The European Union Emission Trading System (EU ETS), launched in 2005, represents the world's largest carbon market and a cornerstone of European climate policy. By establishing a price on carbon dioxide emissions, the EU ETS aims to incentivize emission reductions and channel investment toward low-carbon technologies, particularly renewable energy. Understanding the dynamic relationship between carbon prices and renewable energy deployment is crucial for evaluating the effectiveness of carbon pricing as a climate policy instrument. This study investigates the time-frequency relationship between European Union Emission Trading System (EU ETS) carbon prices and renewable energy deployment using wavelet coherence analysis. Employing annual data from 2005 to 2024, we examine how the co-movement between carbon pricing signals and renewable energy consumption has evolved across different EU ETS phases. Our findings reveal a significant structural shift in the relationship: while the early phases (2005-2012) exhibited weak or negative correlation (r = -0.33), the relationship strengthened considerably during Phase III (2013-2017, r = 0.50) and became strongly positive in Phase IV (2018-2024, r = 0.75). The wavelet analysis identifies distinct time-frequency patterns, with high coherence at 3–5-year scales emerging after the implementation of the Market Stability Reserve (MSR) in 2019. Lead-lag analysis suggests that renewable energy development may anticipate carbon price movements, indicating forward-looking investment behavior. These results have important implications for climate policy design, suggesting that credible long-term carbon price signals can effectively incentivize renewable energy investment.

Prof. Oleksandr Dluhopolskyi is a Member of the National Agency for Higher Education Quality Assurance (NAQA) 2018-2025. He worked as a Professor at the Kyiv School of Economics (KSE) 2017-2020. He was also a part-time consultant for the United Nations under the projects of IOM, UNDP 2017. Since 1999 until today, he works at the Ternopil National Economic University (now – West Ukrainian National University): as a Senior Lecturer, Assistant Professor and Professor of Economics Department. Since 2022 he is Prof. of WSEI University (Lublin, Poland). Repeatedly he was invited as a visited researcher to the international universities and science centers of UK (Leeds Metropolitan University, UCL School of Slavonic and East European Studies), Germany (GESIS – Leibnitz Institute for the Social Sciences, Saarland University, Goethe-Institut Ukraine), Italy (La Sapienza University), Norway (NORD University) and Poland (University of Warsaw, Academy of Special Education, KUL, The College of Europe, Natolin Campus). He is also the Executive Director of NGO “Civic Synergy” and works as an expert of other different NGOs (Civic Synergy, Poruch, Ukrainian Educational Research Association, International Association of Institutional Research). He is the Project Manager of few Erasmus+ projects like SUSTED “Education for sustainable development: synergy of competences for the recovery of Ukraine” ERASMUS-EDU-2024-CBHE-STRAND-1, AFID “Academic freedom and inclusion through digitalization” ERASMUS-EDU-2022-CBHE-LS-101081850, BI4SME “Boosting business intelligence skills for SME growth” 2020-1-FR01-KA204-080632