Rare Earths, Clean Energy, and Global Markets: Frequency-Domain Connectedness Analysis of Systemic Risk in the Energy Transition

This paper examines the evolving interdependence between rare earth elements, clean energy technologies, energy markets, and global financial assets over the period 2014-2025, using a TVP-VAR framework combined with a frequency-domain connectedness decomposition. The results reveal a system that has become increasingly integrated, punctuated by episodes of systemic stress during which global shocks dominate and synchronize market dynamics. The frequency analysis highlights a clear dissociation: short-term fluctuations are primarily driven by supply tensions and geopolitical shocks affecting rare earths, while long-term dynamics are shaped by structural forces such as investment cycles, climate policies, and technological costs. Net connectedness measures confirm this asymmetry: rare earths act as net receivers during crises but become short-term transmitters in calmer periods, especially after 2023. These findings underscore the strategic yet unstable role of critical minerals and call for strengthened supply-chain security, stable industrial policies, and enhanced macro-prudential monitoring.