Environmental Science and Pollution Research (2023) 30:28206–28216

https://doi.org/10.1007/s11356-022-24188-x

RESEARCH ARTICLE

The effect of GDP, renewable energy and total energy supply

on carbon emissions in the EU‑27: new evidence from panel GMM
Abraham Deka1,2 · Huseyin Ozdeser1 · Mehdi Seraj1

Received: 27 April 2022 / Accepted: 9 November 2022 / Published online: 18 November 2022
© The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature 2022

Abstract
The vast usages of sources of energy that pollute the environment have resulted in major problems of global warming in the
world. Global warming and greenhouse effect causes droughts, hunger, and starvation among many other health problems.
In this research, the effect of energy use, economic, growth, and renewable energy on carbon emissions, in the European
Union region from 1990 to 2019, is examined. The current study differs from previous researches, in that it specifies “effec-
tive capital” which is the interaction between energy and capital (a product of energy and capital) in the model. Effective
capital is inevitable in the production process because physical capital such as machinery, without power or energy to fuel
it, is dysfunctional. The current research employs the Generalized Method of Moments which is strong over endogeneity
and overcomes heteroskedasticity, serial, and autocorrelation problems. The findings of this research support past studies
that renewable energy reduces carbon emissions and gross domestic product exacerbates carbon emissions. Effective capital
and energy use are observed to promote carbon emissions, whereas capital and population size reduces carbon emissions
in the European Union.

Keywords Energy · Carbon emissions · Renewable energy · Effective capital · Non-renewable energy · GMM

Introduction 2020), among many other developed nations and emerging

economies such as China and India (Qin et al. 2021). There-
Carbon emissions (CEs) have been observed as the major fore, vast use sources of energy that pollute the environment
cause of greenhouse effect and global warming (Salim and have caused major problems of global warming in the world.
Rafiq (2012); Banga et al. (2022); Becker and Fischer (2013)). Global warming and greenhouse effect cause droughts,
CE comes from the use of sources of energy that are not envi- hunger, and starvation among many other health problems
ronmentally friendly, such as non-renewable energy (NRE) (Mukhtarov et al. (2022)). Thus, it is paramount and imminent
or fossil fuels (Bakhsh et al. (2022); Boukhelkhal (2022); to work towards reducing CE in the world. In a bid to reduce
Akadiri and Adebayo (2021)). The EU region is one of the global warming problems, the United Nations came up with
top leading areas of CE (Balsalobre-Lorente and Leitão the carbon neutrality goal. Nations, worldwide, are encour-
aged to work towards the use of clean energy. By doing so,
sustainable economic development and environmental quality
Responsible Editor: Eyup Dogan
improvement is achieved. Renewable energy (RE) is one of
* Abraham Deka the best alternative source that is friendly to the environment
[email protected] (Banga et al. (2022); Balsalobre-Lorente and Leitão (2020);
Huseyin Ozdeser Akadiri and Adebayo (2021); Shahbaz et al. (2021)), improves
[email protected] economic development (Ivanovski et al. (2021); Apergis and
Mehdi Seraj Payne (2010); Chen et al. (2020); Dogan et al. (2020)), and
[email protected] stabilizes the rate of inflation and exchange rate (Deka et al.
(2022), Mukhtarov et al. (2022); Deka and Dube (2021)).
1
Economics Department, Near East University, Mersin 10, Literature shows that economic growth and the emis-
Nicosia 99138, North Cyprus, Turkey
sions of carbon are significantly related (see, e.g., Asiedu
2
Department of Banking and Finance, University of Kyrenia, et al. (2021), Balsalobre-Lorente and Leitão (2020), and
Kyrenia, Cyprus

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Environmental Science and Pollution Research (2023) 30:28206–28216 28207

