Cross-category spillovers of uncertainties in energy transition: Insights from a full-distributional framework

Xiaohang Ren, Jingyao Li, Kun Duan and Mamata Parhi

Energy Economics, 2025, vol. 149, issue C

Abstract: The ongoing escalation of downward pressure amid the tortuous transition toward energy sustainability has ignited public concerns about various uncertainties and their cross-category spillovers in the economic system. Resting upon a full-distributional framework, this paper studies the information spillover between multiple uncertainties related to the energy transition and its association with economic and policy related environments in different market conditions. The spillover is quantified in the forms of the static uncertainty spillover, the time-varying uncertainty evolution, and the network uncertainty connectedness, respectively. Our results show that uncertainty spillovers evolve depending on market conditions with the extent of the overall connectedness being stronger when uncertainty levels are extremely high. The connectedness in uncertainty spillovers demonstrates time-varying features and is prone to shocks to external events. The role of each uncertainty in driving the spillover is shown to switch between information receivers and givers across market conditions over time. Moreover, the directional spillover network of uncertainty shows evident heterogeneities in structural characteristics, contagion direction, spillover intensity, and uncertainty centres in different market conditions. Our findings enhance the comprehension of uncertainty spillovers in energy transition, contributing to effective risk prevention toward sustainability.

Keywords: Cross-category uncertainties; Spillover effects; Network connectedness; Quantile VAR model (search for similar items in EconPapers)
JEL-codes: C32 E44 F01 G18 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:149:y:2025:i:c:s0140988325006371

DOI: 10.1016/j.eneco.2025.108810

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