Sustainable development at the crossroads: Geopolitical risks, natural resource scarcity, and renewable energy in energy security transitions

Abstract

Energy security is a crucial aspect of modern societies, as it directly impacts the availability, accessibility, and reliability of energy sources. The reliance on natural resources and geopolitical factors in shaping energy security has gained significant attention in recent years. Natural resources and geopolitical risk are examined in 38 countries at risk of geopolitical conflict between 1990 and 2021 by examining CO₂ emissions, renewable energy consumption, and foreign direct investment as controlling variables. The long-run analysis conducted in this study focused on slope heterogeneity, Westerlund cointegration, and dynamic panel data estimation. The findings indicated that the energy security index is positively associated with various determinants, including natural resources, geopolitical risk, CO₂ emissions, and renewable energy consumption. However, foreign direct investment was found to be negatively associated with the energy security index among the selected 38 geopolitical risk countries. The role of natural resources and geopolitical risk in energy security cannot be overlooked. Natural resources provide the raw materials for generating electricity and powering our societies, while geopolitical risks can disrupt energy supply chains and threaten stability. Achieving sustainable energy security requires a comprehensive approach that addresses both aspects of energy provision. Transitioning to renewable energy sources, improving energy efficiency, diversifying energy supplies, promoting international cooperation, and conserving natural resources are essential steps towards a more sustainable and resilient energy future.

Keywords

Energy security risk / Natural resource management / Renewable energy transition / CO₂ emissions / Sustainable investment / Resource-dependent economies

CRediT authorship contribution statement

Jinjun Zhang: Validation, Supervision, Methodology, Formal analysis, Data curation. Liu Xiao-feng: Writing – review & editing, Writing – original draft, Visualization, Supervision, Software, Data curation, Conceptualization.

Declaration of competing interest

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

Acknowledgement

The research is funded by a grant from the Interdisciplinary Research Institute in New Finance and Economics, Hubei University of Economics (No. JXZD202403).

References

[1] Akadiri, S.S., Eluwole, K.K., Akadiri, A.C., Avci, T., 2020. Does causality between geopolitical risk, tourism and economic growth matter? Evidence from Turkey. J. Hosp. Tour. Manag. 43, 273-277. https://doi.org/10.1016/j.jhtm.2019.09.002.

[2] Baltagi, B.H., Pesaran, M.H., 2007. Heterogeneity and cross section dependence in panel data models: theory and applications introduction. J. Appl. Econom. 22, 229-232. https://doi.org/10.1002/jae.955.

[3] Butt, H.M.M., Khan, I., Xia, E., 2023. How do energy supply and energy use link to environmental degradation in China? Environ. Sci. Pollut. Res. 30 (40), 92891-92902. https://doi.org/10.1007/s11356-023-28960-5.

[4] Caldara, D., Iacoviell, M., 2022. Measuring geopolitical risk. Am. Econ. Rev. 112, 1194-1225. https://doi.org/10.1257/aer.20191823.

[5] Cherp, A., Jewell, J., 2014. The concept of energy security: beyond the four as. Energy Policy 75, 415-421. https://doi.org/10.1016/j.enpol.2014.09.005.

[6] Crawley, G.M., 2016. Introduction to fossil fuels. Foss. Fuels Curr. Status Futur. Dir. xvii-xix. https://doi.org/10.1142/9698.

[7] Dogan, B., Balsalobre-Lorente, D., Nasir, M.A., 2020. European commitment to COP21 and the role of energy consumption, FDI, trade and economic complexity in sustaining economic growth. J. Environ. Manage. 273, 111146. https://doi.org/10.1016/j.jenvman.2020.111146.

[8] Doytch, N., 2020. The impact of foreign direct investment on the ecological footprints of nations. Environ. Sustain. Indic. 8, 100085. https://doi.org/10.1016/j.indic.2020.100085.

[9] Erdogan, S., Pata, U.K., Kartal, M.T., 2024. The effectiveness of geopolitical risk, load capacity factor, and urbanization on natural resource rent: evidence from top ten oil supplier countries. Resour. Policy 96, 105224. https://doi.org/10.1016/j.resourpol.2024.105224.

[10] Eweade, B.S., Uzuner, G., Akadiri, A.C., Lasisi, T.T., 2022. Japan energy mix and economic growth nexus: Focus on natural gas consumption. Energy Environ. 35 (2), 692-724. https://doi.org/10.1177/0958305X221130460.

[11] Gielen, D., Boshell, F., Saygin, D., Bazilian, M.D., Wagner, N., Gorini, R., 2019. The role of renewable energy in the global energy transformation. Energy Strateg. Rev. 24, 38-50. https://doi.org/10.1016/j.esr.2019.01.006.

[12] Gupta, D.G., 2023. Geopolitical risk and investment-cash flow sensitivity: an empirical analysis for Indian business group-affiliated firms and non-business group affiliated firms. Financ. Res. Lett. 58, 104574.

[13] Hang, L., Tu, M., 2007. The impacts of energy prices on energy intensity: evidence from China. Energy Policy 35, 2978-2988. https://doi.org/10.1016/j.enpol.2006.10.022.

