The connectedness and structural changes among green and conventional energy markets with CO2 emissions in the United States

Javier Cifuentes-Faura, Kamel Si Mohammed and Hind Alofaysan

Economic Analysis and Policy, 2024, vol. 83, issue C, 80-94

Abstract: As the world's biggest oil producer and second-biggest polluter, the United States has set a strict target to cut net CO2 emissions by 50–52 percent from 2005 levels by 2030 and a net zero emission by 2050 through various strategies, particularly clean energy initiatives. This research attempts to examine the effects of five specific renewable and conventional energy subsectors with carbon emission across five sectors, including power (POW), industry (IND), ground transportation (GT), domestic aviation (DA), and residential (RE). The data illustrate the decline and subsequent increase in CO2 emissions throughout the COVID-19 pandemic, the Russia-Ukrainian conflict, and the USA recession periods from January 1 2021 to September 30 2022. Employing the Vector Autoregressive (VAR) model and a novel quantile connectedness framework, it was found that risk transmission between different markets has been exceptionally high, exceeding 80% both in the COVID-19 outbreak and in the aftermath. The finding suggests that the COVID-19 pandemic shock and the Russian-Ukrainian conflict have intensified the connections between carbon emissions and clean and non-clean energy markets. Policymakers should adjust net zero targets to align with changing dynamics, prioritize wind and geothermal energy, and promote energy independence due to rising oil prices. Leverage lithium for electric vehicles and create specific policies for power, industry, transportation, aviation, and residential sectors to manage CO2 emissions effectively.

Keywords: Sectoral energy; Green energy sectors; Net zero emissions; USA (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:83:y:2024:i:c:p:80-94

DOI: 10.1016/j.eap.2024.06.009

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