1 s2.0 S0140988324000963 Main

Energy Economics 131 (2024) 107388
Contents lists available at ScienceDirect
Energy Economics
journal homepage: www.elsevier.com/locate/eneeco
Understanding the effects of artificial intelligence on energy transition: The

moderating role of Paris Agreement
Muhammad Zubair Chishti a, Xiqiang Xia b, Eyup Dogan c, *
a
Business School, Zhengzhou University, Zhengzhou 450001, Henan, China
b
Business School, Zhengzhou University, Zhengzhou 450001, China
c
Department of Economics, Abdullah Gul University, Kayseri, Turkey
A R T I C L E I N F O A B S T R A C T
Keywords: This study contributes to the existing literature by investigating and confirming a range of diverse outcomes
Energy transition related to the interplay of factors shaping the global energy transition (ET). Employing advanced methodologies,
Artificial intelligence including the extension of the QVAR technique to short-term (SR), medium-term (MR), and long-term (LR)
BRI
connectedness analysis, as well as the application of the CQ method to explore relationships within varying
Paris Agreement
market conditions and timeframes, the study examines the interconnectedness of critical variables: artificial
intelligence (AI), the Belt and Road Initiative (BRI), the Paris Agreement (PA), green technologies (GT),
geopolitical risk (GPR), and ET. The findings highlight several crucial insights. Firstly, all selected variables
demonstrate substantial interconnectedness across different time horizons, except for MR, which exhibits
comparatively weaker connectedness than SR and LR. Secondly, independent series reveal diverse impacts on ET
across various market conditions and periods. For example, in SR, most series produce mixed effects on ET, with
BRI having primarily adverse consequences and GPR predominantly yielding positive impacts. In MR, the in
fluence of AI, PA, and GT on ET varies, while BRI enhances ET, and GPR essentially hampers it. Notably, in LR,
AI, BRI, PA, and GT significantly promote ET, while GPR disrupts its progress. Additionally, the study un
derscores the dynamic and time-varying nature of the relationships between AI, BRI, PA, GT, GPR, and ET across
different market conditions, thus holding essential implications for shaping global policies to foster sustainable
energy transitions.
1. Introduction to a rise in climate pollution. According to environmentalists, the rem

