A1332
Title: Network risk spillovers between European energy related firms
Authors: Jone Ascorbebeitia - University of the Basque Country UPV/EHU (Spain) [presenting]
Jordi Barbera - FS Consulting - KPMG (Spain)
Susan Orbe - University of the Basque Country (Spain)
Abstract: The purpose is to investigate risk spillovers among Eurozone energy-related industries over the period 2015-2025. The energy transition, combined with geopolitical and economic shocks, is reshaping European stock markets, altering sector dynamics and amplifying sectoral vulnerabilities. Understanding how extreme events propagate across the energy chain is therefore crucial for both investors and regulators. The focus is on the most capitalized firms in the Energy, Utilities, and Basic Materials industries, which represent the production, distribution, and consumption stages of energy in the Eurozone. Using the tail event driven network (TENET) framework, the transmission of tail risks is captured, and systemic firms both within and across industries are identified. Findings reveal three pronounced waves of spillovers, corresponding to the trade conflict between U.S. and China, the COVID-19 outbreak, and the Russia-Ukraine war. The results show that the upstream Energy industry consistently acts as a net transmitter of risk, while Utilities and Basic Materials mainly absorb shocks. Moreover, spillovers are primarily driven by intra-industry contagion, underscoring the importance of sector-specific connections. Overall, the analysis highlights that systemic vulnerabilities extend beyond financial institutions and that energy-related industries play a critical role in the stability of Eurozone markets during the ongoing energy transition.
