Decarbonizing economic growth through renewable energy in the EU economies

Abstract

Striving for a sustainable growth model in Europe demands a nuanced understanding of the interconnections between energy dynamics, economic development, and environmental stewardship. This study examines the long-term relationship between electricity mix, economic growth, and carbon emissions across European economies from 1990 to 2021. While reaffirming the general link between energy composition and CO₂ emissions, our analysis provides new empirical evidence on how different energy sources (renewable, nuclear, and fossil fuels) exert distinct effects on emission trajectories. By employing the Fourier ARDL bootstrap approach, a novel econometric technique that can capture structural breaks and nonlinear transitions, we uncover the comparative effectiveness of nuclear versus renewable energy in advancing Europe’s carbon neutrality goals. The findings reveal that shifts in the electricity mix have a significant influence on CO₂ emissions, with renewable energy offering the most substantial reductions. These insights contribute to the existing literature by extending beyond conventional associations and offering actionable, policy-relevant guidance for energy transition strategies in diverse economic contexts.