edy for this pressing issue involves altering our current path of energy
Over the past decade, the global economy has grappled with consumption. In simpler terms, transitioning from fossil fuel-based en
numerous severe and enduring environmental challenges, including ergy to clean energy, often called “energy transition” (Xu et al., 2023;
climate change, desertification, deforestation, global warming, ozone Liu et al., 2023), can open the path towards achieving sustainable
layer depletion, and respiratory diseases (Gozgor et al., 2023; Lee et al., development and fulfilling SDG 7 and 13. Identifying emerging catalysts
2023). The primary driver behind these catastrophic shifts in climate for energy transition, coupled with the proposal of a policy framework
predominantly arises from the rising levels of greenhouse gas emissions designed to facilitate and accelerate this imperative shift, is the core
(GHGs). The increasing economic activities aimed at sustaining high agenda of this study.
economic growth rates are the major contributors to the escalating GHG To achieve the objectives outlined in SDG 7 and progress towards the
emissions (Gozgor and Paramati, 2022; Lau et al., 2023;). These activ targets set in SDGs 8 and 13, the attainment of an energy transition is
ities cause a 0.2 ◦ C temperature rise per decade, 150 billion metric tons paramount. This transformative process facilitates the deployment of
of annual Antarctic ice melt, 6 million hectares of yearly deforestation, low-carbon energy sources and enhances overall energy efficiency, ul
and 7 million premature air pollution deaths (Zhao et al., 2021). The timately aiding in the realization of the targets set in SDGs 8 and 13 by
fundamental driver behind the environmental damages is the combus fostering sustainable growth and protecting the environment. While
tion of fossil fuel-based energy to accelerate economic activities, leading numerous global economies have made notable progress in pursuing the
* Corresponding author.
E-mail addresses: chishtimz9@gmail.com (M.Z. Chishti), xqxia@zzu.edu.cn (X. Xia), eyup.dogan@agu.edu.tr (E. Dogan).
https://doi.org/10.1016/j.eneco.2024.107388
Received 9 October 2023; Received in revised form 26 January 2024; Accepted 27 January 2024
Available online 6 February 2024
0140-9883/© 2024 Elsevier B.V. All rights reserved.
M.Z. Chishti et al. Energy Economics 131 (2024) 107388
aims of SDGs 7, 8, and 13 (SDGs Report, 2022), many countries still fall These innovations have the potential to enhance existing technologies
short of meeting the specified targets of these goals, as depicted in by reducing their diffusion costs and improving productivity (Stef et al.,
Figs. 1, 2 a, and b. Therefore, the recent COP27 summit has further 2023). This development ushers in a new era of technological revolu
galvanized global authorities to accelerate the transition to a greener tion, accelerating the application of AI across various domains, notably
energy landscape (COP27 Report, 2022). The developmental perspec within the realm of green energy (Srivastava et al., 2023).
tive conveyed within this stance encompasses the Breakthrough agenda, It is essential to initiate efforts at the domestic level and on a global
which addresses the expansion and dissemination of green technological scale by fostering global economic integration. This approach addresses
solutions aimed at transitioning away from fossil fuel-dependent pro environmental issues through the collaborative sharing of experiences
duction processes. In other words, transitioning from fossil fuel- and knowledge. Economic integration of this kind can serve as a means
dependent production processes to clean production processes might to transfer experience, knowledge, innovation, and financial support
assist in achieving SDG 13. However, it requires the diffusion of clean among economies (Duarte et al., 2022). This integration is anticipated to
technologies with the support of advanced technologies, proper regu promote the energy transition by bolstering clean technologies and en
latory systems, and economic integration. The multi-stakeholder strat ergy efficiency. Within this framework, the Belt and Road Initiative
egy advocated by the International Renewable Energy Agency (2023) (BRI), a global economic development project encompassing 151 na
delineates these prerequisites for accomplishing a global-scale energy tions, is anticipated to contribute significantly to the energy transition.
transition. The pertinent academic literature (Zhang et al., 2023a, This contribution is expected through integrating global economies and
2023b; Sinha et al., 2023; Irfan et al., 2023; Wei et al., 2023a, 2023b; Du sharing knowledge and innovations in green technology. Under the
et al., 2023) has identified the crucial role of clean or green technologies “Green Development Coalition” program, initiated in April 2019, the
in boosting the energy transition process. BRI seeks to disseminate knowledge, data, support, and green devel
In the present phase, innovation-driven development is forging to opment policies. This initiative aims to accelerate the adoption of green
wards achieving a sustainable and environmentally-friendly global energy technologies by establishing a collaborative research network to
economy by advancing green technologies. Within this framework, address climate-related challenges (United Nations Environment Pro
artificial intelligence (AI), emerging as a novel technological catalyst gramme, 2023).
capable of steering the evolution and growth of the energy sector while In a similar fashion, efforts to promote green energy development
fostering advancements in green technology, will unquestionably serve within the BRI nations have led to an increase in the proportion of green
as a vital component for nations looking to bolster the fundamental finance in energy investment from 38% in 2019 to 57% in 2020,
competitiveness of their energy transition endeavors (World Economic demonstrating a commitment to clean energy initiatives and global
Forum, 2021). AI’s swift advancement has profoundly impacted global- sustainable development goals (GG). Furthermore, BRI authorities have
level energy production and management practices by actively engaging taken significant steps to promote green energy for development pro
with energy technologies (Green Energy, 2022). As a strategic technol jects. For instance, investments in solar/wind and coal were 5.93% and
ogy, AI is poised to advance sustainable energy by catalyzing the 16.49% in 2013, 25.45% and 27.15% in 2020, and 41.72% and 0% in
development of clean technologies through a new phase of sci-tech 2023, respectively, as the details are depicted in Fig. 2c. Similarly, in
innovation and transformation. This sector is gaining popularity as vestments in other fossil fuel-based energy sources have also signifi
numerous countries closely monitor and vie for its development cantly decreased from 2013 to 2023. Additionally, the BRI authorities
worldwide. For instance, the global AI sector was $142.319 billion, have devised a comprehensive green environment management plan.
expected to increase by 1198.14% by 2030, and worth $1847.495 This plan is designed to increase the allocation of green finance to
billion. Specifically, investment in the AI sector is rapidly surging in promote environmental sustainability throughout all regions within the
Asia, Europe, and North America (Statista, 2023). Through ongoing BRI. By facilitating green transition, this initiative aims to assist member
technological advancements such as the internet, big data, and cloud nations in achieving the 2030 agenda for green growth and environ
computing, AI has given rise to a multitude of innovative technologies. mental objectives (Green Belt and Road Initiative Center, 2023).
Fig. 1. The scenario of SDG – 7. Source: Sustainable Development Report (2023).
2
Fig. 2. a. The scenario of SDG – 13. Source: Sustainable Development Report (2023).
b. The scenario of SDG – 13. Source: Sustainable Development Report (2023).
c. Scenario of BRI energy investment to various energy sectors. Source: BRI Investment Report (2023).
For harnessing substantial benefits from local and regional energy zero-carbon solutions are anticipated to become cost-competitive in
transition efforts, it is essential to establish a supportive policy frame sectors responsible for >70% of worldwide emissions by 2030.
work aimed at mitigating adverse climate impacts. In this context, global On the other hand, the persistent geopolitical tensions emanating
environmental agreements like the Paris Agreement might play a vital from the evolving landscape of global geopolitics might influence the
role in regulating the endeavors for the green environment and making investment ratio of the energy transition. For instance, the report by the
them beneficial for global nations. This treaty mainly focuses on a “zero- United Nations (2022) documented that the Ukraine – Russia War
carbon solution.” Further, the Paris Agreement might assure a green impeded the green transition by disrupting the global investment and
environment by endorsing the developed nations to share large-scale trade ratio, tending to a high oscillation in global energy prices. Similar
green investment, clean technologies, and green energy capacity disruptive effects were observed during the COVID-19 pandemic
building with the developing nations (United Nations Climate Change, (Shahbaz et al., 2023) and the 2008 Financial Crisis (Asian Development
2023). Such steps, ultimately, may trigger the green transition. Thus, Bank, 2011). The China-US trade war adversely impacted various local
3
Fig. 2. (continued).
and global investment sectors by disrupting global trade patterns, transition process by bolstering clean technologies. Both drivers
thereby escalating high inflation rates (Centre for Economic Policy appear to foster global economic and technological collaboration,
Research, 2023). Given that energy transition initiatives heavily rely on which could positively impact the promotion of cleaner energy
investment, foreign investment serves as a critical pillar for these pro technologies.
jects. Any global economic or geopolitical shock has the potential to 3. The study aims to investigate whether BRI and PA can mitigate the
slow down the global investment chain, consequently impeding progress adverse consequences arising from GPR, with the objective of facil
in green transition projects. itating the adoption of advanced technologies for ET. This particular
Given the critical discourse above, it’s plausible to hypothesize that nexus has received limited attention in existing literature. Conse
the impact of AI on the energy transition (ET) is dynamic. Similarly, the quently, examining this interplay could contribute to developing a
influences of the Belt and Road Initiative (BRI), green technologies, and more comprehensive policy framework.
the Paris Agreement (PA) on the ET process might also vary over time. 4. Given the potential dynamism in the relationship among the selected
Consequently, it’s reasonable to expect that the modeled series’ poten variables, employing a methodology capable of capturing their time-
tial effects on ET could be sensitive to shifts stemming from new tech varying effects is crucial. To this end, this recent article aims to
nological advancements in the global economy. Additionally, it’s utilize two advanced methods: the Quantile Vector Autoregressive
essential to recognize that unexpected economic shocks, such as COVID- (QVAR) method developed by Chatziantoniou et al. (2022) and the
19 and the Ukraine-Russia war (URW), could disrupt these trends. Cross Quantilogram method introduced by Han et al. (2016). The
Therefore, anticipating these shocks’ challenges to the ET process is a QVAR method is adept at examining dynamic connections across
rational hypothesis. Addressing these issues and developing a policy different time horizons, including short-, medium-, and long-term
framework is the primary focus of this research. To offer a more trans perspectives. Meanwhile, the Cross Quantilogram method effec
parent and more focused direction, the following research question can tively reveals marginal effects over these varying timeframes. The
be articulated: goal is to gain a deeper understanding of the dynamic interactions
“How does the energy transition respond to artificial intelligence, BRI, and, in turn, formulate policy recommendations that are responsive
and the Paris Agreement over time, particularly in the context of evolving to these dynamics.
geopolitical risks?”
In addressing the query above, this article seeks to comprehend the The structure of the coming part of the article has the following
dynamic relationships within the modeled series, particularly in the age order. The second section contains the pertinent literature review, fol
of GPR, and subsequently formulate a policy framework based on lowed by the third section, which formulates a theoretical framework.
various time horizons. As such, the article’s contributions are outlined as The fourth section underlines the proposed methodology and data
follows: sources. The fifth and sixth sections cover the discussion and conclusion
of the results.
1. This study delves into the dynamic impact of AI on ET, seeking to
comprehend how emerging technologies shape the transition process 2. Literature review
by influencing green technologies, especially in the context of GPR.
Given this area’s limited attention, an in-depth exploration of the ET- It is widely agreed upon that energy transition (ET) represents the
AI nexus may provide valuable insights for constructing a responsive primary solution for achieving the objectives of SDG – 7 and SDG – 13.
policy framework. Therefore, it hinges on how global policymakers perceive the signifi
2. The study additionally examines the ramifications of BRI and PA on cance of the ET process and how they plan to implement it to safeguard
ET, anticipating that these emerging drivers could accelerate the the global green environment. Existing literature underscores the urgent
4
necessity for both individual and collective efforts to address ET. Indi contribution is anticipated through integrating global economies and
vidual efforts may manifest through the adoption of green and advanced sharing knowledge and innovations in green technology, ultimately
technologies, whereas collaborative endeavors can take the form of fostering the ET.
economic and environmental projects and agreements. Considering In this context, several scholars strive to investigate how ET responds
these considerations, the present article aims to assess the relevant to various drivers in the BRI nations. For example, Zhang et al. (2023a,
literature to identify comprehensive gaps in the existing body of 2023b) took a sample of 54 BRI nations and found that FDI and technical
knowledge. efficiency significantly contribute to sustainable development by
fostering ET. The same outcome is witnessed by Wei et al. (2023a,
2.1. Energy transition and AI 2023b) for 140 BRI nations. Ullah et al. (2023) deploy the 78 BRI
economies data to assess the drivers of the ET process. The results
Generally, artificial intelligence (AI) can be referred to as “the ca determine that fintech, environmental policy, and urbanization have a
pacity of a digital computer or computer-controlled robot to carry out vital role in determining the ET in the sampled nations. Also, Wang and
activities typically linked with intelligent entities” (Britannica, 2023). Lin (2022), Ge (2022), Luo and Zhang (2022), Shakib et al. (2022), and
More broadly, deploying computer vision, deep learning, machine Wu et al. (2021) witnessed that the ET process in various nations gains
learning, and other related techs to minimize human involvement, significant benefits after joining that BRI project. Therefore, it is rational
leading to the potential substitution of human mental labor, can be to infer that BRI might be a source of knowledge sharing and innovations
called “AI” (Chen et al., 2021). According to a report by Bloomberg that can enhance ET by improving green technologies.
(2023), AI is a form of advanced technology that leverages machines to Therefore, some scholars explored the effects of BRI on the ET pro
take over certain human functions, enhancing operational quality, cess, and these effects could be direct and indirect. For example, Cheng
automating production processes, and improving production and ser and Wang (2023) analyze the direct effects of BRI. The results show that
vices sectors. AI, as an advanced technology, is making significant in the BRI project can influence the ET process by expediting green finance.
roads into various aspects of human life, encompassing sectors such as In a similar vein, Wang et al. (2023a, 2023b) testify about the effects
banking and finance, healthcare, marketing, e-commerce, lending so stemming from BRI on the ET process while utilizing the firm-level data.
lutions, the industrial sector, agriculture, transportation, insurance, and The findings indicate the supportive role of BRI in fostering green
decision-making processes (Goralski and Tan, 2020). technologies. The BRI’s indirect effects are also affirmed. Such as Liu
Similarly, AI is capable of enhancing resource efficiency and and Ma (2023) report that BRI possesses the ability to hinder climatic
impeding the energy intensity by industrial robots, leading to sustain change by supporting green energy efficiency. The same outcome is
able development through providing sustainable energy (Green Energy, observed by Cheng and Wang (2023), supporting the finding that Liu
2023). Also, it is recognized that AI can enhance environmental quality and Ma (2023) reported.
by curtailing carbon emissions. This offers a chance to facilitate the shift Based on the preceding discussion, we can deduce that the Belt and
of industries from extensive production methods to intelligent and Road Initiative (BRI) can potentially enhance the Energy Transition (ET)
resource-intensive production by promoting green energy, thereby process, whether directly or indirectly. Therefore, it is reasonable to pro
enabling the achievement of environmentally friendly manufacturing pose the hypothesis that the BRI plays a supportive role in advancing the ET
practices and fostering sustainable economic growth (Lee et al., 2022). process.
In this framework, few studies have explored AI’s role in promoting
sustainable and efficient energy through triggering the ET process. For 2.3. Paris Agreement and ET
instance, Lee et al. (2022) analyze how AI can contribute to ET by
deploying industrial robots. The study claims that the injections of in In order to fully leverage the significant advantages of local and
dustrial robots assist in formulating green technologies, resulting in regional energy transition initiatives, it is crucial to create a supportive
expediting the ET process. Also, a study by Chen et al. (2021) developed policy framework aimed at mitigating the adverse impacts of climate
an “AI-based useful evaluation model” to assess AI’s role in the ET change. Without any regulatory policy, the potential benefits of other
sector. The study argues that AI possesses the ability to enhance the ET important drivers of ET cannot be attained. In this context, the policy
by fostering energy efficiency by 97.32%. The same outcome was makers suggest various policies to protect the climate from unwanted
observed by Sharifi et al. (2021), and the study confirms the supporting and hazardous effects exerted by the consumers’ and producers’
role of AI in the ET sector. Besides, Goralski and Tan (2020) report the activities.
considerable nexus between AI and SGDs. One of the suggested environmental policies is the “Pigouvian tax,”
The preceding discussion clearly underscores the paramount signif which may assist in protecting the environment from adverse external
icance of AI in shaping the ET through its potential to enhance both the ities. A study by Debia et al. (2019) suggests that the practice of carbon
efficiency and accessibility of green energy. Furthermore, AI could taxes can support the ET and cut down the damaging influence of carbon
accelerate the ET by enhancing green technologies by integrating in emissions. The same argument is documented by Sharif et al. (2023a,
dustrial robots. Therefore, it is reasonable to posit that “AI could catalyze 2023b) while analyzing the effects of energy tax. However, some policy
the ET process,” making it logical to investigate this hypothesis on a global makers are of the view that environmental regulations can play a
scale. paramount role in fostering the ET, specifically when regional-level
regulations are practiced (Chishti et al., 2023a). Many studies (Pan
2.2. BRI and ET et al., 2023; Liu et al., 2022; Ahmed et al., 2022) confirm the vital role of
environmental policies in improving the ET in the sampled nations.
Initiating efforts to address environmental challenges is crucial at the Within this context, global agreements on the environment, such as
national level and on a global scale, where the promotion of worldwide the Paris Agreement, might play a crucial role in regulating efforts to
economic integration plays a pivotal role. This approach facilitates promote a green environment and ensuring their benefits extend to
