Rare disaster and renewable energy in the USA: new insights from wavelet coherence and rolling-window analysis

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Rare disaster and renewable energy in the USA: new insights from wavelet coherence and rolling‑window analysis Arshian Sharif1,2 · Eyup Dogan3   · Ameenullah Aman1 · Hafizah Hammad Ahmad Khan4 · Isma Zaighum1 Received: 1 January 2020 / Accepted: 3 June 2020 © Springer Nature B.V. 2020

Abstract The increasing trend of economic and political crises in different parts of the world has made global economies highly vulnerable because of having globally as well as regionally integrated economic systems. In such an environment, switching to alternative energy products, such as renewable energy production, may be devastating. Therefore, the aim of this paper is to provide novel insights for the relationship between rare disaster risks and renewable energy production (REN) of the USA by utilizing the time series monthly data from 1973 to 2016. Using time-varying continuous wavelet power spectrum, the wavelet coherence, and the modified bootstrap rolling-window analysis, the results reveal significant linkages between all the categories of rare disaster risks and renewable energy production. Rare disaster risks and REN are linked with each other, and both the variables have time-varying cyclic and anti-cyclic effects on each other with robust and significant predictability from rare disasters to REN. These findings have novel implications for many stakeholders. For instance, producers of energy may safely switch to renewable energy production since disasters are found to have potential to leave cyclic effect on renewable energy at most. Keywords  Rare disaster · Renewable energy production · Wavelet transformation · Rollingwindow analysis

1 Introduction The global economy is continuously facing challenges associated with energy security, particularly in electricity supply, transportation fuel and operating industries (Bhattacharya and Kojima 2012). This is due to the fact that fossil fuels being the major source of global energy supply comes from are nonrenewable and may potentially be depleted in the near future (Alper and Oguz 2016; Lin and Moubarak 2014; Wüstenhagen and Menichetti 2012). The world’s rising population and its growing demand for energy underscore the risks of energy depletion and environmental degradation (Balat 2005; Suman 2018). * Eyup Dogan [email protected] Extended author information available on the last page of the article

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Natural Hazards

Hence, the transition toward renewable energy sources is crucial to ensure the sustainability of future energy (Belloumi 2009; Ikram et al. 2020). Additionally, global warming associated with CO2 emissions from most conventional energy products has convinced the world that alternate energy sources like renewable energy may help in saving ecosystems. As a result, many countries opted for renewable energy in order to reduce carbon emissions, especially after the establishment of the Kyoto Protocol (Farinelli 2004; Holburn 2012; Menegaki 2011; Menyah and Wolde-Rufael 2010; Shahbaz et al. 2012). Moreover, in the aftermath of the Fukushi