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Global Climate Risk Perception and Its Dynamic Impact on the Clean Energy Market: New Evidence from Contemporaneous and Lagged R 2 Decomposition Connectivity Approaches

Author

Listed:
  • Dan Yi

    (School of Economics & Management, Changsha University of Science & Technology, Changsha 410114, China)

  • Sheng Lin

    (School of Economics & Management, Changsha University of Science & Technology, Changsha 410114, China)

  • Jianlan Yang

    (Economic College, Hunan Agricultural University, Changsha 410125, China)

Abstract

The acceleration of global climate change presents unprecedented challenges to market stability and sustainable social development. Understanding how market dynamics are impacted by perceptions of climate risk is essential to creating risk management plans that work. Current research frequently concentrates on static evaluations of how climate risk is perceived, ignoring its dynamic influence on clean energy markets and the intricate channels via which these risks spread. To examine the dynamic influence of climate risk perceptions on clean energy markets, this study builds a spillover network model. We determine the main risk transmission pathways and their temporal variations by looking at changes in market connection over time. Our results demonstrate that climate risk perceptions have a substantial direct and indirect impact on the volatility of clean energy markets. Specifically, the ‘Risk Concern Index (GCTC and GCPC) → Clean Energy Market Index → Climate Policy Uncertainty Index (CPU) → Risk Indices (GCTRI and GCPRI)’ pathway highlights how public and policymaker concerns about climate risk significantly influence market behavior and overall dynamics. Furthermore, the dynamic analysis demonstrates that market spillovers are significantly amplified by economic and geopolitical events, highlighting the necessity of taking external shocks into account when designing policies. This study offers fresh perspectives on how climate risk perception affects clean energy markets, serves as a useful resource for investors and policymakers, and encourages the creation of robust risk management plans and market mechanisms.

Suggested Citation

  • Dan Yi & Sheng Lin & Jianlan Yang, 2025. "Global Climate Risk Perception and Its Dynamic Impact on the Clean Energy Market: New Evidence from Contemporaneous and Lagged R 2 Decomposition Connectivity Approaches," Sustainability, MDPI, vol. 17(8), pages 1-29, April.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:8:p:3596-:d:1635984
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