The Impact of Geopolitical Risk on Renewable Energy Innovation in OECD Countries
Keywords:
Geopolitical Risk, Renewable Energy Innovation, OECD Countries, Energy Security, Technological Innovation, Panel Data, Renewable Energy PatentsAbstract
This study aimed to investigate the effect of geopolitical risk on renewable energy innovation in OECD countries during 2000–2022. This quantitative longitudinal study employed a balanced panel-data design covering 25 OECD countries over 23 years, yielding 575 country-year observations. Renewable energy innovation was measured using patent-based indicators, while geopolitical risk was assessed using the country-specific Geopolitical Risk Index. Macroeconomic and structural control variables included real GDP per capita, research and development expenditure, trade openness, renewable energy share, CO₂ emissions per capita, and population. The data were analyzed using descriptive and panel diagnostic procedures, two-way fixed-effects regression, lagged specifications, Driscoll–Kraay robust standard errors, and dynamic system generalized method of moments estimation. Robustness analyses were also conducted using alternative measures, exclusion of extreme observations, and alternative model specifications. Geopolitical risk had a positive and statistically significant effect on renewable energy innovation in the fully adjusted fixed-effects model, B = 0.169, SE = 0.059, p = .005. The one-year-lagged effect was stronger, B = 0.207, SE = 0.064, p = .001, while the two-year-lagged effect also remained significant, B = 0.121, SE = 0.059, p = .041. In the dynamic system-GMM model, lagged geopolitical risk continued to positively predict renewable energy innovation, B = 0.154, SE = 0.058, p = .008, after controlling for innovation persistence. GDP per capita, R&D expenditure, and renewable energy share also showed significant positive effects, whereas CO₂ emissions per capita had a significant negative effect. The positive geopolitical-risk effect remained stable across all robustness specifications. The findings indicate that geopolitical risk can act as a stimulus for renewable energy innovation in OECD countries, particularly with a short temporal delay, suggesting that geopolitical uncertainty may strengthen incentives for technological development aimed at improving energy security, diversification, and strategic autonomy.
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