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Critical metals in uncertainty: How Russia-Ukraine conflict drives their prices?
Abstract
Critical minerals bring new challenges to energy security in the transition to clean energy, so their supply and prices are a spectacle of global uncertainties. This research investigates the impact of the Russia-Ukraine war on critical metal prices and the extent to which it affects them. The study will also highlight the price trends in the absence of this geopolitical event. The results outline that the Russia-Ukraine conflict drives critical metals prices. The outcomes show rapid divergence from counterfactual predictions, and the critical metals prices are consistently higher than expected without conflict. The curves suggest a reconvening pattern in metals prices around April 2022. The point-wise causal effect displays an estimate of the critical metal prices increased following the conflict. In relative terms, the prices of critical metals, namely cobalt, nickel, lithium, copper, and aluminum, experienced increases of 2%, 36%, 14.97%, 3%, and less than 1%, respectively. In comparison, the price of lead exhibited a decrease of 8%. The highest increase was observed in nickel, followed by lithium, indicating that these two metals are more responsive to such variations. However, it is noteworthy that prices tend to stabilize and return to pre-event levels from May to September, depending on the respective metal's sensitivity. Moreover, outcomes emphasize that global dependencies, lack of resources and investments, and intentional conflict of crucial minerals exporting nations lead to the conflagration.
... Geopolitical risk (GPR) is defined "as the risk associated with wars, terrorist acts, and tensions between states that affect the normal and peaceful course of international relations" (Caldara and Iacoviello, 2022). Given geopolitical rivalry to secure critical minerals (Khurshid et al., 2023;Vivoda, 2023;Vivoda and Matthews, 2023) and the potential for violent conflict, supply chains are particularly susceptible to GPR (Dou and Xu, 2023;Renneboog et al., 2022). For instance, the Russia-Ukraine war is a source of GPR to critical mineral markets because Russia is a major producer of cobalt and nickel (Khurshid et al., 2023(Khurshid et al., , 2024Pata et al., 2024). ...
... Given geopolitical rivalry to secure critical minerals (Khurshid et al., 2023;Vivoda, 2023;Vivoda and Matthews, 2023) and the potential for violent conflict, supply chains are particularly susceptible to GPR (Dou and Xu, 2023;Renneboog et al., 2022). For instance, the Russia-Ukraine war is a source of GPR to critical mineral markets because Russia is a major producer of cobalt and nickel (Khurshid et al., 2023(Khurshid et al., , 2024Pata et al., 2024). The spike in lithium and nickel prices attributable to the disruption in supply chains due to the COVID-19 pandemic and the Russia-Ukraine war resulted in acute supply shortages in the European electric vehicle market (Considine et al., 2023). ...
... Energy Economics 142 (2025) 108195 deployment, consumption and use (Alsagr and Van Hemmen, 2021;Cai and Wu, 2021;Islam et al., 2023;Sweidan, 2021); and trade in critical minerals and energy-related products Zhang et al., 2024a). The extant literature on the effect of GPR on different aspects of prices for critical minerals is mostly recent and relatively scant (Aloui et al., 2023;Khurshid et al., 2023;Pata et al., 2024;Wang et al., 2023;Zhang et al., 2024b;Zhao, 2023). Compared with these studies, our approach and our results analyse in a more systematic way the instability of impulse response functions (IRF) on a larger sample of critical minerals. ...
We use constant and time-varying parameter local projection (TVP-LP) regression models to examine the effect of geopolitical risk on prices of six critical minerals: aluminium, copper, nickel, platinum, tin and zinc. We propose a conceptual framework in which the responsiveness of prices for critical minerals to geopolitical risk depends on the non-technical risk associated with procuring each critical mineral and geopolitical threats have a bigger effect on critical mineral prices than geopolitical acts. Our results are generally consistent with these predictions. We find considerable evidence that the effect of geopolitical risk on the prices of critical minerals is time varying, with the Gulf War, 9/11 terrorist attacks and COVID-19 pandemic each having a significant effect. We find that shocks due to geopolitical threats are generally bigger in magnitude than geopolitical acts and that prices respond more quickly to geopolitical threats.
... Geopolitical risk (GPR) is defined "as the risk associated with wars, terrorist acts, and tensions between states that affect the normal and peaceful course of international relations" (Caldara & Iacoviello, 2022). Given geopolitical rivalry to secure critical minerals (Khurshid et al 2023;Vivoda, 2023;Vivoda & Mathews 2023) and the potential for violent conflict, supply chains are particularly susceptible to GPR (Dou & Xu, 2023;Renneboog, 2022). For instance, the Russia-Ukraine war is a source of GPR to critical mineral markets because Russia is a major producer of cobalt and nickel (Khurshid et al., 2023(Khurshid et al., , 2024Pata et al., 2024). ...
... Given geopolitical rivalry to secure critical minerals (Khurshid et al 2023;Vivoda, 2023;Vivoda & Mathews 2023) and the potential for violent conflict, supply chains are particularly susceptible to GPR (Dou & Xu, 2023;Renneboog, 2022). For instance, the Russia-Ukraine war is a source of GPR to critical mineral markets because Russia is a major producer of cobalt and nickel (Khurshid et al., 2023(Khurshid et al., , 2024Pata et al., 2024). The spike in lithium and nickel prices attributable to the disruption in supply chains due to the COVID-19 pandemic and the Russia-Ukraine war resulted in acute supply shortages in the European electric vehicle market (Considine et al, 2023). ...
... The extant literature on the effect of GPR on different aspects of prices for critical minerals is mostly recent and relatively scant (Aloui et al, 2023;Khurshid et al, 2023;Pata et al, 2024;Wang et al, 2023;Zhang et al, 2024b;Zhao, 2023). Compared with these studies, our approach and our results analyse in a more systematic way the instability of impulse response functions (IRF) on a large array of critical minerals. ...
Ensuring a stable supply of critical minerals at reasonable prices is essential for the clean energy transition. The security of supply of critical minerals is particularly susceptible to geopolitical risk. In this paper, we use constant and time-varying parameter local projection (TVP-LP) regression models to examine the effect of geopolitical risk on prices of six critical minerals: aluminium, copper, nickel, platinum, tin and zinc. We propose a conceptual framework in which we make two predictions. The first is that the responsiveness of prices for critical minerals to geopolitical risk will depend on the non-technical risk associated with procuring each critical mineral, which will be reflected in the elasticity of supply. The second is that geopolitical threats will have a bigger effect on critical mineral prices than geopolitical acts. With the exception of platinum prices, which have suffered a downward structural demand side shock associated with the growth of the electric vehicle market, we find empirical support for the first prediction. Our results are also consistent with the second prediction. We find considerable evidence that the effect of geopolitical risk on the prices of critical minerals are time varying with time-varying effects of geopolitical shocks observed during the Gulf War, following the 9/11 terrorist attacks and during the COVID-19 pandemic with the time varying effects generally being stronger for geopolitical threats than geopolitical acts.
... Critical metals are essential for developing renewable energy technologies and new shipping vessels. While Russia and Ukraine are major exporters of critical metals and rare earth metals, China is a world leader in processing these metals (Khurshid et al., 2023). In the wake of the Russian-Ukraine war, prices of nickel and lithium in China increased by 36% and 15% in February 2023 versus January 2018 (Khurshid et al., 2023). ...
... While Russia and Ukraine are major exporters of critical metals and rare earth metals, China is a world leader in processing these metals (Khurshid et al., 2023). In the wake of the Russian-Ukraine war, prices of nickel and lithium in China increased by 36% and 15% in February 2023 versus January 2018 (Khurshid et al., 2023). Since battery production is dependent on nickel and lithium, and nickel is used in steel production, the increase in these prices has negative consequences for the uptake of battery technologies and the building of shipping vessels (Fang & Shao, 2022;Khurshid et al., 2023). ...
... In the wake of the Russian-Ukraine war, prices of nickel and lithium in China increased by 36% and 15% in February 2023 versus January 2018 (Khurshid et al., 2023). Since battery production is dependent on nickel and lithium, and nickel is used in steel production, the increase in these prices has negative consequences for the uptake of battery technologies and the building of shipping vessels (Fang & Shao, 2022;Khurshid et al., 2023). According to Bring (interviewee), the investment decisions for building their new shipping vessel were delayed due to the high cost of steel. ...
With the melting of the Arctic sea ice induced by climate change, the navigability window of the Arctic shipping routes becomes longer, making it possible for container ships to shorten their travel distance from Europe to the Pacific. The resulting growth in shipping traffic in the Arctic could intensify climate change impacts in the region with global implications and consequences. The establishment of a green shipping corridor (GSC) in the Arctic could be a first step to kickstart the transition towards zero-emission shipping in the region and inspire other regions to follow. This chapter takes Project Neptun Tromsø as a case study to identify the key factors and examine the dynamics between them to analyse how they affect the value chain. The analysis shows that the potential for a GSC in the Arctic by 2030 looks promising when considering current technological advancements and the establishment of regulatory frameworks. However, there remain significant social and political factors that may hinder the further development of the project. These factors include the uncertainties linked to the impacts of the ongoing Russian-Ukraine war and the socio-political challenges for renewable energy expansion.
... Climate change is now seen as a major challenge for the global economy (Khurshid et al., 2023). The European Union has numerous actions and targets for a low-carbon and climateneutral economy. ...
