My name is Maruf Ahmed, a Doctorial Researcher at the University of Vaasa. My passion lies in the field of energy sustainability, particularly the financial market that will facilitate this transition from fossil fuel to clean energy technologies. My Doctoral thesis delves into the risk’s profiles in both financial and socio-economic implications of achieving SGD7 and 13.
The global energy transitional shift has led to a growing demand for key energy minerals such as the rare earth that are essential in producing renewable energy technologies. Their unique chemical and physical properties of rare earth make them indispensable in the development of efficiency and durable renewable technologies such as wind turbines, electric vehicles (EV), solar panels, hydrogen storage and energy- efficient lighting. Despite the crucial role of rare earth in transition to clean energy, it remains the most concentrated mineral production in the world. In both mining and refining, the lion’s share of rare earth production comes from China. This monopolistic position has the potential to impact price volatility and disrupt the supply chain of rare earth due to political tensions, trade restrictions and natural disaster. We intend to examine the risks profile of rare earth by analyzing time-varying interconnectedness between rare earth and clean energy, and their connection with geopolitical risks over time.
The study seeks to employ the time-varying DCC GARCH Student- t copula technique to examine the extreme nonlinear tail dependence. This novel econometric model is tailored to capture relationships on both average and extreme market conditions by assessing the hedging and safe-haven properties of rare earth against clean energy under certain geopolitical scenarios. Additionally, we plan to compute the value at risk (VaR), conditional value at risk (CVaR) for both individual and diversify portfolio to determine the overall risk for investment in clean energy technologies.
The study has several implications for various stakeholders. Firstly, for policymakers, it provides valuable insight into the geopolitical risks associated with rare earth concentration and the supply chain vulnerabilities in achieving SGD 7 and 13. Secondly, it offers investors a better understanding of the interconnectedness of rare earth investment with renewable energy assets.
MSc (Econ) Maruf Ahmed is Doctoral Researcher at University of Vaasa. In the grant round 2024 he received €26,000 for her project ”Assessing the risks profile and causality of rare earth element against clean energy assets”. Ahmed`s research is a thematic special project of the Foundation for Economic Education in the focus area Future sustainable environment.