Energy transition, geopolitical risk, and natural resources extraction: A novel perspective of energy transition and resources extraction

Abstract

Recently, developed economies have been aiming for energy transition while investing in producing and implementing environmentally friendly energy resources. Numerous factors and indicators could affect the energy transition process. However, the USA, the most industrialized economy globally, still lacks comprehensive empirical evidence regarding those factors influencing energy transition. This study uses the extended dataset covering 1985–2021 and employs advanced time series estimation approaches. Johansen-Fisher and Bayer-Hanck cointegration tests support the presence of a long-run equilibrium relationship between the variables. Utilizing three long-run estimators, the results asserted that economic growth and renewable electricity output enhance energy transition in the country. However, natural resource extraction asymmetrically affects the energy transition, where mineral and oil rents are positively associated with the energy transition, while forest rents and coal rents adversely affect it. On the other hand, geopolitical risk is observed adversely affect energy transition, which is insignificant. This study suggests further increases in renewable energy production and consumption, efficient utilization of natural resources, and reduced geopolitical risk to improve energy transition.