... Akcil et al., 2019;Nakatani et al., 2018). Palladium, nickel, scandium and titanium play an important role in the energy transition, thereby affecting availability and prices(Khurshid et al., 2023). The war in Ukraine contributed to an increase in raw material prices, which translated into higher inflation(Korosteleva, 2022). ...
Purpose: The aim of this paper is to test the hypothesis of the occurrence of increased margin values in the mining and extraction industry in an environment of increased CPI inflation rates in selected EU countries. Design/methodology/approach: The study used selected quantitative methods, including: categorising companies by mean and standard deviation and the Kruskal-Wallis test for non-parametric independent variables. Findings: The study showed that an increase in margins was observed in France and Italy in the 2021 and 2022 periods analysed. The largest increase was found in France, where the median gross profit margin increased from 3.5 per cent between 2015 and 2020 to 7.3 and 6.3 per cent, respectively, between 2021 and 2022. Research limitations/implications: A significant limitation is the limited access to complete data. In addition, the analysis included countries that differ in terms of the availability of raw material deposits and also have varying levels of socioeconomic development. As soon as more data becomes available, it would be worth expanding the area of analysis. Practical implications: The occurrence of increased gross profit margins is a phenomenon limited to selected countries and not generally observable in the global market. These findings can be valuable for understanding economic trends in specific regions and can help isolate countries where companies experience higher margins compared to others. Our research provides basic information that can provide a starting point for decision-makers involved in the extractive sector at both EU and individual EU member state level. The conclusions drawn by the authors suggest the need for further exploration of the identified research area. Originality/value: To our knowledge, this is one of the first articles on the verification of elevated margin values in the mining and extraction industry. The study contributes to the assessment of the adaptability of the European Union mining and quarrying industry and the phenomenon of increased margins.
... Previous research on the impact of energy security has primarily focused on political (e.g., geopolitical conflicts), economic (e.g., energy supply and demand relationship and utilization efficiency), and environmental factors. In terms of political factors, internal and external geopolitical conflicts can disrupt energy prices and threaten energy security (Khurshid et al., 2023;Zhang et al., 2024). In terms of economic factors, imbalanced energy supply and demand increases energy costs, which interrupts the energy supply chain, forcing corresponding countries to rely on internal fossil energy and reducing energy efficiency, which diminishes sustainable energy development (Lee and Wen, 2025). ...
... Additionally, diversification should include proactive measures such as strategic storage of critical resources. To mitigate the impact of conflicts on critical metal markets, measures such as the development of strategic stockpiles, stimulating domestic production, and investing in alternative technologies are essential (Khurshid et al. 2023); 2. ...
This study examines the integrated impacts of cyberattacks, geopolitical, and financial market volatility on rare earth markets during the 2014–2024 period, using Time-Varying Parameter Vector Autoregression and wavelet analysis. By bridging critical gaps in the literature, this research provides a comprehensive framework for understanding the compounded effects of emerging risks on market dynamics. The analysis includes key market indices (SOLLIT, PICK, SPGSIN, GSPTXGM, MVREMXTR, and XME), alongside green energy prices, to capture cross-market dependencies. The findings reveal that financial volatility exerts the most persistent long-term influence, while geopolitical events, such as the US-China trade tensions and the Ukraine conflict, trigger significant market disruptions. Cyberattacks, although episodic, exacerbate short-term volatility, especially during global crises. Rising green energy prices further amplify vulnerabilities in supply chains, underscoring the interconnectedness of rare earth markets and the sustainable energy transition. This research provides actionable insights for integrated risk management strategies, emphasizing supply chain diversification, enhanced cybersecurity, and international cooperation to ensure market stability and resilience in the energy transition.
... However, the volatility of cryptocurrencies is higher than traditional assets, characterized by continuous trading and trading anonymity (Yue et al. 2021). Similarly, cryptocurrency has a high potential for manipulation (Gandal et al. 2018;Khurshid et al. 2023), speculative investing characteristics, and the possibility of intrinsic price bubbles (Corbet et al. 2018;Naeem et al. 2022;Kaneda et al. 2023). From another aspect, risk-averse investors seek assets with high diversification, minimal risk, and profitability prospects. ...
This study uses the Bayesian structural model to assess the causal effect of the futures exchange (FTX) insolvency on cryptocurrencies from October 2022 to December 14, 2022. Findings show that FTX insolvency negatively impacts cryptocurrencies. Moreover, the results indicate rapid divergence from counterfactual predictions, and the actual cryptocurrencies are consistently lower than would have been expected in the absence of the FTX collapse. Cryptocurrency is reacting strongly to the uncertainty caused by insolvency. In relative terms, the collapse of FTX has been highly detrimental to Solana and Ethereum. Furthermore, the outcomes show that cryptocurrencies would not have been negatively affected if the intervention had not occurred. FTX collapsed owing to a mismatch between the assets and liabilities. The industry is still mostly unregulated, and regulators must act quickly, highlighting the need for outstanding innovation and decentralized and trustless technology adoption.
... For example, the supply chains of electronics retailers have seen prices rise due to the reduced availability of rare earth metals from Russia and Ukraine. Supply chains of car retailers have also been impacted due to a reduction in the availability of palladium, which is used to produce vehicles' catalytic converters [9]. The soaring cost and reduced energy availability have mostly affected energy-based supply chains [10]. ...
The resilience of established business strategies has been tested in the wake of recent global supply chain upheavals triggered by events like the COVID-19 pandemic, Russia-Ukraine combat, Hamas-Israel war, and other geopolitical conflicts. Organizations are compelled to integrate sustainable practices into their supply chains to navigate the complexities of the post-COVID-19 era and mitigate the far-reaching consequences of such disruptions. However, exploring supply chain imperatives from sustainability dimensions still remains underexplored, presenting a significant research gap, particularly in the fashion retail sector. In response, this study aims to pioneer an innovative approach by amalgamating Pareto analysis, Bayes theorem, and the Best-Worst Method to evaluate sustainability imperatives comprehensively. Focusing on emerging economies like Bangladesh and its fashion retail industry, this methodology synthesizes insights from literature reviews, expert feedback, and Pareto analysis to curate a definitive set of influential imperatives. Finally, the Bayesian Best-Worst Method is applied to examine them. The results reveal the availability of government support schemes to promote sustainability, developing strategic supply chain interventions to ameliorate the impact of disruptive events, and digitalizing the supply chain as the most monumental imperatives under economic, social, and environmental perspectives, respectively. The study’s innovative methodology and its implications for sustainable supply chain management offer valuable insights for both academic research and practical application, presenting a strategic blueprint for the fashion retail industry to navigate and thrive in the post-COVID-19 era. This work can not only advance the theoretical understanding of supply chain sustainability but also provide actionable guidance for industry leaders in developing robust, resilient, and sustainable supply chain strategies.
... Nevertheless, the conflict between Russia and Ukraine has instigated significant alterations in the geopolitical balances that existed before February 24, 2022 (Orenstein, 2023). This event is generating widespread apprehensions and a spectrum of repercussions, notably within sectors such as the economy, finance, environment, energy, and society Garbellini and Lampa, 2023;Jiang and Chen, 2024;Khurshid et al., 2024;Khurshid et al., 2023;Lei et al., 2023). In particular, in Europe, in a very short period, the criticality related to the dependence of energy supply on Russia and the lack of energy autonomy of European countries have become evident (Colgan et al., 2023;Cui et al., 2023;McWilliams et al., 2023). ...
... Additionally, there are supply risks associated with crucial materials across these supply chains. These researchers raised attention to the fact that the world's shift to renewable energy sources has introduced additional difficulties, such as the effects of price fluctuations and geopolitical vulnerabilities on the prices of essential metals used in global trade [26,27]. The above-mentioned studies identified the key countries involved in these industrial chains and the primary factors that influence the risks related to the traction battery industrial chain. ...
The fast expansion of the electric vehicle market has led to a significant increase in the demand for traction batteries, an essential element in these vehicles that provide the opportunity to achieve low-carbon and environmentally friendly growth and carbon neutrality. By analyzing the network structure and key trading countries from 2000 to 2021, this research uses multilayer network theory to explore the trade patterns and the evolution of the global cathode material industrial chain of traction batteries. Our findings indicate the following: (1) The industrial networks display multi-core trading country characteristics. Trade connections among the top 20 countries, which account for more than 80% of the global trade volume, have strengthened. (2) Over time, the geographic center of trade has shifted from being primarily focused in Europe, North America, and East Asia to embracing the entire world, including regions such as Africa, South America, and Oceania. (3) In 2021, Australia overtook Japan as the main exporter, which held the top position in 2000. Similarly, China surpassed the United States, which was the top importer in 2000. (4) Changes in global trade relationships have affected the trading habits of the top-ranked countries.
... Additionally, there are supply risks associated with crucial materials across these supply chains. These researchers raised attention to the fact that the world's shift to renewable energy sources has introduced additional difficulties, such as the effects of price fluctuations and geopolitical vulnerabilities on the prices of essential metals used in global trade [26,27]. The above-mentioned studies identified the key countries involved in these industrial chains and the primary factors that influence the risks related to the traction battery industrial chain. ...
