Geopolitical Conflict and Risk and the EU Energy Trading: A Dynamic Evolutionary Networks Analysis

Shuanglei Xu (), Youyi Deng, Rabindra Nepal and Tooraj Jamasb
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Shuanglei Xu: School of International Trade and Economics, University of International Business and Economics, Beijing 100029, China
Youyi Deng: School of International Trade and Economics, University of International Business and Economics, Beijing 100029, China

No 14-2024, Working Papers from Copenhagen Business School, Department of Economics

Abstract: Since the Russian-Ukrainian conflict, the European Union (EU)’s energy imports have faced challenges, and energy security has come to the fore. Focusing on the EU and its relations with major energy trading countries, we adopt a social network approach (SNA) and exponential random graph model (ERGM) to analyze the energy trade impact of the conflict. We use data from a sample of 47 countries from 2014-2023 to explore the characteristics of the structural evolution of the EU’s conventional and renewable trade networks and the influencing mechanisms behind them. As a result of the conflict and the global trend towards decoupling, the EU’s conventional trade network is undergoing a contraction. Meanwhile, its renewable trade network is thriving, indicating a shift in energy structures; the core-periphery undergoing restructuring, Russia fading out of the core circle of the trade, and the US becoming a key hub connecting all parties. Germany, France, and the Netherlands play the role of important importers as core nodes of the network. Mechanistic analysis shows that mutual plays an important role in multilateral trade; rising geopolitical risks, while posing a barrier to energy imports, have facilitated a boom in renewable trade; economic size and trade openness have positively driven energy trade. Foreign investment, intellectual property rights, and levels of population and urbanization have had a differentiated impact on the two types of energy trade; geographic proximity, linguistic commonality, and free trade agreements positively contribute to the construction and maintenance of energy trade networks. This study depicts the dynamics of EU energy trade under geopolitical turbulence, expands the research methodology in this area, deepens the understanding of energy geopolitics, and informs the transformation of the EU’s energy structure.

Keywords: European Union; Conventional energy trade; Renewable energy trade; Social network; Exponential random graph model (search for similar items in EconPapers)
JEL-codes: F18 Q43 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2024-10-30
New Economics Papers: this item is included in nep-cis, nep-ene, nep-int and nep-net
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