Do global supply chain pressures affect energy demand: The moderating role of climate risk exposure.

Abstract

Energy demand is increasingly influenced by external shocks that carry significant policy implications for supply security, system efficiency, and environmental sustainability. This study examines the impact of global supply chain pressure (GSCP) on energy demand (ENG) in 54 developing economies. Using data from 1998 to 2024 and employing the Least Absolute Shrinkage and Selection Operator (LASSO), a machine learning method, the study finds that a 1 % rise in GSCP leads to a 0.31 % increase in ENG. Meanwhile, climate risk exposure significantly moderates the effect of GSCP on ENG. The findings are further validated through robustness checks and by addressing the endogeneity concern, using cross-fit partialling-out instrumental variable LASSO model. Moreover, global energy policies such as Technology Collaboration Programs, Just Transition Initiative, and Montreal Protocol are effective in shaping ENG demand. Policymakers should diversify supply chains, integrate climate risk management into energy policy, and reinforce efforts to achieve Sustainable Development Goal (SDG) 7 as a safeguard against supply chain shocks.