ENERGY MARKET DECOUPLING UNDER GLOBAL SHOCKS- EVIDENCE FROM RENEWABLE AND NON-RENEWABLE ENERGY INDICES

DOI: https://doie.org/10.65985/APER.2026178670

Authors:

Mr. Shubham Sehgal, Dr. Bhavna Ranjan Ahuja, Dr. Ajitabh Ambastha, Mr. Suman Sourav

Keywords:

Renewable Energy; Fossil Fuels; Exogenous Shocks; Event Study; Market Model; Asset Pricing Decoupling; Financial Contagion.

Abstract:

This study evaluates the financial sensitivity and risk-return adjustments of global renewable and non-renewable energy equity indices across a multi-class panel of 24 major exogenous shocks from 2018 to 2024. Using a market model-based event study methodology, we isolate daily Cumulative Average Abnormal Returns (CAAR) within various event windows to explore tensions between market efficiency, green asset pricing, and financial contagion theories. The empirical findings reveal distinct, shock-dependent valuation channels. Geopolitical conflicts trigger an energy-security decoupling channel, driving independent, statistically significant positive abnormal returns for renewables. Conversely, global macroeconomic collapses and public health crises activate a systemic contagion compression channel that synchronises downward risks and dissolves green asset premiums. Finally, climate policies and environmental anomalies induce asymmetric, idiosyncratic valuation drifts. Baseline estimations are fully cross-validated using alternative benchmarks and compressed event windows ([t−1, t+1]), demonstrating complete directional invariance and robust informational processing velocity.

PDF