How to promote green energy transition in the age of geopolitical crises and international shocks: Evidence from the EU-27

Abstract

The transition towards green energy systems has become a key goal for policymakers worldwide in an attempt to both reduce the environmental implications of energy generation and increase energy supply security. This objective is even more pressing in a global context characterised by the rapid succession of economic shocks, non-economic crises and geopolitical tensions. The present research aims to evaluate how international crises and geopolitical threats can influence renewable energy sector efficiency, which we measure in terms of consumption levels, in the 27 European Union Member States. We found that during the main international shocks occurring between 2000 and 2022, inefficiencies have been reduced, with a special case for the Covid-19 pandemic. Moreover, we identified a positive nexus between the exposure to geopolitical risk and the reduction of inefficiencies in RE consumption. Crises-specific evidence and policy implications are provided accordingly.