The effect of GDP, renewable energy and total energy supply on carbon emissions in the EU-27: new evidence from panel GMM.

Abstract

The vast usages of sources of energy that pollute the environment have resulted in major problems of global warming in the world. Global warming and greenhouse effect causes droughts, hunger, and starvation among many other health problems. In this research, the effect of energy use, economic, growth, and renewable energy on carbon emissions, in the European Union region from 1990 to 2019, is examined. The current study differs from previous researches, in that it specifies "effective capital" which is the interaction between energy and capital (a product of energy and capital) in the model. Effective capital is inevitable in the production process because physical capital such as machinery, without power or energy to fuel it, is dysfunctional. The current research employs the Generalized Method of Moments which is strong over endogeneity and overcomes heteroskedasticity, serial, and autocorrelation problems. The findings of this research support past studies that renewable energy reduces carbon emissions and gross domestic product exacerbates carbon emissions. Effective capital and energy use are observed to promote carbon emissions, whereas capital and population size reduces carbon emissions in the European Union.