Contagion in global clean energy markets: Evidence from multilateral and unilateral policy episodes

Abstract

Addressing climate change and energy security increasingly relies on clean energy policies implemented through national and international frameworks; however, existing studies provide limited evidence on how policy-induced risks propagate across countries, differ between multilateral and unilateral policy regimes, and shape cross-market interconnectedness in global clean energy markets. This study examines the effects of major multilateral and unilateral clean energy policies implemented between 2015 and 2024 on stock returns in clean energy markets across 20 countries. Using multiple-dependence contagion tests combined with network analysis, we quantify the magnitude and direction of policy-driven risk transmission. The main findings are as follows: 1) multilateral policies generate significantly stronger contagion effects than unilateral interventions, with the US withdrawal from and subsequent re-entry into the Paris Agreement producing the largest global impact; 2) among unilateral policies, Japan's Basic Hydrogen Strategy and China's 14th Five-Year Plan are the most influential episodes in static network analysis, whereas dynamic analysis identifies Germany's Acceleration Package as the dominant source of time-varying spillovers; 3) policy-induced shocks exhibit spatial dependence, with transmission effects declining as geographical distance increases; and 4) European markets display the highest level of interconnectedness, followed by the Americas, while Asian markets exhibit relatively lower cross-border policy transmission. These findings offer valuable insights for policymakers and investors aiming to manage risks and highlight the importance of strengthening multilateral cooperation in the evolving global clean energy landscape.