1694. Geopolitical Risks, Critical Materials and Energy Transition: Insights from Wavelet Analysis
Invited abstract in session WC-7: Power Trading , stream Risk Management in Commodities and Financial Markets .
Wednesday, 12:30-14:00Room: Clarendon GR.01
Authors (first author is the speaker)
| 1. | Ivan De Crescenzo
|
| La Sapienza Rome University | |
| 2. | Loretta Mastroeni
|
| Dept. of Economics, University of Roma TRE | |
| 3. | Alessandro Mazzoccoli
|
| Economics, Roma TRE University |
Abstract
This paper investigates the nexus between geopolitical risks and some energy transition-related commodities via a wavelet-based
method. The data set includes natural gas, copper, palladium and cobalt, whose time series cover a fourteen-year time span (2010-
2024). Geopolitical risk is measured through the GPR index by Caldara and Iacoviello. Our investigation shows different degrees
of correlation between geopolitical risk and the above-mentioned commodities. In an overall perspective, commodities that have a
consolidated history of application tend to show a more straightforward connection with geopolitical dynamics, while those recently
gaining prominence in the energy transition show weaker and less consistent signals. In this respect, despite its wide use , we infer
that GPR index holds some limitations when it is intended to explain dynamics regarding rare and critical elements, which originate
from geographical sites that mainstream media are not used to cover on a regular basis. Understanding that the energy transition is
producing a change in the paradigm from a geostrategic standpoint requires awareness when such indexes are utilized. At the very
same time, it also suggests rethinking the way risk indexes are engineered so to mirror geopolitical phenomena related to the new
centers of gravity derived from the energy transitions.
Keywords
- Energy Policy and Planning
- OR in Energy
Status: accepted
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