Boukhelkhal (2022)). The findings of these studies show a model “effective capital,” which is the interaction between
strong significant link between CE and economic growth. energy and capital (a product of energy and capital). Effec-
This shows that CE affects economic growth and economic tive capital is inevitable in the production process because
growth affects CE. In addition to that, Akadiri and Ade- physical capital such as machinery by itself without power
bayo (2021); Abbasi et al. (2021); Bilgili et al. (2022); and or energy to fuel it is dysfunctional. Thus, this study adds
Bouyghrissi et al. (2021) provide economic growth as one effective capital on top of other series (GDP, energy, capital,
major factor that significantly exacerbates the emissions of population, RE) to see how they affect CE in the EU region.
carbon in the environment, whereas Ben Youssef (2020), Moreover, the current research employs the Generalized
Adebayo (2021), Bakhsh et al. (2021), and Ahmad et al. Method of Moments (GMM) which is strong over endoge-
(2020a, b) provide that CEs significantly impact economic neity (Banga et al. (2022)) and overcomes heteroskedastic-
growth positively. The positive and significant relationship ity, serial, and autocorrelation problems (Fraj et al. (2018))
between CE and economic growth is due to the use of NRE, for robust results. The findings of this research support past
which emits CE, to enhance economic growth. The findings studies that RE reduces CE and GDP exacerbates CE. Effec-
of past studies show that indeed NRE provides a significant tive capital and energy use are observed to promote CE,
positive effect on economic growth (Ntanos et al. (2018); whereas capital and population size reduces CE in the EU.
Pao and Fu (2013); Afroz and Muhibbullah (2022); Ben
Youssef (2020); Bhat (2018); Asif et al. (2021); Behera and
Mishra (2020)). Economic growth is very crucial for the Literature review
economy, at the same time its negative effects environment,
due to the vast use of NRE which emits that CE is desirable Carbon emissions, non‑renewable energy,
to the economy. Thus, policies that raise economic growth and the environment
of a country together with rising environmental degradation
pose a dilemma to economists, environmentalists, and the It is crucial to understand the relationship that exists between
government. Other studies provide for a negative and neu- CE, NRE, and the environment among world economies. NRE
tral effect of NRE on economic growth (Ahmed et al. 2019; is seen as the major cause of CE which in turn causes envi-
Baz et al. 2021). The negative and neutral effect of NRE ronmental degradation. Thus, for proper policy making and
on economic growth is due to the shift to RE use which is implementation, thorough research is required. According to
friendly to the environment. NRE causes environmental deg- Anser et al. (2021), in a study of selected South Asian coun-
radation (Boukhelkhal 2022; Asif et al. 2021), RE reduces tries, environmental quality is being worsened. This is due to
CE (Akadiri and Adebayo 2021; Mathiesen et al. (2011); the wide usage of sources of energy that are not friendly to
Bhat 2018; Akram et al. 2022), and RE improves the quality the environment. Moreover, Balsalobre-Lorente and Leitão
of the environment (Balsalobre-Lorente and Leitão 2020). (2020) allude that greenhouse gas and climate change are
Nuclear energy is also observed to reduce carbon emissions directly correlated with growth in the EU-28, whereas Bakhsh
and promote economic growth (Menyah and Wolde-Rufael et al. (2022) allude that sulphur dioxide (SO2) emissions are
(2010); Omri et al. (2015)). It is also observed that resource related significantly with energy consumption, in Pakistan.
based and green nations perform better economically (Gatto In the case of 35 African countries, Boukhelkhal (2022) pro-
and Drago (2020a, b)) and that proper energy policy making vides that NRE causes environmental degradation. On the
should be followed by governments (Gatto and Drago 2020a, other hand, Adedoyin et al. (2020) provide that environmental
b; Drago and Gatto 2022); this is so because some govern- degradation across the Central and Eastern Europe (CEE),
ment backed policies, meant to achieve political Goals, have Commonwealth of Independent States (CIS), and New Mem-
been observed to impede RE investment (Aguirre and Ibi- ber States (NMS) blocks is different, whereas Ben Jebli and
kunle 2014). Therefore, to promote both environmental qual- Ben Youssef (2015) provide that the Environmental Kuznets
ity and economic growth, it is encouraged to resort to the use Curve hypothesis is not supported.
of RE. By doing so, the carbon neutrality goal is achieved. On the relationship between NRE and the CE, Akadiri
The study on the effect of GDP, RE and total energy sup- and Adebayo (2021) provide that NRE has a positive effect
ply on CE is of paramount importance. It helps understand on CE in India. These postulations support the findings of
how and which factors degrade the environment through the Bhat (2018) in the BRICS economies that NRE increases
emission of carbon in the air. By doing so, proper policy emissions. Therefore, excessive use of NRE results in envi-
making and implications are provided. The current research ronmental stress. Above that, Asif et al. (2021) support the
is done in the European Union (EU) region, which is among assertion above, by providing that in the 99 world coun-
the largest emitters of CE, hence the major region that tries, NRE negatively affects the environment due to the
causes global warming. The current study differs from pre- emissions of carbon in the air. In addition to that, Abbasi
vious researches done in this region, in that it specifies in the et al. (2021) allude that energy use, industrial value added,

