This is a Free article. You will receive access to the full text.

Oil Prices and the Renewable Energy Sector

Free Article

Energy security, climate change, and growing energy demand issues are moving up on the global political agenda, and contribute to the rapid growth of the renewable energy sector. In this paper we investigate the effects of oil price shocks, and also of uncertainty about oil prices, on the stock returns of clean energy and technology companies. In doing so, we use monthly data that span the period from May 1983 to December 2016, and a bivariate structural VAR model that is modified to accommodate GARCH-in-mean errors. Moreover, we examine the asymmetry of stock responses to oil price shocks of different sizes, with and without oil price uncertainty. Our evidence indicates that oil price uncertainty has no statistically significant effect on stock returns, and that the relationship between oil prices and stock returns is symmetric. Our results are robust to alternative model specifications and stock prices of clean energy companies.

Download Executive Summary Download PDF

Keywords: Renewable energy, Transition, Oil prices, Uncertainty, GARCH-in-Mean model, Asymmetric responses

DOI: 10.5547/01956574.40.SI1.ekyr

References: Reference information is available for this article. Join IAEE, log in, or purchase the article to view reference data.

Published in Volume 40, The New Era of Energy Transition of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


© 2024 International Association for Energy Economics | Privacy Policy | Return Policy