collaborative exchanges of experiences and knowledge, transferring nations worldwide. This treaty primarily emphasizes “zero-carbon so
valuable expertise, innovation, and financial support across economies lutions.” A study conducted by Dogan et al. (2022) has examined the
(Duarte et al., 2022). This kind of economic integration is poised to impact of the Kyoto Protocol on Energy Transition (ET), utilizing a
advance the energy transition (ET) by strengthening clean technologies sample of G-7 nations, and has affirmed its pivotal role. With 194 na
and enhancing energy efficiency. Within this context, the Belt and Road tions having ratified the global environmental policy known as the
Initiative (BRI), a global economic development endeavor involving 149 “Paris Agreement,” it becomes imperative to investigate its influence on
nations, is expected to contribute significantly to the ET. This ET as part of the process of crafting a policy framework for Sustainable
5
Development Goal 7 (SDG-7). As a result, the study postulates the Paris replace conventional energy sources to achieve energy efficiency and a
Agreement’s indispensable role in shaping ET’s trajectory. green environment. In simple words, ET is a strategy that enhances
energy efficiency to replace carbon-based energy with clean energy,
2.4. Geopolitical risks and ET resulting in a high growth rate and a clean environment. This concept of
ET can be depicted by the conjecture of the energy ladder (Jia et al.,
While analyzing how AI, BRI, and the Paris Agreement might affect 2022). Fig. 3 visualizes the energy ladder conjecture, indicating how a
ET, the inevitable detrimental shocks stemming from geopolitical sce shift to clean energy can assist in obtaining sustainable development. In
narios cannot be neglected. The investment ratio towards the green order to expedite the process of ET, an appropriate environment that can
energy sector is highlighted and linked with the market situation. Any provide the transition process technical, economic, and regulatory
uncertain shocks might discourage investors from investing in the green support is required. In this context, green technologies might play an
energy sector. Therefore, it is critical to consider the potential influence essential role in empowering the ET sector. Such technologies might be
of geopolitical risks (GPR) on ET markets. local or imported; the usage of these technologies might be the backbone
The diverse aspects of GPR could potentially exert varying effects on for ET (Chen et al., 2023). Academic literature calls such technologies
investments in energy transition initiatives. A recent study by Chishti “green technologies” (GT). Hence, it is rational to formulate the above
et al. (2023a) and Shahbaz et al. (2023) identified the dynamic impacts theoretical nexus as:
of GPR on the ET markets. The study suggests the significant dynamic
ET t = f (GT t ) (1)
connectedness between GPR and ET. Also, the study deuces that
although GPR has mixed effects, it predominantly deteriorates the ET To realize the full potential of these technologies for ET, the
process. Wang et al. (2023a, 2023b) support the outcome of the study involvement of advanced technologies such as artificial intelligence (AI)
above by deducing that any GPR shocks can impede green energy pro might play a considerable role (Lee et al., 2022; Chen et al., 2021).
duction by disrupting green finance. Further, Acheampong et al. (2023) Mechanically, the potential role of AI in improving the ET system can be
and Bashir et al. (2023) verify how the volatilities stemming from GPR categorized into two parts. Firstly, it might trigger the ET by assisting in
can hinder green financing, leading to decreased ET. Thus, Chishti et al. the production side of green energy. For instance, by integrating AI with
(2023b) argue that GPR has a direct considerable link with the ET green smart grids, the flow of electricity could be controlled and
markets. Any geopolitical risk can escalate the uncertainty in the green monitored, its supply and demand could be balanced, and its outages
finance markets, slowing the ET down. Furthermore, the study explains could be detected and responded to, leading to an efficient and reliable
how the recent GPR, like the Ukraine-Russia war, increases the risk and, electrical grid. Also, by utilizing machine learning algorithms, AI might
eventually, hurts the various energy markets. analyze real-time data and adjust to reduce energy wastage, leading to
The above literature-based debate on the nexus between GPR and ET optimized energy consumption in various sectors, such as buildings,
indicates that the effects of GPR on ET might be dynamic in nature. Also, industries, and transportation, and eventually, energy-saving. AI might
it can be inferred that GPR might have mixed effects on ET; however, assist in enhancing the forecast of green energy generation, thereby
these might be predominantly adverse. Hence, the adverse effects of GPR helping in the management of the integration of intermittent renewable
on ET might be hypothesized. energy sources more effectively. Additionally, AI might enhance the
reliability of the grid by detecting its potential faults and issues in real-
2.5. Literature gap time. Secondly, AI might trigger the ET by storing, supplying, and uti
lizing green energy optimally and efficiently. For instance, AI might
The preceding review clearly highlights the potentially significant assist in storing clean energy, such as in batteries, and ensuring a stable
role of AI, BRI, and the Paris Agreement in shaping the ET. Simulta and reliable energy supply when needed. Also, AI might ensure efficient
neously, it underscores the dynamic impact of GPR, which cannot be charging and reduce the strain on the grid during peak periods by rec
underestimated. Nevertheless, a critical examination of the relevant ommending a suitable charging time based on energy availability and
literature reveals several crucial gaps that need to be addressed, which cost. AI might optimize the combustion of clean energy by controlling
could contribute to the development of a comprehensive policy buildings’ heating, cooling, and lighting systems and maintaining
framework. comfort levels (Zhang et al., 2022).
For instance, a limited number of studies delve into the direct effects Similarly, AI might assist in analyzing the environmental impact of
of AI on ET, making it insufficient as a basis for formulating appropriate renewable energy installations, such as wind farms and solar facilities,
policy recommendations. Furthermore, many prior studies rely on by providing AI-powered drones and sensors. It can address concerns
dummy variables when investigating how BRI, a global-scale economic about wildlife and ecosystem disruption. In addition, by analyzing large
initiative, can influence ET. Using an index in place of a dummy variable datasets and modeling the potential outcomes of different policy choices
to measure the effects of BRI might help attain more robust and practical with the assistance of AI, policymakers might make informed decisions
results. Additionally, the relationship between the Paris Agreement and regarding the further production and utilization of clean energy. Even
ET remains unexplored, and further research in this area is warranted, as tually, this process might decrease the green investment-related un
it has the potential to offer new insights for policy development. certainties, too. Besides, AI, by modeling the likely outcomes of various
Moreover, the previous literature has not explored how AI, BRI, and policy choices through analyzing large datasets, might help make
the Paris Agreement collectively impact ET within the context of GPR. intelligent decisions regarding green energy investment (Forbes, 2021).
Furthermore, a significant portion of the studies overlook the consid Based on the above logical arguments, the model in Eq. 1 can be
eration of different time horizons when examining the relationships extended as:
between the variables. It is essential to recognize that these relationships
ET t = f (GF t , AI t ) (2)
can vary depending on the time frame, and considering this aspect could
contribute to establishing a more logical and practical policy frame Now, the efforts to address global environmental challenges require
work. To address the gaps in the existing literature, this study aims to promoting worldwide economic integration. It might facilitate knowl
investigate how the independent variables, when analyzed across edge sharing, innovation transfer, and financial support among econo
various time horizons, influence the ET. mies (Duarte et al., 2022). In this framework, the Belt and Road
Initiative (BRI), might contribute significantly to the energy transition
3. Theoretical underpinning by promoting clean technologies and energy efficiency through global
economic integration and advanced and green technology sharing.
Energy transition (ET) is a process in which clean energy sources Economically, BRI might contribute to accelerating the ET by financing
6
Fig. 3. The depiction of the energy ladder hypothesis. Source: Our World in Data (2023).
green energy projects and smart grids. For instance, in 2019, the BRI to increase green energy projects. This step might escalate the ET process
authorities devised a comprehensive green environment management by enhancing the utilization of green energy sources. Additionally, the
plan. This plan is designed to increase the allocation of green finance, PA inspires advanced economies to share advanced technologies with
with the objective of promoting environmental sustainability developing nations. This transfer of technologies process might foster
throughout all regions within the BRI (Green Belt and Road Initiative the production of GT, resulting in improving the ET. Similarly, the PA
Center, 2023). Also, BRI can be a source of knowledge sharing and green might motivate global economies to collaborate in R&D on green envi
innovations. For instance, through trade among participating and other ronments. It might lead to the development of more efficient and
economies, BRI might increase the export and import of clean energy affordable ET solutions. Moreover, to meet the PA commitments, the
technologies and services. Eventually, it might promote the utilization of global economies are implementing carbon pricing mechanisms, such as
clean and green energy-based on clean technologies, resulting in carbon taxes or emissions trading systems. Such practices might create
fostering the ET. Through international collaboration, BRI might incentives for investors and individuals to invest in cleaner energy al
endorse maintaining the environmental standards, addressing climate ternatives for reducing carbon emissions (International Renewable En
change exigencies, and promoting the energy transition on a global ergy Agency, 2020). Hence, it is might be important to consider the
scale. Additionally, BRI strongly encourages R&D projects to enhance influence of PA on ET and thereby, the model can be enhanced as:
the capacity of advanced technologies in participating nations. This
ET t = f (GT t , AI t , BRI t , PAt ) (4)
process might trigger green technologies, thereby leading to expediting
the ET ratio (UN Environment Program, 2023). Besides, BRI encourages Despite the fact that GT, AI, BRI, and PA might be the vital drivers of
participating nations to align their policies with sustainability goals. It ET solutions, the uncertainties stemming from geopolitical risks (GPR)
might result in developing policies and regulations supporting the ET by cannot be neglected. The persistent geopolitical tensions emanating
adopting renewable energy and efficiency measures. Thus, after from the evolving landscape of global geopolitics might influence the
including the BRI as a potential driver of ET, the previous mathematical investment ratio of the energy transition. For instance, the report by the
model can be extended as: United Nations (2022) documented that the Ukraine–Russia War
impeded the green transition by disrupting the global investment and
ET t = f (GT t , AI t , BRI t ) (3)
trade ratio, thereby tending to a high oscillation in global energy prices.
In order to fully leverage the significant advantages of local and Similar disruptive effects were observed during the COVID-19 pandemic
regional energy transition initiatives, it is crucial to create a supportive (Naeem et al., 2023) and the 2008 Financial Crisis (Asian Development
policy framework aimed at mitigating the adverse impacts of climate Bank, 2011). Additionally, the China-US trade war adversely impacted
change. Without any regulatory policy, the potential benefits of other various local and global investment sectors by disrupting global trade
important drivers of ET cannot be attained. Within this context, global patterns, thereby contributing to the escalation of high inflation rates
agreements on the environment, such as the Paris Agreement (PA), (Centre for Economic Policy Research, 2023). Given that energy tran
might play a crucial role in regulating efforts to promote a green envi sition initiatives heavily rely on investment, foreign investment serves as
ronment and ensuring their benefits extend to nations worldwide. a critical pillar for these projects. Any global economic or geopolitical
Technically, there might be various ways through which the PA can shock has the potential to slow down the global investment chain,
foster the ET ratio. Since this global treaty primarily emphasizes “zero- consequently impeding progress in green transition projects. Therefore,
carbon solutions,” it might encourage the participating economies to the study considers the influence the global economic shocks and in
combust green energy and improve energy efficiency, thereby promot cludes the GPR as a measure of the economic shocks in the model. The
ing the transition to cleaner energy systems. Also, the PA motivates the final version of the model can be expressed as follows:
developed world to provide green finance to developing nations in order
ET t = f (GT t , AI t , BRI t , PAt , GPRt ) (5)
7
In the above expression, GT, AI, BRI, PA, and GPR are the potential 4.2. CQ method
drivers of the ET process. Further, based on the above critical discourse,
it can be inferred that AI, GT, BRI, and PA might support the ET solu To assess the marginal impact of independent variables on Energy
tions, while GPR might deteriorate the ET process. Therefore, it is Transition (ET), this article prefers employing the Cross Quantilogram
rational to outline: ΔET
ΔAIt
t
> 0, ΔGT
ΔETt
> 0, ΔBRI
ΔETt
> 0, ΔPA
ΔETt
> 0, and ΔGPR
ΔET t
< 0. (CQ) approach. A distinctive feature of the CQ method is its ability to
t t t t
evaluate the dependence of the dependent variable on explanatory
4. Econometric approach and data variables across different quantiles. There are several advantages that
make the CQ approach more effective than other methods. For example,
For attaining the prime objective of the study, two advanced tech the CQ method quantifies marginal effects across various quantiles,
niques viz., Quantile VAR (QVAR) and cross-qunatilogram (CQ) ap aiding in addressing the impact of outliers. This quantile-specific anal
proaches are utilized. Furthermore, the article first deploys the QVAR ysis also helps in managing potential nonlinearities in the data. Addi
approach to measure the connectedness among the opted series for tionally, the CQ method’s optimal lag selection is crucial for avoiding
various time horizons. Subsequently, the marginal influence of the in model misspecification and ensuring robust results (Naeem et al., 2023).
dependent side on the dependent side is computed to understand the Moreover, the CQ approach’s flexibility in using different lags to
directional effects of the policy framework. calculate marginal effects enables analyzing various time horizons,
thereby exploring time-varying effects. Furthermore, considering
4.1. Quantile VAR (QVAR) technique different lags allows for the examination of nonlinear relationships (Han
et al., 2016). Consequently, these significant advantages motivate the
The article, firstly, tends to deploy a new QVAR approach by Chat current study to apply the CQ method, particularly for addressing po
ziantoniou et al. (2021) that has the capability to capture the connect tential issues in the daily data. Furthermore, Han et al. (2016) formu
edness and produce the outcome in a graphical presentation. To lated the following mathematical expression to measure the CQ-based
formulate this method, Chatziantoniou et al. (2021) extended the con effects:
ventional vector autoregressive (VAR) model by adding quantiles and E[ψτ1 (y1t ≤ q1t (τ1 ) )ψτ2 (y2t− k ≤ q2t− k (τ2 ) ) ]
the factor structure. The QVAR computes the connectedness while ρτ (k) = √̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅
[ ]√̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅
[ ] (10)
considering the various quantiles. This feature assists in capturing the E ψ2τ1 (y1t ≤ q1t (τ1 ) ) E ψ2τ2 (y2t− k ≤ q2t− k (τ2 ) )
effects of outliers, which might be due to different economic shocks.
Also, this method incorporates time, which can evaluate the variations The above expression possesses yi,t (signifying the series having no
stemming from the global economic shocks. Similarly, QVAR helps in unit root), t (signifying the time), and qit (τi ) = inf {v : Fi (v) ≥ τi }
understanding the total and series-wise connectedness by providing the (signifying the respondent function), and τ (signifying the quantiles of
total and directional connectedness among the opted series. Following independent and dependent sides).
Chatziantoniou et al. (2021), the article, firstly, tends to compute the
all-connectedness (TC) and utilizes the following expression:
4.3. Data and pre-estimation analysis
p
∑
yt = α(τ) + θj (τ)yt− j + ut (τ) (6)
j=1 Aiming at divulging the dynamic nexus between artificial intelli
gence (AI), BRI, the Paris Agreement (PA), green technologies (GT),
In the above expression, y, a, θ, and u exhibit the dependent series (in geopolitical risk (GPR), and energy transition (ET), the articles retrieve
vector), intercept, regressors (in matrix), and the error term. Further, τ the data for the aforementioned series from authentic sources. For
shows the quantiles utilized to obtain the quantile-wise dynamic total instance, the data for AI (proxied by AI index), PA (proxied by PA index),
connectedness (DTC). After integrating the h-step ahead GFEVD, the GT (proxied by clean technologies), and ET (proxied by clean energy
influence of each variable i on all other variables j can be computed by index) are obtained from S&P Dow Jones Indices (https://www.spg
the following express while denoting it by “TO”: lobal.com/spdji/en/). Further, the data for GPR (proxied by GPR
∑k ̂g index) is taken from Caldara and Iacoviello (2022). The data is collected
=j ωij (τ)
TO = ∑
i=1,i∕
× 100 (7) for the period from June 1, 2018, to August 30, 2023, based on data
k ̂g
i=1, ωij (τ) availability. This timeframe also encompasses critical global economic
shocks, such as the impact of events like COVID-19 and the
Likewise, the influence on each variable i from any shock stemming
Ukraine-Russia war (URW), which have a substantial influence on global
from all other variables j can be computed by the following express
economic markets. Besides, the study developed an index to measure the
while denoting it by “FROM”:
influence of BRI. To do so, the study follows Boungou and Yatié (2022)
∑k ̂g and opts the trending words such as “One Belt, One Road,” “economy of
=j ωij (τ)
(8)
i=1,i∕
FROM = ∑
k ̂g
× 100 China,” “sustainable development,” “trade,” financial integration,“ and
i=1, ωij (τ) “connectivity” from various public interest-based sites including google
Finally, the net total directional connectedness (NTDC) can be trends, Reddit, and twitter trends. These words are selected based on the
attained by subtracting “FROM” from “TO” as: core objectives of the BRI project.
After finalizing the data, the study performs pre-estimation tests
NTDCi (τ) = TOi (τ) − FROMi (τ) (9) before presenting the main results in Table 1. The first-differenced series
From the above mathematical expression, DTC and NTDC can be exhibits significant skewness, kurtosis, and JB (Jarque-Bera) values,
measured for various quantiles. Further, the recent study extends the suggesting that the selected variables have a nonlinear distribution. This
QVAR strategy to measure the short-, medium-, and long-run DTC and is further supported by the high variance values of the series. Addi
NDTC for divulging deep information. Subsequently, the article moves tionally, the trend of the selected series, as visualized in Fig. 4, dem
towards measuring the marginal effects of the opted series on ET, and to onstrates their nonlinear nature. This indicates that using linear
this aim, the cross-qunatilogram (CQ) technique is utilized (Chishti methods for estimation could result in biased and inconsistent outcomes.
et al., 2023a). Therefore, it is essential to employ methods capable of handling non
linearities in the series. As a result, the study utilizes the QVAR and CQ
techniques, which are designed to address potential nonlinearities in the
data. The study also employs the ERS test to confirm the presence of
8
Table 1
descriptive stats and pre-estimations test.
ET BRI AI GT PA GPR
Mean 0.02 − 0.025 0.025 0.034 0.018 − 0.001

