Do fossil energy prices and climate policy uncertainty affect clean energy markets? Insights for financial sustainable development
Year: 2026
Type: article
Abstract: Clean energy equities play a pivotal role in sustainable finance and the global energy transition, yet their performance remains highly sensitive to global fossil energy price fluctuations and climate policy uncertainty. Existing studies have largely examined these drivers separately and often ignore their nonlinear, asymmetric, and time-scale-dependent relationships. Recognizing this crucial gap, our study provides an integrated examination of global fossil energy price dynamics and climate policy uncertainty on clean energy equity performance using an advanced wavelet-based quantile-on-quantile regression method. Analyzing monthly data from January 2008 to November 2024, we uncover distinct nonlinear and asymmetric relationships. Specifically, global fossil energy price increases are generally positively correlated with clean energy equity performance, with a stronger positive correlation observed during periods of sustained volatility and among higher-performing stocks, particularly over medium- and long-term horizons. Conversely, climate policy uncertainty is consistently negatively correlated with clean energy equity performance, with the negative correlation intensifying under prolonged uncertainty. This study contributes actionable insights for investors in managing risks within sustainable portfolios and for policymakers in designing stable, coordinated climate and energy policies to accelerate the transition toward financial sustainability and net-zero goals.
Authors: Ali Nawaz, Chi Wei Su, Ran Tao, Oana-Ramona LOBONŢ
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $1,890
OpenAlex ID: W7208823088
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