The fast expansion of the electric vehicle market has led to a significant increase in the demand for traction batteries, an essential element in these vehicles that provide the opportunity to achieve low-carbon and environmentally friendly growth and carbon neutrality. By analyzing the network structure and key trading countries from 2000 to 2021, this research uses multilayer network theory to explore the trade patterns and the evolution of the global cathode material industrial chain of traction batteries. Our findings indicate the following: (1) The industrial networks display multi-core trading country characteristics. Trade connections among the top 20 countries, which account for more than 80% of the global trade volume, have strengthened. (2) Over time, the geographic center of trade has shifted from being primarily focused in Europe, North America, and East Asia to embracing the entire world, including regions such as Africa, South America, and Oceania. (3) In 2021, Australia overtook Japan as the main exporter, which held the top position in 2000. Similarly, China surpassed the United States, which was the top importer in 2000. (4) Changes in global trade relationships have affected the trading habits of the top-ranked countries.
... The first factor is the supplier's bargaining power, where the supplier's products and/ or services are limited (high). According to Khurshid et al. (2023), the ongoing Russian-Ukrainian war since 2022 has impacted the availability and prices of several critical raw materials. The second factor is the differentiation of the supplier's services, with no suitable substitutes available (high). ...
The steel industry plays a crucial role in national development. Major global steel producers such as the United States, Russia, and Japan have seen declines due to the rise of China as a dominant steel producer. Integrated Steel Corporation (ISC) in Indonesia has also faced declining performance, with its market capitalization dropping by 68.9% over the past eight years. The research primarily aimed to analyze customer preferences in the maintenance industry and determine positioning strategies. Additionally, it sought to identify the factors driving the formation of the Strategic Maintenance Services (SMS) spin-off from ISC and propose strategies for SMS to achieve a competitive advantage. Data were collected qualitatively through interviews and Focus Group Discussions (FGDs) with customers to understand their perspectives, SMS management to grasp core business competencies and strategy, and ISC management to understand the parenting strategy. The results show several internal dynamics within ISC drove the formation of the SMS spin-off: 1) the transformation of the parent company; 2) short circuit incident at the main ISC factory; and 3) the cost burden of maintenance support. External factors indicate rapid industrial growth and the company's strengthening as a group after experiencing losses for almost a decade. The proposed strategy for SMS involves leveraging ISC’s subsidiaries and joint venture companies for centralized service maintenance. SMS aims to offer customized one-stop maintenance solutions with high quality at competitive prices by enabling Digital Maintenance Information (DMI). The target markets include large industries in steel manufacturing, petrochemicals, flour mills, cement, and logistics.
... As a result, higher CPU could discourage investment in cleaner technologies and strategies to reduce CE. Economic policy uncertainty (EPU) can also hinder economic growth (Battiston et al. 2017;Khan et al. 2021a;Khurshid et al. 2023). Poor economic conditions and a lack of clear and consistent climate policies create challenges in reducing emissions. ...
This study assesses the influence of climate policy uncertainty (CPU) on carbon emissions (CE) against the backdrop of economic policy uncertainty (EPU) in the US. The wavelet analysis provides a comprehensive understanding of correlations in the time and frequency domains. The results demonstrate a significant correlation between CPU and CE, which varies across different time periods and frequencies. In the time domain, the results indicate that the CPU and CE move together during certain subperiods. Moreover, there are observable comovements in the frequency domain, particularly in the short to medium range. However, the correlation becomes stronger in the short term when there is no EPU, suggesting a closer interaction between CPU and CE. Therefore, it is crucial for governments to prioritize improving the clarity, credibility, and consistency of climate policies. They should also consider potential economic shocks when designing these policies.
... Moreover, the pandemic has necessitated the adaptation of these companies to new working conditions, which has had implications for production processes and innovation (Giese, 2022). Furthermore, the ongoing Russia-Ukraine conflict has also played a pivotal role in affecting the clean energy transitions driven by rare earth elements and the markets of tech companies (Khurshid et al., 2023;Abbas et al., 2023b). In addition to disrupting the global flow of rare earth components within high-tech industries, the escalation of tensions has led to the implementation of export restrictions, bilateral dependencies, and a lack of transparency, exacerbating vulnerabilities within supply chains (Cui et al., 2023). ...
Rare earth elements play a crucial role in supporting low-carbon energy generation technologies, such as electric motors in electric vehicles and the production of wind turbines. Additionally, these elements are utilized in a wide range of products manufactured by tech companies, including smartphones, aerospace components, and microelectronics. This paper aims to investigate the interplay between rare earth element prices (REMX), clean energy innovations (NEX), and the market of tech companies (PSE) from February 2018 to February 2023. To analyze the interdependencies between these markets, the study employs the cross-quantilogram (CQ) and wavelet local multiple correlation (WLMC) techniques. The findings of the investigation reveal a positive correlation between rare earth elements and the clean energy market, but only when both markets are in their respective extreme quantiles (10th and 90th). However, when the clean energy market is in a lower quantile and REMX is in a higher one for an extended period, there is either no significant interdependence or a negative relationship. Furthermore, the study identifies a positive co-movement between PSE and REMX in the short, intermediate, and extremely long-term. However, this relationship turns negative in the long run. The values of the coefficients fluctuate over time, particularly at larger scale periods of 8–16 when using the WLMC procedure. These findings have notable implications for stakeholders, including investors, managers, and policymakers, who are linked to the field of mineral resources and industries reliant on rare earth element-based technologies.
... Previous literature addresses the issue of the impacts of geopolitical risks on the oil market (C. , commodity markets (Mishra and Ghate, 2022), equity markets (Xie et al., 2022), and energy market (Chen et al., 2023;Khurshid et al., 2023b). These studies observed the volatility in natural resource prices specifically in the short run and, therefore, have relevant significance to understanding and judging the behavior of price hikes due to conflicts amongst nations. ...
This study evaluated the impact of geopolitical risk (GPR) on natural resources (NRs) by employing monthly from January 1990 to January 2023 and daily data from 3rd January 2022 to 31st March 2022. The outcomes using wavelet QQ and novel Bayesian structural model reveal that GPR has a more profound impact on oil prices (in a quantile range of 0.4–0.8), natural gas prices (range of quartiles from 0.4 to 0.8) and gold prices (in a range of lower to upper quantiles) exhibiting that they are more sensitive to geopolitical uncertainties at all levels. The effects of geopolitical risk are also prominent on palm oil in lower to upper quantile (0.2–0.7) and urea in medium or upper quantile, showing that higher uncertainty drives their prices. In contrast, the response of iron ore (IO) was observed only in upper quantiles (0.7–0.8). The results of the causal analysis reveal that the Russia-Ukraine conflict positively impact NRs prices and that there was a rapid divergence from counterfactual projections. Our findings bear significant implications for sample economies highlighting the alternatives to cope with the GPR and its consequences for natural resource prices.
... Zhou et al. (2022) and Wang et al. (2023) stressed the urgency of strengthening international cooperation to secure lithium supplies and other critical materials, particularly in the context of the rising material costs impacting China's electric vehicle ambitions. Kim et al. (2021) and Khurshid et al. (2023) highlighted the new challenges brought about by the global transition to clean energy, such as price volatility and geopolitical vulnerabilities affecting critical metal prices. Previous studies have shown that complex network analysis is an effective tool for studying the supply chain of international trade. ...
... In the aftermath of a significant earthquake, the stock market may witness a reduction in value owing to the extensive damage inflicted upon infrastructure or the disruption of economic activity (Valizadeh et al., 2017;Xu et al., 2023;Khan et al., 2021). Moreover, earthquakes can have a more comprehensive economic impact, resulting in increased uncertainty and negative investor sentiment, which may lead to the transfer of capital to safer assets (Shan and Gong, 2012;Khurshid et al., 2023). Furthermore, insurance companies may increase their premiums following an earthquake, affecting companies that rely on insurance to operate and decreasing their stock prices (Tao et al., 2019;Derindere Köseoğlu et al., 2023). ...
This study investigates the causal effect of the earthquake in Turkey on construction, transportation, and insurance stocks. The results reveal a significant negative impact on these stocks. This indicates that the earthquake induced a high level of uncertainty, resulting in a substantial negative influence on the stock market\'s value on a subsequent day. In addition, the results indicate that stocks are lower than expected without an earthquake. The point-wise causal effect refers to the variation between the expected and actual data, and it remains relatively stable near zero until the action is implemented, at which point it quickly decreases and then increases. In relative terms, the construction stock is more affected by the earthquake, followed by the transportation stock. The findings have important implications for investors and policymakers, highlighting the importance of preparing for natural disasters to reduce their negative impact on the stock market.
Introduction
With the development of global industrialization, metal minerals have become a global focal point of great power competition. An in-depth investigation into the evolution of global mineral trade structures, alongside an analysis of the relationships between metal minerals trade, resource endowments, industrialization, regional dynamics, and geopolitical competition, is crucial for nations to formulate effective trade policies and enhance the stability of global mineral trade development.
Methods
This study explores the evolution trends of the global metal minerals trade structure from 1990 to 2022 based on complex network and further detect community structure using the Infomap algorithm.
Results and discussion
The results show that (1) There is a general upward trend in global metal minerals trade from 1990 to 2022, which can be segmented into phases of slow, rapid, and moderate growth. (2) The two major trading circles formed in the early stage with Japan and Europe as the center have changed, forming a dual pattern with China as the super demand center and Australia as the super supply center. (3) China, Australia, the U.S., Japan, Brazil, and the European Union play key roles in shaping the global trade network, with the structure of the global metal minerals trade network primarily being driven by demand centers. (4) According to the economic trends and the evolving resource demands, the global trade structure will translate from a concentrated bipolar model to a diversified network with multiple trade centers. The conclusion of this research helps specify international policies and maintain supply chain resilience.
