Assessing the Impact of Geopolitical Risk on Russia's Energy Transition: An ARDL Bounds Testing Analysis

Abstract

This study investigates the relationship between geopolitical risk and the energy transition in Russia using the Autoregressive Distributed Lag (ARDL) Bounds Testing approach. Russia's economy is highly dependent on fossil fuel exports, making the transition toward cleaner energy sources particularly sensitive to geopolitical developments. The research examines how geopolitical risk influences renewable energy adoption, energy consumption patterns, carbon emissions, and energy sector investments over time. Time-series data are analyzed to identify both short-run and long-run dynamics between geopolitical uncertainty and energy transition indicators. The ARDL Bounds Testing approach is employed due to its suitability for variables integrated at different orders and its ability to estimate long-term equilibrium relationships. The findings reveal that heightened geopolitical risk significantly affects the pace of energy transition by altering investment decisions, energy security priorities, and policy implementation. While geopolitical tensions may initially reinforce dependence on conventional energy resources, they can also stimulate domestic innovation and diversification in the energy sector over the long term. The study contributes to the growing literature on energy economics and geopolitical studies by providing empirical evidence from Russia, offering policy implications for achieving sustainable energy transformation under conditions of geopolitical uncertainty.