Transmission and Volatility Mechanisms of Mineral and Oil Prices in the Context of Clean Energy Transition: A Global Perspective

The prices that govern the output of producers in specific industries hold great significance, particularly in the context of the renewable energy industry, which is profoundly influenced by the dynamics of critical mineral prices. Oil prices also affect mineral transportation and cost-competitive consumer choices, altering the renewable energy sector. This study examines the global transmission of shocks and volatility spillover effects of essential mineral and oil prices in renewable energy production covering the monthly data from January 1990 to June 2023. We use partial cross-quantilogram (PCQ) and rolling window-based recursive cross-quantilogram (RCQ) methods to address the dataset's non-normal and fat-tailed nature. The PCQ analysis shows that aluminum and copper price shock transmission and volatility spillover effects boost cumulative and decomposed renewable energy generation, particularly solar and wind power, in bullish market conditions with long-term memory. Nickel prices decline in bullish markets with long memory. Interestingly, oil price shock transmission and spillover effects benefit solar and wind energy generation over long time horizons. Thus, this study emphasizes the importance of leveraging mineral prices by determining favorable values and implementing market operations to promote environmental sustainability and sustainable development in the face of oil-based industrial expansion.