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Nonlinear heterogeneity impact of El Niño-Southern Oscillation on energy markets: A global perspective analysis

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  • Huang, Yujie
  • Shu, Mingyu
  • Liu, Fengming
  • Liu, Baoliu
  • Huang, Chen
  • Wang, Shun

Abstract

El Niño-Southern Oscillation (ENSO), an important climate phenomenon, has wide-ranging impacts on the global environment and economy. The energy market, influenced by various factors, occupies a crucial position in the global economic landscape. We use quantile-to-quantile regression to analyze how ENSO affects the global energy market. The research results show that this impact is mainly long-term and features significant nonlinearity and heterogeneity. The El Niño phenomenon has a significant and highly correlated impact on the natural gas market, yet its impact on the carbon emissions market is relatively weak. Additionally, the El Niño phenomenon has both positive and negative impacts on different energy markets, showing heterogeneity. Further use of wavelet decomposition reveals that El Niño-Southern Oscillation will have a highly significant nonlinear and heterogeneous impact on energy market fluctuations at various scales. Due to the influence of the El Niño phenomenon, there are significant differences in market connectivity at different quantile levels, and the impact is more pronounced in extreme cases. Thus, energy market regulatory agencies should recognize the differences in this impact and develop flexible policies for different markets. Meanwhile, considering nonlinearity, asymmetry, and the impact on network connectivity, a risk warning mechanism should be established to comprehensively understand the relationships among energy markets and enhance overall stability and risk resistance.

Suggested Citation

  • Huang, Yujie & Shu, Mingyu & Liu, Fengming & Liu, Baoliu & Huang, Chen & Wang, Shun, 2025. "Nonlinear heterogeneity impact of El Niño-Southern Oscillation on energy markets: A global perspective analysis," Energy, Elsevier, vol. 333(C).
    • Handle: RePEc:eee:energy:v:333:y:2025:i:c:s0360544225031172
    DOI: 10.1016/j.energy.2025.137475
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