The Impact of Climate Policy Uncertainty on Product Prices in Futures Markets

Zhengyang Zhao

doi:10.62051/ijgem.v10n4.07

Authors

Zhengyang Zhao

DOI:

https://doi.org/10.62051/ijgem.v10n4.07

Keywords:

Climate policy uncertainty, Green finance, Climate policy uncertainty index, Futures market

Abstract

As climate issues become more frequent, the government's macro-climate policy regulation plays an increasingly important role in financial markets. Based on this, this article starts from four types of futures products in the futures market: food, agricultural products, energy, and chemicals, and explores the potential effects caused by climate policy uncertainty at the level of climate transition risks. The research results show that climate policy changes in the current period are significantly positively correlated with the price index of grain, agricultural products, and energy futures products, and are significantly negatively correlated with the price index of chemical futures products. These results are still robust after lag one period and adding control variables. Climate policy uncertainty has a great impact on futures product prices.

Downloads

Download data is not yet available.

References

[1] Zeng, C., Zhou, Z. H., Ke, X. L., et al. (2024). Research status and interdisciplinary analysis of sustainable agricultural development under global climate change. Journal of Huazhong Agricultural University, 43(6), 6-16.

[2] Ma, Z. Y., & Qin, F. M. (2022). Analysis of climate policy impact mechanisms and effects in macro-financial networks. Finance and Economics, (4), 13-22.

[3] Ji, Q., Zhao, W. L., Zhang, D. Y., et al. (2022). The impact of climate risk perception on financial markets: Based on micro evidence at the Chinese enterprise level. Journal of Econometrics, 2(3), 666-680.

[4] Borenstein, S., Bushnell, J., Wolak, F. A., et al. (2015). Expecting the unexpected: Emissions uncertainty and environmental market design. American Economic Review, 109(11), 3953-3977.

[5] Liu, W. W., Zhao, P., Xu, D. C., et al. (2024). Research on the impact of climate sentiment on stock returns in polluting industries. Wuhan Finance, (8), 43-52.

[6] Ginglinger, D., & Moreau, Q. (2019). Climate risk and capital structure. Post-Print.

[7] Zhou, Y. Y., Jia, X. R., & Jia, Y. Y. (2024). Research on the impact of climate risks on corporate ESG performance. Financial Theory and Practice, (12), 72-86.

[8] Alenazi, Y. M. (2025). Assessing the impacts of transition and physical climate risks on industrial metal markets: Evidence from the novel multivariate quantile-on-quantile regression. Atmosphere, 16.

[9] Albanese, M., Caporale, G. M., Colella, I., et al. (2025). The effects of physical and transition climate risk on stock markets: Some multi-country evidence. International Economics, 181.

[10] Wang, S., & Zhou, Z. J. (2023). Climate policy uncertainty and corporate bond issuance: Empirical evidence based on bond credit spreads. Journal of Shanghai University of Finance and Economics, 25(6), 59-72.

[11] Raza, S. A., Khan, K. A., Benkraiem, R., et al. (2024). The importance of climate policy uncertainty in forecasting the volatility of green, clean and sustainable financial markets. International Review of Financial Analysis, 91.

[12] Owjimehr, S., & Meybodi, M. E. (2025). Dynamic relationship between climate policy uncertainty shocks and financial stress: A GMM-Panel VAR approach. Regional Science Policy & Practice, 17(5), 100181-100181.

[13] Wang, M. D., & Hu, W. T. (2024). Climate policy uncertainty and corporate green and low-carbon innovation. Industrial Technology & Economics, 43(10), 109-118.

[14] Gavriilidis, K. (2021). Measuring climate policy uncertainty. Social Science Electronic Publishing, Rochester.

[15] Noailly, J., Nowzohour, L., & Van den Heuvel, M. (2022). Does environmental policy uncertainty hinder investments towards a low-carbon economy? SSRN Electronic Journal, 02138.

[16] Guo, J., & Yong, Z. T. (2023). Climate policy uncertainty and corporate green innovation: Measurement based on news media text analysis method. Finance and Economics, (9), 75-86.

[17] Liang, X. Z., Wu, Y., Chambers, R. G., et al. (2017). Determining climate effects on US total agricultural productivity. Proceedings of the National Academy of Sciences of the United States of America, 114(12), E2285.

[18] Xi, Y., Huynh, A. N. Q., Jiang, Y., et al. (2023). Energy transition concern: Time-varying effect of climate policy uncertainty on renewables consumption. Technological Forecasting and Social Change, 192.

[19] He, M., & Zhang, Y. J. (2022). Climate policy uncertainty and the stock return predictability of the oil industry. Journal of International Financial Markets, Institutions & Money, 81.

[20] Hua, Y. T. (2021). Analysis of price fluctuation factors in agricultural product futures market: Taking corn futures as an example. Journal of Business Economics Research, (5), 182-184.

[21] Lin, L., & Yan, J. (2024). Research on time-frequency linkage between economic policy uncertainty and agricultural product futures market. Grain, Oil and Food Science and Technology, 32(6), 240-248.

[22] Chen, X. Y. (2023). Research on the impact of economic policy uncertainty on non-ferrous metal futures returns. Master thesis of Shanghai University, 4.

[23] Shi, Z. C., Xu, Z., & Chen, R. (2016). Empirical analysis of the transmission relationship between China's stock market and commodity futures market: Research based on risk Granger causality test. Financial Theory and Practice, (2), 82-89.

[24] Jin, T. (2012). Dynamic correlation between China's commodity futures market and stock market: Research based on state space model. Guangxi Social Sciences, (8), 48-52.

[25] Hua, R. H. (2005). The dynamic relationship between spot prices and futures prices: An empirical study based on the Shanghai Futures Exchange. The Journal of World Economy, (8), 34-41.

[26] Xia, T., & Cheng, X. Y. (2006). Research on the dynamic relationship between domestic and foreign futures prices and domestic spot prices: Empirical analysis based on DCE and CBOT soybean futures markets and domestic soybean markets. Journal of Financial Research, (2), 110-117.

[27] Ni, Y. Z. (2018). Research on macro-financial factors and commodity futures pricing. Master thesis of Shenzhen University, 7.

[28] Davis, S. J., Liu, D., & Sheng, X. S. (2019). Economic policy uncertainty in China since 1949: The view from mainland newspapers. Fourth Annual IMF-Atlanta Fed Research Workshop on China’s Economy Atlanta, 19, 1-37.

[29] Li, N. (2023). Research on the impact of climate drought risk on corporate bond pricing. Master thesis of Shandong University, 1.