Variance 0.594 74.741 0.713 1.528 0.364 436.017
Skewness − 0.439*** 0.741*** − 0.431*** − 0.211*** − 0.654*** − 0.147**
Ex.Kurtosis 7.055*** 68.165*** 4.203*** 3.082*** 12.298*** 1.914***
JB 2781.806*** 255,867.094*** 1013.321*** 532.584*** 8419.049*** 206.406***
ERS − 5.317*** − 8.384*** − 6.009*** − 7.896*** − 11.254*** − 7.769***
Q(10) 43.573*** 265.623*** 42.742*** 16.844*** 116.072*** 297.640***
Q2(10) 562.164*** 197.846*** 570.000*** 379.247*** 1070.283*** 174.017***
Note: *, **, and *** signify significance level at 10%, 5%, and 1%, correspondingly.
Fig. 4. Trends in modeled series.
stationarity in the series. Thus, with confidence in the stationarity of the connectedness as the color bar given with the heatmap exhibits the
data, the QVAR and CQ approaches are applied for analysis. degree of connectedness. Moreover, it is posited that quantiles residing
beneath the 40% threshold connote a bearish market disposition,
5. Results whereas those exceeding the 60% threshold signify a bullish market
sentiment, with quantiles lying within the range of 40% to 60% desig
In this segment, the article documents the outcomes based on two nating a state of normal market. Regarding the SR-TDC, as depicted in
advanced methods. Firstly, the QVAR technique is utilized to explore the Fig. 5, the findings reveal a pronounced level of connectedness during
dynamic connectedness among the opted series for understanding the both bearish and bullish market conditions throughout the majority of
transmission channels. To do so, total and net total connectedness is the observed period. This is notably observable following the years
measured for various time horizons over time. Subsequently, the mar 2020, 2021, and 2022, which correspond to the respective impacts of the
ginal effects of independent series, viz., artificial intelligence (AI), Belt first wave of the COVID, the second wave of the COVID, and the Ukraine-
and Road initiative (BRI), green technologies (GT), the Paris Agreement Russia War. However, the normal market situation has a cold color
(PA), and geopolitical risks (GPR) on energy transition (ET) are during most of the period, implying a low level of connectedness.
computed to understand whether these series deteriorate or ameliorate Looking at the MR-TDC, as visualized in Fig. 6, it exhibits the same
the ET across various time horizons. level of connectedness across the various market conditions as observed
in the SR. Interestingly, the observation of LR-TDC, as depicted in Fig. 7,
5.1. Analysis based on dynamic connectedness overall, a cold color can be seen across all market conditions over time. It
plainly indicates the weak level of connectedness during the LR. Sum
For understanding the quantile-wise transmission channels between ming up, the bearish and bullish markets possess a strong connectedness
ET and other opted series across, the study tends to follow Chatzianto overtime during the SR and MR. However, LR-TDC shows weak
niou et al. (2021) and deploys QVAR that utilizes the 10-step forecast connectedness, implying that connectedness level varies across the
horizon and 200-day rolling window. Further, the (total and net total) different time horizons. Also, these findings suggest that, in the long-
connectedness is computed for short-run (SR), medium-run (MR), and run, uncertainty level fall in the economic markets due to effective
long-run (LR) to grasp a deep understanding of the quantile-wise measures by global authorities. The above outcome is in line with the
dynamics. results deduced by Gong et al. (2023), Ghosh et al. (2023), and Yousaf
Firstly, the article intends to discuss the total dynamic connectedness et al. (2022).
(TDC) among the modeled series for various time horizons. It’s worth Moving towards the net total dynamic connectedness (NTDC) for SR,
emphasizing that on each heatmap, warmer colors signify a greater MR, and LR, the outcomes are reported in Figs. 8 to 25. It’s worth
degree of connectedness, whereas cooler colors indicate a lower level of emphasizing that on each heatmap, the red color signifies that the index
9
Fig. 5. TDC based on ET for short-run.
Fig. 6. TDC based on ET for medium-run.
is transmitting the influence to others, while the blue color signifies that insignificant unlike the SR-NTDC and MR-NDTC, implying the uncer
the index is receiving the impact from others. As for the SR-NTDC, ET in tainty among the selected series tends to fall due to effective policy
Fig. 8 plays the role of net receiver across the various market situations measures taken by respective authorities as shown by weak connect
over most of the time. The same trend is observed in the case of BRI in edness across the various time horizons. These outcomes are contractive
Fig. 9 which plays the role of net recipient across the various market with the results by Sharif et al. (2023a, 2023b) and Asadi et al. (2023).
situations till 2022 Subsequent to this, it signifies the behavior of the From the above results, it can be inferred that a high level of
recipient and transmitter. Further, AI, GT, and PA, as given in Figs. 10, connectedness is witnessed while looking at SR and MR total and net
11, and 12, show a predominant role of transmitter over time. Ironically, connectedness, while a low level of connectedness is witnessed in the LR
as shown in Fig. 13, GPR exhibits a net recipient index across the various across the various market conditions. It plainly indicates that the
market conditions over time. connectedness level varies across the various market situations over
Looking at the MR-NTDC, the connectedness level tends to fall time.
meagerly compared to SR-NTDC, implying a strong connectedness over
time. The AI, GT, and PA predominantly transmit indexes across the 5.2. Analysis based on the CQ method
various market situations over time, as shown in Figs. 16, 17, and 18,
respectively. However, as visualized in Figs. 14, 15, and 19, ET, BRI, and Having confirmed that all modeled series exhibit significant total and
GPR exhibit the behavior of a predominant recipient index. Whereas the net dynamic connectedness across diverse time horizons, it becomes
LR-NTDC is concerned, as given in Figs. 20 to 25, it becomes logical to calculate the marginal effects of the independent variables on
10
Fig. 7. TDC based on ET for long-run.
Fig. 8. Short-run NTDC for ET.
Energy Transition (ET). The primary objective of this study is to develop effects), and the 72th lag (to capture the long-run (LR) effects). Also, it is
a comprehensive policy framework that takes into account the impact of assumed that 1–3 quantiles show a bearish market, 4–6 quantiles show a
Artificial Intelligence (AI) and other factors on ET. The connectedness normal market, and 7–9 quantiles show bullish market conditions in
approach has already contributed to half of this primary goal by order to grasp the dynamic association across various time horizons.
revealing both the total and directional connectedness among the cho Observing the influence stemming from AI as visualized in Fig. 26,
sen series. This significant connectedness has established a dynamic link the outcome evidences that, in the SR, AI possesses a multifaceted in
between the independent variables and ET. However, it remains essen fluence on ET across various market conditions. For instance, during a
tial to delve deeper into how these potential drivers affect the ET process bearish market situation, AI shows a positive association with the cor
- whether they facilitate or hinder it - and to use these insights to shape responding ET market condition, while ET’s normal and bullish market
policy recommendations. To achieve this, it is crucial to estimate the conditions experience no significant and adverse effects, respectively.
marginal effects. Drawing from academic literature, the study chooses to Furthermore, in AI’s normal market situation, it reveals a mixed impact
employ the Cross Quantilogram (CQ) method, calculating the marginal on all of ET’s market conditions, albeit insignificantly. Conversely, in the
effects under different market conditions and across various time spans. case of AI’s bullish market situation, ET’s bearish and normal market
For in-depth analysis, the study takes the 5th lag (to capture the short- conditions respond negatively, while the bullish market condition in
run (SR) effects), the 22nd lag (to capture the medium-run (MR) dicates a significantly positive response.
11
Fig. 9. Short-run NTDC for BRI.
Fig. 10. Short-run NTDC for AI.
In the MR outcome, ET primarily responds negatively to AI across to face predominant loss across most of the market situations on account
various market situations, except for the normal and bullish market of PA except when the ET market is bearish and bullish, which gains
conditions of ET, which reveal a positive correlation with the bullish favorable impacts, responding to PA’s bearish and bullish market situ
market of AI. In the LR, an intriguing outcome becomes evident as all of ations correspondingly. This association turns into a mixed association
ET’s markets exhibit a significantly positive link with all of AI’s market in the MR, such that half of the markets indicate a positive link while the
conditions. This implies that ET gains substantial benefits in the LR. In remaining markets show a negative link with the corresponding markets
summary, the SR and LR market conditions of ET display a mixed of PA. However, the LR outcome determines that ET gains significant
response to AI’s various markets; nevertheless, this association trans favorable effects on account of PA across most market conditions with
forms into a positive association in the LR. the exception of a few quantiles which exhibit the adverse influence
Looking at the impacts of BRI visualized in Fig. 27, ET has to endure a stemming from PA. In sum, in the SR and MR, PA has a mixed impact,
significant loss on account of BRI in the SR as ET’s all market situations while in the LR, it fosters the ET ratio.
show the adverse link with the BRI’s all market conditions. This negative In the context of the ET-GT nexus, Fig. 29 illustrates a similar
association turns into the mixed but predominantly positive link in the outcome to that reported for the ET-PA nexus. In the SR and MR, GT
MR as most of the ET’s market conditions demonstrate a positive asso exhibits mixed impacts on ET across various market conditions; how
ciation except for its bearish and bullish market conditions, which reveal ever, in the MR, the positive influence appears to be predominant. Over
a negative correlation. Further, the LR results display that ET gains the long run, GT demonstrates beneficial effects on the ET process across
favorable benefits as its all-market conditions exhibit a significantly all market conditions, suggesting that GT fosters the ET process more
positive link with the BRI’s all-market situations except for the ET’s effectively in the LR compared to the SR and MR. Regarding the ET-GPR
bullish market, which shows the adverse impacts of BRI. nexus depicted in Fig. 30, a diverse range of outcomes is evident. For
As for the effects exerted by PA, Fig. 28 visualizes the findings for instance, in the SR, ET exhibits a mixed response to GPR, with ET pri
various time horizons. For example, the SR outcome suggests that ET has marily reaping benefits from GPR when considering its normal and
12
Fig. 11. Short-run NTDC for GT.
Fig. 12. Short-run NTDC for PA.
Fig. 13. Short-run NTDC for GPR.
13
Fig. 14. Medium-run NTDC for ET.
Fig. 15. Medium-run NTDC for BRI.
Fig. 16. Medium-run NTDC for AI.
14
Fig. 17. Medium-run NTDC for GT.
effects of GPR on ET are observed across various time horizons.
5.3. Discussion
The utilization of the QVAR technique ensures strong interconnec

