IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v160y2026ics0140988326003038.html

The power of words: Central bank green communication and performance of energy sectors

Author

Listed:
  • Davtyan, Karen
  • Kalozdi, Adel R.

Abstract

This paper investigates the effect of climate- and energy-related (green) communication by the European Central Bank (ECB) on the performance of renewable and fossil-based energy sectors. Using a sentence-embedding natural language processing model, we identify ECB speeches from 2015 to 2024 that explicitly reference both climate and energy themes, categorize them, and compute a green score for each. The analysis reveals prominent topics of climate and financial risk, and monetary policy and economic conditions, along with consistently positive and trust-related emotional cues. We then use high-frequency identification to estimate the effect of ECB green speeches on the return differential between green and brown energy sectors. The results show that ECB green communication positively and significantly affects sectoral relative returns, highlighting the communicative role of the ECB in influencing the relative performance of green and brown energy sectors. The results remain robust across a series of sensitivity analyses. The effect does not change significantly with the outbreak of the Russian–Ukrainian war or across ECB communication topics. We further find that ECB green speeches delivered by the President have a stronger effect on the return differential.

Suggested Citation

  • Davtyan, Karen & Kalozdi, Adel R., 2026. "The power of words: Central bank green communication and performance of energy sectors," Energy Economics, Elsevier, vol. 160(C).
    • Handle: RePEc:eee:eneeco:v:160:y:2026:i:c:s0140988326003038
    DOI: 10.1016/j.eneco.2026.109424
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988326003038
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2026.109424?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

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

    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:160:y:2026:i:c:s0140988326003038. 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.

    We have no bibliographic references for this item. You can help adding them by using 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.