Not all are alike: Assessing the effect of geopolitical risk on regional renewable energy development in China

Abstract

Frequent recent episodes of geopolitical risk have spurred scholarly interest in its economic and environmental implications. Compared with previous research, this study constructed a panel data set of China's 30 provinces/municipalities to assess how geopolitical risk affects the development of renewable energy. The results of both linear and nonlinear analysis reveal that the effect of geopolitical uncertainty is not alike and is region- and state-dependent. Compared to its effect in China's eastern and central regions, geopolitical risk exerts a negative effect on renewable energy development in the western region. This negative effect tends to be more pronounced in areas characterized by relatively weak economic and social conditions. We also observe a threshold effect between them, as geopolitical risk typically weakens (enhances) renewable energy development when the economic condition is at a lower (higher) level. Finally, a sound financial system oriented toward “going green” and a stronger environment of technological innovation lessen the harmful effect of geopolitical risk. These findings provide targeted insights for policymakers seeking to improve local economic conditions, promote energy transition, balance regional energy inequality, and realize sustainable development.