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A Global Perspective on the Nexus Between Energy and Stock Markets in Light of the Rise of Renewable Energy

Author

Listed:
  • Ansaram, Karishma

    (IESEG School of Management)

  • Petitjean, Mikael

    (Université catholique de Louvain, LIDAM/LFIN, Belgium)

Abstract

The rise in renewable energy and the associated divestment initiatives from fossil fuel around the world have become prominent in combating climate change. This paper revisits the relationship between energy and stock markets by accounting for renewable energy through the use of the Divisia index method. The paper contributes to the literature by using three renewable energy tariffs rather than relying on clean energy stocks as a proxy for renewable energy. We retrieve data for both the price and consumption of fossil energy (oil, coal and gas) and renewable energy (solar, wind and hydro). We estimate a Vector Autoregressive (VAR) model over the period 2000–2019 across 25 countries globally. Our study identifies a significant time-dependent dynamics between renewable energy and both the energy stock and carbon markets, while fossil energy has no significant influence on those markets. The increasing influence of renewable energy in this nexus signals to policymakers that investors have started to shift their focus of attention from fossil to renewable energy.

Suggested Citation

  • Ansaram, Karishma & Petitjean, Mikael, 2025. "A Global Perspective on the Nexus Between Energy and Stock Markets in Light of the Rise of Renewable Energy," LIDAM Reprints LFIN 2025005, Université catholique de Louvain, Louvain Finance (LFIN).
    • Handle: RePEc:ajf:louvlr:2025005
    DOI: https://doi.org/10.1016/j.eneco.2024.107406
    Note: In: Energy Economics, 2024, vol. 131, 107406
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    4. Mohnot, Rajesh & Ozturk, Ilhan & Rafiuddin, Aqila & Sisodia, Gyanendra Singh & Singh, Vivek Kumar, 2025. "Changing dynamics of renewable energy investments ecosystem: A scientometrics analysis," Innovation and Green Development, Elsevier, vol. 4(4).
    5. Zhou, Xing & Xu, Jianze & Zhang, Fenglan & Ma, Pingping & Jin, Yi, 2025. "The logic of policies for energy price regulation in the future: A synergistic developmental perspective based on energy and carbon markets," Renewable and Sustainable Energy Reviews, Elsevier, vol. 222(C).
    6. Duan, Kun & Shan, Shuwen & Huang, Yingying & Urquhart, Andrew, 2025. "How do housing markets comove with the financial system? Evidence from dynamic risk spillovers," Research in International Business and Finance, Elsevier, vol. 77(PB).
    7. Wang, Hui & Zhang, Yiyi & Zhang, Yi & Wang, Jilong & Xie, Yuzhi & Luo, Shen, 2025. "Mixed-frequency data-driven forecasting of thermal coal price: A novel hybrid model," Energy, Elsevier, vol. 334(C).

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    Keywords

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    JEL classification:

    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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