The impact of renewable energy on the price linkage between crude oil and agricultural commodities:

: comparing biofuel-related and non biofuel-related commodities

Abstract

This thesis explores how renewable energy usage affects the price linkage between crude oil and agricultural commodities, analyzing and comparing biofuel-related and non-biofuel-related commodities. Using monthly data from 1990 to 2020, the study employs complex regressions, causality tests and cointegration analysis to analyze changes over time, particularly before and after 2005 - a turning point marked by the expansion of biofuel policies and consequente production. The results show that biofuel-related commodities, such as Maize, Soybeans, and Wheat, experienced significant changes in their price dynamics with crude oil after 2005. Maize, as a key input for ethanol production, had a historical strong linkage with oil prices driven by production costs, however, post-2005, this linkage weakened as biofuel demand became the dominant driver of maize prices, reducing dependence on oil. Soybeans, widely used for biodiesel, saw a strengthening price linkage with oil after 2005 as a result of the growing integration of biodiesel into energy markets. Wheat, less tied to biofuel production, showed a moderately strengthening linkage post-2005, though its price dynamics remained relatively more stable compared to Maize and Soybeans. Non-biofuel-related commodities, such as Cocoa, Coffee, and Sugar, showed weaker and less linear relationships with oil prices, influenced primarily by regional renewable energy usage, situational production costs and local environmental policies. For Sugar, the dynamics varied significantly by region, with opposite results between the USA and the European Union.

Date of Award	3 Feb 2025
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Eva Schliephake (Supervisor)