Energy Consumption, Economic Growth and Greenhouse Gas Emissions in the European Union Countries

Abstract

This paper investigates the relationship between economic growth, greenhouse gas emissions and other factors based on the panel data of 22 countries of the EU in the period 1995–2014. The fixed effect panel model was used as a framework for the analysis. The novel contribution of this paper is that the factors of economic growth, energy consumption, energy taxes as well as R&D were tested in one expanded EKC model, including the data of three Baltic States. The regression coefficients referring to GDP, Energy consumption have a positive sign, while R&D and Energy taxes have a negative sign. The empirical analysis combines two steps of evaluation of panel models of different groups of countries. The results imply that the analysed factors (energy consumption, energy taxes as well as R&D) can be applied to adjust the EKC trend in the region and might be useful for the climate change policy adjustment.

Greenhouse Gas Emissions Growth in Europe: A Comparative Analysis of Determinants

“…These analyses, however, did not aim at analyzing the reasons for the GHG emissions growth, and contained a limited identification and assessment of determinants of GHG emissions. The limited identification of determinants is also found in other studies, such as [18][19][20][21].…”

“…However, while the methodology used was more consistent than previous approaches, the scarcity of variables considered in the analysis was the main limitation of this study. Following a similar approach, the authors in [20] analyzed the impact of economic growth, energy consumption, energy taxes and research and development during 1995-2014 for 22 EU countries, using a fixed effect panel data. This study carried out an extensive literature review of studies based on panel-data regression models addressing the relationship between GDP (or economic growth), GHG emissions and energy consumption.…”

“…Factors Affecting GHG Emission Growth [1] Fuel mix, energy efficiency, renewables, structural changes in the economy, temperature, production levels (GDP), emission reduction measures, carbon intensity, switch from gasoline to diesel and use of biofuels [19] Economic growth, energy consumption and renewable energy sources [20] Economic growth, energy consumption, energy taxes and research and development.…”

“…(+) [1,18,20,24,33,36,38] Fuel prices [FP] Higher prices lead to lower energy consumption levels. The variable used is estimated as an weighted average of different fuel prices (see below a more detailed explanation of the variable used) (−) [1,23,36];…”

“…Other deficiencies found in the research of determinants of GHG emissions are the non-inclusion of variables with high explanatory power in stochastic models (such as fuel mix, the structure of the economy or the fleet of vehicles), the use of own estimations and heterogeneous data sources (as [21]); multicollinearity among variables (as in [19,20,22]) and non-stationary data series (as [23][24][25]).…”