmental degradation and economic growth in selected SAARC countries: Progress towards green economy," Renewable Energy, Elsevier, vol. 71(C), pages 123-132.
    23. Perera, A.T.D. & Nik, Vahid M. & Mauree, Dasaraden & Scartezzini, Jean-Louis, 2017. "Electrical hubs: An effective way to integrate non-dispatchable renewable energy sources with minimum impact to the grid," Applied Energy, Elsevier, vol. 190(C), pages 232-248.
    24. Abid Rashid Gill & Kuperan K. Viswanathan & Sallahuddin Hassan, 2018. "A test of environmental Kuznets curve (EKC) for carbon emission and potential of renewable energy to reduce green house gases (GHG) in Malaysia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 20(3), pages 1103-1114, June.
    25. Harding, Matthew & Lamarche, Carlos, 2009. "A quantile regression approach for estimating panel data models using instrumental variables," Economics Letters, Elsevier, vol. 104(3), pages 133-135, September.
    26. Bernard Njindan Iyke, 2020. "The Disease Outbreak Channel of Exchange Rate Return Predictability: Evidence from COVID-19," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(10), pages 2277-2297, August.
    27. Aguirre, Mariana & Ibikunle, Gbenga, 2014. "Determinants of renewable energy growth: A global sample analysis," Energy Policy, Elsevier, vol. 69(C), pages 374-384.
    28. Unknown, 2016. "Energy for Sustainable Development," Conference Proceedings 253270, Guru Arjan Dev Institute of Development Studies (IDSAsr).
    29. Omair Haroon & Syed Aun R. Rizvi, 2020. "Flatten the Curve and Stock Market Liquidity – An Inquiry into Emerging Economies," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(10), pages 2151-2161, August.
    30. Sadorsky, Perry, 2009. "Renewable energy consumption, CO2 emissions and oil prices in the G7 countries," Energy Economics, Elsevier, vol. 31(3), pages 456-462, May.
    31. Paramati, Sudharshan Reddy & Apergis, Nicholas & Ummalla, Mallesh, 2017. "Financing clean energy projects through domestic and foreign capital: The role of political cooperation among the EU, the G20 and OECD countries," Energy Economics, Elsevier, vol. 61(C), pages 62-71.
    32. Chang, Chun-Ping & Wen, Jun & Zheng, Mingbo & Dong, Minyi & Hao, Yu, 2018. "Is higher government efficiency conducive to improving energy use efficiency? Evidence from OECD countries," Economic Modelling, Elsevier, vol. 72(C), pages 65-77.
    33. Alok Kumar Mishra & Badri Narayan Rath & Aruna Kumar Dash, 2020. "Does the Indian Financial Market Nosedive because of the COVID-19 Outbreak, in Comparison to after Demonetisation and the GST?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(10), pages 2162-2180, August.
    34. Ackermann, Thomas & Söder, Lennart, 2000. "Wind energy technology and current status: a review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 4(4), pages 315-374, December.
    35. Pan, Zaitao & Segal, Moti & Arritt, Raymond W & Takle, Eugene S, 2004. "On the potential change in solar radiation over the US due to increases of atmospheric greenhouse gases," Renewable Energy, Elsevier, vol. 29(11), pages 1923-1928.
    36. Apergis, Nicholas & Payne, James E., 2011. "The renewable energy consumption-growth nexus in Central America," Applied Energy, Elsevier, vol. 88(1), pages 343-347, January.
    37. Foxon, T.J. & Pearson, P.J.G., 2007. "Towards improved policy processes for promoting innovation in renewable electricity technologies in the UK," Energy Policy, Elsevier, vol. 35(3), pages 1539-1550, March.
    38. Gan, Lin & Eskeland, Gunnar S. & Kolshus, Hans H., 2007. "Green electricity market development: Lessons from Europe and the US," Energy Policy, Elsevier, vol. 35(1), pages 144-155, January.
    39. Barbier, Enrico, 2002. "Geothermal energy technology and current status: an overview," Renewable and Sustainable Energy Reviews, Elsevier, vol. 6(1-2), pages 3-65.