[14] Hao, Y., Khan, I., 2025. Impact of decarbonization enablers, energy supply between transition and disruption, on renewable energy development. Energy 324, 135863. https://doi.org/10.1016/j.energy.2025.135863.

[15] IEA, 2023. Climate Resilience for Energy Security. https://www.iea.org/reports/climate-resilience-for-energy-securityaccessed on 16 March, 2025).

[16] Ikram, D.M., Zhang, P.Q., Sroufe, P.R., Shah, P.S.Z.A., 2020. Towards a sustainable environment:the Nexus between ISO 14001, renewable energy consumption, access to electricity, agriculture and CO₂ emissions in SAARC countries. Sustain. Prod. Consum. 22, 218-230. https://doi.org/10.1016/j.spc.2020.03.011.

[17] Jahanger, A., Ozturk, I., Chukwuma Onwe, J., Joseph, T.E., Razib Hossain, M., 2023. Do technology and renewable energy contribute to energy efficiency and carbon neutrality? Evidence from top ten manufacturing countries. Sustain. Energy Technol. Assessments 56, 103084. https://doi.org/10.1016/j.seta.2023.103084.

[18] Kartal, M.T., Ali, U., Nurgazina, Z., 2022. Asymmetric effect of electricity consumption on CO 2 emissions in the USA: analysis of end-user electricity consumption by nonlinear quantile approaches. Environ. Sci. Pollut. Res. 29, 83824-83838. https://doi.org/10.1007/s11356-022-21715-8.

[19] Kartal, M.T., Pata, U.K., Alola, A.A., 2024. Energy security risk and financial development nexus: disaggregated level evidence from South Korea by cross-quantilogram approach. Appl. Energy 363, 123135. https://doi.org/10.1016/j.apenergy.2024.123135.

[20] Khan, I., 2025. The Energy Trilemma: an overview of balancing security, sustainability, and affordability. Habitable Planet 1, 56-68 https://doi.org/10.63335/j.hp.2025.0006.

[21] Kumar, M., 2020. Social, Economic, and Environmental Impacts of Renewable Energy Resources. In: Okedu, K.E., Tahour, A., Aissaou, A.G. (Eds.), Wind Solar Hybrid Renewable Energy System. IntechOpen, p.1-16. https://doi.org/10.5772/intechopen.89494.

[22] Kwakwa, P.A., Alhassan, H., Adu, G., 2020. Effect of natural resources extraction on energy consumption and carbon dioxide emission in Ghana. Int. J. Energy Sect. Manag. 14, 20-39. https://doi.org/10.1108/IJESM-09-2018-0003.

[23] Le, T.H., Nguyen, C.P., 2019. Is energy security a driver for economic growth? Evidence from a global sample. Energy Policy 129, 436-451. https://doi.org/10.1016/j.enpol.2019.02.038.

[24] Liu, S.Q., Huang, X., Li, X., Masoud, M., Chung, S.-H., Yin, Y., 2021. How is China’s energy security affected by exogenous shocks? Evidence of China-US trade dispute and COVID-19 pandemic. Discov. Energy 1, 1-64. https://doi.org/10.1007/s43937-021-00002-6.

[25] Liu, W., Chen, X., 2022. Natural resources commodity prices volatility and economic uncertainty: evaluating the role of oil and gas rents in COVID-19. Resour. Policy 76, 102581. https://doi.org/10.1016/j.resourpol.2022.102581.

[26] Lombardi, P., Gruenig, M., 2016. Low-Carbon Energy Security from a European Perspective. Elsevier.

[27] Luo, J., Ali, S.A., Aziz, B., Aljarba, A., Akeel, H., Hanif, I., 2023. Impact of natural resource rents and economic growth on environmental degradation in the context of COP-26: evidence from low-income, middle-income, and high-income Asian countries. Resour. Policy 80, 103269. https://doi.org/10.1016/j.resourpol.2022.103269.

[28] Muhammad, B., Khan, S., 2019. Effect of bilateral FDI, energy consumption, CO₂emission and capital on economic growth of Asia countries. Energy Rep. 5, 1305-1315. https://doi.org/10.1016/j.egyr.2019.09.004.

[29] Nepal, R., Paija, N., Tyagi, B., Harvie, C., 2021. Energy security, economic growth and environmental sustainability in India: does FDI and trade openness play a role? J. Environ. Manage. 281, 111886. https://doi.org/10.1016/j.jenvman.2020.111886.

[30] Payne, J.E., Truong, H.H.D., Chu, L.K., Dog˘an, B., Ghosh, S., 2023. The effect of economic complexity and energy security on measures of energy efficiency: evidence from panel quantile analysis. Energy Policy 177, 113547. https://doi.org/10.1016/j.enpol.2023.113547.

[31] Pesaran, M.H., 2007. A simple panel unit root test in the presence of cross-section dependence. J. Appl. Econom. 22, 265-312. https://doi.org/10.1002/jae.951.

