The dynamic impact of energy productivity and economic growth on environmental sustainability in South European countries

Abstract

In the wake of global warming, the world is in an ecological state of disarray. Consequently, governments across the globe are committing to achieving low temperatures with a target of 1.5 °C, of which South European countries play a key role. This study aims to examine the effects of energy productivity (EP), economic growth (GDP), and globalization (GLO) on CO2 emissions of Cyprus, Spain, Portugal, Italy, Greece, and Malta (Southern European countries). The study covers the time from 1990 to 2018. Unlike earlier studies, the current analysis considers EP a significant factor in determining CO2 emissions in Southern European countries. Southern European countries primarily represent a group of emerging economies, but it is relatively ignored in empirical environment literature. This study is the first to reveal a newly second-generation connection among EP, GDP, GLO, and CO2 emissions in the Southern European countries by using the novel method of panel cointegration of Westerlund cointegration, Pedroni cointegration, augmented mean group (AMG), common correlated effects mean group (CCEMG), and followed by Dumitrescu–Hurlin causality tests. The empirical results suggest that the variables' effects are cointegrated, and EP reduces CO2 emissions while GDP, and GLO increase CO2 emissions in the South European countries. Furthermore, findings from the Dumitrescu Hurlin panel causality test suggest that any reductions in EP would have a positive impact on the extent of carbon emissions. On the basis of these empirical findings, this study suggests that policy administrators of the South European countries should consider the energy efficiency impact among the variables in setting their environmental, growth, and energy policies.