Journey to net-zero and investment in renewable energy: Evidence from developed and developing countries

This study examines how geopolitical risk, high-technology exports and the Paris Agreement shape investment in renewable energy across developed and developing economies. Drawing on structural contingency theory, we conceptualise renewable energy investment as a country-level response to external contingencies and analyse a global panel of 100 countries from 2007 to 2021. Using OLS, fixed-effects panel models, two-step system GMM and dynamic Difference-in-Differences models, we find that Paris Agreement ratification has a positive effect on renewable energy investment, but only after a 3- to 4-year onset period. Geopolitical risk is negatively associated with renewable energy investment in developed economies, whereas high-technology exports have a positive and robust association in developing economies, particularly after Paris Agreement ratification. This study calls for heterogeneous net-zero strategies to address the external disruptions and trade-related challenges.