    40. Chang, Chun-Ping & Wen, Jun & Dong, Minyi & Hao, Yu, 2018. "Does government ideology affect environmental pollutions? New evidence from instrumental variable quantile regression estimations," Energy Policy, Elsevier, vol. 113(C), pages 386-400.
    41. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    42. Wen Ming & Zhengqing Zhou & Hongshan Ai & Huimin Bi & Yuan Zhong, 2020. "COVID-19 and Air Quality: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(10), pages 2422-2442, August.
    43. Ryan David Dreveskracht, 2013. "Economic Development, Native Nations, and Solar Projects," American Journal of Economics and Sociology, Wiley Blackwell, vol. 72(1), pages 122-144, January.
    44. K. Warner & M. Hamza & A. Oliver-Smith & F. Renaud & A. Julca, 2010. "Climate change, environmental degradation and migration," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 55(3), pages 689-715, December.
    45. Bölük, Gülden & Mert, Mehmet, 2014. "Fossil & renewable energy consumption, GHGs (greenhouse gases) and economic growth: Evidence from a panel of EU (European Union) countries," Energy, Elsevier, vol. 74(C), pages 439-446.
    46. Mark T. Buntaine & William A. Pizer, 2015. "Encouraging clean energy investment in developing countries: what role for aid?," Climate Policy, Taylor & Francis Journals, vol. 15(5), pages 543-564, September.
    47. Jefferson, Michael, 2008. "Accelerating the transition to sustainable energy systems," Energy Policy, Elsevier, vol. 36(11), pages 4116-4125, November.
    48. Zheng, Mingbo & Feng, Gen-Fu & Feng, Suling & Yuan, Xuemei, 2019. "The road to innovation vs. the role of globalization: A dynamic quantile investigation," Economic Modelling, Elsevier, vol. 83(C), pages 65-83.
    49. Popp, David & Hascic, Ivan & Medhi, Neelakshi, 2011. "Technology and the diffusion of renewable energy," Energy Economics, Elsevier, vol. 33(4), pages 648-662, July.
    50. A. T. D. Perera & Vahid M. Nik & Deliang Chen & Jean-Louis Scartezzini & Tianzhen Hong, 2020. "Quantifying the impacts of climate change and extreme climate events on energy systems," Nature Energy, Nature, vol. 5(2), pages 150-159, February.
    51. Labordena, Mercè & Patt, Anthony & Bazilian, Morgan & Howells, Mark & Lilliestam, Johan, 2017. "Impact of political and economic barriers for concentrating solar power in Sub-Saharan Africa," Energy Policy, Elsevier, vol. 102(C), pages 52-72.
    52. Dinh Hoang Bach Phan & Paresh Kumar Narayan, 2020. "Country Responses and the Reaction of the Stock Market to COVID-19—a Preliminary Exposition," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(10), pages 2138-2150, August.
    53. Nicholas Stern, 2008. "The Economics of Climate Change," American Economic Review, American Economic Association, vol. 98(2), pages 1-37, May.
    54. Wüstenhagen, Rolf & Menichetti, Emanuela, 2012. "Strategic choices for renewable energy investment: Conceptual framework and opportunities for further research," Energy Policy, Elsevier, vol. 40(C), pages 1-10.
    55. C. T. Vidya & K. P. Prabheesh, 2020. "Implications of COVID-19 Pandemic on the Global Trade Networks," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(10), pages 2408-2421, August.
    56. Pinglin He & Hanlu Niu & Zhe Sun & Tao Li, 2020. "Accounting Index of COVID-19 Impact on Chinese Industries: A Case Study Using Big Data Portrait Analysis," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(10), pages 2332-2349, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Azam Ghezelbash & Vahid Khaligh & Seyed Hamed Fahimifard & J. Jay Liu, 2023. "A Comparative Perspective of the Effects of CO 2 and Non-CO 2 Greenhouse Gas Emissions on Global Solar, Wind, and Geothermal Energy Investment," Energies, MDPI, vol. 16(7), pages 1-20, March.
    2. Chen, Yin-E & Li, Chunyan & Chang, Chun-Ping & Zheng, Mingbo, 2021. "Identifying the influence of natural disasters on technological innovation," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 22-36.
