The relationship among urbanization, economic growth, renewable energy consumption, and environmental degradation: A comparative view of European and Asian emerging economies

Abstract

Economic growth is strongly connected to carbon emissions, mainly when based on intensive energy consumption and fossil sources for energy production. Recent studies discussed how an industrial structure in which the primary industries are dominant is expected to have a higher carbon footprint than a structure where tertiary industries dominate. Also, the value creation of primary industries is less energy efficient than the tertiary level, and higher levels of environmental damage are expected. The study examines the relationship among urbanization, financial development, economic growth, renewable energy consumption, industrial structure, and environmental degradation. We are using Feasible Generalized Least Squares (FGLS) and panel-corrected standard errors (PCSEs) models to estimate the correlation. The results support that growth policies should be shaped based on sustainable urban communities. As the economic output is based on a significant energy input, renewable sources should be considered for switching the energy mix from the classical one based on fossil sources to one with renewable sources predominance.