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and population growth, in the UK, boost the sustainability Carbon emissions and economic growth
of the environment in the long run. Environmental quality
and the consumption of energy in Pakistan are observed to On the association between CE and economic growth, a
exhibits for a symmetric feedback effect. Other studies also significant positive relationship between economic growth
allude that consumption of energy is symmetrically caused and CE (Akadiri and Adebayo (2021)), is observed. A bidi-
by environmental quality (Baz et al. (2021). Therefore, the rectional causality is observed between gross regional prod-
evidence provided for in past literature studies show that uct growth and SO2 emissions (Ahmad et al. (2020a, b)).
NRE increases the emissions of carbon and hence the deg- Moreover, Asiedu et al. (2021) allude for the existence of a
radation of the environment. long-run relationship between economic growth and CE in
the 26 European countries, whereas Balsalobre-Lorente and
Non‑renewable energy (NRE) and economic growth Leitao (2020) allude that economic growth is positively cor-
related with CE in the EU-28 region. In a study of 35 Afri-
Inasmuch as NRE causes CE and hence environmental can countries, a bidirectional relationship between economic
degradation, it is observed to increase economic growth. growth and CE exists (Boukhelkhal (2022)). Moreover, in
Boukhelkhal (2022) in the 35 African countries from 1980 Morocco during the period 1990–2014, Bouyghrissi et al.
to 2016 observed a bidirectional relationship between eco- (2021) observed a significant effect from economic growth
nomic growth and the consumption of NRE. Moreover, to CE. Economic growth stimulates the emissions of carbon
Afroz and Muhibbullah (2022) observed that in Malaysia dioxide (CO2) in the short run (Abbasi et al. (2021)). It is
during 1980–2018, in the short run and long run, the asym- also observed that the growth of fossil fuel consumption is
metric effect of NRE consumption on economic growth is increased by GDP growth (Bilgili et al. (2022)). In addition
confirmed. Positive shocks of NRE in the short and long run to that, Ben Mberek et al. (2018) also add that in Tunisia,
are more than RE positive shocks (Afroz and Muhibbullah CO2 emissions are affected by economic growth in the long
(2022)). The findings of Afroz and Muhibbullah (2021) also and short run.
show hat, economic growth in Malaysia is more depend- On the other hand, Ben Youssef (2020) observed a long
ent on NRE than RE consumption. Moreover, according to run unidirectional causality from CO2 emissions to eco-
Ben Youssef (2020) in research done in the USA during the nomic growth in the USA. This is in support of the findings
period 1980–2016, a long run unidirectional causality from of Adebayo (2021) in a study of Japan, which alludes that
consumption of fossil fuel energy to economic growth exists. CE triggers economic growth. Additional causality from
In addition to that, in the G7 countries short run causality CE to economic growth is also observed (Adebayo (2021)).
between the consumption of NRE with economic growth Another indicator of CE, SO2 emissions significantly impact
exists (Behera and Mishra (2020)). In the BRICS coun- GDP in Pakistan, Bakhsh et al. (2022). In China, Ahmad
tries NRE positively affects economic growth in the long et al. (2020b) allude that the effect of economic performance
run (Bhat (2018)). This supports the findings of Asif et al. deterioration is induced by sulphur dioxide emissions and
(2021) in the 99 world countries that NRE has a significant that economic growth has the effect of introducing the emis-
positive effect on economic growth. Therefore, the evidence sions curtailment effect. Moreover, in the G7 economies,
provided for in past studies is overwhelming to prove that Balcilar et al. (2020) propose that in order to reduce CE,
NRE is a major driver towards economic growth. Italy, the USA, Japan, and Canada should sacrifice economic
However, other studies confirm the existence of a nega- growth by reducing fossil fuel energy. However, in the case
tive effect of NRE on economic growth. Ahmed et al. (2019) of France, since the 1990s and for German in the whole
in a study done in Myanmar during the period 1990–2016 period of analysis, including some few exceptions in UK, the
observed that NRE has a negative influence on economic above situation is invalid (Balcilar et al. (2020)).
growth. In the presence of technological inefficiency, NRE
is counterproductive (Ahmed et al. (2019)). Moreover, Baz Carbon emissions and renewable energy
et al. (2021) in Pakistan observed a neutral effect in nega-
tive and positive shocks of fossil fuel and economic growth. According to Akadiri and Adebayo (2021), the consump-
Thus, according to these studies, NRE reduces economic tion of RE reduces CE in India. This is in line with the
growth or does not provide a significant impact in enhancing postulations of Bhat (2018) who alludes that the consump-
economic growth. As discussed earlier, NRE is also blamed tion of RE tends to decrease CE in the BRICS economies.
for exacerbating environmental degradation through the Balsalobre-Lorente and Leitao (2020) postulate that envi-
emission of CO2. Thus, if it does not promote economic ronmental quality is improved by RE use. This shows that,
growth, a major indicator in the economy, then it should in order for nations to achieve the carbon neutrality goal,
not be used since it provides double problems, both to the they should resort to the use of RE. Moreover, Akram
environment and to the economy. et al. (2022) allude that, in Mexico, Indonesia, Nigeria,

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and Turkey (MINT) region during 1990–2014, RE and Data

