Linking climate change, energy transition and renewable energy investments to combat energy security risks: Evidence from top energy consuming economies

Abstract

Energy security is an essential element in achieving economic and environmental sustainability. The current study analyzes the empirical impact of climate change, energy transition and renewable energy investments on energy security risk in the 25 largest energy consuming countries from 1990 to 2021. To this end, the study uses cross-sectionally augmented distributed lag (CS-ARDL), augmented mean group (AMG), common correlated effects mean group (CCEMG) and the regularized common correlated estimation (rCCE) to show that energy transition and energy transformation reduce energy security risks, while climate change, trade openness and financial market development exacerbate energy challenges. The empirical results suggest that structural changes in the energy sector through energy transition and investment in renewable energy can address energy security challenges, as fossil energy resources degrade environmental quality and are vulnerable to issues such as energy availability, sustainability, affordability and supply. Based on the outcomes, the study puts forward new policy proposals to increase renewable energy consumption and avoid long-term risks to energy security.