THE RELATIONSHIPS BETWEEN GDP GROWTH, ENERGY CONSUMPTION, RENEWABLE ENERGY PRODUCTION AND CO2 EMISSIONS IN EUROPEAN TRANSITION ECONOMIES

Klodian Muço,Enzo Valentini,Stefano Lucarelli

doi:10.32479/ijeep.11275

Abstract

The objective of the analysis is to study the relationships between GDP, energy consumption, renewable energy production, and CO2 emissions in some European transition economies in the period 1990-2018. We use the growth rates of per capita values, in a panel VAR approach where all variables are typically treated as endogenous, allowing some inference on the causality of the relationships. The decision to focus on European transition countries is motivated by the fact that a significant part of the future of the green economy in Europe depends on the environmental and energy policies that will be implemented by these countries. In the transition economies (and years) included in the analysis, our findings suggest that investing in energy efficiency is good for the competitiveness of economies (in terms of effects on GDP growth) and is good for the environment (in terms of diminishing CO2 emissions). Finally, an increasing production of renewable energies reduces CO2 emissions.

Highlights

Energy plays an important role in the supply chain as it is a nondurable consumption good for consumers and an input into the production processes of firms (Sari et al, 2008), Sharma (2010), (Magazzino, 2012).The importance of energy draws the attention to the relationship between energy consumption and economic growth, since higher economic growth leads to a higher level of energy consumption
We study the causal relationship between GDP growth, energy consumption, renewable energy production and CO2 emissions in some European transition economies
In 2011, the European Commission published a roadmap for moving to a competitive low-carbon economy in 2050

Summary

Introduction

Energy plays an important role in the supply chain as it is a nondurable consumption good for consumers and an input into the production processes of firms (Sari et al, 2008), Sharma (2010), (Magazzino, 2012).The importance of energy draws the attention to the relationship between energy consumption and economic growth, since higher economic growth leads to a higher level of energy consumption. Energy plays an important role in the supply chain as it is a nondurable consumption good for consumers and an input into the production processes of firms (Sari et al, 2008), Sharma (2010), (Magazzino, 2012). Some researchers have pointed out that even developing countries should sacrifice some economic growth to protect the environment (Harrison and Eskeland, 2003), (Coondoo and Dinda, 2020). The nexus between energy consumption, economic growth and environmental pollutant has been the subject of considerable academic research over the past few decades in different countries. The empirical evidence remains controversial and ambiguous. Different studies employ different empirical models and different data periods (Ang, 2007)

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