energy efficient significantly reduce CE in the region.
Energy efficient reductions positively affect CE, while The variables employed in this research are CE, GDP, effec-
energy efficient positive shocks have a negative relation- tive capital, RE, primary energy supply, population size, and
ship with CE (Akram et al. (2022)). However, according to capital. CE is the dependent variable in this study, while
Anser et al. (2021) in Bangladesh, globalization index and the rest of the series are independent variables. Moreover,
RE positively impact CE, while Menyah and Wolde-Rufael the data of all the variables is retrieved from https://​data.​
(2010) provide for no significant link between RE and CE. oecd.o​ rg except for the CE indicator which is retrieved from
Adedoyin et al. (2020) postulate that an increase in RE https://​data.​world​bank.​org. To cater for missing data and
generation rises CO2 emissions in CIS and CEE countries, hence the quality of data analysis, pairwise deletion method
by 0.04 and 0.02% respectively. It however results in a has been employed. Pairwise deletion is of the assumption
decrease in CE of NMS countries. Therefore, it is crystal that the data is missing completely at random (MCAR). With
clear that RE use mitigates the emissions of carbon; hence, pairwise deletion, all cases that contain the data together
the quality of the environment is improved (Mathiesen with those cases with missing data are employed in the anal-
et al. (2011)). ysis. This approach is advantageous because it allows more
of the data to be utilized by data scientists. The disadvantage
of pairwise deletion technique is that it causes more varia-
tion on the resulting statistics since its basis is on different
Model specification, data, and methodology data sets. Moreover, duplication of outcomes may be difficult
considering a complete data set. Panel data is used in this
Model specifications research for 27 EU countries for the period that ranges from
1990 to 2019. The GDP is total value of products produced
The major drivers towards CE in the world are: NRE, in a nation during a certain period (Deka and Dube (2021)),
energy use, economic growth, fossil fuel use and popula- and in this research it is measured in total US dollars per
tion growth among many others. According to Apeaning capita. Primary energy supply is a total of NRE and RE,
(2021), the emissions of CO2 can be expressed as a func- that is, measured in tons per 1000 US dollars. CE indicator
tion of GDP per capita, emission factor, total population, in this research is represented by the emissions of CO2 and
fossil fuel mix, final energy intensity of GDP, and conver- is measured in metric tons per capita. Capital in this study
sion efficiency. Amirnejad et al. (2021) also provide GDP is the physical assets in a nation that are used in the pro-
per capita and its square root as the major determinants of duction process of goods and services and is measured as a
CE. Moreover, Akram et al. (2022); Akadiri and Adebayo percentage of gross fixed capital formation (GFCF). Effec-
(2021); and Adedoyin et al. (2020) specified CE as a func- tive capital considers the interaction between energy use
tion of economic growth, energy efficiency, GDP, NRE, and capital, the physical machinery. In this study, to find the
and RE. Therefore, due to the postulations of past stud- value of effective capital, a product of capital and energy use
ies, the current study specifies CE as a function of GDP, is considered. Population size is the number of people living
capital, effective capital, population size, primary energy in a country permanently during a set period of time and
supply, and RE. Thus, the current study differs from past is measured in million persons as a total. RE consumption
studies in that it adds a new determinant, effective capital, employed in this study consists of clean sources of energy
of CE. The model specification employed in this research that are friendly to the environment (Deka et al. (2022)),
is given in Eq. (1): and is measured as a percentage of primary energy supply.
CE = f (GDP, CAP, EC, POP, PES, RE) (1)
CE is the emissions of carbon dioxide, GDP is the gross Method
domestic product, POP is the population size, RE is renew-
able energy, PES is primary energy supply, CAP is the The current research follows two major steps in data
capital stock, and EC is effective capital. The statistical analysis.
representation of the model employed in this research is
specified in the Eq. (2): Step 1: preliminary tests
CE = 𝛽0 + 𝛽1CAP + 𝛽2EC + 𝛽3POP + 𝛽4PES + 𝛽5RE + 𝛽6GDP + 𝜇 (2) The current research in the data analysis begin by running
β0 is the constant term; β1, β2, ……, β6 are the coef- the descriptive statistics, unit root test, and the cointegration
ficient terms; and μ is the error term of the model. test, as preliminary tests before employing the major tech-
niques of data analysis. Preliminary tests are crucial in data

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analysis because they show the behavior of the data and how coefficients of the model and another that specifies the
the variables are related. long-run coefficients of the model. Due to the fact that the
The descriptive statistics shows the characteristics of each data set used in this research contains the number of cross-
and every variable in terms of their, mean, median, standard sectional dependence (N) that is greater than the number
deviation, and sum, among others. On the other hand, the of time series observations (t), hence the most appropriate
unit root test shows if the variable is stationary or not and model to employ is the Generalized Method of Moments
hence ascertains the order of integration of each variable. (GMM) (Deka and Cavusoglu 2022). GMM model is pre-
Variables that are not stationary, if specified in an ordinary ferred because it overcomes endogeneity problems, auto-
least square (OLS) model, result in spurious regressions. correlation, and heteroskedasticity problems (Banga et al.
Thus, in an OLS model, all indicators should be stationary. (2022); Fraj et al. (2018); for review, see also Deka and
Unit root test is also crucial in ascertaining the best method Cavusoglu (2022)). GMM technique was founded through
to employ in a study. For example, cointegration methodolo- the work of Holtz-Eakin et al. (1988); Anderson and Hsiao
gies, like dynamic ordinary least square (DOLS), vector error (1982); Arellano and Bond (1991); Blundell and Bond
correction (VEC), and fully modified ordinary least square (1998); and Arellano and Bover (1995). Holtz-Eakin et al.
(FMOLS) models, require all variables to be integrated of (1988), Anderson and Hsiao (1982), and Arellano and Bond
order 1. On the other hand, autoregressive distributive lag (1991) pioneered the first-difference GMM which uses dif-
(ARDL) technique works with variables that are integrated ferencing method to correct for endogeneity. First-difference
of order 0 or 1 or a mixture of both (Pesaran et al. (1997; GMM has one short fall, that is, it subtracts the previous data
1999; 2001); see also Deka et al. (2022) and Deka and Dube from the contemporaneous one, thereby magnifying the gaps
(2021) for review). In this research, the Philips Peron (PP) in unbalanced data set. Systems GMM (Blundell and Bond
together with the Augmented Dickey Fuller (ADF) techniques (1998); Arellano and Bover (1995)), unlike first-difference
by Phillips and Perron (1988) and Dickey and Fuller (1979) GMM, uses orthogonal deviations which subtracts the aver-
respectively are used to test for unit root. The PP and ADF age of the variable’s average of future observations available
tests are the traditional models of unit root and hence provide (Blundell and Bond 1998; Arellano and Bover 1995). This
robust outcomes. The current research also tests for cointegra- research uses both first difference and systems GMM, and
tion as a preliminary test. Cointegration test helps to ascertain the outcomes are compared. For the purpose of providing
the existence of a long-run association among variables that long-term coefficients of the model, the DOLS and FMOLS
are specified in a model (Granger 1986; Engle and Granger techniques are used. The DOLS and FMOLS techniques are
1987). Variables that are cointegrated can be expressed in cointegration regressions that are used in the event that all
cointegration regression techniques such as the DOLS, VEC, the variables in a model are stationary at first difference and
and FMOLS, to specify the long-run association of the vari- that they are cointegrated. The DOLS and FMOLS models
ables. It follows that, if these two major preliminary tests (i.e., are crucial since they produce robust long-term results that
if variables are integrated of order 1 and if the variables are are crucial for policy making.
cointegrated) are satisfied, then cointegration regressions can
be used. The panel cointegration tests of Johansen Fisher and
Kao tests are used. Results and data analysis

