Energy Storage Innovation, Environmental Sustainability Risk, and Energy Affordability Risk in the European Union

ABSTRACT

This study investigates whether energy storage innovation reduces environmental sustainability risk (ESR) and energy affordability risk (EAR) in six European Union countries over the 2008–2023 period within the Sustainable Development Goals (SDGs) framework. An extended STIRPAT model and the bias‐corrected method of moments (BCMM) are employed to evaluate the effects of energy storage patents alongside economic growth, urbanization, and environmental taxes. The results show that a 1% increase in energy storage patents reduces ESR by approximately 0.032%, underscoring the critical role of storage innovation in lowering carbon intensity and facilitating renewable energy integration. Energy storage innovation also reduces EAR, although the effect is weaker and only marginally significant, reflecting technology diffusion lags and high capital costs. Economic growth and urbanization significantly mitigate both environmental and affordability risks, whereas environmental taxes improve environmental outcomes but have no significant effect on affordability. These findings demonstrate that energy storage innovation delivers stronger environmental than affordability benefits in the short run, highlighting the need for complementary financial and regulatory measures to accelerate technology diffusion. Overall, the study provides new empirical evidence on the dual role of energy storage innovation in supporting sustainable energy transitions and offers important policy implications for the European Green Deal and the achievement of SDGs 7, 9, 12, and 13.