Do nonrenewable-energy prices affect renewable-energy volatility? The case of wood pellets

Hui Xian, Gregory Colson, Berna Karali and Michael Wetzstein

Journal of Forest Economics, 2017, vol. 28, issue C, 42-48

Abstract: Over the past decade, the U.S. Southeast has experienced a rapid expansion of wood-pellet biomass production for European export. This renewable wood-pellet supply requires nonrenewable-energy inputs in its manufacturing and logistics, which suggests possible price-volatility spillovers between renewable and nonrenewable markets. A BEKK-MGARCH model is employed for investigating these possible price-volatility spillovers. Overall, results suggest a limited negative effect of past volatile nonrenewable-energy prices influencing current wood-pellet price volatility. Specifically, high volatilities in nonrenewable-energy prices do not affect the volatility of wood-pellet prices. Thus, any stability concerns in terms of nonrenewable-input prices affecting the wood-pellet market are not warranted.

Keywords: GARCH; Nonrenewable energy; Renewable energy; Wood pellets (search for similar items in EconPapers)
JEL-codes: Q21 Q23 Q31 Q40 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (3)

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Working Paper: Impact of nonrenewable on renewable energy: The case of wood pellets (2015)
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DOI: 10.1016/j.jfe.2017.05.004

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