The rising demand for critical raw materials (CRMs) driven by renewable energy technologies poses challenges like price volatility, supply chain disruptions, and geopolitical risks. As most CRMs are sourced internationally, their supply is vulnerable; recycling provides a key solution. In this respect, this study develops a multi-period mixed-integer linear programming model under uncertainty to optimise Italy's CRM recycling supply chain. Photovoltaic panels, electric vehicle batteries, and neodymium magnets from wind turbines and electric vehicles are considered under various future scenarios, including net-zero emissions. Projections for 2030 and 2050 indicate a sharp rise in waste availability, requiring significant infrastructure expansion. Costs are expected to double by 2031, driven primarily by battery recycling, and reach 2154 M€ by 2050 under the net-zero scenario. Strategic placement of facilities is essential to balance processing and transport costs and adapt to evolving waste availability trends, ensuring a resilient and efficient supply chain.
The ongoing conflict between Russia and Ukraine has introduced significant volatility into the global oil markets, highlighting the need for robust forecasting models to understand and anticipate price fluctuations during such geopolitical events. This study presents a comprehensive hybrid modeling approach to predict oil prices in the context of Russia and Ukraine across three distinct periods: before the war, during the war, and the immediate aftermath of the conflict. Using advanced machine learning techniques, we developed a hybrid system combining Random Forest, ElasticNet, K-Nearest Neighbors, Gradient Boosting, and Support Vector Regressor models. These models were integrated through a Voting Regressor to enhance prediction accuracy. Our analysis revealed varying levels of predictive performance across the different periods. Prior to the war, the models showed strong predictive capabilities, evidenced by low mean-squared error (MSE) values and high coefficients of determination (R2). However, during the war, the models struggled to capture extreme volatility, resulting in significantly increased MSE and negative R2 values. Predictions for the immediate aftermath of the conflict demonstrated improvements, with a reduction in MSE and positive R2 values, indicating a return to relatively more stable market conditions. Notably, combining data from both before the war and war periods could further improve predictive accuracy, as it would reduce the impact of the conflict’s volatility on model performance. These results emphasize the challenges of forecasting oil prices in periods of geopolitical instability and underscore the importance of hybrid modeling approaches to adapt to rapidly changing market dynamics.
The aim of this study is to investigate the existence of electricity price bubbles and identify the factors that contribute to their formation by conducting a comparative analysis between a developed country, Germany, and an emerging country, Romania. We employ the generalized sup ADF test, utilizing bi-annual data spanning from 2007 to 2022. Our findings reveal the presence of 2 distinct electricity price bubbles in both Germany and Romania. In Germany, the first bubble emerged in the second half of 2008, coinciding with the onset of the global economic crisis. Conversely, Romania did not experience a bubble as a result of the economic crisis during this period. The second electricity price bubble in both countries was primarily driven by Russia’s decision to halt gas supplies to Europe. Additionally, the surge in energy consumption following the economic recovery from the COVID-19 pandemic played a significant role. This research contributes to the broader discourse on energy economics by elucidating the mechanisms behind electricity price fluctuations in different economic contexts. The comparative approach underscores the importance of tailored policy responses that consider country-specific factors while addressing global challenges. As energy markets continue to evolve, such studies will be instrumental in guiding strategic decisions and fostering sustainable economic growth.
JEL Classification: Q41, E31
Environmental regulation motivates producers to adopt greener and more sustainable technologies, fostering innovation in green technology. The study aims to examine the direct impact of environmental regulations (EPY) regulation on green innovation (EINV) to observe the learning effect in Europe. Therefore, this study uses a panel dataset of 25 European nations from 1994 to 2020 and employs the Spatial Durbin model to test the relationships. In addition, the study illuminates the significance of various factors, including environmental taxes, fiscal expenditure, urbanization, foreign direct investment, and research and development expenditures, in shaping the relationship between EPY and EINV. The results indicate that EPY has a significant total impact of 0.636 %, with a direct impact of 0.187 %. This direct effect incorporates both formal and informal EPY impacts on the development of green technologies. It indicates that EPY enhances EINV in Europe significantly. Furthermore, the spatial spillover effect demonstrates a substantially positive coefficient of 0.449 %, representing the learning behavior in European countries. The outcomes suggest that policymakers should consider EPY's direct and indirect effects on EINV when considering policy interventions to promote EINV in Europe.
In emerging economies, it is expected to find products that do not comply with established norms, for example, low-quality production, material, counterfeits, etc., in the market where users are motivated by the low price, especially in times of economic crisis. With regards to products for electrical installations, there is no difference. Notably, several products in the wire and cable market do not comply with established standards. Many manufacturers seek to reduce costs and improve margins using cheaper or less raw materials. This is mainly observed in the reduction of copper used in the conductors, causing overheating, increasing electrical losses, reducing the service life, and ultimately increasing the risk of fires of electrical origin. Brazil has had an independent entity for 30 years, which monitors the market – Qualifio – Brazilian Association for the Quality of Electrical Wires and Cables and SINDICEL - Union of the Electrical Conductor, Wire Drawing and Lamination Industry of the State of São Paulo. Therefore, 136 cable samples with cross-sections of 1.5 mm², 2.5 mm², 4 mm² and 6 mm² were analyzed. These cross-sections were chosen as they represent the most common cables found in electrical installations in Brazil. The data was collected by Qualifio and submitted to tests following Brazilian National Standards Organization - ABNT NBR 6814: Electrical wires and cables - Electrical resistance test. The results showed 68% of the collected wires and cables did not comply with the ABNT. In some cases, the resistance was 300% higher than the upper limit established in the ABNT.
Geopolitical risks and environmental policy have become increasingly important in the European Union (EU), which is committed to tackling climate change and protecting the environment. However, geopolitical risks can undermine its environmental policy objectives. Thus, the study evaluates the relationship between geopolitical risks and environmental policy in nineteen EU countries from 1994 to 2020 through panel bootstrap Granger causality. The results show that geopolitical risks significantly influence environmental policy in Denmark, Estonia, Finland, France, Germany, Luxembourg, and Romania. On the other hand, the findings reveal that environmental policy causes geopolitical risks only in Latvia, while there is no relationship in the remaining countries. Therefore, policymakers must develop resilience to geopolitical risks, promote renewable energy, strengthen environmental regulations, and address social and economic implications to reduce environmental policy vulnerability to geopolitical risks.
Energy storage technology as a key support technology for China’s new energy development, the demand for critical metal minerals such as lithium, cobalt, and nickel is growing rapidly. However, these minerals have high external dependence and concentrated import sources, increasing the supply risk caused by geopolitics. It is necessary to evaluate the supply risks of critical metal minerals caused by geopolitics to provide a basis for the high-quality development of energy storage technology in China. Based on geopolitical data of eight countries from 2012 to 2020, the evaluation indicators such as geopolitical stability, supply concentration, bilateral institutional relationship, and country risk index were selected to analyze the supply risk of three critical metal minerals, and TOPSIS was applied to construct an evaluation model for the supply risk of critical metal minerals of lithium, cobalt, and nickel in China. The results show that from 2012 to 2017, the security index of cobalt and lithium resources is between .6 and .8, which is in a relatively safe state, while the security index of nickel resources is .2–.4, which is in an unsafe state. From 2017 to 2020, lithium resources remain relatively safe, and the security index of nickel has also risen to between .6 and .7, which is generally in a relatively safe state. However, the security index of cobalt has dropped to .2, which is in an unsafe or extremely unsafe state. Therefore, China needs to pay attention to the safe supply of cobalt resources and formulate relevant strategies to support the large-scale development of energy storage technology.
This study investigates how renewable energy markets reacted to the war in Ukraine in 2022 using event study and network connectedness analyses and compares this effect to traditional energy sources. Combining event study with connectedness analysis is of great interest in identifying abnormal returns from the Russia-Ukraine conflict event. The risk-return profiles make clean energy more appealing to investors, and increased investment in clean energy subsectors leads to improved climate change mitigation. Sampled data are wrangled daily from 03 August 2021 to 30 March 2022. The results confirm that renewable energy markets have positive and significant cumulative abnormalities while traditional energy markets are heavily affected during the post-war. Moreover, we find higher pairwise return connectedness after the announcement event than during and before the war in Ukraine. The geothermal and full cell markets are the more robust net information transmitter to other clean energy subsectors. Finally, renewable energy appeared more pertinent during and after the Russian invasion of Ukraine, given its properties to serve diversifications and hedging tools.
