Impact of geopolitical risk & economic policy uncertainty among energy transition metals in extreme market conditions

Bikramaditya Ghosh () and Anandita Ghosh ()
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Bikramaditya Ghosh: Symbiosis International (Deemed University)
Anandita Ghosh: Symbiosis International (Deemed University) (SIU)

Mineral Economics, 2025, vol. 38, issue 3, No 5, 567 pages

Abstract: Abstract This study investigates the impact of global economic policy uncertainty (GEPU) & Geopolitical Risk (GPR) on the dynamic connectedness among energy transition metals (namely Copper, Nickel, Aluminium and Zinc) during two Black Swans (GFC and Covid) using Quantile-VAR at median & extreme quantiles (τ = 0.1,0.2, 0.5, 0.8, 0.9). This method provides both the tail (left & right) distributions of the energy transition metal returns corresponding to their respective connectedness effects under both regular and stressful market conditions. Extreme events and stressful times lead to an increase in TCI. Finally stressful events significantly impact the interrelationship of the energy transition metals with both GPR & GEPU. By employing the QVAR model we measured the risk connectedness among four energy transition metals (namely Aluminium, Copper, Nickel, and Zinc) along with GPR & GEPU. Our results provide evidence of asymmetrical connectedness & significant connectedness effect in the extreme conditions. Aluminium is a consistent net emitter of shocks in the extreme quantiles across both the Black Swans. Nickel is a consistent net receiver of shocks; therefore, it has emerged as a hedging option. COVID impacted copper and zinc as both the metals turned into net receiver of shocks. Both GPR and GEPU are significant drivers of connectedness among the energy transition metals (in extreme quantiles). We find that GPR and GEPU positively influence energy transition, particularly in the context of Black Swans. Our study has many takeaways for clean energy investors & policymakers alike.

Keywords: Geopolitical risk; Energy transition; Policy consistency/uncertainty; Market turbulence; Connectedness; P42; Q48; E61; E32; O33 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s13563-025-00504-y

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