Abstract
Environmental policies are a significant cornerstone of a developed economy, but the question that arises is whether such policies lead to a sustainable growth path. It is clear that the energy sector plays a pivotal role in environmental policies, and although the current literature has focused on examining the link between energy consumption and economic growth through an abundance of studies, it does not explicitly consider the role of institutional or governance quality variables in the process. Both globalization and democracy are important drivers of sustainability, while environmentalism is essential for the objective of gaining a “better world.” Governance quality is expected to be the key, not only for economic purposes but also for the efficiency of environmental policies. To that end, the analysis in this paper explores the link between governance quality and energy efficiency for the EU-28 countries, spanning the period 1995 to 2014. The findings document that there is a nexus between energy efficiency and income they move together: the most efficient countries are in the group with higher GDP per capita. Furthermore, the results show that governance quality is an important driver of energy efficiency and, hence, of environmental policies.
Highlights
Nowadays, environmental policies are a significant cornerstone of a developed economy
The paper attempted to investigate the empirical role of certain institutional variables for energy efficiency across all members of the European Union (EU)-28
The empirical evidence indicated that the hypothesis that effective policies would have a positive effect on environmental conservation, especially for countries that exhibit carbon-emitting attitudes (Tajudeen et al 2018), like the EU-28 group
Summary
Environmental policies are a significant cornerstone of a developed economy. As Jebli et al (2016) illustrate the big problem is that the consumption of non-renewable energy (i.e., oil, coal, and natural gas) increases economic growth and increases carbon dioxide emissions. These emissions are considered as the main cause of global warming. One challenge appears: Barros et al (2013) and Apergis and Payne (2014) note that it is critical for the development of a sustainable energy consumption mix for policymakers to understand that policy initiatives must focus on costeffective renewable energy sources, as well as on technologies that can effectively compete with fossil fuel–based energy sources
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