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Eco-innovation strategies in response to energy-related uncertainty and geopolitical risk: Insights from the energy sector

Lookup NU author(s): Dr Vu TrinhORCiD

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Abstract

This study examines eco-innovation investment strategies across the global energy sector in response to energy security concerns and geopolitical risks. Drawing on growth options theory and real options theory, and using a comprehensive dataset of 1351 energy firms across 20 countries from 2002 to 2020 (10,501 firm-year observations), we find that energy-related uncertainty and geopolitical risk play significant roles in shaping firms' ecoinnovation strategies. Energy-related uncertainty is positively associated with eco-innovation, suggesting that firms increase investments in eco-innovation to manage uncertainty and enhance energy security. However, this positive effect weakens as geopolitical risk intensifies. In other words, while energy-related uncertainty can stimulate eco-innovation, political instability dampens this relationship. Overall, our findings advance both theory and practice by providing new insights into how energy firms adjust their eco-innovation strategies amid geopolitical conflict and energy-related uncertainty.

Publication metadata

Author(s): Trinh VQ, Nguyen TH, Lieu ML, Pham MQ, Dao T

Publication type: Article

Publication status: Published

Journal: Energy Economics

Year: 2026

Volume: 160

Online publication date: 25/05/2026

Acceptance date: 21/05/2026

Date deposited: 02/07/2026

ISSN (print): 0140-9883

ISSN (electronic): 1873-6181

Publisher: Elsevier BV

URL: https://doi.org/10.1016/j.eneco.2026.109414

DOI: 10.1016/j.eneco.2026.109414

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