As a conflict between two major agricultural powers, the Russia–Ukraine war has various negative socioeconomic impacts that are now being felt internationally and might worsen, notably, for global food security. If the war deepens, the food crisis will worsen, posing a challenge to many countries, especially those that rely on food imports, such as those in the Middle East and North Africa (MENA) region. Simultaneously, the war came at a bad time for global food markets because food prices were already high due to disruptions in the supply chain caused by the COVID-19 pandemic, strong global demand, and poor harvests in some countries. Understanding how conflict-related disruptions in global food and fertilizer markets might affect price and availability is critical for understanding the overall impact on global food security. Further, four months into the war, its implications for food security suggest that this review is timely, urgent, and highly needed. Accordingly, this paper aims to investigate the Russia–Ukraine war’s direct and indirect impact on global food security. The paper highlights that the war resulted in immediate and far-reaching cascading consequences on global food security: Ukrainian exports have stopped, conscription and population displacement have caused labor shortages, access to fertilizers is restricted, and future harvests are uncertain. First, Ukraine’s export capacity has been hampered. Secondly, conscription and population displacement caused labor shortages. Thirdly, access to vital agricultural products such as fertilizers is also constrained. The war may delay spring planting and winter crop harvesting. Further, the war has indirect and cascading effects. Indeed, rising fertilizer costs may reduce their use and crop yields. Moreover, as seen during the 2007–2008 food crisis, export restrictions and speculation are driving up international prices and worsening the situation. Furthermore, the war triggered a panic buying movement at country and individual levels. Finally, the war may jeopardize the implementation of the Sustainable Development Goals (SDGs), notably SDG 1 (No poverty), SDG 2 (Zero hunger), and DG 12 (Responsible consumption and production). However, the consequences of the war on food security are being exacerbated by a variety of underlying rigidities, vulnerabilities, and inefficiencies in global food systems. Accordingly, the transition toward healthy, equitable, and ecologically sustainable food systems must be strengthened by adopting urgent and long-term reforms and policies.
We examine the hedging properties of different asset classes as impacted by the Russian invasion of Ukraine in 2022. We employ wavelet coherence analysis to study the impact of geopolitical risk on various types of securities. We found that different asset classes exhibited unequal risk sensitivity in both magnitude and timescale. Bonds and stocks displayed strong coherence for multi-week horizons, whereas currencies were affected at shorter periods. The green bonds, gold, silver, Swiss franc, and real estate proved the most resistant to geopolitical risk fluctuations. Hence, they may serve as the best hedge against geopolitical risk.
The conflict in Ukraine has triggered significant disruptions in various industries worldwide, and the impacts that this will have on us all are substantial. Food is one of the most heavily traded items. The terrible circumstances taking place in Ukraine, also nicknamed the "breadbasket of Europe", will impact businesses and consumers worldwide. As a result, the availability and supply of a wide range of food raw materials and finished food products have been seriously disrupted. The conflict has adversely affected food supply chains throughout all their stages with significant effects in production, sourcing, manufacturing, processing, and logistics, as well as significant shifts in demand. Global food supply chains, which had recently recovered from the Covid-19 impact, had shown a high level of robustness and resiliency against several disruptions, and are now genuinely compromised due to this war. This paper aims to analyze the impacts of the conflict between Russia and Ukraine on the effectiveness and responsiveness of global food supply chains. The disruption to food output, supply chains, availability, and affordability could last for a long time. The paper investigates the impacts, as well as likely measures and policy changes required.
Following the invasion of Ukraine, there is a call to replace Russian gas and oil with green electric energy. A prime sector subject to electrification is the transportation sector. Consequently , access to the critical minerals for electrification has become an important strategic issue in the electric vehicle industry. Our analysis indicates that the markets for scarce and critical minerals, like cobalt, graphite, lithium, and rare earth elements, are in a highly concentrated number of countries. China, a strategic partner of Russia, has a dominant power position in both graphite and rare earth elements and is a dominant player in the processing of copper, nickel, cobalt, lithium, and rare earth elements. Furthermore, at least 70% of cobalt, graphite, and rare earth element resources are in corrupt or very corrupt states. Transportation sector electrification might therefore increase Europe's and the USA's resource dependency on totalitarian, corrupt, and unstable countries. The surging resource dependency on China, Russia's most important strategic partner, intensifies the geopolitical risk to the green transition. We suggest strategies like vertical control of supply chains, specific technology and infrastructure investments, innovation of other green energy sources, and exploration of critical minerals in other countries. Substitution and closed-loop technology also reduce resource dependency and geopolitical risk. However, closed-loop recycling cannot compensate for the short-run growth in the electric vehicle markets. Thus, the circular economy will reduce but not eliminate geopolitical risk. Countries, supply chains, and companies should examine the geopolitical risk and strategic uncertainty associated with different green energy sources and technology.
Following its invasion of Ukraine, Russia’s macroeconomic stability will worsen; foreign trade and Russia-bound investment will dry up; and human capital will become scarce. Russia will not fully compensate these losses with increased economic engagement with China, with particular deficiencies likely in high-tech areas for Russia. Import substitution is also unlikely to allow Russia to innovate its way out of economic isolation or escape the resource curse. As Kremlin-connected elites further dominate the impoverished economy, crony state capitalism and kleptocracy will rise. The global repercussions of Russia’s war will include commodity shocks and the attendant supply chain disruptions and inflationary pressures. In terms of FDI, the global industries in energy, auto, and consumer goods will be particularly affected. The loss of the Russian market will be less critical to sales revenues. Structurally, Russia’s forced decoupling from the global economy may lead to the fragmentation of global financial infrastructure and the formation of economically contained blocks.
As a topical issue, this paper studies the responses of world stock market indices to the ongoing war between Ukraine and Russia. Using daily stock market returns in a sample of 94 countries and covers the period from 22 January 2022 to 24 March 2022, we consistently document a negative relationship between the Ukraine-Russia war and world stock market returns. Our results point to a larger impact at the onset of war, especially during the first two weeks after the invasion of Ukraine on 24 February 2022. The reaction of global stock markets was weaker in the weeks that followed. Furthermore, we find that these effects were most pronounced for countries bordering Ukraine and Russia, as well as for those UN member states that demanded an end to the Russian offensive in Ukraine. Overall, we provide the first empirical evidence of the effect of the Ukraine-Russia war on world stock market returns.
The Iran-Saudi Arabia conflict is an ongoing struggle for influence in the region that has created uncertainty, affected oil prices and regional economics. This paper uses wavelet analysis to examine the frequency and time-varying co-movement and casual nexus between petroleum prices (OP) and financial liquidness (MS) with and without geopolitical risk (GPR). The aim is to test the validity of the monetary equilibrium model from 1988 to 2019. The model is supported by the findings, as both short and medium-term association is found between OP and MS at high frequencies in the presence of GPR. We find a medium-term association between OP and MS in the absence of GPR. The paper’s overall conclusion suggests that GPR affects OP and OP, in turn, impact MS. Diversifying economic activities to minimize oil dependency, which is sensitive to external shocks, is suggested as a mitigation solution.
The green innovations, environmental policies, and carbon taxes are the tools to achieve sustainable development goals (SDGs) in the mitigation process. This study is intended to examine the impact of innovation, carbon pricing (CTAX), environmental policies (EP), and energy consumption (ECON) on PM2.5 and greenhouse gas (GHG) emission for Central-Eastern European countries. The panel effect during 2000–2018 is tested using a dynamic panel data model while the Granger causality approach obtains country-related outcomes. The outcomes reveal that eco-friendly innovations have a more profound effect on carbon mitigation. Environmental policies reduce emissions by 2.7% in the short run and 17.4% in the long run. Similarly, CTAX mitigates GHG emissions by 8.6% in the short-run and PM2.5 by 0.9% and 5.7% in the short and long run. However, urbanization, energy consumption and trade openness are the leading polluters in the region. The main findings remain dominant in the country-specific results and find unidirectional and bidirectional causality evidence among variables. The research concludes that green innovations and strict environmental policy can lead towards achieving sustainable development goals using carbon taxes as a tool on the way.
Graphical abstract
Electricity infrastructures are key for the provision of crucial energy services and economic prosperity. We investigate the current state and historical development of the global power sector from a “stock-flow-service nexus” (SFS-nexus) perspective. The SFS-nexus emphasizes the interrelations and dependencies between social metabolism (i.e. stocks and flows of biophysical resources), provision of services and societal well-being. Focussing on the most relevant stocks and flows, we quantify the main bulk materials (iron/steel, concrete, copper and aluminium) in power plants, grids and transformers, and fuel use of thermal power plants from 1980 to 2017. We assess the relevance of stocks, flows and related greenhouse gas emissions in the overall metabolism of countries and groupings by politico-economic and geographic criteria. Finally, we empirically explore the relations between material stocks and qualitative indicators for service quality and societal well-being.
Globally, concrete stocks (9,000 million tons (Mt) in 2017) are dominated by hydropower, whereas aluminium and copper stocks (181 and 161 Mt, respectively) are mostly comprised in conductors in grids (>80%). 50% of the iron/steel stocks (total: 840 Mt) are incorporated in power plants. Annualized embodied emissions of bulk materials account for less than 1% of fuel combustion emissions from power plants. Material intensities and power generation mixes are highly diverse amongst technologies and countries, respectively. Still, electricity supply quality and well-being indicators on country level are clearly correlated with per-capita metal stocks in electricity infrastructures. We thus showcase how material stock inventories can provide insight into the material basis of societies’ well-being.
We estimate a time-varying parameter VAR (TVP-VAR) with stochastic volatility using U.S. data to study the effects of uncertainty shocks on inflation. We find the response of inflation to be negative in the post-WWII period. Our findings suggest that uncertainty shocks propagate like aggregate demand shocks and not like aggregate supply shocks.
The financial market response to the COVID-19 pandemic provides the first example of a market crash instigated by a health crisis. As such, the crisis provides a unique setting in which to examine the market response to changes in investor attention. We utilise Google search volume (GSV) as a proxy for investor attention. GSV for the “coronavirus” keyword increases markedly from late-February and peaks in mid-March before declining substantially. Our results are broadly consistent with Da, Engelberg, and Gao (2015), indicating that GSV is primarily a proxy for the attention of retail investors and confirming that investor attention negatively influences global stock returns during this crisis period. A rise in the number of internet searches during the COVID-19 crisis induces a faster rate of information flow into financial markets and so is also associated with higher volatility. The identified relationships are economically and statistically significant even after controlling for the number of COVID-19 cases and macroeconomic effects. Increases in GSV have less impact on government bond yields where the limited role of GSV is likely due to lower participation of retail investors. The results suggest that, rather than searching for information on potential stocks to buy (Barber & Odean, 2008), retail investors are searching for information to resolve uncertainty about household FEARS (Da et al., 2015) during the COVID-19 crisis.