Step 2: major methodologies In this section of the study, we provide the results of the
research. Table 1 gives the results of the descriptive statis-
The next step after the preliminary tests is to specify the tics of all the variables RE, GDP, primary energy supply,
appropriate methodologies. In this research, we use two CE, capital, effective capital, and population size. The total
forms of methodologies, one that specifies the short-run observations for each and every variable employed in this

Table 1  Descriptive statistics GDP RE PES CE CAP EC POP

results
Mean 27,156 11.325 0.117 7.4202 15.35 1.6057 16.101
Maximum 117,721 44.918 0.409 29.040 56.635 5.1538 83.161
Median 25,083 8.2065 0.102 6.870 15.783 1.6712 8.389
Std. Dev 17,565 9.6138 0.053 3.9703 11.531 1.2278 21.119
Minimum 0.000 0.000 0.000 0.0000 0.000 0.000 0.3542
Sum 22,729,846 9479 98.21 6210.67 12,848 1343.96 13,477
Observations 837 837 837 837 837 837 837

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study is 837 (see Table 1). For GDP, Table 1 shows that Table 3  Results of Johansen Fisher and Kao residual cointegration
its mean value is 27,156, its maximum value is 117,721, test
median value of 25,083, and standard deviation of 17,564. Johansen Fisher panel cointegration test
Moreover, Table 1 shows that in the case of RE varia- No. of CE(s) Trace test stat P value Max-Eigen P value
ble, its mean value is 11.325, maximum value of 44.918, test stat
median value of 8.2065, and standard deviation of 9.6138. None 908.0 0.0000 606.8 0.0000
Primary energy supply is also observed to have a mean Kao residual cointegration test
value of 0.117, maximum value of 0.409, median value t-Statistic P value
of 0.102, and standard deviation of 0.053. In addition, CE ADF − 4.691702 0.0000
variable is observed to have a mean value of 7.42, maxi-
mum value of 29.04, median value of 6.87, and standard
deviation of 3.97. The other variable capital, employed in that the series in this research study are cointegrated. This
this research, has a mean value of 15.35, maximum value shows that these series have a significant long run associa-
of 56.635, median value of 15.783, and standard deviation tion. As a result, since these series are integrated of order
of 11.531. Effective capital which happens to be the inter- one, according to the PP and ADF test of unit root, and
action between energy use and capital in this research is are cointegrated, then they can be specified in cointegration
observed to have a mean value of 1.6057, maximum value regression techniques.
of 5.1538, a median value of 1.67, and standard deviation The long-run results of the DOLS and the FMOLS tech-
of 1.2278, whereas population size is observed to have a niques in this research study are provided in Table 4. The find-
mean of 16.101, maximum value of 83.16, median value of ings of this study show that RE consumption in the EU-27
8.389, standard deviation of 21.119, and minimum value countries has a significant negative influence on CE in the
of 0.3542. long-run, considering both the results of the FMOLS and the
In this study, we also provide the results of the PP and DOLS models. The results shows that when RE consumption
the ADF tests of unit root test. The results provided for in increases by 1 unit, then CE will decrease by 0.23 or 0.24 units
Table 2 of the ADF unit root test show that the variables in the long-run. These findings show that, in order for coun-
GDP, CE, primary energy supply, RE, and population size tries in the EU-27 block to suppress CE, they should shift to
are not stationary at level but stationary at first difference. the use of RE that is friendly to the environment and does not
The variables effective capital and capital according to the emit carbon into the air. Moreover, the long-run findings of the
ADF unit root test are observed to be stationary at level and DOLS and the FMOLS models in this study as provided for
stationary at first difference. However, the findings of the PP in Table 4 show that GDP has a significant positive effect on
test of unit root in Table 2 shows that all the variables GDP, CE in the EU-27 countries. The findings show that an increase
CE, primary energy supply, effective capital, RE, population in GDP by 1% causes CE to increase by 1.7% or 3.5% in the
size, and capital are not stationary at level but stationary long-run. Therefore, in the EU-27 countries GDP is observed
at first difference. Therefore, in this research, we conclude to exacerbates CE. This is so because, when nations increase
that all the variables specified in this research are integrated productivity and hence achieve high economic growth, they
order one. use more of NRE which emits CO2 in the air. Thus, a positive
We also provide the results of the cointegration test as per link between GDP and CE is observed. Primary energy sup-
Johansen Fisher panel and the Kao residual tests of cointe- ply is also observed to provide a positive effect on CE in the
gration in Table 3. The results provided in Table 3 indicate EU-27 countries. An increase in primary energy supply by 1

