Energy security and the shift to renewable resources: The case of Russia-Ukraine war

Abstract

The performance of energy firms plays a crucial role in ensuring energy security, as it determines the availability and affordability of energy resources for a country, especially in the face of geopolitical crisis. This study explores the impact of economic sanctions imposed on Russia in early 2022 on energy stock returns in 57 countries, providing causal evidence on the relationship between major geopolitical events and energy security. Using advanced DiD methodology, the research found that nations heavily reliant on oil imports saw a significant increase in energy stock returns, suggesting no major issue of energy security in sanction-sender nations. Moreover, renewable energy companies experienced a greater rise in returns than non-renewable counterparts, indicating a potential shift towards renewables during times of geopolitical tension. These findings shed light on the intricate relationship between geopolitical events, market trends, and energy security policy, offering valuable insights for policymakers to navigate this complex landscape.