Tariffs and the transition: A study on the effects of global trade on energy mix diversification

This empirical investigation explores the relationship between international trade and the composition of the energy mix, encompassing nuclear, renewable, and fossil fuel energy sources. We propound four novel hypotheses: commercial dependence, asymmetric transition, tariff the transition, and tariff the externalities, which aims to provide better insights of the dynamics at play within the green transition. Our econometric analysis reveals that tariffs exert a heterogeneous impact on the energy mix, contingent upon a country's income level and the specific characteristics of the energy source. Notably, economic openness does not necessarily catalyze energy diversification, and a pronounced reliance on fossil fuels persists. Furthermore, the nature of trade balances, dichotomized into high and low value-added components, exhibits asymmetric patterns of energy mix adoption. We yield policy recommendations aimed at promoting sustainability in commerce, underscoring the relevance of trade policies tailored to the needs of countries with varying income levels and trade profiles.