Dynamic relationship between renewable energy, economic development, and energy security based on SVAR and ARDL-ECM models: Evidence from China

The urgency of addressing the climate crisis has intensified the shit from fossil fuels to renewable energy sources. China has proactively pursued renewable energy development in alignment with its climate commitments. However, the socio-economic relationships influencing renewable energy adoption remain inconclusive, and existing studies lack a unified framework that integrates renewable energy, economic dynamics, and energy risks. This study employs a SVAR model, supplemented by an ARDL-ECM model to analyze the interplay between renewable energy scale, economic development, crude oil imports, geopolitical risk and international oil price. Results suggest that all variables act as Granger causes to renewable energy development, with bidirectional causality between renewable energy development and crude oil imports. Impulse response analysis reveals that higher crude oil imports and intensifying geopolitical risk trigger energy security concerns, thereby stimulating renewable energy development. In addition, higher crude oil imports also inhibit economic development, reflecting inefficient economic structure and the economic burden caused by trade deficits. Surprisingly, we found that faster economic development is associated with a lower share of renewable energy, suggesting that economic expansion continues to rely heavily on traditional energy sources. A structural break is identified around the 2015 energy reform, after which renewable energy is decoupled from economic growth. This study aims to provide insights for China and similar countries facing foreign oil dependency, facilitating a balance between sustainable energy transitions, economic stability, and energy security in a volatile geopolitical context.