Abstract
Recent debates on the Environmental Kuznets Curve (EKC) in the context of the European Green Deal highlights that pollution could be controlled using channels other than economic development. The role of renewable energy consumption in reducing pollution should be correlated with quality of governance, which could support initiatives for a cleaner environment. This study considers the renewable Kuznets curve for 10 Central and Eastern European countries in the period 2006–2019, using economic indicators (index of economic freedom, foreign direct investment, domestic credit to private sector and labour productivity) as control variables and indicators reflecting the quality of governance (Worldwide Governance Indicators and Google Trend indexes associated to key-word corruption in each language). The research is based on two types of panel data models: panel dynamic OLS model (PDOLS) and panel autoregressive distributed lag models based on pooled mean group (PMG) estimator. The results indicate that government effectiveness reduces pollution in both the short-run and long-run, while control of corruption and rule of law supports environmental protection in the long-run. Google searches for corruption as a proxy for quality of governance indicate that tGHG emissions have immediate and practical implications in nowcasting pollution.
Highlights
Engaged on the road to becoming the world’s first climate-neutral continent by 2050, the EU has set up an ambitious set of measures designed to facilitate the accomplishment of climate action initiatives under the European Green Deal, as part of a set of Sustainable Development Goals
This study considers the renewable Kuznets curve for 10 Central and Eastern European countries in the period 2006–2019, using economic indicators as control variables and indicators reflecting the quality of governance (Worldwide Governance Indicators and Google Trend indexes associated to key-word corruption in each language)
Cross-sectional independence was observed for Worldwide Governance indicators and Google Trend indexes and it is explained by the fact that government instability is determined by specific issues in each country
Summary
Engaged on the road to becoming the world’s first climate-neutral continent by 2050, the EU has set up an ambitious set of measures designed to facilitate the accomplishment of climate action initiatives under the European Green Deal, as part of a set of Sustainable Development Goals. Many reinforcing areas for action at all policy levels are needed to facilitate the achievement of the economic, social, and environmental objectives of the European Green Deal, since launching and implementing a set of initiatives might not be enough. A deep transformation of the EU economy to a climate-neutral and circular economy requires an understanding of the specific mechanisms and processes that are at the core of the economy-environment relationship. The European Green Deal and the EU’s strategic goal to become the world’s first “climateneutral block” by 2050 have urged the emergence of EKC research studies, slightly moving the analysis and discussion from the area of EKC hypothesis and the macroeconomic determinants to the role of institutional quality and its implications on EKC in this new challenging context. The quality of governance, in particular the environmental governance, has become a key-issue in the achievement of Green Deal objectives
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