The Linkage between Economic Growth, Renewable Energy, Tourism, CO2 Emissions, and International Trade: The Evidence for the European Union

Nuno Carlos Leitão,Daniel Balsalobre Lorente

doi:10.3390/en13184838

Nuno Carlos Leitão, Daniel Balsalobre Lorente

Open Access

https://doi.org/10.3390/en13184838

Copy DOI

Abstract

This paper evaluates the link between economic growth, renewable energy, tourism arrivals, trade openness, and carbon dioxide emissions in the European Union (EU-28). As an econometric strategy, the research uses panel data. In the first step, we apply the unit root test, and the results demonstrated that the variables used in this study are integrated I (1) in the first difference. In the second step, we apply the Pedroni cointegration test, and Kao Residual cointegration test, and we observe that the variables are cointegrated in the long run. The panel fully modified least squares (FMOLS), panel dynamic least squares (DOLS), and generalized moments system (GMM-System) estimator are considered in this research. The econometric results proved that trade openness and renewable energy decreased climate change and environmental degradation. The empirical study also found a positive effect of economic growth on carbon dioxide emissions. Moreover, tourism arrivals are negatively correlated with carbon dioxide emissions, showing sustainability practices of the tourism sector on the environment. Furthermore, carbon dioxide emissions in the long run present a positive impact, indicating that climate change increases. In this study, we also consider the recent methodology of Dumitrescu–Hurlin to observe the causality and the relationship between renewable energy, trade openness, economic growth, tourism arrivals, and carbon dioxide emissions.

Highlights

The correlation between economic growth and the energy economy has always been associated with energy efficiency and energy demand
The results proved that trade openness and renewable energy consumption are negatively associated with CO2 emissions
This study considers the impacts of economic growth, renewable energy, tourism arrivals, and international trade on carbon dioxide emissions (CO2 ) for the period 1995–2014

Summary

Introduction

The correlation between economic growth and the energy economy has always been associated with energy efficiency and energy demand. There are numerous studies [1,2] that assess this relationship by demonstrating that non-renewable energy increases environmental damage, namely climate change, and global warming. Many of these studies use macroeconomic variables and are applied to a set of countries (panel data) or to a country (time series). Researchers began to analyze the impact of renewable energies on economic growth and climate change (e.g., [6,7,8,9,10]), this realization being closer to sustainable development. Directive 2009/28/EC made European states and their governments invest more in renewable energies, demonstrating that they are efficient from a long-term perspective

Methods

Results

Conclusion