Persistent Policy Uncertainty and Green Energy Valuation: A Long-Run ARDL Analysis of the CELS Index
This study examines the dynamic, asymmetric influence of macroeconomic and policy uncertainty on the NASDAQ Clean Edge Green Energy Index (CELS), a key benchmark for US renewable energy stocks. Using monthly data from January 2008 to June 2025 and employing an Autoregressive Distributed Lag (ARDL) model with bounds testing, we confirm a significant and stable long-run cointegrating relationship. Our primary contribution is the clear delineation of effects across time horizons. In the short run, the CELS index is highly responsive to immediate shocks, particularly those originating from the Volatility Index (VIX) and Brent crude oil prices.
However, in the long run, the most dominant and persistent negative influence stems from the US Climate Policy Uncertainty Index. This finding suggests that while investors tolerate short-term macroeconomic volatility, sustained ambiguity regarding federal energy policy significantly depresses the long-term value of clean energy assets. We provide actionable, evidence-based guidance for policymakers, recommending the implementation of durable, cross-cycle mechanisms (such as guaranteed pricing or consistent regulatory standards) to mitigate long-term uncertainty and stabilise capital flows into the clean energy transition. The results also offer clear strategies for asset managers seeking to hedge against specific macroeconomic and policy risks in the green energy sector.
Copyright© 2025 The Author(s). This article is distributed under the terms of the license CC-BY 4.0., which permits any further distribution in any medium, provided the original work is properly cited.
Article’s history: Received 6th of October, 2025; Revised 31st of October, 2025; Accepted 25th of November, 2025; Available online: 30th of December, 2025. Published as article in the Volume XX, Winter, Issue 4(90), December, 2025.
Sahu, A., & Kumar, A. (2025). Persistent Policy Uncertainty and Green Energy Valuation: A Long-Run ARDL Analysis of the CELS Index. Journal of Applied Economic Sciences, Volume XX, Winter, 4(90), 659 - 674. https://doi.org/10.57017/jaes.v20.4(90).02
Acknowledgments/Funding: The research is conducted without financial assistance from any organisation.
Conflict of Interest Statement: The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.
Data Availability Statement: The data supporting the findings of this study are publicly available on Mendeley Data at the following link: https://data.mendeley.com/datasets/pptbmyvv8h/1 and https://doi.org.10.17632/pptbmyvv8h.1
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