Environmentally clean and dirty energy equities during extraordinary global conditions

Mahadeo, S. M. R. ORCID: https://orcid.org/0000-0001-8576-5755 (2024) Environmentally clean and dirty energy equities during extraordinary global conditions. Journal of Environmental Management, 368. 122227. ISSN 0301-4797 doi: 10.1016/j.jenvman.2024.122227

Abstract/Summary

I examine which extraordinary international events coincide with pronounced changes in the equity markets for some of the world’s largest publicly traded suppliers on opposite sides of the global energy mix — oil and environmentally clean energy companies. First, I adapt an intuitively appealing non-parametric filter to empirically timestamp unexpected and prominent increases and decreases in a wide range of global indicators relevant to the international energy market. Then, I use such extraordinary conditions to characterise the performance of oil and environmentally clean energy equities, and their relationships. My findings suggest that jumps in the global stock market, international crude oil market shocks, and the US dollar real effective exchange rate, are the indicators that define the financial landscape during which considerable gains, losses, and instability across both types of energy markets materialise. In contrast, major elevated uncertainties related to geo-political risk and climate policy reflect relative stability in the equities of both oil and environmentally clean energy companies. Although these results imply that both energy assets are potentially lucrative hedging strategies for investors to exploit during heightened geo-political and climate policy uncertainties, clean energy equities offer market participants the option to combine profit maximising and sustainability objectives while minimising global energy security risks.

Item Type	Article
URI	https://centaur.reading.ac.uk/id/eprint/124457
Identification Number/DOI	10.1016/j.jenvman.2024.122227
Refereed	Yes
Divisions	Arts, Humanities and Social Science > School of Politics, Economics and International Relations > Economics
Publisher	Elsevier
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