Skip to main navigation menu Skip to main content Skip to site footer
logo

Articles

No. 1 (2026)

The impact of carbon and fossil fuel prices on renewable energy companies’ stock prices: New evidence from piece-wise approach

DOI
https://doi.org/10.3280/epe2026oa22886
Submitted
maggio 26, 2026
Published
2026-06-09

Abstract

This study aims to elucidate the relation between oil, gas, coal, carbon prices and the clean market index. We adopt a piece-wise linear approach and assume that each piece represents a unique structural mechanism. We utilize an optimization model that endogenously finds cut-off dates on non-stationary data along with the model coefficients for each period. Our findings highlight that the clean market index is positively related to stock market performance and negatively related to carbon and oil prices. The direction of the effects of gas and coal, on the other hand, are found to be alternating among the break periods. Moreover, predictor importance of the factors also changes through the timeline. Empirical evidence indicates that splitting the time series data into pieces according to their distinct structural characteristics improves the prediction performance and it is imperative to better understand the behavior of the renewable energy market. By doing so, we aim to provide insights for policy makers on how to utilize the leverage effect of financial markets to empower renewable energy companies.

References

  1. Ahmad, W. (2017). On the dynamic dependence and investment performance of crude oil and clean energy stocks. Research in International Business and Finance, 42, 376-389. DOI: 10.1016/j.ribaf.2017.07.140.
  2. Ahmad, W., Sadorsky, P., Sharma, A. (2018). Optimal hedge ratios for clean energy equities. Economic Modelling, 72, 278-295. DOI: 10.1016/j.econmod.2018.02.008.
  3. Bai, J. (1997). Estimation of a change point in multiple regression models. Review of Economics and Statistics, 79(4), 551-563.
  4. Bai, J., Perron, P. (2003). Computation and analysis of multiple structural change models. Journal of Applied Econometrics, 18(1), 1-22.
  5. Bai, J., Perron, P. (1998). Estimating and testing linear models with multiple structural changes. Econometrica, 47-78.
  6. Bibi, M., Khan, M. K., Shujaat, S., Godil, D. I., Sharif, A., Anser, M. K. (2022). How precious metal and energy resources interact with clean energy stocks? Fresh insight from the novel ARDL technique. Environmental Science and Pollution Research, 29(5), 7424-7437. DOI: 10.1007/s11356-021-16262-7.
  7. Bondia, R., Ghosh, S., Kanjilal, K. (2016). International crude oil prices and the stock prices of clean energy and technology companies: Evidence from non-linear cointegration tests with unknown structural breaks. Energy, 101, 558-565. DOI: 10.1016/j.energy.2016.02.031.
  8. Dutta, A. (2017). Oil price uncertainty and clean energy stock returns: New evidence from crude oil volatility index. Journal of Cleaner Production, 164, 1157-1166. DOI: 10.1016/j.jclepro.2017.07.050.
  9. Dutta, A., Bouri, E., Noor, M. H. (2018). Return and volatility linkages between CO2 emission and clean energy stock prices. Energy, 164, 803-810. DOI: 10.1016/j.energy.2018.09.055.
  10. Elie, B., Naji, J., Dutta, A., Uddin, G. S. (2019). Gold and crude oil as safe-haven assets for clean energy stock indices: Blended copulas approach. Energy, 178, 544-553. DOI: 10.1016/j.energy.2019.04.155.
  11. Ferrer, R., Shahzad, S. J. H., López, R., Jareño, F. (2018). Time and frequency dynamics of connectedness between renewable energy stocks and crude oil prices. Energy Economics, 76, 1-20. DOI: 10.1016/j.eneco.2018.09.022.
  12. Fu, Z., Chen, Z., Sharif, A., Razi, U. (2022). The role of financial stress, oil, gold and natural gas prices on clean energy stocks: Global evidence from extreme quantile approach. Resources Policy, 78, 102860. DOI: 10.1016/j.resourpol.2022.102860.
  13. Gu, F., Wang, J., Guo, J., Fan, Y. (2020). How the supply and demand of steam coal affect the investment in clean energy industry? Evidence from China. Resources Policy, 69, 101788. DOI: 10.1016/j.resourpol.2020.101788.
  14. He, X., Mishra, S., Aman, A., Shahbaz, M., Razzaq, A., Sharif, A. (2021). The linkage between clean energy stocks and the fluctuations in oil price and financial stress in the US and Europe? Evidence from QARDL approach. Resources Policy, 72, 102021. DOI: 10.1016/j.resourpol.2021.102021.
