Energy use and environmental degradation in Europe: evidence from panel nonlinear ARDL

Abstract

This study examines the nonlinear effect of energy use including coal, gas, oil, and electricity on CO2 emissions in European Union (EU) countries. Annual panel data of twenty-one European Union countries i.e. Austria, Azerbaijan, Belarus, Bulgaria, Belgium, Denmark, Finland, France, Greece, Germany, Hungary, Ireland, Italy, Kazakhstan, Lithuania, Netherland, Norway, Spain, Slovakia, Switzerland, and Ukraine from 1990 to 2018 is used, while panel nonlinear ARDL methodology is applied for examining the long and short run association. Findings showed that an increase in the coal, electricity, and oil usage increase carbon dioxide emissions, while a reduction in coal, electricity, gas, and oil usage reduce carbon dioxide emissions in the long run. Results of panel nonlinear ARDL (NARDL) model prove the existence of asymmetric impact of energy usage including coal, electricity, and oil on CO2 emissions in European countries. Bidirectional causality exits among positive partial sum of gas usage and CO2 emissions, as well as among partial positive component of oil usage and CO2 emissions in the short run. Pollution needs to be controlled by using new and efficient technologies by making research and development centers more efficient and productive, while the usage of renewable energy resources should be promoted by replacing the traditional energy resources to reduce emissions. ENERGY STAR strategy can be used to improve the energy performance of commercial buildings and industrial plants as well as government has to formulate policies of production which are environment friendly.