The pandemic has temporarily closed mines, factories and borders and destabilized flows of cobalt, lithium and more — metals that are crucial for batteries, wind turbines and solar panels.
The research explores the nexus between technological innovation and green growth in nine newly industrialized (NI) countries for the period from 2000 to 2016. Cross-sectional dependence and unit root tests are preliminary conducted. Pedroni’s panel cointegration and fully modified OLS (FMOLS) confirm the existence of long-run variables association. The outcome from IPAT, STIRPAT, and MLR reveals that production and processing-related technologies are harmful to green growth. Climate change mitigation technologies linked to transportation, water treatment, and processing have a positive impact on green growth. However, energy consumption, generation, and transmission technologies hurt the environment. Similarly, energy consumption in the agriculture sector adds in greenhouse gas emission, whereas, renewable energy is contributing positively to green production and growth. Environmental taxes and research and development budgets are playing a decisive role in the pursuit of green growth. The results have significant policy implications for policymakers, which can lead to green growth.
The forthcoming global energy transition requires a shift to new and renewable technologies, which increase the demand for related materials. This study investigates the long-term availability of lithium (Li) in the event of significant demand growth of rechargeable lithium-ion batteries for supplying the power and transport sectors with very-high shares of renewable energy. A comprehensive assessment that uses 18 scenarios, created by combining 8 demand related variations with 4 supply conditions, were performed. Here this study shows that Li is critical to achieve a sustainable energy transition. The achievement of a balanced Li supply and demand throughout this century depends on the presence of well-established recycling systems, achievement of vehicle-to-grid integration, and realisation of transportation services with lower Li intensity. As a result, it is very important to achieve a concerted global effort to enforce a mix of policy goals identified in this study.
Wind power needs to be expanded rapidly across the world to stabilize our climate. However, there are increasing concerns about conflicts between the supply of rare-earth elements (REs) (mainly neodymium, praseodymium, and dysprosium) and the global expansion of wind power. Here, we provide a dynamic, technology-rich, and regional-specific approach to exploring such conflicts among ten world regions through 2050 under four widely recognized climate scenarios. We find that the significant increase in RE demand driven by the ambitious 2050 global wind-power targets cannot be achieved without 11- to 26-fold expansion in the RE production. Material recycling and efficiency, production expansion, and technical innovation are promising for alleviating RE supply shortages in the long term. However, the existing global RE supply structure, along with the intensifying geopolitical and environmental constraints, could inhibit the rapid expansion of wind power, which calls for global cooperation to foster a sustainable and responsible RE supply chain.
This study examines the causality relationship between oil price movements and geopolitical risks for a group of 18 geopolitically sensitive countries, using monthly data by implementing all quantiles distributions. Contrary to earlier studies, which have applied the Granger‐causality through the conditional mean regression, this research estimates the association between the variables through Granger causality within quantiles. Evidence of a two‐way causality is found linking the changes in geopolitical risk and fluctuations in oil prices in the case of Thailand, Argentina, Israel, China, Mexico India, Korea, Indonesia, South Africa, Turkey, Philippines, Venezuela, Ukraine, and others. In addition, it is confirmed that oil prices Granger cause geopolitical risks for the countries like Brazil, Malaysia, and Colombia. Furthermore, a one‐way causality direction is found from changes in geopolitical risk to shifts in oil prices in Russia and Saudi Arabia, which are observed as super oil rich states. This study findings highlight the importance of government policies and business strategies that aim at containing the effects of geopolitical risk and the resulting oil price movements.
The study evaluates the causal nexus between geopolitical risk and energy security from 2004 to 2022. The results of the full sample causality indicate bidirectional causality between geopolitical risk and energy security. Moreover, the results suggest that geopolitical risk significantly impacts energy security in different sub-samples driven by the economic crisis, conflicts between nations, political instability, and terrorism, which have caused energy supply disruptions and increased energy insecurity. On the other hand, the result shows that energy security impacts geopolitical risk caused by economic instability and political unrest resulting from energy insecurity. Our model supports the results, demonstrating that geopolitical risk and energy security are closely intertwined and can have direct and indirect effects on each other. Energy security can be improved through energy diversification, investing in clean energy, building resilient energy infrastructure and promoting the peaceful resolution of conflicts.
Given the alarming rate of climate change and environmental degradation, major countries are seeking ways to curtail environmental damage and attain sustainability in the future. In the quest for a green economy, countries are motivated to adopt renewable energy that can assist in resource conservation and efficiency. Accordingly, this study examines the diverse effects of the underground economy, environmental policy strictness, geopolitical risk, gross domestic product, carbon emissions, population, and oil prices on renewable energy for 30 high- and middle-income countries from 1990 to 2018. The empirical outcomes based on quantile regression document significant variations across two country groups. For instance, for high-income countries, the shadow economy has a detrimental effect across all quantiles but it is statistically significant at the top quantiles. Nonetheless, the effect of the shadow economy on renewable energy is detrimental and significant statistically across all quantiles for middle-income countries. In the context of environmental policy stringency, the effect is positive across both country groups, though there is heterogeneity in outcomes. Geopolitical risk has a positive influence on the deployment of renewable energy for high-income countries but negatively impacts renewables for middle-income countries. As far as policy suggestions are concerned, the policymakers of both high- and middle-income countries need to take steps to constrain the growth of the shadow economy by adopting effective policy strategies. Policies need to be implemented for middle income-countries to reduce the unfavorable effect of geopolitical uncertainty. The findings of this study contribute to a better and more precise understanding of factors shaping the role of renewables whereby the energy crisis would be mitigated.
This study examines the asymmetric relationships between EU sectoral stocks and oil, oil implied volatility, geopolitical risk, and market sentiment during turbulent times of geopolitical unrest. In a set of parametric and nonparametric quantile-based techniques, we employ daily data on eleven sectors of economic activity in addition to crude oil prices (WTI) and three sentiment-driven indices tracking the crude oil volatility (OVX), geopolitical risk (GPR), and investor sentiment (VIX) over the period between January 2020 and October 2022. Findings from the causality-in-quantile-means test suggest that the sectoral stock returns from the EU are asymmetrically predicted by WTI, OVX, VIX and GPR. The findings from the quantile regression and quantile-on-quantile regression metrics demonstrate that (i) in bearish periods, EU sectoral stocks could hedge against GPR, (ii) WTI does not serve as a hedge for EU stocks regardless of the sector of economic activity, and (iii) OVX and VIX possess some hedging and safe-haven attributes against EU stocks. These findings have notable implications for market regulation and portfolio management.
The ongoing geopolitical crisis that has emerged due to the war in Ukraine has created economic winners and losers. We adopt the DS-ARDL and Cross-Quantilogram approaches to examine the effect of higher energy prices on commodity currencies during this war. Our findings based on 4-h time frame data between January and November 2022 indicate a significant positive effect of energy price hikes on the value of the Australian dollar relative to the Japanese yen, Euro, and British pound. The comparison of the effects of gas and oil price hikes on the exchange rates reveals that these exchange rate movements have been mostly due to gas price shocks. Considering the effects of this war on the international economy, the most critical policy implications to improve the financial health of the economies are provided.
The economic growth of the nations is highly dependent on the hydrocarbon fuel, despite limited supplies, demand has been continually increasing, which makes it critical to manage energy resources. It is therefore important to evaluate the current scholarship in the domain of sustainable energy technologies, which are reducing the dependency on carbon fuels and conserve the fast depleting natural resources. This study aims to present a bibliometric analysis by coupling a systematic review of literature of current body of knowledge in the domain of sustainable energy technologies. This study reviews 2766 documents in the field of sustainable energy technologies published in the WoS. A comprehensive material about the growth in research, leading authors, publishers and journals that contribute the literature is presented in the first part. We then present an analysis of major research studies that encapsulates the sustainable energy technologies research, followed by an exhaustive analysis of the contemporary research published during the past five years. The results unveil a phenomenal rise in the research output for 25 studies in 2005 and peaking to 833 in 2021. The future directions of the research have been identified as work on efficient carbon capture, innovative systems for urban heating and cooling. Sustainable technologies which help rural and framing communities as well as technologies to reduce energy consumption in large infrastructural projects are identified as the themes of prospective research. Improving the technologies in construction material, energy storage and advancing the intelligent grid systems aresome of the most desired areas for advancement in the sustainable energy technology.
Precious metals and traditional energy prices are shaken by geopolitical tension, financial instability, rising inflation, declining economic growth, and financial markets. In addition, conventional energy, such as oil and gas, are intensive inputs to metal production, making these variables increasingly interconnected for economies and financial investment. This study analyzes the dynamics of the connectedness generated by economic instability and geopolitical risk on the traditional non-renewable energy and precious metals markets using Time-Varying Parameter Vector Autoregressive (TVP-VAR) and Wavelets Coherences from 11 June 2012 to 23 May 2022. The results show that the total connectedness index was higher during the Russia-Ukrainian conflict in February–May 2022. Moreover, the geopolitical risk, financial instability, and oil return are net transmitters of shocks, while gold, gas, and silver are the net received. The wavelet coherence results show strong co-movement during the Russia-Ukrainian conflict between geopolitical risk, oil, gas, and silver returns at various scales, given its properties for diversification at the time-frequency domain. Gold appears a stable asset and serves as a haven ability against geopolitical risk and financial instability. Findings indicate that geopolitical risk and financial instability are crucial in determining metals, precious, and energy markets that the investors, managers, funds, and producers need to consider in their investment and production decisions. Policymakers and macroprudential authorities should consider a shifting macroeconomic environment.