  15. Henriques, I., Sadorsky, P. (2008). Oil prices and the stock prices of alternative energy companies. Energy Economics, 30(3), 998-1010. DOI: 10.1016/j.eneco.2007.11.001.
  16. IEA (2022). CO2 Emissions in 2022. -- https://www.iea.org/reports/co2-emissions-in-2022.
  17. Inchauspe, J., Ripple, R. D., Trück, S. (2015). The dynamics of returns on renewable energy companies: A state-space approach. Energy Economics, 48, 325-335. DOI: 10.1016/j.eneco.2014.11.013.
  18. IPCC (2021). Climate Change 2021: The Physical Science Basis. Working Group I contribu-tion to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. -- https://www.ipcc.ch/report/ar6/wg1/downloads/report/IPCC_AR6_WGI_Full_Report.pdf. (Accessed: 13.08.2021).
  19. Kocaarslan, B., Soytas, U. (2019). Asymmetric pass-through between oil prices and the stock prices of clean energy firms: New evidence from a nonlinear analysis. Energy Reports, 5, 117-125. DOI: 10.1016/j.egyr.2019.01.002.
  20. Kumar, S., Managi, S., Matsuda, A. (2012). Stock prices of clean energy firms, oil and carbon markets: A vector autoregressive analysis. Energy Economics, 34(1), 215-226. DOI: 10.1016/j.eneco.2011.03.002.
  21. Maghyereh, A. I., Awartani, B., Abdoh, H. (2019). The co-movement between oil and clean energy stocks: A wavelet-based analysis of horizon associations. Energy, 169, 895-913. DOI: 10.1016/j.energy.2018.12.039.
  22. Managi, S., Okimoto, T. (2013). Does the price of oil interact with clean energy prices in the stock market?. Japan and the World Economy, 27, 1-9. DOI: 10.1016/j.japwor.2013.03.003.
  23. Nasreen, S., Tiwari, A. K., Eizaguirre, J. C., Wohar, M. E. (2020). Dynamic connectedness between oil prices and stock returns of clean energy and technology companies. Journal of Cleaner Production, 260, 121015. DOI: 10.1016/j.jclepro.2020.121015.
  24. Qiu, L., Chu, L., Zhou, R., Xu, H., Yuan, S. (2023). How do carbon, stock, and renewable energy markets interact: Evidence from Europe. Journal of Cleaner Production, 407, 137106.
  25. Reboredo, J. C. (2015). Is there dependence and systemic risk between oil and renewable energy stock prices?. Energy Economics, 48, 32-45. DOI: 10.1016/j.eneco.2014.12.009.
  26. Reboredo, J. C., Ugolini, A. (2018). The impact of energy prices on clean energy stock prices. A multivariate quantile dependence approach. Energy Economics, 76, 136-152. DOI: 10.1016/j.eneco.2018.10.012.
  27. Reboredo, J. C., Rivera-Castro, M. A., Ugolini, A. (2017). Wavelet-based test of co-movement and causality between oil and renewable energy stock prices. Energy Economics, 61, 241-252. DOI: 10.1016/j.eneco.2016.10.015.
  28. Sadorsky, P. (2012a). Correlations and volatility spillovers between oil prices and the stock prices of clean energy and technology companies. Energy Economics, 34(1), 248-255. DOI: 10.1016/j.eneco.2011.03.006.
  29. Sadorsky, P. (2012b). Modeling renewable energy company risk. Energy Policy, 40, 39-48. DOI: 10.1016/j.enpol.2010.06.064.
  30. Sharpe, W. F. (1963). A simplified model for portfolio analysis. Management Science, 9(2), 277-293. DOI: 10.1287/mnsc.9.2.277.
  31. Song, Y., Ji, Q., Du, Y. J., Geng, J. B. (2019). The dynamic dependence of fossil energy, investor sentiment and renewable energy stock markets. Energy Economics, 84, 104564. DOI: 10.1016/j.eneco.2019.104564.
  32. Sun, C., Ding, D., Fang, X., Zhang, H., Li, J. (2019). How do fossil energy prices affect the stock prices of new energy companies? Evidence from Divisia energy price index in China’s market. Energy, 169, 637-645. DOI: 10.1016/j.energy.2018.12.032.
  33. The Guardian (2023), ‘Era of global boiling has arrived,’ says UN chief as July set to be hot-test month on record. -- https://www.theguardian.com/science/2023/jul/27/scientists-july-world-hottest-month-record-climate-temperatures.
  34. Tiwari, A. K., Abakah, E. J. A., Gabauer, D., Dwumfour, R. A. (2022). Dynamic spillover effects among green bond, renewable energy stocks and carbon markets during COVID-19 pandemic: Implications for hedging and investments strategies. Global Finance Journal, 51, 100692. DOI: 10.1016/j.gfj.2021.100692.
  35. Tunc, H., Genç, B. (2021). A column generation based heuristic algorithm for piecewise linear regression. Expert Systems with Applications, 171, 114539.
  36. Xia, T., Ji, Q., Zhang, D., Han, J. (2019). Asymmetric and extreme influence of energy price changes on renewable energy stock performance. Journal of Cleaner Production, 241, 118338. DOI: 10.1016/j.jclepro.2019.118338.