Financial derivatives in energy economics

Roshaiza Taha

Chapter 60 in Elgar Encyclopedia of Energy Economics, 2025, pp 226-228 from Edward Elgar Publishing

Abstract: Laypeople do not really understand the importance of financial derivatives in the economy, due to their complexity. Regardless of that, financial derivatives are now becoming the choice of investment which is being used to speculate and to hedge investment, usually by professional investors. This option of investment usually benefits more the big investor, which can result in the domination of certain markets. Diverted to energy economics, the discussion is now surrounding the evolution of new sources of energy which are renewable in nature. With new resources of energy coming under the spotlight, investors are looking for opportunities regarding investments. Thus, the objective of this entry is to give some insight into the nexus between financial derivatives and energy economics, and clear understanding of their association, which is important nowadays.

Keywords: Financial Derivatives; Energy Economics; Renewable Energy; Clean Energy; Investment; Climate (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035310364
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