    3. Yunpeng Wang & Chun-Ping Chang, 2023. "The effect of policy stability on clean energy investment," Economic Change and Restructuring, Springer, vol. 56(1), pages 327-344, February.
    4. Padhan, Rakesh & Prabheesh, K.P., 2021. "The economics of COVID-19 pandemic: A survey," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 220-237.
    5. Sui, Bo & Chang, Chun-Ping & Jang, Chyi-Lu & Gong, Qiang, 2021. "Analyzing causality between epidemics and oil prices: Role of the stock market," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 148-158.
    6. Naidu, Dharmendra & Ranjeeni, Kumari, 2021. "Effect of coronavirus fear on the performance of Australian stock returns: Evidence from an event study," Pacific-Basin Finance Journal, Elsevier, vol. 66(C).
    7. Feng, Gen-Fu & Yang, Hao-Chang & Gong, Qiang & Chang, Chun-Ping, 2021. "What is the exchange rate volatility response to COVID-19 and government interventions?," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 705-719.
    8. Yu, Zhen & Xiao, Yao & Li, Jinpo, 2021. "How does geopolitical uncertainty affect Chinese overseas investment in the energy sector? Evidence from the South China Sea Dispute," Energy Economics, Elsevier, vol. 100(C).
    9. Si, Deng-Kui & Zhao, Bing & Li, Xiao-Lin & Ding, Hui, 2021. "Policy uncertainty and sectoral stock market volatility in China," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 557-573.
    10. Qiang Fu & Chun-Ping Chang, 2021. "How Do Pandemics Affect Government Expenditures?," Asian Economics Letters, Asia-Pacific Applied Economics Association, vol. 2(1), pages 1-5.
    11. LI, Yang & Luo, Jingqiu & Jiang, Yongmu, 2021. "Policy uncertainty spillovers and financial risk contagion in the Asia-Pacific network," Pacific-Basin Finance Journal, Elsevier, vol. 67(C).
    12. Gong, Min & He, Wei & Zhang, Nan, 2021. "Political promotion incentives and local employment," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 492-502.
    13. Narayan, Paresh Kumar & Devpura, Neluka & Wang, Hua, 2020. "Japanese currency and stock market—What happened during the COVID-19 pandemic?," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 191-198.
    14. Su, Chi-Wei & Huang, Shi-Wen & Qin, Meng & Umar, Muhammad, 2021. "Does crude oil price stimulate economic policy uncertainty in BRICS?," Pacific-Basin Finance Journal, Elsevier, vol. 66(C).
    15. Salisu, Afees A. & Vo, Xuan Vinh & Lucey, Brian, 2021. "Gold and US sectoral stocks during COVID-19 pandemic," Research in International Business and Finance, Elsevier, vol. 57(C).
    16. Narayan, Paresh Kumar & Phan, Dinh Hoang Bach & Liu, Guangqiang, 2021. "COVID-19 lockdowns, stimulus packages, travel bans, and stock returns," Finance Research Letters, Elsevier, vol. 38(C).
    17. Yang, Qi-Cheng & Zheng, Mingbo & Wang, Jun-Sheng & Wang, Yun-Peng, 2022. "The shocks of armed conflicts to renewable energy finance: Empirical evidence from cross-country data," Energy Economics, Elsevier, vol. 112(C).
    18. Harun, Cicilia A. & Taruna, Aditya Anta & Ramdani,, 2021. "Capturing the nonlinear impact in distress state: Enhancing scenario design of stress test," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 265-288.
    19. Bing, Tao & Ma, Hongkun, 2021. "COVID-19 pandemic effect on trading and returns: Evidence from the Chinese stock market," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 384-396.
    20. Dogan, Eyup & Seker, Fahri, 2016. "Determinants of CO2 emissions in the European Union: The role of renewable and non-renewable energy," Renewable Energy, Elsevier, vol. 94(C), pages 429-439.

    More about this item

    Keywords

    Climate change; Extreme weather events; Clean energy investment; Heterogeneity;
    All these keywords.

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:95:y:2021:i:c:s0140988321000414. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.