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Investigation on the causality relationship between environmental innovation and energy consumption: Empirical evidence from EU countries

Author

Listed:
  • Muhammad Usman
  • Magdalena Radulescu
  • Daniel Balsalobre-Lorente
  • Abdul Rehman

Abstract

Environmental innovations, investments, and expenses have been identified as an efficient and reliable way of addressing ecological issues. Nevertheless, how environmental innovations, investments, and expenses may influence the level of environmental pollution in European nations and whether the outcome may fluctuate among various environmental innovation indicators remain to be inspected. Therefore, this research is designed to empirically scrutinize the influence of environmental innovations, environmental investment, environmental expenditure, research and development (R&D) expenses, and foreign direct investment (FDI) on renewable and non-renewable energy in a sample of 15 European countries during the period from 2005 to 2018. To achieve this, we apply robust panel econometric estimation techniques. After testing the stationary property of the series, the findings of the Pedroni cointegration test disclose the presence of a long-run stable connection among the series. The empirical results from the ARDL, FMOLS and DOLS regression show that the impact of environmental innovations, environmental expenditure, R&D expenses, and FDI help to reduce overall non-renewable energy and promote renewable energy. In contrast, environmental investment significantly increases non-renewable energy and diminishes renewable energy usage. Moreover, the findings of Dumitrescu and Hurlin's tests discover a unidirectional causality running from non-renewables and renewables towards environmental investment, environmental expenditure, and FDI. Additionally, bi-directional causality is found between environmental innovations R&D, with both non-renewable and renewable energy utilization. Furthermore, we summarize by arguing that the efforts toward efficient and sustainable use of energy by reducing the combustion of non-renewable energy sources should support modern and innovative strategies by ensuring the transformation of non-renewables with renewable energy sources.

Suggested Citation

  • Muhammad Usman & Magdalena Radulescu & Daniel Balsalobre-Lorente & Abdul Rehman, 2023. "Investigation on the causality relationship between environmental innovation and energy consumption: Empirical evidence from EU countries," Energy & Environment, , vol. 34(8), pages 3130-3159, December.
    • Handle: RePEc:sae:engenv:v:34:y:2023:i:8:p:3130-3159
    DOI: 10.1177/0958305X221120931
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    Cited by:

    1. Hao, Jingjun & Dong, Peiting & Yao, Xin, 2025. "High-speed railway opening, firm agglomeration and carbon emission: Evidence from China," Energy Economics, Elsevier, vol. 148(C).
    2. Pea-Assounga, Jean Baptiste Bernard & Bambi, Prince Dorian Rivel & Jafarzadeh, Elham & Nima Ngapey, Jonathan Dior, 2025. "Investigating the impact of crude oil prices, CO2 emissions, renewable energy, population growth, trade openness, and FDI on sustainable economic growth," Renewable Energy, Elsevier, vol. 241(C).
    3. Bożena Gajdzik & Radosław Wolniak & Rafał Nagaj & Brigita Žuromskaitė-Nagaj & Wieslaw Wes Grebski, 2024. "The Influence of the Global Energy Crisis on Energy Efficiency: A Comprehensive Analysis," Energies, MDPI, vol. 17(4), pages 1-51, February.
    4. Wang, Feng & Rani, Tayyaba & Razzaq, Asif, 2024. "Resource curse, energy consumption, and moderating role of digital governance: Insights from South Asian countries," Resources Policy, Elsevier, vol. 98(C).
    5. Zhang, Ying & Liu, Baoliu & Xue, Jinjun & Chen, Yiming & Zhao, Fang, 2025. "Would geopolitical risks be the new driver of the energy transition? An empirical study on renewable energy technology innovation," Energy Economics, Elsevier, vol. 141(C).
    6. Rani, Tayyaba & Wang, Feng & Ur Rehman, Syed Aziz & Amjad, Muhammad Asif, 2025. "Shaping sustainable futures in BRICS-T economies: The role of digitalization with moderating effects of green technology innovation and financial inclusion," Technology in Society, Elsevier, vol. 82(C).
    7. Cappelli, Federica & Carnazza, Giovanni, 2025. "Close ties: How trade dynamics and environmental regulations shape international dependence on oil," Energy Policy, Elsevier, vol. 202(C).
    8. Wang, Lingning & Pal, Shreya & Mahalik, Mantu Kumar & Gozgor, Giray, 2025. "Empowering sustainable development in emerging economies: The role of renewable energy and domestic investment," Energy Economics, Elsevier, vol. 148(C).
    9. Alam, Mohammad Mahtab & Murshed, Muntasir & Ozturk, Ilhan & Khudoykulov, Kurshid, 2024. "Macroeconomic determinants of non-renewable and renewable energy consumption in India: The roles of international trade, innovative technologies, financial globalization, carbon emissions, financial d," Energy, Elsevier, vol. 308(C).
    10. Usman, Muhammad & Simionescu, Mihaela & Radulescu, Magdalena & Balsalobre-Lorente, Daniel, 2024. "Breaking barriers, cultivating sustainability: Discovering the trifecta influence of digitalization, natural resources, and globalization on eco-innovations across 27 European nations," Resources Policy, Elsevier, vol. 94(C).
    11. Federica Cappelli & Giovanni Carnazza, 2025. "Close ties: how trade dynamics and environmental regulations shape international dependence on oil," SEEDS Working Papers 0125, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Jan 2025.

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