The transportation sector has a strong negative impact on the environment and therefore requires new sustainable development measures. This paper proposes a new indicator of sustainability in transport obtained through a multi‐criteria analysis based on Eurostat data and a panel of 10 academics. The results show a positive performance of Sweden in the period 2015–2019 and a small number of countries above the European average. Furthermore, a quantitative analysis based on these experts identifies the critical success factors associated with purchasing electric vehicles. The greatest importance is assigned to purchase cost, followed by battery autonomy. Our analysis proposes that electric vehicles are unable to achieve a sustainable transition unless three conditions are met: (i) use of renewable sources, (ii) local industrial development of the sector, and (iii) battery recycling. Therefore, Europe urgently needs to realize new industrial activities and avoid social unsustainability. The long‐term objective of a policy plan is to promote independence from external sources of energy, materials, and other resources.
This article explores the impact of the Russian-Ukraine war on the metals, conventional energy, and renewable energy markets, by using an event research technique. The data collected demonstrates a significant increase in the anomalous returns that are associated with the renewable energy industry. Apart from the gas oil index, none of the conventional energy or metals markets tend to exhibit large abnormal returns on the event day. Moreover, Europe was one of the first clean energy markets to react to war. The impact was, likewise, highest on the t+1 day, which was not the case that showed replication in the other markets. War had a significant influence on gold, platinum, palladium, and nickel, among other metals.
The study aims to examine the connectedness between clean energy stocks and precious metals prices under the different market episodes. We employ the Granger causality-in-the distribution test proposed by Candelon and Tokpavi (2016) to investigate the presence of a causality relationship between the variables for the whole distribution because the test has superior power even if the sample size is small. WilderHill Clean Energy Index is considered a benchmark for the clean energy stock market and gold, silver, platinum, and palladium prices are used for the precious metals. By using daily data from January 1, 2001, to December 12, 2021, we find that there is a unidirectional causal link running from the clean energy stock returns to the precious metal prices in the center and the left tail of the distribution. On the other hand, there is strong feedback between the variables in the right tail of the distribution. These results show that clean energy stock prices have an edge in affecting precious metal prices and precious metals cannot be used to hedge the downside risk of clean energy stock investments.
Using stock returns from a sample of 94 countries over the period from 22 January to 24 March 2022, we document a negative relationship between the Ukraine–Russia war and world stock market returns. We thus provide the first empirical evidence.
We investigate the impact of geopolitical risk (GPR) generated by the Russian-Ukrainian conflict on European and Russian bonds, equity, and global commodity markets. We employ the GPR index and apply the quantile-on-quantile regression approach to the GRP index and financial asset returns. Our findings indicate that (i) most assets are in a mix of negative and positive relationship with GPR; (ii) GPR leads to changes in asset returns during normal market conditions; and (iii) the magnitude and direction of GPR's effect on asset returns depend on the type of market and market conditions.
In this paper, we use the improved Diebold & Yilmaz method based on TVP-VAR-SV model to analyze dynamic connectedness between energy, precious metal, industrial metal, agriculture and livestock commodity markets. The results show that the energy, industrial metal, and precious metal commodity markets are the information transmitters in commodity markets, and the agriculture and livestock commodity markets play the roles of information receivers. Furthermore, we employ the GARCH-MIDAS model to study the influence of geopolitical risk on the dynamic connectedness between five commodity markets. We find that geopolitical risk, especially geopolitical act risk, significantly affects the overall connectedness of commodity markets. And more notably, the impacts on the net spillover of various commodity markets are different. Geopolitical risk has positive effects on the net spillover of energy, agriculture and livestock commodity markets, and negative effects on precious metal and industrial metal commodity markets.
The ongoing Russia-Ukraine war is obviously the most prominent war in Europe since the second world war, changing the dynamics of the oil and other prominent markets. As the oil market has been historically known to associate with other financial and commodity markets, it is important to see if oil connects differently with prominent financial assets during market turbulence caused by a war. Thus, we make the first attempt to examine how oil connects with prominent financial assets, namely bonds, bitcoin, U.S. dollar, gold, and stocks, using intra-day data, before and during the war. We find that connectedness is stronger during the war than before it. Oil becomes a net transmitter of spillovers during the war, unlike in the prewar era when it is characterized as a net receiver of spillovers. Also, whereas the net directional pairwise results suggest heterogeneity regarding how oil connects individually with each of the remaining assets before the war, oil has a strong spillover effect on all of them during the war. However, the spillover effect is transitory, as it dies out over time. The findings are robust to intra-day data of different frequency, and have suitable implications for short-term investors, and further agendas for future research in relation to the impacts of the war are provided.
Economic policy uncertainty (EPU) reduces energy consumption and the use of pollution intensive commodities, which not only relieves environmental degradation, but also hinders investment in renewable energy and R&D, and leading to environmental degradation. Geopolitical risks (GPRs) result in a sharp drop in economic growth and energy consumption, and hinder environmental degradation. In addition, they can bring about a decrease in R&D, innovation and renewable energy, and will further exacerbate environmental degradation. By using the monthly data from Jan. 2000 to Dec. 2017 of China, a five-variable time varying parameter stochastic volatility vector auto regression model (TVP-VAR) of EPU, GPRs, industrial added value growth rate, crude oil growth rate and ecological footprint (EFOOT) is established. According to the results of the model, the conclusions can be drawn as follows : (1) EFOOT has a positive feedback on EPU in short, medium and long term, marking the investment effect of EPU is greater than consumption effect. (2) EFOOT has a negative feedback on GPRs in short, medium and long term. (3) The utilization characterized by the growth rate of industrial added value and crude oil has a negative impact on EFOOT. It is worth noting with the steady improvement of China’s economy, the further improvement of economic strength and the high attention to environmental protection from 2015, the impact of EPU and GPRs on the EFOOT began to weaken.
Bstract
We examine the dynamic effects of uncertainty shocks on unemployment during recessions in the US. We estimate a Bayesian time-varying parameter structural vector autoregression. We analyze how the impact of uncertainty shocks on U.S. unemployment changes over time. We find that uncertainty shocks have both higher unit impact and higher total effect on unemployment during the Great Recession compared to those of previous recessions. Different characteristics of the Great Recession amplify the effect of uncertainty on unemployment. Two channels distinguish the Great Recession from other recessions: the federal funds rate hitting the zero lower bound and financial frictions. We find that these factors are significant determinants of the time-varying relationship between unemployment and uncertainty. Robustness analyses with alternative measures of uncertainty and alternative empirical specifications validate the results of the paper.
This paper tests whether gold can be used to hedge against various forms of uncertainty, using monthly data for the sample period from January 1998 through August 2020. The study presents a model featuring GED-GARCH(1,1) technique to examine gold return behavior for five regional markets: the U.S., U.K., European Union, China and India. The model relates gold returns to changes of economic policy uncertainty, changes of geopolitical risk, market volatility due to interest rate variations and equity market volatility resulting from a worsening in the pandemic while controlling for the inflation rate, stock returns, economic growth, and changes in the exchange rate. Testing of gold prices expressed in U.S. dollars, British pounds, Euros, and Chinese yuans finds evidence that gold returns respond positively to a rise in a set of uncertainty variables, suggesting that gold can be viewed as a hedge against uncertainties. However, tests of a gold return equation in Indian rupee (or USD) show that some coefficients of uncertainty variables have negative signs because gold is most likely treated as an alternative to money.
At present, the COVID-19 epidemic is still spreading around the world, which greatly affects the global supply of mineral resources. Due to numerous resources supply nodes and complex and changeable risk factors, it is urgent to carry out comprehensive research on the supply base, supply node and supply chain of mineral resources from the perspective of production and transportation supply chain. Based on the global perspective and long-term research on risk assessment and countermeasures of global mineral resources, this paper puts forward the concept, connotation and evaluation method of mineral resources supply chain for the first time and traces the whole chain of mineral products from production, transportation and smelting process in space. With the mineral resources supply base as the entry point, the method of determination and comprehensive evaluation of mineral resources supply base based on space technology is established to realize the transformation of the delineation of mineral resources supply base from the traditional planarization to the spatialization. The collation and stipulation of the technical system through the establishment of supply key nodes and supply chain of mineral resources can collate and stipulate supply chain and key knots by systematically taking into consideration the mineral resources supply of the target country, and can utilize the risk evaluation method of the mineral resources supply chain to carry out risk evaluation directed against the supply chain. These measures help the target country wholly grasp hidden risk of the mineral resources supply chain and, according to different forewarning grades, draw up safety contingency plans in accord with different grades and kinds, thus guaranteeing continued and stable supply of mineral resources.