tedness among the selected series (AI, BRI, PA, GT, GPR, and ET) across
different time horizons. This indicates a significant association among
the series during short-term (SR), medium-term (MR) periods except in
the long-run (LR). This marks the initial distinctiveness of the article, as
it identifies the connectedness among the series across various time
spans. This dynamic interconnectedness necessitates an exploration of
directional relationships to understand the interplay and formulate an
Fig. 18. Medium-run NTDC for PA. appropriate policy framework. Thus, this study intends to employ the
CQ technique for this specific purpose.
bullish market conditions in response to GPR’s normal market situation. With the application of the CQ approach, the study confirms the
In the MR, GPR demonstrates a significantly detrimental impact on ET several diverse results across the various time horizons. For instance,
across most market conditions. This same pattern of effects persists artificial intelligence (AI) has mixed effects on energy transition (ET) in
when examining the LR outcome, with the majority of ET’s market the SR and MR, as visualized in Fig. 26. The plausible reason might be
conditions experiencing adverse influences stemming from GPR. How that the invention and deployment of any new technology create un
ever, the bearish, normal, and bullish markets of ET gain benefits when certainty for the time being (Chiffi et al., 2022). However, in the LR, AI
responding to the bullish market situation of GPR. In summary, mixed strongly enhances the ET solutions and exhibits favorable effects,
Fig. 19. Medium-run NTDC for GPR.
15
Fig. 20. Long-run NTDC for ET.
Fig. 21. Long-run NTDC for BRI.
Fig. 22. Long-run NTDC for AI.
16
Fig. 23. Long-run NTDC for GT.
Fig. 24. Long-run NTDC for PA.
supporting the confirmation of the hypothesis of the positive nexus be energy supply when needed. Also, AI might ensure efficient charging
tween AI and ET. Thus, it is rational to infer the supporting role of AI to and reduce the strain on the grid during peak periods by recommending
ET for targeting SDG 7 and 13. Mechanically, the potential role of AI in a suitable charging time based on energy availability and cost. AI might
improving the ET system can be categorized into two parts. Firstly, it optimize the combustion of clean energy by controlling the heating,
might trigger the ET by assisting in the production side of green energy. cooling, and lighting systems in buildings and maintaining comfort
For instance, by integrating AI with green smart grids, the flow of levels (Zhang et al., 2022). Similarly, AI might assist in analyzing the
electricity could be controlled and monitored, its supply and demand environmental impact of renewable energy installations, such as wind
could be balanced, and its outages could be detected and responded to, farms and solar facilities, by providing AI-powered drones and sensors.
leading to an efficient and reliable electrical grid. Also, by utilizing It can address concerns about wildlife and ecosystem disruption. In
machine learning algorithms, AI might analyze real-time data and make addition, by analyzing large datasets and modeling the potential out
adjustments to reduce energy wastage, leading to optimized energy comes of different policy choices with the assistance of AI, policymakers
consumption in various sectors, such as buildings, industries, and might make informed decisions regarding the further production and
transportation, and eventually, saving energy. AI might assist in utilization of clean energy. Eventually, this process might decrease the
enhancing the forecast of green energy generation, thereby helping in green investment-related uncertainties, too. Besides, AI, by modeling
the management of the integration of intermittent renewable energy the likely outcomes of various policy choices through analyzing large
sources more effectively. Additionally, AI might enhance the reliability datasets, might help in making smart decisions regarding green energy
of the grid by detecting its potential faults and issues in real-time. Sec investment (Forbes, 2021).
ondly, AI might trigger the ET by storing, supplying, and utilizing green In the case of the BRI, as reported in Fig. 27, it is evident that it exerts
energy optimally and efficiently. For instance, AI might assist in storing a varied influence on ET across different time horizons. In the SR, the
clean energy, such as in batteries, and ensuring a stable and reliable BRI primarily leads to a decline in ET, while in the MR, its influence
17
Fig. 25. Long-run NTDC for GPR.
predominantly becomes positive across most market conditions. The the utilization of green energy sources. Additionally, the PA inspires
reason for the adverse effects is that before 2019, the authorities over advanced economies to share advanced technologies with developing
seeing the BRI could not devise any comprehensive green environment nations. This transfer of technologies process might foster the produc
management plan and mainly focused on economic growth. In the LR, tion of GT, resulting in improving the ET. Similarly, the PA might
the BRI appears to promote the ET process significantly. Overall, the motivate global economies to collaborate in R&D on green environ
findings verify the hypothesis of a positive nexus between BRI and ET. ments. It might lead to the development of more efficient and affordable
Economically, BRI might contribute to accelerating the ET by financing ET solutions. Moreover, to meet the PA commitments, the global econ
green energy projects and smart grids. For instance, in 2019, the au omies are implementing carbon pricing mechanisms, such as carbon
thorities overseeing the BRI devised a comprehensive green environ taxes or emissions trading systems. Such practices might create in
ment management plan. This plan is designed to increase the allocation centives for investors and individuals to invest in cleaner energy alter
of green finance, with the objective of promoting environmental sus natives for reducing carbon emissions (International Renewable Energy
tainability throughout all regions within the BRI (Green Belt and Road Agency, 2020). Besides, the outcome supports the findings reported by
Initiative Center, 2023). Also, BRI can be a source of knowledge sharing Dogan et al. (2022) while analyzing the influence of the Kyoto Protocol.
and green innovations. For instance, through trade among participating Additionally, the study deduces that the impacts of green technolo
and other economies, BRI might increase the export and import of clean gies (GT) on ET are multifaceted. In the short-term (SR) and medium-
energy technologies and services. Eventually, it might promote the uti term (MR), these impacts are a blend of positive and negative out
lization of clean and green energy-based on clean technologies, resulting comes. This may be attributed to the high initial costs associated with
in fostering the ET. Through international collaboration, BRI might the deployment of GT, as economies of scale have not yet been realized.
endorse maintaining the environmental standards, addressing climate In the LR, the ET process enjoys considerable benefits stemming from the
change exigencies, and promoting the energy transition on a global utilization of the GT. Since the PA and BRI have played an essential role
scale. Additionally, BRI strongly encourages R&D projects in order to in transferring knowledge, experiences, and technologies across borders,
enhance the capacity of advanced technologies in participating nations. it might enhance the access of global nations, especially the developing
This process might trigger green technologies, thereby leading to nations, to the GT, thereby leading to a positive influence of GT on ET in
expediting the ET ratio (UN Environment Program, 2023). Besides, BRI the LR.
encourages participating nations to align their policies with sustain Finally, the findings establish the multifaceted effects of geopolitical
ability goals. It might result in the development of policies and regula risk (GPR) on ET. For instance, ET predominantly experiences positive
tions that support the ET by renewable energy adoption and energy outcomes in the SR due to GPR, although adverse effects are observed in
efficiency measures. These outcomes are unique as compared to the a few quantiles. This could be attributed to global firms hedging against
findings documented by Liu and Ma (2023), Cheng and Wang (2023) uncertain risks. In the MR, GPR notably negatively impacts ET across a
and Wang et al. (2023a, 2023b). wide range of market conditions, and a similar pattern is observed in the
Like AI, the Paris Agreement (PA) demonstrates the mixed effects on LR. The reason being, the persistent geopolitical tensions emanating
ET in SR and MR, implying that ET process has to face favorable and from the evolving landscape of global geopolitics might influence the
adverse influences on account of PA. Interestingly, these mixed effects investment ratio of the energy transition. For instance, the report by the
turn into a positive influence in LR, indicating that PA significantly United Nations (2022) documented that the Ukraine–Russia War
triggers the ET solutions in LR. These outcomes plainly support the impeded the green transition by disrupting the global investment and
hypothesis of a positive nexus between PA and ET. Technically, there trade ratio, thereby tending to a high oscillation in global energy prices.
might be various ways through which the PA can foster the ET ratio. Similar disruptive effects were observed during the COVID-19 pandemic
Since this global treaty primarily emphasizes “zero-carbon solutions,” it (Tian et al., 2023) and the 2008 Financial Crisis (Asian Development
might encourage the participating economies to combust green energy Bank, 2011). Additionally, the China-US trade war adversely impacted
and improve energy efficiency, thereby promoting the transition to various local and global investment sectors by disrupting global trade
cleaner energy systems. Also, the PA motivates the developed world to patterns, thereby contributing to the escalation of high inflation rates
provide green finance to developing nations in order to increase green (Centre for Economic Policy Research, 2023). Given that energy tran
energy projects. This step might escalate the ET process by enhancing sition initiatives heavily rely on investment, foreign investment serves as
18
Fig. 26. Impacts of AI on ET deploying CQ.
a critical pillar for these projects. Any global economic or geopolitical requires policies that can navigate through potential setbacks in the
shock has the potential to slow down the global investment chain, green energy sector. To handle this exigency, incentivizing research and
consequently impeding progress in green transition projects. These development in AI to better align with ET goals or revising regulatory
outcomes are aligned with the findings by Wang et al. (2023a, 2023b), frameworks to better manage AI’s influence on ET. As AI’s bullish
Acheampong et al. (2023), and Bashir et al. (2023). To recapitulate the market condition seems to support the ET process, policies should focus
outcome, the summary is documented in Table 2. on strengthening these synergies. For instance, investing in AI applica
tions that are proven to facilitate ET in specific contexts might assist in
enhancing the positive association.
5.4. Policy implications for energy transition based on AI’s role
Focusing on the long–run nexus, the AI sector seems to significantly
enhance the green transition, underscoring the need for sustained in
Focusing specifically on the policy implications for the relationship
vestment in AI technologies and applications that can facilitate ET. It can
between AI and ET, here are the time – horizon-wise policy implications.
be attained by supporting AI research on renewable energy, energy ef
In the short–run, AI’s effects on ET are multifaceted, so the policies
ficiency, and smart grid technologies. Also, global policymakers should
should be highly adaptable, responding swiftly to changing market
focus on long-term strategic planning to accelerate the beneficial impact
conditions. Policies could capitalize on AI-driven opportunities for
of AI on ET. It might be obtained by setting long-term goals for AI
accelerating ET in bearish markets, where AI positively correlates with
integration in energy sectors and creating frameworks that encourage
ET. However, the adverse impacts on ET are witnessed in normal and
innovation and collaboration at the global scale.
bullish market conditions. To mitigate these harmful effects, short-term
subsidies or support mechanisms for green energy sectors might play a
crucial role.
Since AI seems to impede the ET progress in the medium – run, it
19
Fig. 27. Impacts of BRI on ET deploying CQ.
6. Conclusion impacts on ET across various market conditions and time periods. For
instance, in the SR, most independent series display mixed effects on ET,
The study extends the prior pertinent literature and confirms the except for BRI, which predominantly has adverse effects, and GPR,
several diversified outcomes. To this end, the study utilized, firstly, the which predominantly has positive effects. In the MR, the mixed in
QVAR technique and extended it to SR, MR, and LR connectedness to fluences of AI, PA, and GT on ET are witnessed, with the exceptions
capture the interconnectedness among the opted series (artificial intel being BRI, which improves ET, and GPR, which predominantly de
ligence (AI), BRI, the Paris Agreement (PA), green technologies (GT), teriorates it. Interestingly, in the LR, AI, BRI, PA, and GT significantly
GPR, and energy transition (ET)) for various time horizons. Secondly, enhance ET, while GPR disrupts ET solutions. Thirdly, the outcomes
the study relies on the CQ method to explore the nexus across the various plainly endorse that the nexus between AI, BRI, PA, GT, GPR, and ET is
market conditions for different time periods. Deploying both advanced diversifying and time-varying across the various market conditions.
methods confirms that: Thereby, these outcomes might be crucial while framing the pertinent
Firstly, all opted series possess significant connectedness for all time policies to the global authorities. Fourthly, the findings unequivocally
horizons except LR connectedness, which seems weak compared to the confirm the hypotheses indicating a positive correlation between AI,
SR and MR connectedness. BRI, PA, GT, and ET, as well as a negative correlation between GPR and
Secondly, all of the independent side series demonstrate diverse ET. Besides, the graphical conclusion (in Fig. 31) visualizes the overall
20
Fig. 28. Impacts of PA on ET deploying CQ.
outcomes of the study. supply disruptions during periods of GPR.

