Rare Earths, Clean Energy, and Global Markets: Frequency-Domain Connectedness Analysis of Systemic Risk in the Energy Transition

Sandrine Lardic () and Sonia Bielewicz ()
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Sandrine Lardic: EDEHN - Equipe d'Economie Le Havre Normandie - ULH - Université Le Havre Normandie - NU - Normandie Université
Sonia Bielewicz: EDEHN - Equipe d'Economie Le Havre Normandie - ULH - Université Le Havre Normandie - NU - Normandie Université

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Abstract: This paper examines the evolving interdependence between rare earth elements, clean energy technologies, energy markets, and global financial assets over the period 2014-2025, using a TVP-VAR framework combined with a frequency-domain connectedness decomposition. The results reveal a system that has become increasingly integrated, punctuated by episodes of systemic stress during which global shocks dominate and synchronize market dynamics. The frequency analysis highlights a clear dissociation: short-term fluctuations are primarily driven by supply tensions and geopolitical shocks affecting rare earths, while long-term dynamics are shaped by structural forces such as investment cycles, climate policies, and technological costs. Net connectedness measures confirm this asymmetry: rare earths act as net receivers during crises but become short-term transmitters in calmer periods, especially after 2023. These findings underscore the strategic yet unstable role of critical minerals and call for strengthened supply-chain security, stable industrial policies, and enhanced macro-prudential monitoring.

Keywords: Rare earths; Energy transition; TVP-VAR; Frequency-domain connectedness (search for similar items in EconPapers)
Date: 2025-12-31
Note: View the original document on HAL open archive server: https://hal.science/hal-05436768v1
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