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Clean Energy Industries and Rare Earth Materials: Economic and Financial Issues

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  • Lucia BALDI
  • Massimo PERI
  • Daniela VANDONE

Abstract

In the last few years Rare Earth Materials (REMs) prices have experienced a strong increase, due to geopolitical policies and sustainability issues. Provided that these materials at risk of supply disruptions are largely employed in the development of new technologies - such as clean energy industries - financial markets may already have included these concerns into clean energy companies evaluation. We use a multifactor market model for the period January 2006-September 2012 to analyse the impact of REMs price changes – specifically Dysprosium and Neodymium - to six clean energy indexes (NYSE-BNEF) tracking the world’s most active quoted companies in the clean energy sector. Results show that during period of price increase there is a negative relation between REMs price changes and the stock market performance of clean energy indexes, specifically wind. The European clean energy index is also negatively affected and this may be relevant to policy makers considering that Europe is putting in place some relevant policy actions to support the development of the clean energy industry.

Suggested Citation

  • Lucia BALDI & Massimo PERI & Daniela VANDONE, 2013. "Clean Energy Industries and Rare Earth Materials: Economic and Financial Issues," Departmental Working Papers 2013-07, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    • Handle: RePEc:mil:wpdepa:2013-07
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    Cited by:

    1. A. Mateus & C. Lopes & L. Martins & J. Carvalho, 2017. "Towards a multi-dimensional methodology supporting a safeguarding decision on the future access to mineral resources," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 30(3), pages 229-255, October.
    2. Riesgo García, María Victoria & Krzemień, Alicja & Manzanedo del Campo, Miguel Ángel & Menéndez Álvarez, Mario & Gent, Malcolm Richard, 2017. "Rare earth elements mining investment: It is not all about China," Resources Policy, Elsevier, vol. 53(C), pages 66-76.
    3. Pavel, Claudiu C. & Lacal-Arántegui, Roberto & Marmier, Alain & Schüler, Doris & Tzimas, Evangelos & Buchert, Matthias & Jenseit, Wolfgang & Blagoeva, Darina, 2017. "Substitution strategies for reducing the use of rare earths in wind turbines," Resources Policy, Elsevier, vol. 52(C), pages 349-357.
    4. Baldi, Lucia & Peri, Massimo & Vandone, Daniela, 2016. "Stock markets’ bubbles burst and volatility spillovers in agricultural commodity markets," Research in International Business and Finance, Elsevier, vol. 38(C), pages 277-285.
    5. Lundgren, Amanda Ivarsson & Milicevic, Adriana & Uddin, Gazi Salah & Kang, Sang Hoon, 2018. "Connectedness network and dependence structure mechanism in green investments," Energy Economics, Elsevier, vol. 72(C), pages 145-153.
    6. Apergis, Emmanuel & Apergis, Nicholas, 2017. "The role of rare earth prices in renewable energy consumption: The actual driver for a renewable energy world," Energy Economics, Elsevier, vol. 62(C), pages 33-42.

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    More about this item

    Keywords

    Clean energy; rare earth materials; stock prices;
    All these keywords.

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • E39 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Other

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