The impact of geopolitical risks on the renewable energy transition

Zhi-Wen He, Chien-Chiang Lee () and Susan Sunila Sharma

Energy Economics, 2025, vol. 143, issue C

Abstract: Given the frequency of geopolitical events and the urgency of responding to climate change, it is essential to explore the impact of geopolitical risk (GPR) on renewable energy transition (RET). Based on panel data for 41 countries from 2000 to 2021, this paper analyzes the impact and mechanism of GPR on RET. The results show that an increase in GPR accelerates RET across countries, a conclusion that still holds after a series of robustness tests, such as instrumental variable regressions, the exclusion of the effects of other shocks, and replacing the explanatory and explained variables. Second, oil rent, openness, and technological innovation are the mechanisms by which GPR affects RET. Specifically, lower oil rents, lower levels of openness, and higher levels of technological innovation are the preconditions for GPR to drive RET. Finally, for different types of renewable energy, the effects produced by GPR are, in descending order, solar, biomass, and hydropower, but the effect of GPR on wind energy is not significant. In addition, the impact of GPR on RET is more pronounced in countries that are more ecologically disadvantaged and more dependent on foreign countries for energy. The findings show the relationship between GPR and RET and can help the government formulate policies related to renewable energy development.

Keywords: Geopolitical risk; Renewable energy transition; Oil rent; Openness; Technological innovation (search for similar items in EconPapers)
JEL-codes: F51 O13 Q54 Q56 Q58 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:143:y:2025:i:c:s014098832500101x

DOI: 10.1016/j.eneco.2025.108278

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