The need for energy efficiency and economic prosperity in a sustainable environment

Abstract

Energy efficiency accounts for approximately 40% of the possibility of reducing greenhouse gases. Mitigating climate change while maintaining economic growth is a critical challenge. We investigated the impact of energy efficiency on economic growth and environmental sustainability in the ten most energy-efficient countries from 1990 to 2019, using energy access, energy security, and energy depletion as moderator variables. To this aim, a thorough empirical analysis was performed, and advanced econometric techniques were employed. The Westerlund panel co-integration test results indicate the existence of long-run relationships within the variables considered. Specifically, findings show that energy intensity, access, and security were positively associated with CO2 emissions, ecological footprint, and economic growth. At the same time, energy depletion was negatively associated with economic growth and positively related to CO2 emissions and ecological footprint. These findings demonstrate that energy intensity, access, and security positively impact economic growth and degrade the environment. This empirical evidence suggests that economies should simultaneously achieve economic and environmental goals by decoupling energy consumption from economic growth, which can be accomplished through improvements in energy efficiency.