Secondly, the authorities should implement short-term energy effi
ciency programs to enhance energy transition. These programs can
6.1. Policy framework
reduce overall energy consumption and greenhouse gas emissions.
Further, incentives such as tax breaks, subsidies, or rebates for energy-
This subsection is further divided into the following parts. Firstly,
efficient technologies and practices might encourage both businesses
general policies are recommended for the short, medium, and long run.
and households to participate. Also, public awareness campaigns can
Secondly, specific policies are suggested for portfolio investments.
educate citizens about the benefits of energy efficiency and provide
Thirdly, additional recommendations are provided.
practical tips for reducing energy consumption.
Thirdly, considering the adverse influence of GPR on ET, policy
6.1.1. General policy recommendations
makers should focus on implementing risk mitigation strategies. To do
so, insurance schemes specifically tailored to energy projects can be
6.1.1.1. Short-run policies. Firstly, since the mixed effects of the po introduced. Consequently, such schemes might protect against political
tential drivers are observed, the authorities should prioritize the diver risks stemming from various sources. Also, these measures can
sification of energy sources. It endorses shifting away from heavy encourage private sector investment in energy transition projects.
reliance on a single energy source and exploring a mix of renewable and
conventional sources. This step might assist in mitigating the negative
6.1.1.2. Medium run policies. Firstly, as the BRI supports the ET process
impacts of certain variables while capitalizing on the positive ones. For
in the MR, policymakers should consider aligning their energy projects
example, a diverse energy portfolio might provide resilience against
21
Fig. 29. Impacts of GT on ET deploying CQ.
with the principles of BRI. It can be done by investing in sustainable sources like solar and wind. Policies should encourage research and
infrastructure projects that promote clean energy generation, energy development in energy storage systems, such as advanced batteries and
efficiency, and environmentally friendly transportation. Additionally, grid-scale storage solutions.
the partnerships with nations participating in BRI might facilitate the
flow of green funds and clean technology transfer. 6.1.1.3. Long-run policies. Firstly, as AI, BRI, PA, and GT have positive
Secondly, the mixed impacts of AI, PA, and GT on ET indicate the effects on ET in the long run, the authorities should promote and support
need for targeted policies promoting the adoption of these technologies. long-term planning in these areas. To this end, the favorable conditions
Governments should consider incentives such as research grants, tax for sustained investment in AI and GT can be practiced by establishing
credits, or subsidies for businesses and research institutions involved in clear, long-term energy transition goals. Also, policymakers should
AI and GT development. Additionally, adherence to the goals of the PA provide stable regulatory frameworks and incentives to attract long-
should be reinforced through domestic legislation and international term investments from both domestic and international sources.
cooperation. Secondly, the practice of environmental regulation in the form of
Thirdly, the emphasis should be placed on energy storage technol carbon taxes to cut down the costs of carbon emissions can play an
ogies to ensure a stable and reliable energy transition. Governments can essential role in promoting the ET in the long run. At the same time,
provide grants and subsidies to support innovation in this critical area, targeting the sustainable environmental goals aligned with the Paris
reducing the intermittency issues associated with renewable energy Agreement treaty might be imperative to provide economic incentives
22
Fig. 30. Impacts of GPR on ET deploying CQ.
for businesses to reduce their carbon footprint and accelerate green

