Risk contagion among renewable energy, fossil energy and agricultural commodity markets: Insights from dynamic networks

Abstract

Although global energy transition fundamentally reshapes interdependencies between fossil energy-renewable energy-agricultural commodity (FRA) markets, the intricate risk contagion within FRA market system remains underexplored. Using dynamic spillover and risk network analysis, this study investigates risk contagion within the FRA system comparing the representative markets in China and the US, and further identifies the impact of extreme events. The findings reveal that agricultural commodity market acts as the dominant bridge for risk spillover between fossil and renewable energy markets due to bioenergy demand and cost linkages. Extreme events dynamically change risk transmission networks, exhibiting pronounced market heterogeneity. Structural and institutional differences of Chinese and the US markets form fundamentally distinct risk propagation pathways. China’s renewable energy shifts from risk transmitter to recipient during trade conflicts, while the US fossil energy amplifies risk absorption during supply disruptions. These findings improve risk supervision for policymakers and investors during energy transition.