Abstract
Investment in renewable energy is vital, not just for the climate, but also for energy security. However, most studies on renewable energy focus on its drivers; there is still limited knowledge about how it affects resource-related uncertainties. This study is a global analysis of the renewable energy-geopolitical oil price uncertainty nexus. Wavelet coherence analysis, quantile-on-quantile regression and quantile regression are carried out using global time-series data spanning 2004Q1 to 2019Q4. The outcomes show a significant negative relationship between renewable energy use and geopolitical oil price uncertainty in the short and medium term from 2008 to 2010 and in the short to long term from 2012 to 2019. It also reveals that the expansion of renewable energy use minimizes geopolitical oil price uncertainty. The inferences drawn affirm that renewable energy is a means of lowering oil dependence and consequently hedging against global oil price uncertainties induced by geopolitical events. The findings provide an additional rationale, asides the associated environmental benefits, for considering renewable energy as an indispensable part of sustainable energy strategy. Thus, it is recommended that international energy institutions’ energy transition efforts should be complemented by increased sponsorship of renewable energy development by other international organizations across the globe.
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