Impact of different geopolitical factors on the energy transition: The role of geopolitical threats, geopolitical acts, and geopolitical risks

Abstract

In order to better understand the impact of different geopolitical factors on energy transition, the impact of geopolitical threats (war threats, peace threats, military buildups, nuclear threats and terror threats), geopolitical acts (beginning of war, escalation of war and terror acts), and geopolitical risks on energy transition were systematically investigated. Green technologies, natural resource rents and trade openness were incorporated into the analytical framework, and a dynamic panel threshold model was utilized to explore the impact of geopolitical risks on energy transition across different income levels. To this end, data on geopolitical threats, geopolitical acts, geopolitical risks, energy transitions and other key social economic factors for 38 countries from 2000 to 2022 were collected. The heterogeneity simulation results show that there is a negative correlation between geopolitical threats, geopolitical acts, geopolitical risks and energy transition. Moreover, geopolitical threats have more significant hindrance to the energy transition than geopolitical acts. The results of the nonlinear panel simulation show that there is a double threshold effect of geopolitical risks on energy transition. When geopolitical risk crosses the threshold (0.5197), the coefficient decreases to −0.29, which means that the rising geopolitical risk increases the inhibition on energy transition, and the inhibitory effect is slightly weakened after a certain level. Finally, policy implications are offered.