The risk spillover effect of the COVID-19 pandemic on energy sector: Evidence from China

Abstract

Detecting the adverse effects of major emergencies on financial markets and real economy is of great importance not only for short-term policy reactions but also for economic and financial stability. This is the lesson we learnt from the COVID-19 pandemic. This paper focuses on the risk spillover effect of the COVID-19 on Chinese energy industry using a high-dimensional and time-varying factor-augmented VAR model. The results show that the net volatility spillovers of the pandemic remain positive to all underlying energy sectors during January to June of 2020 and February to April of 2021. For the former sub-period, the volatility spillover of the COVID-19 is not only the highest, but also lasts longest for oil exploitation sector, followed by the power and gas sectors. While for the latter sub-period, the COVID-19 has relatively higher volatility spillovers to the power, coal mining and petrochemical sectors. These findings suggest that the COVID-19 has significant risk spillover effects on Chinese energy sectors, and the effects vary among different energy sub-sectors and across different periods of time.

The Energy Efficiency Post-COVID-19 in China’s Office Buildings

“…It is essential to acknowledge that energy consumption dropped during lockdowns and not when the economy reopened, a scenario similar to the post-C19 simulated in the current research. To support this claim, Si et al [31] state that the power and gas sectors were some of the most affected by the COVID-19 pandemic, leading to negative supply over demand.…”

“…Nevertheless, the study does not cover building a specific use and directly targets the USA context; the research team considers outcomes valid in Chinese territory due to the universality of HVAC systems' layout and operation in large office buildings. Si et al [31] unveiled the effect of COVID-19 on energy exploitation and consumption in China, following the impact of major global events and underlining the disrupters, from social to industry patterns. The study findings demonstrate that the exploitation, followed by the power and gas sectors, were the most impacted by pandemics leading to negative supply over demand, which cut the oil, power, and gas sectors' capacity, pressing energy insecurity and poverty.…”

Modeling potential impact of COVID-19 pandemic on global electric vehicle supply chain

“…A number of studies have evaluated the impacts of the pandemic on human society from the perspectives of energy demand and associated environmental implications (Forster et al, 2020;He et al, 2020;Kikstra et al, 2021;Le Que ´re ´et al, 2020;Shan et al, 2020), critical material supply stability (Ata et al, 2020;Roskill, 2020;Zhu et al, 2021), energy security (Gillingham et al, 2020;Marina et al, 2020;Ou et al, 2020;Ruan et al, 2020;Si et al, 2021), and economic losses (Guan et al, 2020). A few studies have explored the impact of the COVID-19 pandemic on EV industry.…”

Addressing External Shock in Urban Agglomeration: Implications From the Transmission Pattern of COVID-19 in the Beijing-Tianjin-Hebei Area

“…This strategy was able to eradicate the epidemic in mainland China but exerted a negative influence on the social and economic activities. For example, COVID-19 had significant risk spillover effects on Chinese energy sectors; in fact, the oil exploitation sector held the highest and longest volatility spillover during the panic phase ( 10 ). Next, the adjustment phase in China occurred between April 2020 and July 2021, during which a mitigation strategy was adopted ( 11 ).…”