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Eco-innovation strategies in response to energy-related uncertainty and geopolitical risk: Insights from the energy sector

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  • Trinh, Vu Quang
  • Nguyen, Tam Huy
  • Liêu, Minh-Lý
  • Pham, Mai Quynh
  • Dao, Thuy

Abstract

This study examines eco-innovation investment strategies across the global energy sector in response to energy security concerns and geopolitical risks. Drawing on growth options theory and real options theory, and using a comprehensive dataset of 1351 energy firms across 20 countries from 2002 to 2020 (10,501 firm-year observations), we find that energy-related uncertainty and geopolitical risk play significant roles in shaping firms' eco-innovation strategies. Energy-related uncertainty is positively associated with eco-innovation, suggesting that firms increase investments in eco-innovation to manage uncertainty and enhance energy security. However, this positive effect weakens as geopolitical risk intensifies. In other words, while energy-related uncertainty can stimulate eco-innovation, political instability dampens this relationship. Overall, our findings advance both theory and practice by providing new insights into how energy firms adjust their eco-innovation strategies amid geopolitical conflict and energy-related uncertainty.

Suggested Citation

  • Trinh, Vu Quang & Nguyen, Tam Huy & Liêu, Minh-Lý & Pham, Mai Quynh & Dao, Thuy, 2026. "Eco-innovation strategies in response to energy-related uncertainty and geopolitical risk: Insights from the energy sector," Energy Economics, Elsevier, vol. 160(C).
    • Handle: RePEc:eee:eneeco:v:160:y:2026:i:c:s0140988326002938
    DOI: 10.1016/j.eneco.2026.109414
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