Renewable Energy Consumption in EU-28 Countries: Policy Toward Pollution Mitigation and Economic Sustainability

Abstract

A major challenge facing humans in the 21st century is how to strike a balance between the mitigation of environmental degradation and the achievement of sustainable economic growth. On this note, this investigation applies an autoregressive distributed lag (ARDL) methodology to a panel data of 28 European Union (EU-28) countries over the period 1995-2015. The study confirms the existence of positive and significant long-run nexus among environmental sustainability, renewable energy consumption and economic growth in the EU-28 countries. In addition, empirical results indicate that real gross fixed capital formation, carbon emissions and other environmental factors are principal determinants of long-run growth in the EU. Using Dumitrescu and Hurlin (2012) Granger non-causality in heterogeneous panel, results show long-run bidirectional causal relationships among renewable energy consumption, economic growth and other growth determinants. Based on these results, we infer that the exploitation of renewable energy sources in the EU-28 countries is a reliable pathway toward environmental pollution mitigation. Consequently, achieving sustainable development goals (SDGs) by the year 2030 through renewable energy consumption and carbon emission mitigation is very much achievable in the EU28 countries, and should also be adopted by all countries as an effective global policy.