Table 2
transition solutions.
Summary of the results.
Thirdly, regarding the deteriorating impacts of GPR in the long run,
Series Short-run Medium-Run Long-run Support the authorities should engage in proactive diplomacy and international
to SDG-7
cooperation to mitigate geopolitical tensions. In this regard, strength
AI Mixed Mixed Positive ✓ ening diplomatic ties, fostering multilateral agreements, and promoting
BRI Mixed but Mixed but Positive ✓
peaceful conflict resolution might play a notable role. Eventually, the
predominantly predominantly
negative positive reduction in GPR on a global scale might assist the policy makers in
PA Mixed Mixed Positive ✓ creating a more stable environment for long-term energy transition
GT Mixed Mixed Positive ✓ investments.
GPR Mixed but Mixed but Mixed but ✘
predominantly predominantly predominantly
positive negative negative 6.1.1.4. Policy implications for portfolio investments. As the results
exhibit variations from the short to the long run, they carry crucial
implications for portfolio investments. Consequently, the following
investment-oriented implications are recommended.
23
Fig. 31. Graphical conclusion. Source: Authors’ erection.
In the context of diversification, investors should consider a more 6.1.1.5. Further suggestions.
dynamic and responsive strategy in the short run due to a positive as
sociation in bearish markets but adverse effects in bullish markets. 1. The global authorities should continuously monitor the dynamic
Diversifying holdings to balance these effects could be beneficial. For association between AI, BRI, PA, GT, GPR, and ET. Understanding
example, there is increasing exposure to ET in AI-driven bearish markets the dynamic correlation might help in erecting flexible policy ad
while being cautious in bullish scenarios. Considering the mixed re justments. Ultimately, it could assist in framing and adopting the
sponses, a balanced approach is advisable in the medium run. For changing circumstances and emerging trends in energy transition
instance, portfolios might be adjusted to account for the negative re solutions.
sponses of ET to AI in most conditions while capitalizing on positive
correlations in normal and bullish markets. In the long run, the uni 2. As the ET is strongly influenced by PA and BRI, the collaboration
formly positive link between AI and ET’s markets in the LR suggests a between countries and international organizations should be
strong case for long-term investments in ET, especially in portfolios enhanced. Sharing best practices, technologies, and funding re
aligned with technological advancements. sources can accelerate progress towards sustainable ET practices on a
In the context of market condition-based adaptation, the bearish global scale.
market scenarios suggest that ET investments seem favorable when
influenced by AI, PA, and possibly GPR. This means a counter-cyclical 3. The global authorities should focus on public awareness campaigns
investment approach in these sectors during downturns. In normal and to educate citizens about the importance of ET and its benefits. This
bullish market Conditions, mixed responses are observed, which re step might encourage public support for policies promoting ET so
quires a more nuanced approach. Monitoring the prevailing external lutions to obtain a sustainable future.
influences (like AI, BRI, and GT) and adjusting the portfolio composition
accordingly could optimize returns. Also, the study suffers from certain limitations that might assist in
In the context of sector-specific strategies, the effects of AI across exploring new directions in the future. For instance, the study mainly
different market conditions and time horizons suggest the need for a targets the global level to analyze how AI, BRI, and PA shape ET amid
flexible investment strategy in ET, possibly using AI as a leading indi GPR. Future studies can perform a region-wise analysis for more policy-
cator for making adjustments. Further, the significant loss in the short oriented findings. Additionally, the study considers the effects of various
run, followed by predominantly positive links in the medium and long economic shocks while performing the analysis. However, future studies
runs, suggests a cautious short-term approach but a favorable medium to can analyze the influence of the global shocks explicitly. Finally, the
long-term outlook on investments related to BRI. Additionally, the study handles the likely nonlinearities while deploying the advanced
diverse outcomes, especially the detrimental impacts in specific sce methods; however, the likely asymmetries are neglected. The scholars
narios, underline the importance of risk management. Strategies like are motivated to explore the asymmetric nexus for more interesting
hedging or stop-loss orders could mitigate potential losses, especially in outcomes.
more volatile or uncertain market conditions. Besides, the overall pos Furthermore, this study has limitations that could guide future
itive long-term implications for ET across various factors suggest growth research in new directions. Primarily, our analysis focuses on a global
opportunities in this sector. Investors with a long-term perspective perspective to examine how AI, BRI, and PA impact ET within the
might find ET a valuable addition to their portfolios, especially as the context of GPR. Future studies may consider regional-level analyses to
world increasingly moves towards renewable energy and technology- provide more policy-relevant insights. Additionally, while our analysis
driven solutions. takes into account various economic shocks, there is room for future
24
research to delve into the effects of global shocks explicitly. Lastly, development efficiency: a province level evidence from China. Energy Econ. 126,
106922.
although we address potential nonlinearities using advanced methods,
COP27 Report, 2022. What is Technology Development and Transfer? Available at: htt
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Declaration of competing interest Forbes, 2021. How Artificial Intelligence And Machine Learning Are Transforming The
Future Of Renewable Energy. Available at: https://www.forbes.com/sites/for
The authors declare that they have no known competing financial bestechcouncil/2021/11/30/how-artificial-intelligence-and-machine-learning-are-tr
ansforming-the-future-of-renewable-energy/?sh=1486cc96541b.
interests or personal relationships that could have appeared to influence Ge, T., 2022. A conceptual framework for assessing social and environmental impacts of
the work reported in this paper. belt and road initiative and just energy transition. Front. Sustain. Food Syst. 6,
982086.
Ghosh, B., Pham, L., Teplova, T., Umar, Z., 2023. COVID-19 and the quantile
Appendix A. Supplementary data connectedness between energy and metal markets. Energy Econ. 117, 106420.
Gong, X.L., Zhao, M., Wu, Z.C., Jia, K.W., Xiong, X., 2023. Research on tail risk contagion
Supplementary data to this article can be found online at https://doi. in international energy markets—the quantile time-frequency volatility spillover
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Energy Economics 131 (2024) 107388

