A Causality Perspective: Investments in Green Energy Business vs. Conventional Business

Abstract

Abstract At the level of the European Union numerous sustainability programs are being created. Considering these the main role f the research is to explore the potential of green energy production along with its limitations. Studies have found that by combining multiple sources of green energy and harnessing technological advances, there is the possibility to believe that one can reduce human’s dependence on fossil fuels. The aim of this study is to create a stock market analysis in order to identify future investment trends by assessing whether there is greater interest in investing in renewable electricity companies. The current paper explores the impact of investing in renewable electricity companies versus investing in the stock market of fossil fuel-based energy companies. The dataset includes closing stock price data for two major companies, one of which is the British-Dutch company SHELL.L Global (known in the oil industry as well as the energy sector) and the other company is Vestas Wind Systems (a Danish company that manufactures wind turbines for renewable energy parks around the world). This dataset covers the period 3rd of January 2011 to 24th of November 2023 and is used together with time series statistical tests. The purpose is to highlight the main objective of this article: to demonstrate through Granger causality whether investment in the renewable electricity market affects investment in the conventional energy market. This result will shed light on whether long-term investments in fossil fuel-based businesses are worth investors’ attention going forward. While the major purpose of the paper is the research mentioned above, there is also a secondary objective, that of carrying out a descriptive analysis of the two listed companies and their evolution in order to identify the key periods that led to significant fluctuations in the series temporal.