Empowering energy transition: Revisiting the dynamic impacts of Carbon emissions trading and the crude oil market

Xiaoqing Wang, Wenxin Jin and Sebastian-Emanuel Stan

Economic Analysis and Policy, 2025, vol. 86, issue C, 988-1001

Abstract: Against the background of combating global climate change and achieving carbon neutrality, carbon trading prices (CTP) and crude oil prices (COP) have emerged as potential auspicious drivers of the energy transition (ENT). However, a systematic time- and quantile-varying investigation of the relationships between CTP, COP and ENT remains lacking in the current literature. Therefore, a quantile autoregressive distributed lag model is employed to quantitatively assess the impacts of CTP and COP on ENT under different quantile asymmetries. The results show that increased CTP and COP lead to increased cost input, thus increasing ENT. In addition, rolling window analysis further reveals that ENT is distinctly affected by CTP and COP with time-varying characteristics, with both short- and long-term effects occurring. Notably, long-term effects dominate the variable relationships, indicating that the energy transition is caused mainly by long-term shocks. The findings not only supplement existing studies but also help market participants better understand how different levels of CTP and COP affect ENT. Finally, targeted policies are proposed to promote energy transition through the synergy of carbon trading prices and crude oil prices.

Keywords: Carbon trading prices; Crude oil prices; Energy transition; Quantile autoregressive distributed lag model (search for similar items in EconPapers)
JEL-codes: C22 Q32 Q58 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:86:y:2025:i:c:p:988-1001

DOI: 10.1016/j.eap.2025.04.020

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