Measuring the time-frequency spillover effect among carbon markets and shipping energy markets: A global perspective

Global decarbonization has significantly tightened the link between the shipping industry and the carbon market. Understanding the mechanism of the interdependence between shipping energy and the carbon market is of great importance for carbon pricing and decarbonization of shipping; however, one challenge is that, unlike traditional energy resources, the transmission channels of carbon emissions from shipping energy are built on a global network with distinct geographical heterogeneity. In view of this, we propose a global carbon-shipping market-level framework and scrutinize the intermarket spillover effect in the time and frequency domains. The main findings are as follows: First, the short-term spillover dominates the interaction, where shipping energy markets mainly act as the transmitters and carbon markets mainly play the role of the receivers. Second, the EU carbon market has the largest influence on shipping energy markets, and the spillovers of the marine gas oil and high‑sulfur fuel oil markets on carbon markets are more prominent. Third, the intensity of the spillover effect is negatively correlated with the distance of major events, while the volatility of the spillover effect is the largest in European ports and the smallest in Asian ports. Last, policy-oriented events have the most significant impact on the volatility spillovers between markets, followed by politically oriented events, with market-oriented events having the mildest impact. This study sheds light on the mechanism of the spillovers between the carbon and shipping markets accounting for geographical heterogeneity and provides valuable insights for policymakers to better understand both markets and improve policy efficiency.