Energy security: Does systemic risk spillover matter? Evidence from China

Considering the severity and frequency of energy risk event shocks, this paper examines whether energy security issue is related to the propagation of significant shocks within the energy system. Relevant researches fail to concern the impact of systemic risk spillovers across energy firms on energy security and its influence mecha-nisms. By employing a complex network for characterizing risk event shock propagation mechanisms among high-dimensional data, our study captures the transmission of systemic risk among 128 Chinese energy firms from January 2013 to June 2021. Furthermore, using a modified spatial panel model, we find that systemic risk spillovers significantly affect energy security, and the effects are particularly salient in 2015-2016 and under COVID-19. The diffusion of risk event shocks in the Chinese energy system causes a decline in energy production and energy investment, further influencing short-and long-term energy security, respectively. Compared to the energy investment channel during 2015-2016 volatile periods, the negative effect of the COVID-19 crisis on security issues relies more on the energy production channel. The results also show a heterogeneous effect of individual energy firms' risk event shocks on energy security, and the influence of the systemic risk spillovers caused by state-owned firms' risk events is more significant than private firms. Overall, in dealing with frequent energy shocks, collaborations among energy firms, energy sectors, and the government are important for ensuring a country's energy security.