Does geopolitical uncertainty matter for the diffusion of clean energy?

This study revisits the determinants of renewable energy (RE) deployment, with an emphasis on the role of recent adverse geopolitical events. We implement a panel vector autoregressive model where different techniques and tools are available to trace the dynamic interdependence between RE and its main drivers. The impulse response analysis indicates that geopolitical uncertainty exerts a positive impact on the clean energy sector in advanced countries. However, geopolitical shocks do not appear to stimulate the transition toward alternative sources of energy in emerging and developing economies. The forecast-error variance decomposition confirms the importance of adverse geopolitical shocks in explaining the dissemination of renewables in advanced economies. Policymakers in less developed countries are urged to continue supporting RE initiatives and infrastructure, which are key to successful mitigation strategies.