Energy security risk in the age of economic uncertainty: The role of environmental policy stringency

Energy is used as a vital input in the production and function of almost every sector of the economy, and hence, it is the fundamental component of the development process of the economies. Due to the rising energy demand, the issue of energy security has become crucial for economic stability. Thus, it is crucial to estimate the factors that can contribute to mitigating risks related to energy security. This analysis aims to investigate the influence of environmental policy stringency and economic policy uncertainty on energy security risk by utilizing the cross sectional autoregressive distributed lag. The findings reveal that economic policy uncertainty helps enhance the energy security risk in the short and long-run. In contrast, environmental policy stringency enhances the energy security risk only in the long-run. In contrast, technological, economic, and financial development hurt the energy security risk in the long run, while these factors enhance the energy security risk in the short run. In the context of these findings, we suggest that policymakers should focus on reducing economic uncertainties and implementing environmental policies with great caution to enhance energy security.