The energy transition, Trump energy agenda and COVID-19

Abstract

Market participants and public policy makers around the world are working hard, attempting to move the world away from the use of carbon-intensive fossil fuels and towards the adoption of viable renewable energy sources. The Trump energy plan supports the production of fossil fuels by reversing this progress. The COVID-19 and the resulting lockdown measures come to worsen the situation by causing a noticeable disruption across the fossil fuel and renewable energy industries. Given these developments, this study seeks to address how and to what extent the Trump energy agenda is rolling back the plans for advancing renewable energy, and how the pandemic is changing the pace of energy transition. For this purpose, we compare the performances of renewable energy and fossil fuels in terms of volatility, efficiency and diversifications benefits for three different periods with varying-uncertainty levels, namely the pre- and the post- Trump's inauguration periods and the period of rising anxiety over COVID-19. Our results reveal that in the period after the Trump inauguration, coal and oil (renewable energy) have become less (more) volatile but are relatively more (less) responsive to good news. The conditions however became worse with the onslaught of the coronavirus pandemic. COVID-19 adversely affects investment in oil, coal and renewable energy stock markets, though with varying levels. This virus persists to strongly hit fossil fuels demand because of the stringent containment measures. It also poses a huge threat to the timely deployment of renewables and their contributions to the renewable energy progress. These findings have relevant implications for risk management and policy designs.