Heterogeneous dynamic spillovers of climate risk to energy shipping markets: Insights from China

Amid escalating climate change and the accelerating energy transition, the energy shipping sector is confronted with increasing levels of uncertainty. This study examines the impacts of climate risk—including policy, concern, transition, and three categories of physical risks—on China’s energy shipping market by applying the TVP-VAR-DY and TVP-VAR-BK models. The results indicate that climate risk is moderately integrated with tanker and coal shipping markets. Climate risk has a more pronounced impact on the coal shipping market than the crude oil tanker shipping market. Transition risk exerts the most significant influence on tanker and coal shipping markets, followed by concern, policy, and physical risks. Additionally, the connectivity is predominantly short-term, but long-term shocks related to transition, policy, and concern risks remain significant. Within the realm of climate change, the liquefied natural gas (LNG) shipping market exhibits distinctive characteristics compared to the tanker and coal shipping markets. These results offer valuable insights into the subjective drivers of climate action in the energy shipping industry and assist energy shipping companies in addressing climate risks.