[32] Pesaran, M.H., Yamagata, T., 2008. Testing slope homogeneity in large panels. J. Econom. 142, 50-93. https://doi.org/10.1016/j.jeconom.2007.05.010.

[33] Sharvini, S.R., Noor, Z.Z., Chong, C.S., Stringer, L.C., Yusuf, R.O., 2018. Energy consumption trends and their linkages with renewable energy policies in East and Southeast asian countries: challenges and opportunities. Sustain. Environ. Res. 28, 257-266. https://doi.org/10.1016/j.serj.2018.08.006.

[34] Soto, G.H., 2025. The role of FDI and energy intensity upon the consolidation of circular economies among the European Union. J. Environ. Manage. 373. https://doi.org/10.1016/j.jenvman.2024.123806.

[35] Taghizadeh-Hesary, F., Chang, Y., Yoshino, N., Morgan, P.J., 2021. Energy insecurity, renewable energy and economic growth. Singapore Econ. Rev. 66, 313-322. https://doi.org/10.1142/S0217590821020021.

[36] Taghizadeh-Hesary, F., Zakari, A., Yoshino, N., Khan, I., 2022. Leveraging on energy security to alleviate poverty in Asian economies. Singapore Econ. Rev. 68 (04), 1063-1090. https://doi.org/10.1142/S0217590822440015.

[37] Teng, W., Islam, M.M., Vasa, L., Abbas, S., Shahzad, U., 2023. Impacts of nuclear energy, greener energy, and economic progress on the load capacity factor: what we learn from the leading nuclear power economies? Geosci. Front. 15, 101739. https://doi.org/10.1016/j.gsf.2023.101739.

[38] Tian, G., Khan, I., 2025. Impact of energy end-uses and efficiency indicators on the environmental policy stringency index. Energy 326, 136232. https://doi.org/10.1016/j.energy.2025.136232.

[39] Uddin, G.S., Rahman, M.L., Shahzad, S.J.H., Rehman, M.U., 2018. Supply and demand driven oil price changes and their non-linear impact on precious metal returns: a Markov regime switching approach. Energy Econ. 73, 108-121.

[40] Ulussever, T., Kartal, M.T., Kılıç Depren, S., 2023. Effect of income, energy consumption, energy prices, political stability, and geopolitical risk on the environment: evidence from GCC countries by novel quantile-based methods. Energy Environ. 36 (2), 979-1004. https://doi.org/10.1177/0958305X231190351.

[41] Usman, M., Balsalobre-Lorente, D., 2022. Environmental concern in the era of industrialization: can financial development, renewable energy and natural resources alleviate some load? Energy Policy 162, 112780. https://doi.org/10.1016/J.ENPOL.2022.112780.

[42] Vakulchuk, R., Overland, I., Scholten, D., 2020. Renewable energy and geopolitics: a review. Renew. Sustain. Energy Rev. 122, 109547. https://doi.org/10.1016/j.rser.2019.109547.

[43] Wang, Q., Wang, S., 2020. Is energy transition promoting the decoupling economic growth from emission growth? Evidence from the 186 countries. J. Clean. Prod. 260, 120768. https://doi.org/10.1016/j.jclepro.2020.120768.

[44] Westerlund, J., 2008. Panel cointegration tests of the fisher effect. J. Appl. Econom. 23, 193-233.

[45] Westerlund, J., 2006. Testing for panel cointegration with a level break. Econ. Lett. 91, 27-33. https://doi.org/10.1016/j.econlet.2005.10.010.

[46] World, Bank, 2022. China’s Transition to a Low-Carbon Economy and Climate Resilience Needs Shifts in Resources and Technologies https://www.worldbank.org/en/news/press-release/2022/10/12/china-s-transition-to-a-low-carbon-economy-and-climate-resilience-needs-shifts-in-resources-and-technologies.

[47] Xiong, J., Xu, D., 2021. Relationship between energy consumption, economic growth and environmental pollution in China. Environ. Res. 194, 110718. https://doi.org/10.1016/j.envres.2021.110718.

[48] Yasmeen, H., Wang, Y., Zameer, H., Solangi, Y.A., 2019. Does oil price volatility influence real sector growth? Empirical evidence from Pakistan. Energy Rep. 5, 688-703. https://doi.org/10.1016/j.egyr.2019.06.006.

[49] Yi, S., Raza Abbasi, K., Hussain, K., Albaker, A., Alvarado, R., 2023. Environmental concerns in the United States: can renewable energy, fossil fuel energy, and natural resources depletion help? Gondwana Res. 117, 41-55. https://doi.org/10.1016/j.gr.2022.12.021.

[50] Zafar, M.W., Qin, Q., Nasir, M., Anees, S., Zaidi, H., 2020. Foreign direct investment and education as determinants of environmental quality: the importance of post Paris Agreement (COP21). J. Environ. Manage. 270, 110827. https://doi.org/10.1016/j.jenvman.2020.110827.

[51] Zhang, J., Khan, I., 2024. Energy use, energy access, and oil price fluctuations as new determinants of environmental quality in APEC countries. Gondwana Res. 132, 309-322. https://doi.org/10.1016/j.gr.2024.04.015.