Investigating the role of energy mix and sectoral decomposition on environmental sustainability in selected European countries

Abstract

This study investigates the interactions between per capita CO2 emissions, economic growth, energy consumption (renewable and nonrenewable), agricultural, industrial, and services value-added, and trade openness across a panel of 23 European countries from 1995 to 2022. The empirical analysis is based on panel data econometric approaches (fixed effects, fully modified ordinary least squares, dynamic ordinary least squares, quantile regression models). Empirical findings reveal that economic growth and renewable energy consumption negatively impact CO2 emissions across all models, highlighting its role as a crucial mitigating factor in reducing air pollution. Conversely, fossil fuel energy consumption and trade openness positively influence CO2 emissions, underscoring the urgent need to transition towards more sustainable sources and trade strategies. Agriculture, industry, and services value-added are also significantly associated with air pollution, indicating areas requiring targeted interventions to curb emissions effectively. These empirical insights contribute to the literature and provide actionable plans for policymakers.