Table 2  PP and ADF unit root ADF PP

test results
Level First difference Level First difference
Statistic P value Statistic P value Statistic P value Statistic P value

lnGDP 25.4369 0.9997 140.766 0.0000 30.8283 0.9953 253.576 0.0000

GHG 69.3708 0.0540 262.039 0.0000 102.898 0.0000 472.779 0.0000
PES 49.8878 0.6337 256.297 0.0000 27.8309 0.9988 552.022 0.0000
EC 88.1809 0.0001 165.722 0.0000 50.9509 0.2190 603.748 0.0000
RE 31.7270 0.9933 178.634 0.0000 18.8219 1.0000 346.747 0.0000
POP 68.3944 0.0899 138.053 0.0000 47.0027 0.7389 144.836 0.0000
CAP 80.7694 0.0006 160.963 0.0000 40.4624 0.6240 548.360 0.0000

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Table 4  FMOLS and DOLS Dependent variable: CE

techniques’ results
FMOLS DOLS
Variable Coefficient t-Statistic P value Coefficient t-Statistic P value

RE − 0.232677 − 64.72433 0.0000 − 0.242220 − 9.756668 0.0000

lnGDP 1.703465 25.60243 0.0000 3.505405 6.540111 0.0000
PES 18.93426 20.13263 0.0000 53.42471 5.537273 0.0000
EC 0.079590 2.306875 0.0214 − 0.166920 − 0.366719 0.7143
CAP − 0.011482 − 3.350985 0.0009 0.006272 0.155287 0.8768
POP − 0.114024 − 18.44680 0.0000 − 0.197815 − 4.094566 0.0001
R2 0.931162 0.992238
Adjusted R2 0.927527 0.973037

unit causes CE to increase by 18.93 units and 53.42 units in to the FMOLS results, provides for a significant negative effect
the long-run, according to the FMOLS and the DOLS results on CE, while DOLS model shows that the association is not
respectively. The positive influence of primary energy supply significant.
on CE is due to the fact that primary energy supply is a com- The results of the R2 and the adjusted R2 for both the DOLS
bination of NRE and RE energy. Therefore, it is the fraction and FMOLS techniques in Table 4 are very high, close to
of NRE that is positively linked with CE. Hence, in order for 100%, indicating the goodness of fit in the model. Table 5 of
nations to reduce CE, they should shun the use of NRE and this research provides the residual diagnostic testing results.
concentrate on the use of RE. Effective capital is observed The diagnostic testing results provided for in Table 5, for both
to provide a positive effect on CE as per the FMOLS results, the DOLS and the FMOLS, show that these two models have
while the DOLS model shows that the relationship is insignifi- problems of autocorrelation and partial autocorrelation and
cant. The positive effect of effective capital on CE emissions that the residuals are not normally distributed.
is due to NRE that is included in total primary energy which The results of the panel GMM model specified in this study
is used to obtain the value of effective capital. Therefore, we as provided in Table 6 give the results of both the first differ-
observe that NRE causes the interaction between machineries ence GMM and the systems GMM model. The findings of
and energy to produce substances that pollute the environment. the GMM technique in Table 6 show that there is a significant
It is the machineries that produce carbon in the air during the positive effect of the first lag of CE on current CE in the EU-27
production processes because they are powered with NRE countries. The findings of the first difference and the systems
which is friendly to the environment. The long-run findings GMM model show that an increase in the first lag of CE by
also show that population size in the EU exhibits for a sig- 1 unit results in an increase in current CE by 0.82 units in
nificant negative effect on carbon emissions. This shows that the short run. Therefore, past positive CE increases CE in the
an increase in the population size of the EU nations have a future. The results also shows that GDP is positively linked
tendency to reduce carbon emissions. Normally, population with CE in the EU-27 countries. An increase in GDP by 1%
growth exacerbates carbon emissions as more people scramble causes CE to increase by 0.56 or 0.5% in the short run. This is
on the scarce resources causing environmental degradation. so because nations strive to achieve economic growth through
Also, high population entails that energy will be consumed the use more of NRE which emits carbon gases into the air.
in large quantities, and if NRE is consumed more due to high However, RE in the EU-27 countries is observed to have a
population growth, then carbon emissions increase. Therefore, significant negative effect on CE. This shows that the use of
the existence of a negative association between population size RE in the EU-27 economies reduces CE in the air. Thus, in
and carbon emissions in the EU countries can be explained the EU-27 economies, the use of NRE should be shunned and
in two ways. Firstly, EU nations are developed nations that more of RE energy should be used for the purpose of reducing
have developed policies to reduce population growth; thus, CE. Moreover, primary energy supply is observed to provide
their population is not growing much; hence, the use of energy
is not strained. As a result, a negative association of popula-
tion growth and carbon emissions is observed. Secondly, EU Table 5  FMOLS and DOLS techniques’ residual diagnostic
nations have started to shift to the use of RE which is not AC PAC P value Jarque-era P value
harmful to the environment; hence, a rise in the population
DOLS 0.522 0.522 0.000 10,167.96 0.000
size simply raises RE use, and hence carbon emissions are not
FMOLS 0.703 0.703 0.000 9472.84 0.000
worsened. Capital, the control variable in this study according

