The impacts of El Niño-southern oscillation on renewable energy stock markets: Evidence from quantile perspective

Little attention has been paid to the effects of climate oscillations on the performance of renewable energy stock markets, although many studies have examined the instability of these markets caused by various external shocks. This paper aims to investigate the heterogenous impacts of El Niño-Southern Oscillation (ENSO) on renewable energy stock markets under different market conditions using a quantile framework. Our results show that, firstly, ENSO has significant shocks on the EU renewable energy stock market in most market conditions, whereas it has no significant influence on the US market. Secondly, there is an obvious asymmetry in the responses of the EU renewable energy stock markets under bullish and bearish markets to ENSO, respectively. Thirdly, strong La Niña events appear to have larger impacts than those of strong El Niño on the EU renewable energy stock markets. Finally, the good performance of the EU renewable energy stock markets can be deteriorated by strong La Niña events during the COVID-19 crisis. These findings can not only help us to understand the heterogenous shocks of ENSO on different renewable energy markets, but also provide deeper insights on efficient managements of extreme climate risks to renewable energy stock markets. Note: The image in the upper left corner is from NOAA (https://psl.noaa.gov/enso/). [Display omitted] •This study scrutinizes the impacts of El Niño-Southern Oscillation (ENSO) on the US and EU renewable energy stock markets.•Granger causality-in-quantiles approach and Quantile-on-Quantile regression are used in this study.•The causality and effects of ENSO on the renewable energy stock market vary across different quantiles.•Strong La Niña events appear to have larger impacts than those of strong El Niño on the renewable energy stock markets.•The good performance of EU renewable stock markets is deteriorated by strong La Niña events during the COVID-19 crisis.