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The influence of economic growth, urbanization, trade openness, financial development, and renewable energy on pollution in Europe

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Abstract

This study investigates the influence of disaggregated renewable electricity production by source on CO2 emission in 23 selected European countries for the period of 1990–2013. Panel data techniques were used in examining the relationships. The Pedroni cointegration results indicated that CO2 emission, GDP growth, urbanization, financial development, and renewable electricity production by source were cointegrated. Moreover, the fully modified ordinary least-square results revealed that GDP growth, urbanization, and financial development increase CO2 emission in the long run, while trade openness reduces it. Furthermore, renewable electricity generated from combustible renewables and waste, hydroelectricity, and nuclear power have a negative long-run effect on CO2 emission, while renewable electricity generated from solar power and wind power is insignificant. The VECM Granger causality also revealed that GDP growth is the only variable that has causal effects on CO2 emission in all the investigated models, while the rest of the variables have causal effects on CO2 emission in only a few models. A number of policy recommendations were provided for the European countries.

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Notes

  1. A number of European Union countries such as Croatia, Cyprus, Estonia, Latvia, Lithuania, Malta and Romania were not included in the investigation due to the lack of data availability.

  2. This research utilized renewable electricity production instead of renewable energy consumption because the data for renewable energy consumption by source does not exist. Moreover, the researchers assume that a portion of the produced renewable electricity production is consumed by the EU producing countries.

  3. The number of cross sections (countries) is different between the models based on the data availability for each country.

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Al-Mulali, U., Ozturk, I. & Lean, H.H. The influence of economic growth, urbanization, trade openness, financial development, and renewable energy on pollution in Europe. Nat Hazards 79, 621–644 (2015). https://doi.org/10.1007/s11069-015-1865-9

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