Uncertainty and Renewable Energy : The Role of R&D and Technology Innovation to Cope with Geopolitical Risk

The study investigates the impact of adverse geopolitical events and investments in energy technology innovations on renewable energy consumption using the newspaper-based geopolitical risk (GPR) index introduced by Caldara and Iacoviello (2022). With the first and most extensive cross-country evidence, the study documents the negative impacts of GPR on Energy Technology RD&D Budgets spending on renewables which hinder public investments in renewable energy technologies. On the bright side, governments investing more in energy technology innovations can cope with the geopolitical risk while securing a sustainable energy transition by increasing renewable energy consumption as a percentage of total energy in longer terms. Along with financial development as well as a good control for corruption and inflation and other tested economic mechanisms, spending on renewable energy technology innovations play an irrefutable role for governments in maintaining an accelerating but stable sustainable energy transition toward SDGs through times of world uncertainty, coping with adverse geopolitical events. The study employs dynamic panel data estimations with GMM-type instruments for mitigating endogeneity issues with unbiased results tested for longer terms