Comparing how energy policy uncertainty, geopolitical risk, and R&D investment shapes renewable energy and fossil fuels

Abstract

This study examines the comparative impact of energy policy uncertainty, geopolitical risk, and R&D expenditures on renewable and fossil fuel consumption in China from 2002m1 to 2022m12, using Fourier ADL, fully modified and dynamic ordinary least squares methods. The analysis aims to clarify how these key factors shape the country’s energy transition. The results show that energy policy uncertainty significantly promotes renewable energy but has no significant impact on fossil fuel consumption. Geopolitical risk increases the adoption of renewables, while fossil fuel consumption decreases, reflecting concerns about energy security. R&D expenditure contributes to the growth of both renewable and fossil fuel consumption, indicating a dual investment path in China’s energy strategy. These findings underscore the importance of consistent energy policies, reduced reliance on imported fossil fuels, and targeted R&D investment to support China’s transition to a low-carbon energy future. To effectively promote renewable energy and reduce dependence on fossil fuels, China should stabilize its energy policy environment, redirect R&D funding to clean technologies, and treat geopolitical risks as a strategic driver to accelerate domestic renewable energy capacity and energy self-sufficiency.