Impact of geopolitical risks on low-carbon transition in various countries

Abstract

[Objective] Low-carbon transition is an international consensus, accelerating low-carbon development is the focus of the work of all countries in the world, therefore it is necessary to explore the impact of geopolitical risks, a major risk-causing factor, on the process of low-carbon transition in countries. [Methods] Based on a systematic elaboration of the impact of geopolitical risks on the low-carbon transition process of each country, this study empirically examined the impact of geopolitical risks on countries’ low-carbon transition and regulatory role based on the national panel data and geopolitical risk index from 2010 to 2020, and the moderating effect model. [Results] (1) Geopolitical risks can significantly slow down the process of national low-carbon transition, and this result still holds after sample truncation, replacement of explanatory variables and explained variables, and placebo test; (2) The negative moderating effects of financing constraints and trade barriers are significant, exacerbating the disincentive effect of geopolitical risk on countries’ low-carbon transitions, while green technology R&D capacity positively moderates the relationship between geopolitical risk and countries’ low-carbon transitions; (3) Optimizing the industrial structure and the green technology development capacity is the most important mechanism for the low-carbon transition of countries; (4) In regions with a high level of geopolitical actions and threats, the inhibition of geopolitical risks on the process of their low-carbon transition is more pronounced, and this adverse impact is more obvious in developing countries than in developed countries. [Conclusion] Countries should pay attention to the adverse impact of geopolitical risks in the process of national low-carbon transition, pay attention to financing constraints, and actively optimize industrial structure and improve renewable energy production capacity, so as to hedge the negative impact of geopolitical risks and accelerate the process of low-carbon transition.

Keywords

• |geopolitical risks|low-carbon transition|trade barriers|financing constraints|optimization of industrial structure