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Environmental Science and Pollution Research (2023) 30:28206–28216 28213

Table 6  Results of panel GMM Dependent variable: CE

technique
GMM-FD GMM-SYS
Variable Coefficient t-Statistic P value Coefficient t-Statistic P value

CE(-1) 0.819911 74.48020 0.0000 0.823277 49.59680 0.0000

lnGDP 0.558252 3.708835 0.0002 0.499748 6.227349 0.0000
RE − 0.051458 − 2.118101 0.0345 − 0.061893 − 8.098950 0.0000
PES 5.919055 6.380022 0.0000 4.465916 5.671944 0.0000
EC 0.261615 5.597835 0.0000 0.243602 3.641603 0.0003
CAP − 0.022910 − 2.604463 0.0094 − 0.019016 − 1.327428 0.1848
POP 0.049095 0.390429 0.6963 − 0.091009 − 2.312172 0.0210
J-statistic 21.53380 0.308068 17.36429 0.565203

for a significant positive effect on CE, such that an increase in effective capital and capital, effective capital and population
primary energy supply by 1 unit causes CE to increase by 5.91 size, and capital and population size exhibit for a significant
or 4.47 units. Primary energy supply constitutes of NRE and positive association among each other. The existence of a
RE; thus, NRE in primary energy supply exhibits CE. Effec- significant positive correlation among these variables indi-
tive capital is also observed to provide a positive significant cates that a rise in one variable should be followed by a rise
influence on CE. Capital and population size provide a nega- in another. Also, Table 7 shows that GDP and total energy
tive significant effect on CE. The findings of GMM model, just supply, RE and total energy supply, RE and population size,
like the long-run findings of FMOLS, show that an increase in total energy supply and capital, and total energy supply and
the population size of the EU nations has a tendency to reduce population size exhibit for a significant negative association
carbon emissions. In line with the explanation given under the among each other. The presence of a significant negative
FMOLS findings, we provide that under normal circumstances correlation among these variables shows that a rise in one
and in line with postulations of past studies, population growth variable will be followed by a decrease in another. Hence,
exacerbates carbon emissions. Also, high population entails in order to promote one variable, then another respective
that energy will be consumed in large quantities, and if NRE variable should be discouraged. We also show in Table 7
is consumed more due to high population growth, then car- that CE and population size, RE and effective capital, and
bon emissions increases. Therefore, the existence of a negative RE and capital are not significantly related. Therefore, these
association between population size and carbon emissions in variables are not connected in a significant association, and a
the EU countries can be explained in two ways. Firstly, EU change in one variable will not cause any effect on another.
nations are developed nations that have developed policies to
reduce population growth; thus, their population is not grow-
ing much; hence, the use of energy is not strained. As a result, Discussion
a negative association of population growth and carbon emis-
sions is observed. Secondly, EU nations have started to shift to In this research, we observe that the findings of the long-run
the use of RE which is not harmful to the environment; hence, FMOLS and DOLS models and that of the short-run systems
a rise in population size simply raises RE use, and hence car- GMM and first difference GMM models are similar. The cur-
bon emissions are not worsened. rent study based its policy recommendations on panel GMM
The results of the first difference and the systems GMM model which has robust results and also because GMM tech-
in Table 6 are robust because the J-statistic value indicates nique is strong over endogeneity (Banga et al. (2022)) and
that the model correctly specifies the data. The J-statistic overcomes heteroskedasticity, serial, and autocorrelation
value is very low, and its P value is greater than 0.1 showing problems (Fraj et al. (2018)). In this research, we support
that, indeed, the model is correctly specified. Therefore, the the findings provided for by past researches that the use of
findings of the GMM model are the most reliable results in RE has the significant effect of reducing CE. Past studies
this study and can be used for policy making. allude that RE significantly reduces CE and hence should
The outcomes of the correlation analysis in Table 7 show be used to reduce environmental degradation (Ahmad et al.
that carbon emissions and GDP, carbon emissions and total 2020a, b; Bhat 2018; Akadari and Adebayo, 2021). This
energy supply, carbon emissions and effective capital, GDP shows that in order to reduce the effects of global warming,
and RE, GDP and effective capital, GDP and capital, GDP caused by NRE use, nations should shift to using RE. This
and population size, total energy supply and effective capital, is in support with the postulations of Balsalobre-Lorente and

13
28214 Environmental Science and Pollution Research (2023) 30:28206–28216

Leitao (2020) who allude that RE improves the quality of the

environment. Therefore, in this research, we encourage the
use of RE in the EU region. NRE should be shunned since
it is the major driver of CE.

