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The impact of climate risks on global energy production and consumption: New evidence from causality-in-quantile and wavelet analysis

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  • Lan, Yong
  • Gao, Hanxiao
  • Zhou, Ping
  • Zhang, Hua
  • Li, Hailing

Abstract

This study investigates the causal effects of three dimensions of climate risks—Climate Physical Risk (CPR), Climate Concern Index (CCI), and Climate Policy Uncertainty (CPU)—on global energy production and consumption across diverse market environments from January 2013 to October 2022. Employing the Causality-in-Quantile approach, it examines how climate risks impact energy markets' volatility. Additionally, Wavelet Analysis is employed to analyze the heterogeneous impacts of climate risks on energy production and consumption at different time scales. Key findings include: (1) Crude oil production is subject to climate risk under all market conditions, while renewable energy production is subject to climate risk only in stable markets. (2) CCI exerts broader and more significant impacts on energy production and consumption compared to CPR and CPU. (3) The frequency domain analysis reveals that climate risk affects crude oil production in the short term and coal production in the long term. This study enhances understanding of climate risk interactions with energy markets and provides empirical insights crucial for policy formulation and investment decisions in addressing climate change challenges, offering practical guidance for stakeholders.

Suggested Citation

  • Lan, Yong & Gao, Hanxiao & Zhou, Ping & Zhang, Hua & Li, Hailing, 2025. "The impact of climate risks on global energy production and consumption: New evidence from causality-in-quantile and wavelet analysis," Energy, Elsevier, vol. 319(C).
    • Handle: RePEc:eee:energy:v:319:y:2025:i:c:s036054422500492x
    DOI: 10.1016/j.energy.2025.134850
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