The shocks of armed conflicts to renewable energy finance: Empirical evidence from cross-country data

Abstract

Renewable energy finance may incur an economic or fiscal shock due to uncertainty and destruction from armed conflicts. Using cross-country panel data over the period 1996–2018, this research therefore examines the impact of armed conflicts on renewable energy finance based on linear and non-linear regression techniques. From the linear dynamic panel model we find that armed conflicts exhibit a negative shock on renewable energy finance. The results from the panel threshold model and the panel quantile method show that the impact of armed conflict on renewable energy finance depends on economic development level and renewable energy investment. We also present that armed conflicts generate heterogeneous linear and non-linear effects on wind, geothermal, and solar energy finance. Further analysis shows that armed conflict reduces green innovation through renewable energy finance. Our findings deepen the literature's understanding concerning the impact of armed conflicts on renewable energy finance.