Highlights

• This study integrates time and frequency domain analyses to capture both cyclical and dynamic spillovers between renewable energy and environmental markets​
• Unlike previous research, this study identifies EPI as a central risk node with distinct pathways for short- and long-term spillovers to various renewable energy markets​.
• The study’s findings offer new insights into policy and risk regulation by revealing the dominant high-frequency spillover effect between renewable energy and environmental protection.

Summary

This research examines the relationship between the renewable energy market and the environmental protection industry (EPI), focusing on risk spillover effects from both time and frequency perspectives. Using various models (TVP-VAR-DY and TVP-VAR-BK), the study reveals a significant spillover effect, primarily dominated by high-frequency, short-term interactions, with EPI as the primary risk exporter.

Renewable energy markets like solar and hydro act mostly as risk receivers, while wind energy occasionally shifts between being a risk sender and receiver based on specific events. The study shows that risk propagation pathways differ over time, with short-term risks spreading from EPI through biomass energy, while medium- to long-term risks flow via wind energy.

The findings provide insights for policymakers to tailor their regulations based on frequency-driven spillover effects and emphasize EPI’s critical role in stabilizing cross-market risks.

T. Shen, X. X. Mai, Y. Chang, and C. T. Deng, “The dynamic connectedness between renewable energy market and environmental protection industry based on time and frequency perspective,” Energy Strategy Reviews, vol. 53, p. 101371, May 2024, doi: 10.1016/j.esr.2024.101371.