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Geopolitical risk and clean energy market: A counterfactual analysis based on the TVP-SV-VAR model

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  • Jiang, Qinnan
  • Chen, Yaling
  • Dai, Zhifeng

Abstract

Achieving the “dual carbon” goals requires accelerating the energy transition; however, geopolitical risks (GPR) and fluctuations in the critical raw materials market (REMX) pose significant challenges to the clean energy market (Clean). To address this, this paper innovatively combines TVP-SV-VAR model and Kilian-Lewis style counterfactual analysis to investigate the impact of GPR and REMX on Clean and their underlying mechanisms. Our results indicate that the effects of GPR and REMX on Clean are characterized by significant time-varying features and rapid transmission, explaining approximately 23.91% to 71.65% of the variations in Clean over the sample period. The impact of GPR on Clean is notably “event-driven”, meaning that GPR shocks driven by different events have varying, even opposite, effects on Clean. The impulse response of Clean to REMX is marked by strong positive reactions or weak negative reactions, with the largest response occurring contemporaneously. Furthermore, we find that during periods of rising GPR, the negative response of REMX exacerbates the adverse effects of GPR on Clean. This study offers a fresh perspective for understanding the influence of geopolitical risks and the raw materials market on the development of clean energy and their intrinsic dynamics.

Suggested Citation

  • Jiang, Qinnan & Chen, Yaling & Dai, Zhifeng, 2026. "Geopolitical risk and clean energy market: A counterfactual analysis based on the TVP-SV-VAR model," Energy, Elsevier, vol. 348(C).
    • Handle: RePEc:eee:energy:v:348:y:2026:i:c:s0360544226006547
    DOI: 10.1016/j.energy.2026.140551
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