Oil and renewable energy returns during pandemic

In: Environmental science and pollution research: ESPR, Volume 30, Issue 10, p. 25836-25850

Open Access

Abstract

AbstractWe explore the global interactions between oil and renewable energy returns during the Covid-19 pandemic between July 2019 and June 2020. Moreover, we reflect on market stress and global economic activity. In order to deal with challenges generated by exogenous shocks coming from financial, economic or pandemic areas, a battery of advanced time–frequency domain methods is applied, ranging from wavelet transformation and wavelet coherency to wavelet cohesion. The main finding shows that pandemic disease is veritable glue for the oil energy–renewable energy nexus, validating their coupling effect. Additionally, the emerging connection between renewable and financial developments is evidenced during the pandemic crisis, although the connection between oil and financial developments is still stronger. Finally, both renewable energy and oil markets have comparably strong relationships with the general global economic activity. The policy implications should follow direct adjustments in the renewable energy area, and subsidiary to cover the behaviour of agents on the capital markets.