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The impact of geopolitical risks on the renewable energy transition

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  • He, Zhi-Wen
  • Lee, Chien-Chiang
  • Sharma, Susan Sunila

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.

Suggested Citation

  • He, Zhi-Wen & Lee, Chien-Chiang & Sharma, Susan Sunila, 2025. "The impact of geopolitical risks on the renewable energy transition," Energy Economics, Elsevier, vol. 143(C).
    • Handle: RePEc:eee:eneeco:v:143:y:2025:i:c:s014098832500101x
    DOI: 10.1016/j.eneco.2025.108278
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    More about this item

    Keywords

    Geopolitical risk; Renewable energy transition; Oil rent; Openness; Technological innovation;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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