How sustainable is the energy transition? Implications of trade on emissions and energy security

The transition to renewable energy sources is crucial for combating climate change and enhancing energy security. However, along with well-acknowledged benefits, the energy transition may impose overlooked and unintentional risks to sustainability, stemming from patterns of trade between countries. The buildup of solar and wind energy capacity requires critical metals and equipment that are often imported, while too ambitious renewable energy and climate policies may lead to the offshoring of energy- and carbon-intensive industries, resulting in carbon leakage. This study uses principal component and cluster analyses to estimate indicators of trade-related energy security and carbon dioxide emissions embedded in trade of the sixty-four countries. The analysis indicates that wealthier countries, particularly those that are not energy self-sufficient, are more likely to utilize solar and wind energy. Solar and wind energy use is also associated with higher imports of embedded energy and emissions, as well as imports of metals and equipment required for renewable energy production. In contrast, energy-self-sufficient countries, being net exporters of both energy and energy embedded in products, barely use solar and wind for electricity generation and hardly import metals or low-carbon technologies. This study highlights the need to account for possible cross-border dependencies and displaced emissions, which may result from higher reliance on distributed renewable energy sources.