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Linking between Renewable Energy, CO 2 Emissions, and Economic Growth: Challenges for Candidates and Potential Candidates for the EU Membership

Author

Listed:
  • Yuriy Bilan

    (Faculty of Management, Rzeszów University of Technology, Aleja Powstańców Warszawy 12, 35-959 Rzeszów, Poland)

  • Dalia Streimikiene

    (Lithuanian Energy Institute, Breslaujos 3, Kaunas, LT-44403, Lithuania)

  • Tetyana Vasylieva

    (Department of Finance and Entrepreneurship, Sumy State University, Ryms’koho-Korsakova St, 2, 40000 Sumy, Sums’ka oblast, Ukraine)

  • Oleksii Lyulyov

    (Economics, Entrepreneurship and Business Administration Department, Sumy State University, Ryms’koho-Korsakova St, 2, 40000 Sumy, Sums’ka oblast, Ukraine)

  • Tetyana Pimonenko

    (Economics, Entrepreneurship and Business Administration Department, Sumy State University, Ryms’koho-Korsakova St, 2, 40000 Sumy, Sums’ka oblast, Ukraine)

  • Anatolii Pavlyk

    (Economics, Entrepreneurship and Business Administration Department, Sumy State University, Ryms’koho-Korsakova St, 2, 40000 Sumy, Sums’ka oblast, Ukraine)

Abstract

This paper investigates the impact of renewable energy sources (RESs), CO 2 emissions, macroeconomics, and the political stability in a country on the Gross Domestic Product (GDP). The authors analyse the dynamics of RESs use, CO 2 emissions, and GDP development and also test the following hypotheses: (1) The country’s economic growth is related to the energy consumption, in terms of both human resources and capital; (2) the share of the renewable energy consumption of the total energy consumption has a positive impact on the economic growth; and (3) the share of the renewable energy consumption of the total energy consumption is unrelated to the economic growth. To test the above hypotheses, the authors use the modified Cobb-Douglas production function, which also considers RES production volumes, CO 2 emissions, and economic growth. The study employs data between 1995 to 2015 from the candidate and potential candidate countries for the EU membership. The data are drawn from the World Bank and Eurostat. The analyses entail panel unit root tests, Pedroni panel cointegration tests, fully modified OLS (FMOLS), dynamic OLS (DOLS) panel cointegration techniques, and the Vector Error Correction model (VECM). The findings confirm the relationship between RESs, CO 2 emissions, and the GDP. For the EU countries, RESs as human resources and capital have an impact on the GDP. Moreover, the results reveal a correction retraction when the economic growth leads to an increase in renewable energy consumption. The investigation also finds that candidate and potential candidate countries for the EU membership should foster renewable energy development. The authors conclude that developing affordable and effective instruments and mechanisms to boost the RES implementation is necessary to decrease the anthropogenic impact on the environment (in particular, decreasing CO 2 emissions) without any attendant reduction in the economic growth.

Suggested Citation

  • Yuriy Bilan & Dalia Streimikiene & Tetyana Vasylieva & Oleksii Lyulyov & Tetyana Pimonenko & Anatolii Pavlyk, 2019. "Linking between Renewable Energy, CO 2 Emissions, and Economic Growth: Challenges for Candidates and Potential Candidates for the EU Membership," Sustainability, MDPI, Open Access Journal, vol. 11(6), pages 1-16, March.
  • Handle: RePEc:gam:jsusta:v:11:y:2019:i:6:p:1528-:d:213556
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