Environmental taxes, R&D expenditures and renewable energy consumption in EU countries: Are fiscal instruments effective in the expansion of clean energy?

Abstract

In today's world, where energy demand and climate change are experienced, the transition to renewable energy comes to the fore. The main tools used in the expansion of renewable energy are taxes and expenditures. This study examines the impact of R&D expenditures, environmental taxes and economic growth on renewable energy consumption in selected EU countries from 1995 to 2019. This study used augmented mean group (AMG) and dynamic common correlated effects (DCCE), which are novel estimators. Two different long-run estimators were used to obtain robust results. According to the results of the study, Environmental taxes have a positive effect on renewable energy consumption in Germany and France, while they have a negative effect in Spain and Slovenia. R&D expenditures positively impact renewable energy in Portugal, Lithuania, and Slovakia, while negatively affecting it in Germany and Spain. EU countries, which have equal responsibilities in expanding renewable energy, need to review their tax and expenditure policies and implement them in a coordinated manner.