0.395 (12.09***)
Moreover, this research shows that GDP in the EU region
promotes CE. The positive effect of GDP on CE is due to
vast use of NRE in the EU in a bid to achieve high economic
CAP

growth. These findings are supported by past studies that

1
provides for the existence of a significant positive effect of
economic growth on CE (see Bilgili et al. (2022); Abbasi
et al. (2021); Bouyghrissi et al. (2021); and Akadiri and
0.859 (47.164***)
0.276 (8.076***)
Adebayo (2021)). As a result, nations should shun the use of
NRE to achieve high economic growth and resort to the use
of RE which also promotes economic growth without pollut-
ing the environment (Eren et al. 2019; Ivanovski et al. 2021;
EC

Rahman and Velayutham 2020). This study also observes

that effective capital and energy use increases CE. Effec-
0.127069 (3.598***)

tive capital is the interaction between total energy use and

-0.243 (-7.052***)
-0.134 (-3.815***)

capital. Thus, we provide that the positive effect of effec-

tive capital on CE is due to the presents of NRE in total
energy use variable. As a result, if nations shift to the use
of RE, effective capital as a product of RE and capital may
PES

tend to reduce CE. Capital by itself reduces CE in the EU

1

region, while population size by itself is observed to reduce

CE as well. The negative effect of population size on CE
is due to the policies adopted in this region that are meant
-0.108 (-3.053***)

-0.177 (-5.079***)

to reduce population growth. High population growth may

0.044 (1.239)
0.043 (1.226)

exacerbate CE since more people will strive over scarce

resources; hence, more of NRE is used in the production
process. Therefore, the existence of a negative association
RE

between population size and carbon emissions in the EU

countries can be explained in two ways. Firstly, EU nations
are developed nations that have developed policies to reduce
-0.670 (-25.35***)
0.153 (4.365***)
0.366 (11.05***)
0.169 (4.844***)

population growth; thus, their population is not growing

0.076 (2.142**)

much; hence, the use of energy is not strained. As a result, a

negative association of population growth and carbon emis-
lnGDP

sions is observed. Secondly, EU nations have started to shift

to the use of RE which is not harmful to the environment;
1

hence, a rise on their population simply raises RE use, and

*; **; *** represents 10%; 5%; 1% level of significant
Correlation (t-statistics)

hence carbon emissions are not worsened. Thus, all world

-0.375 (-11.378***)

countries are encouraged to set population growth policies

0.195 (5.594***)
0.143 (4.056***)
0.265 (7.738***)

0.136 (3.860***)

to reduce CE.
-0.046 (-1.288)

Conclusion
CE
Table 7  Correlation matrix

In short, this study shows that RE is the best source of

energy to reduce CE; hence, nations should shift from NRE
to RE use. We also observe that high economic growth
obtained from vast use of NRE increases CE. As a result, we
encourage the use of RE to achieve economic growth. The
significant positive effect of energy use and effective capital
lnGDP

CAP
POP
PES

on CE can be explained by the existence of NRE in both

EC
RE

13
Environmental Science and Pollution Research (2023) 30:28206–28216 28215

variables. The current research also encourages countries to among energy investment, SO2 emissions and economic perfor-
adopt some policies to reduce population growth. By doing mance in regional China. Environ Sci Pollut Res 27(3):2730–2744
Ahmed S, Alam K, Sohag K, Gow J, Rashid A, Akter M (2019)
so, CE is reduced as well as global warming effects. The Renewable and non-renewable energy use and its relationship
limitations of the study are that it does not directly include with economic growth in Myanmar. Environ Sci Pollut Res
NRE in the model. However, indirectly NRE is included 26(22):22812–22825
in total energy use. Thus, the impact on CE is indirectly Akadiri SS, Adebayo TS (2021) Asymmetric nexus among financial
globalization, non-renewable energy, renewable energy use, eco-
observed from total energy use. For the purpose of future nomic growth, and carbon emissions: impact on environmental
studies, the interaction between RE and capital should be sustainability targets in India. Environ Sci Pollut Res 1–13
specified to proxy effective capital. If only RE is considered Akram R, Umar M, Xiaoli G, Chen F (2022) Dynamic linkages
in calculating effective capital, then effective capital may between energy efficiency, renewable energy along with economic
growth and carbon emission. A case of MINT countries an asym-
reduce CE. metric analysis. Energy Rep 8:2119–2130
Amirnejad H, Mehrjo A, Yuzbashkandi SS (2021) Economic growth
and air quality influences on energy sources depletion, forest
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original draft, software, data curation. HO: editing, supervision. MS: Anderson TW, Hsiao C (1982) Formulation and estimation of dynamic
visualization, investigation, writing-review. models using panel data. J Econ 18(1):47–82
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were retrieved from the Organization for Economic Co-operation and and environment? The relationship between energy consumption,
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https://​data.​world​bank.​org/. lut Res 28(37):51105–51118
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nomic growth: evidence from a panel of OECD countries. Energy
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has not been previously published in other journals and is not under tions. Rev Econ Stud 58(2):277–297
consideration by other journals. The authors also guarantee that this Arellano M, Bover O (1995) Another look at the instrumental variable
manuscript is original and is their own work. estimation of error-components models. J Econom 68(1):29–51
Asiedu BA, Hassan AA, Bein MA (2021) Renewable energy, non-
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