Undoubtedly, energy is indispensable to attain economic development; however, it also generates CO2 emissions, which are the dominant contributor to environmental deterioration and climate change. In this regard, clean energy can help to achieve both sustainable development and environmental sustainability since it comprises non-carbohydrate energy sources that do not or seldom generate emissions. Against this backdrop, this work considers economic policy uncertainty (EPU) and probes the impact of clean energy consumption on CO2 emissions in the third largest European economy France from 1987 to 2019 controlling urbanization and economic growth. Using the STIRPAT framework, the study employed the novel Augmented ARDL method that overcomes the limitations of the ARDL methods. The outcomes disclosed strong evidence of cointegration. The long-run analysis revealed that clean energy consumption does not contribute to emissions reduction in the long-run. However, EPU poses a threat to environmental sustainability by augmenting emissions levels. Economic growth boosts CO2 emissions, while urbanization is conducive to environmental quality supporting ecological modernization theory. The study detected causality from EPU to economic growth and emissions. Finally, based on the study outcomes, a policy framework is suggested to address the objectives of Sustainable Development Goal (SDG) 7 and 13.
We investigate for spillovers from monetary policy uncertainty in the United States to the policy rates of seven inflation targeting emerging economies — Brazil, Chile, Colombia, Indonesia, Mexico, Poland, and South Africa. We use monthly data, with the start of the sample period being dictated by the start of the inflation targeting regime, and a multivariate GARCH-in-Mean vector autoregression (VAR), controlling for the traditional Taylor rule type variables. We also use a multivariate structural VAR and a different measure of U.S. monetary policy uncertainty, achieving identification by a combination of short-run and long-run restrictions. Our evidence shows that U.S. monetary policy uncertainty, irrespective of how it is measured, has negative effects on the macroeconomic and financial fundamentals of emerging economies.
Venezuela’s oil-dependent economy is severely affected by geopolitical instability, causing hyperinflation and devaluation of the national currency. Therefore, this study intends to examine the nexus among geopolitics, exchange rate, and oil prices by employing the Wavelet analysis for a sample ranging from 2008 to 2019. The results reveal that oil prices and exchange rates have a bidirectional causal relation from 2017 to 2019. Similarly, geopolitics and oil prices cause each other from 2017 to 2019. A medium-run co-movement between geopolitical risk and exchange rates is observed from 2015 to 2019. We notice that oil prices and exchange rates exhibit a causal relation from 2008 to 2011 and from 2018 to 2019. The results support the theoretical model and are in line with the actual dynamics of the economy. Based on our results, we conjecture that Venezuela has to reduce its oil dependence since it is susceptible to geopolitical risk, avoid regional conflicts, and manage exchange rates to achieve sustainable growth.
In the light of The Paris Agreement (COP 21), global leaders reached a consensus to curtail the increase in global temperature up to 2.0 °C ideally 1.5 °C pre-industrial level. Likewise, it has become a pathway to accomplish long-term goals of achieving carbon neutrality. In this regard, this paper aims to explore the role of green process innovation and environmental orientation toward environmental performance for achieving the long-term goal of carbon neutrality. In addition, this paper also discovers a mediating role of green competitive advantage in said context. Using data from a survey among managers of equipment manufacturing sector, the study employed structural equation modeling technique and found that green process innovation, environmental orientation and green competitive advantage significantly influence environmental performance. Subsequently, mediation analysis indicated that green competitive advantage partially mediates the relation from green process innovation and environmental orientation to environmental performance. In light of the carbon neutrality targets, the study highlight that improving environmental performance through green process innovation and environmental orientation can be a way-forward for manufacturing sector to play its role to achieve carbon neutrality. The study concludes with theoretical and practical implications.
Based on the Barunik and Křehlik (2018) and Diebold Yilmaz (2012) methods, we examine the dynamic characteristics of the information spillover effect among gold, oil and BRICS geopolitical risks in different time and frequency domains. The results show that return and volatility spillovers are stronger in the short term than in the long term. The overall spillover is caused mainly by short-term spillover effects. In most cases, the oil market has a strong spillover relationship with the gold market. Furthermore, China's geopolitical risks have the greatest impact on gold, oil, and other countries' geopolitical risks. In addition, China's geopolitical risks are the only net contributor in the time domain, which indicates that China occupies an important position in the BRICS. Furthermore, geopolitical events can significantly increase the connectivity of the entire framework.
To limit global warming well below 2 °C, or even 1.5 °C, a rapid transition toward renewable energies must occur within the next several decades. This study examines the problem of resource constraints in the development of clean energy and transportation technologies (namely wind turbines and batteries in electric vehicles) for different global energy-consumption scenarios. For this study, lithium and cobalt (demand from electric vehicles) and neodymium, praseodymium, and dysprosium (cumulative demand from electric vehicles and wind power) were considered as critical materials. The application of simple dynamic models allows for an integrated assessment, taking into account changes in energy demand, resource intensity of wind energy and electric vehicles, and exploration and recycling technologies. The obtained results show that, irrespective of the considered scenario or the method used for estimating rare-earth element reserves, the demand for neodymium and praseodymium remains within a maximum of 12%–14% of the total reserves even when the development in recycling technologies is not considered. Meanwhile, the demand for dysprosium is much more significant at 86% in the absence of recycling technologies. There are strong indicators that clean-energy development can be threatened by the shortage of cobalt and lithium by the middle of this century unless we achieve rapid progress in technologies related to their exploration and reuse.
The determinants of natural resources rents have been extensively analyzed in the resources economics and policy literature; however, the role of geopolitical risk and uncertainty in rents remains unexplored. Given that these indicators are rather volatile and thus important to discover for developing countries which own a large portion of natural resources in the world, this study aims to examine the effects of geopolitical risk and economic policy uncertainty on natural resources rents in a group of developing economies by applying the novel panel quantile estimation technique on the panel data over 1985–2018. The empirical results suggest that geopolitical risk has a negative impact on the natural resources rents for all quantiles while economic growth increases natural resources rents across middle-and-high quantiles. In contrast, the influence of economic policy uncertainty on resources rents varies across the quantiles. The uncertainty increases natural resources rents in low quantiles and decreases rents in high quantiles. Thus, quantile regression results reveal heterogeneous impacts of the selected main determinants of natural resources rents. Important policy implications are further discussed in the study.
The main objective of this paper is to analyze the causality effect of economic policy uncertainty and geopolitical risk on the prices of precious metals. We employ the Hacker and Hatemi-J (2012) bootstrap causality test and the time-varying version of this test to detect the instabilities in the causality relationship by using monthly data in the period of January 1995-August 2020. While the findings of the Hacker and Hatemi-J (2012) bootstrap causality test show there is no causal link from geopolitical risk to the precious metal prices, and there exists causality from economic policy uncertainty to all prices except gold, the findings of the time-varying causality test indicate these findings are unstable. The causality relationship exists in only some periods. It implies that the existence of the causality links from geopolitical risk and economic policy uncertainty to the precious metal prices is changing in the analysis period.
The link between energy and agricultural markets have been studied extensively in the last two decades. Nonetheless, the literature fails to consider the effects of geopolitical risks (GPRs), geopolitical risks due to acts and GPRs due to threats in studying the link between the two markets. Addressing these issues, we examine the dependence between crude oil prices and agricultural commodities (oats, corn, wheat and soybean) for a period starting from April 4, 1990, to February 15, 2019. Our study used copula-based techniques to study the co-movement. We find that strong co-movements between energy markets and agricultural markets, which are negatively influenced by GPRs. Hence, suggest the ability of agricultural commodities, particularly corn, oats and wheat, to act as a hedge against oil returns downturn resulting from geopolitical unrest. This evidence of hedging is further vindicated, when we observe that agricultural and oil markets are negatively correlated when the former is bullish and the latter bearish.
Based on the spillover index model, we study the dynamic spillover effects between the geopolitical risks of 18 emerging countries and gold prices from February 1985 to June 2019. The results indicate that there is a significant spillover effect between geopolitical risks and gold prices, and the net spillover comes from the geopolitical risks on gold prices. Among 18 emerging countries, China, Ukraine, Saudi Arabia, Venezuela, and Argentina are net contributors, with China being the largest net contributor. A rolling window analysis shows that the spillover effects between geopolitical risks and the gold market present an increasing trend, and it would be strengthened significantly in the short term during major geopolitical events. In addition, we decompose gold prices into three types: gold supply shocks, aggregate demand shocks and gold specific demand shocks, and the phenomenon that spillover effects show considerably different patterns and magnitudes is observed.
Proper use and efficient management of natural resources are critical to shaping a sustainable future in many resource-rich countries in Africa. It is also well-known that globalization creates a great awareness for sustainable resource extraction and provides cleaner production technology transfers to underdeveloped countries and enables them to establish a sustainable development pattern. However, evidence on the role of globalization in reducing the environmental impacts of natural resources in resource-based economies is relatively scant. This study investigates sustainable future strategies by examining the role of natural resources, globalization, human capital, and urbanization in shaping the ecological footprint that is a broader indicator of environmental sustainability. To this end, Sub-Saharan African countries-endowed with a rich natural resource base ranging from arable land, forest, freshwater , marine resources, oil, natural gas, minerals, and wildlife-are analyzed through advanced estimation techniques. Empirical results show that both resource dependence and abundance complicate to design a sustainable future by increasing the pressure on the environment. Similarly, urbanization deteriorates ecological conditions in Sub-Saharan African countries. However, globalization and human capital seem the main sources of a cleaner and sustainable environment. The findings of the study shed new light on the main role of globalization in providing cleaner practices to reverse the negative influence of natural resource dependence and/or abundance on environmental quality.