The impact of energy imports on green innovation in the context of the Russia-Ukraine war

Abstract

This research paper examines the implications of energy imports on green innovation within the context of the Russia-Ukraine war. It utilizes panel data spanning EU countries from 1999 to 2022. Initially, the study explores the influence of natural gas and oil imports on the advancement of green innovation. Specifically, it reveals that the importation of natural gas facilitates progress in this area, whereas the importation of oil can impede such advancement. Following the Russia-Ukraine war, the role of gas imports in fostering green innovation within EU countries has grown, simultaneously exacerbating the adverse effects of oil imports on green innovation. Secondly, by employing a panel threshold model, the study identifies that higher energy prices make natural gas and oil imports unfavorable for the progress of green innovation in EU nations. Thirdly, an analysis of heterogeneity demonstrates that, as a result of the Russia-Ukraine war, natural gas imports have a more significant detrimental effect on the development of green innovation in EU nations with a natural gas dependency ranging from 10% to 90%. In the case of oil imports, EU nations with a dependence on Russian oil exceeding 50% experience a more pronounced negative impact on the development of green innovation. Fourthly, a mechanistic study elucidates that natural gas imports indirectly stimulate green innovation through the mechanism of energy transition, while oil imports hinder the development of green innovation by exacerbating carbon emissions. The empirical findings of this paper carry substantial policy implications for EU nations, urging the acceleration of energy transition in response to the impact of the Russia-Ukraine war on green innovation. Moreover, these findings have broader implications for global environmental management and the collective endeavor to combat climate change.