Contents lists available at ScienceDirect

Understanding the effects of artificial intelligence on energy transition: The

1. Introduction to a rise in climate pollution. According to environmentalists, the rem­

Fig. 1. The scenario of SDG – 7. Source: Sustainable Development Report (2023).

Mean 0.02 − 0.025 0.025 0.034 0.018 − 0.001

Fig. 4. Trends in modeled series.

Fig. 5. TDC based on ET for short-run.

Fig. 6. TDC based on ET for medium-run.

Fig. 7. TDC based on ET for long-run.

Fig. 8. Short-run NTDC for ET.

Fig. 9. Short-run NTDC for BRI.

Fig. 10. Short-run NTDC for AI.

Fig. 11. Short-run NTDC for GT.

Fig. 12. Short-run NTDC for PA.

Fig. 13. Short-run NTDC for GPR.

Fig. 14. Medium-run NTDC for ET.

Fig. 15. Medium-run NTDC for BRI.

Fig. 16. Medium-run NTDC for AI.

Fig. 17. Medium-run NTDC for GT.

effects of GPR on ET are observed across various time horizons.

The utilization of the QVAR technique ensures strong interconnec­

Fig. 19. Medium-run NTDC for GPR.

Fig. 20. Long-run NTDC for ET.

Fig. 21. Long-run NTDC for BRI.

Fig. 22. Long-run NTDC for AI.

Fig. 23. Long-run NTDC for GT.

Fig. 24. Long-run NTDC for PA.

Fig. 25. Long-run NTDC for GPR.

Fig. 26. Impacts of AI on ET deploying CQ.

Fig. 27. Impacts of BRI on ET deploying CQ.

Fig. 28. Impacts of PA on ET deploying CQ.

outcomes of the study. supply disruptions during periods of GPR.

Fig. 29. Impacts of GT on ET deploying CQ.

Fig. 30. Impacts of GPR on ET deploying CQ.

for businesses to reduce their carbon footprint and accelerate green

Fig. 31. Graphical conclusion. Source: Authors’ erection.

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1. Introduction to a rise in climate pollution. According to environmentalists, the rem

The utilization of the QVAR technique ensures strong interconnec