Does climate policy uncertainty drive the extreme spillovers of carbon-energy-shipping markets?

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  • Author(s): Chen Y;Chen Y; Feng A; Feng A; Mi JJ; Mi JJ
  • Source:
    Journal of environmental management [J Environ Manage] 2024 Aug; Vol. 366, pp. 121737. Date of Electronic Publication: 2024 Jul 11.
  • Publication Type:
    Journal Article
  • Language:
    English
  • Additional Information
    • Source:
      Publisher: Academic Press Country of Publication: England NLM ID: 0401664 Publication Model: Print-Electronic Cited Medium: Internet ISSN: 1095-8630 (Electronic) Linking ISSN: 03014797 NLM ISO Abbreviation: J Environ Manage Subsets: MEDLINE
    • Publication Information:
      Original Publication: London ; New York, Academic Press.
    • Subject Terms:
      Climate Change* ; Carbon*; Uncertainty ; Models, Theoretical
    • Abstract:
      In addressing the ramifications of climate change, the shipping industry, reliant on energy, has been integrated into the Emissions Trading System (ETS). This study utilizes the quantile connectedness model to investigate the information spillover mechanisms and extreme time-varying interconnections among carbon, energy, and shipping markets. Whether climate policy uncertainty drives the extreme interconnections is also discussed during both pre- and post-Paris Agreement periods, by using GARCH-MIDAS model. The empirical findings underscore the following key points: (i) the systemic connectedness is highly sensitive to market conditions and major events, increasing significantly under extreme market conditions; (ii) following the implementation of the Paris Agreement, an elevated level of informational interdependence has manifested between the carbon market and the energy and shipping sectors; (iii) the information transfer mechanism between carbon and shipping sectors creates direct and indirect spillover paths, with crude oil market mediating the indirect path; (iv) climate policy uncertainty greatly affects the extreme time-varying interconnections, and this impact has decreased after the Paris Agreement came into effect. These results offer valuable insights for market policymakers and shipping companies in achieving a balance between carbon emission reduction and shipping business, particularly amidst heightened climate policy uncertainty.
      Competing Interests: Declaration of competing interest The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.
      (Copyright © 2024 Elsevier Ltd. All rights reserved.)
    • Contributed Indexing:
      Keywords: Carbon markets; Climate policy uncertainty; Crude oil markets; Extreme spillover; Network estimation; Shipping markets
    • Accession Number:
      7440-44-0 (Carbon)
    • Publication Date:
      Date Created: 20240710 Date Completed: 20240806 Latest Revision: 20240806
    • Publication Date:
      20240806
    • Accession Number:
      10.1016/j.jenvman.2024.121737
    • Accession Number:
      38986384